Document:

EXHIBIT
10.1

SETTLEMENT AGREEMENT AND RELEASE

                    This
Settlement Agreement and Mutual Release (“Agreement”) is dated as of February
9, 2011 between Plaintiff Insignia Systems, Inc. (“Plaintiff”), Scott Drill
(“Drill”) and Defendant News America Marketing In-Store L.L.C. (sued in the
Action (as defined below) as News America Marketing In-Store, Inc.)
(“Defendant”). Plaintiff, Drill and Defendant are collectively referred to
herein as “the Parties.”

RECITALS

                    WHEREAS,
Plaintiff filed a lawsuit against Defendant captioned Insignia Systems, Inc. v. News America
Marketing In-Store, Inc., United States District Court for
Minnesota, Civil No. 04-4213, to collect damages and seek injunctive relief
for,
inter alia, alleged violations of federal and state antitrust laws,
unfair competition, and federal and state disparagement laws. Defendant filed a
counter-claim against Plaintiff and Drill. Collectively, the complaint,
included as amended, and the counterclaim are referred to herein as the
“Action”;

                    WHEREAS,
all claims by Plaintiff against Defendant, and by Defendant against Plaintiff
and Drill, have been vigorously contested, with all Parties denying any and all
liability to each other;

                    WHEREAS,
the Parties hereto desire to forever put to rest all disputes and claims
through the date of this Agreement;

                    NOW,
THEREFORE, in consideration of the foregoing and of the mutual
promises hereinafter set forth, the receipt and adequacy of which are hereby
acknowledged, the Parties agree as follows: 

          1.          Defendant
shall pay Plaintiff the sum of One Hundred Twenty Five Million Dollars
($125,000,000) (“Settlement Amount”), less the Four Million Dollar ($4,000,000)
payment owed by Plaintiff to Defendant under the Exclusive Selling Agreement
(as defined below) for a net payment to Plaintiff of One Hundred Twenty Million
Dollars ($121,000,000) (the “Net Amount”). The Net Amount is payable by the
Defendants as follows: the Net Amount shall be paid on February 10, 2011, by
wire transfer to [ * ]. 

*Indicates
confidential information which has been omitted and filed separately with the
Commission under Rule 24b-2.

21

          2.          Insignia
and News America shall enter into an exclusive selling arrangement consistent
with the terms attached hereto as Joint Exhibit A (the “Exclusive Selling
Agreement”). The Settlement Amount is not part of the consideration for the
Exclusive Selling Agreement. This Agreement, and any and all releases and
covenants not to sue, shall survive and remain in full force and effect and be
considered final and binding even if a dispute arises regarding the Exclusive
Selling Agreement, including but not limited to a dispute in which there are
claims that the Exclusive Selling Agreement has been breached, claims that the
Exclusive Selling Agreement should be declared void or claims that the
Exclusive Selling Agreement lacks consideration.

          3.          Defendant
shall not seek to enforce any right of first refusal and/or right of last
refusal provision contained in any of its current agreements with retailers and
shall not include right of first refusal and/or right of last refusal
provisions in any agreement it reaches with any retailer in the future.
Similarly, Plaintiff shall not include right of first refusal and/or right of
last refusal provisions in any agreement it reaches with retailers in the
future. 

          4.          The
Parties mutually agree that they shall not do or say anything at any time which
is falsely disparaging to the other Parties.

          5.          On
or before February 9, 2011, Plaintiff shall provide Defendant with a stipulated
order in the form of Exhibit B, dismissing the action with prejudice and
without costs. The Parties shall take all reasonable steps to have the order on
the stipulation entered.

          6.          Each
Party shall bear its own expenses and attorneys’ fees in connection with the
Action. 

          7.          The
Parties agree that the United States District Court for Minnesota shall retain
jurisdiction over the Action to enforce this Agreement. Pursuant to 28 U.S.C. §
636, Fed.R.Civ.P. 53 and Local Rule 72.1, the Parties further agree and consent
to the appointment of the Honorable Arthur Boylan as the master to resolve all
disputes in accordance with procedures established by him. Accordingly,
concurrent with the execution of this Agreement, the Parties will exchange
executed copies of the stipulation substantially in the form attached hereto as
Exhibit C and Defendant will promptly file it with the Court. The Parties shall
take all reasonable steps to have the order on the stipulation entered.

          8.          The
terms of the Protective Order as originally entered in the Action on or about
December 28, 2006 (“the Protective Order”) shall survive dismissal of the
Action and are hereby reaffirmed, including the provision that all Confidential
Material (as that term is defined in the Protective Order) shall be destroyed.
For the avoidance of doubt, the Parties agree that all Confidential Material
(including but not limited to discovery responses, documents and things
produced, depositions, summaries of the foregoing, and motion papers filed with
the Court consisting of, incorporating or attaching Confidential Material) that
are in the possession, custody or control of the Parties, their attorneys
and/or their experts and consultants shall be destroyed on or before March 30,
2011, except that outside counsel for the respective parties shall retain for a
period of six (6) years a copy of documents which formed a part of the court
record in the Action. 

22

          9.          Except
for the Parties’ obligations under this Agreement and the Exclusive Selling
Agreement, each of Plaintiff and the Plaintiff Released Parties (as defined
below) hereby releases, remises, acquits, and forever discharges Defendant or
any of its past or present members, related or affiliated companies and any or
all of its respective officers, directors, shareholders, partners, servants,
employees, members, attorneys, accountants, agents, representatives,
affiliates, subsidiaries, parents, successors and assigns, whether in their
individual capacity or as principal or agent (collectively, the “Defendant
Released Parties”), from any and all manner of actions and causes of action,
suits, debts, obligations, contracts, torts, covenants, claims, rights of
contribution and/or indemnification, rights of subrogation, sums of money,
judgments, executions, liabilities, damages, interest, costs, expenses,
attorneys’ fees and legal costs, demands and rights whatsoever, contingent or
noncontingent, in law or in equity, known or unknown, of any kind or character,
from the beginning of time up to the date of this Agreement (collectively, the
“Released Matters”). Each of Plaintiff and the Plaintiff Released Parties
further promises, covenants and agrees not to sue, attempt to introduce as
evidence, or otherwise assert any of the Released Matters and/or the underlying
facts or conduct supporting the Released Matters against the Defendant or the
Defendant Released Parties in any court, governmental or regulatory body or
other proceedings. 

          10.          Except
for the Parties’ obligations under this Agreement and the Exclusive Selling
Agreement, each of Defendant and the Defendant Released Parties hereby
releases, remises, acquits and forever discharges Plaintiff or any of its past
or present members, related or affiliated companies and any or all of its
respective officers, directors, shareholders, partners, servants, employees,
members, attorneys, accountants, agents, representatives, affiliates,
subsidiaries, parents, successors and assigns, whether in their individual
capacity or as principal or agent (collectively, the “Plaintiff Released
Parties”), from any and all manner of actions and causes of action, suits,
debts, obligations, contracts, torts, covenants, claims, rights of contribution
and/or indemnification, rights of subrogation, sums of money, judgments,
executions, liabilities, damages, interest, costs, expenses, attorneys’ fees
and legal costs, demands and rights whatsoever, contingent or noncontingent, in
law or in equity, known or unknown, of any kind or character, from the
beginning of time up to the date of this Agreement (collectively, “Released
Matters”). Each of Defendant and the Defendant Released Parties further
promises, covenants and agrees not to sue, attempt to introduce as evidence, or
otherwise assert any of the Released Matters and/or the underlying facts or
conduct supporting the Released Matters against Plaintiff or Plaintiff Released
Parties in any court, governmental or regulatory body or other proceedings.

23

          11.          Except
for the Parties’ obligations under this Agreement, Drill hereby releases,
remises, acquits, and forever discharges Defendant and the Defendant Released
Parties from any and all manner of actions and causes of action, suits, debts,
obligations, contracts, torts, covenants, claims, rights of contribution and/or
indemnification, rights of subrogation, sums of money, judgments, executions,
liabilities, damages, interest, costs, expenses, attorneys’ fees and legal
costs, demands and rights whatsoever, contingent or noncontingent, in law or in
equity, known or unknown, of any kind or character, from the beginning of time
up to the date of this Agreement (collectively, “Released Matters”). Drill
further promises, covenants and agrees not to sue, attempt to introduce as
evidence, or otherwise assert any of the Released Matters and/or the underlying
facts or conduct supporting the Released Matters against Defendant or any
Defendant Released Parties in any court, governmental or regulatory body or
other proceedings. 

          12.          Except
for the Parties’ obligations under this Agreement, each of Defendant and
Defendant Released Parties hereby releases, remises, acquits and forever
discharges Drill from any and all manner of actions and causes of action,
suits, debts, obligations, contracts, torts, covenants, claims, rights of
contribution and/or indemnification, rights of subrogation, sums of money,
judgments, executions, liabilities, damages, interest, costs, expenses,
attorneys’ fees and legal costs, demands and rights whatsoever, contingent or
noncontingent, in law or in equity, known or unknown, of any kind or character,
from the beginning of time up to the date of this Agreement (collectively,
“Released Matters”). Each of Defendant and Defendant Released Parties further
promises, covenants and agrees not to sue, attempt to introduce as evidence, or
otherwise assert any of the Released Matters and/or the underlying facts or
conduct supporting the Released Matters against Drill in any court,
governmental or regulatory body or other proceedings. 

          13.          Plaintiff
and Defendant hereby warrant and represent to the other that they have not
assigned or transferred, or purported to assign or transfer, to any person or
entity, any rights, claims, counterclaims, obligations, demands, damages,
actions or causes of action that they may have against the other, including but
not limited to rights, claims or damages arising out of or related in any way
to the Action. Plaintiff and Defendant hereby represent and warrant that there
are no other pending actions or claims by Plaintiff against Defendant, or by
Defendant against Plaintiff. 

          14.          Drill
and Defendant hereby warrant and represent to the other that they have not
assigned or transferred, or purported to assign or transfer, to any person or
entity, any rights, claims, counterclaims, obligations, demands, damages,
actions or causes of action that they may have against the other, including but
not limited to rights, claims or damages arising out of or related in any way
to the Action. Drill and Defendant hereby represent and warrant that there are
no other pending actions or claims by Drill against Defendant, or by Defendant
against Drill.

24

          15.          The
Parties understand and agree that this Agreement, and the Parties’ obligations
and payments made hereunder, are entered into and done solely to compromise
disputed claims, and shall not constitute an admission of liability on the part
of any Party. Further, this Agreement, the Parties’ obligations hereunder, and
payments made hereunder, shall not be offered into evidence in any proceedings
by any Party hereto, except as necessary in an action to enforce the terms
hereof.

          16.          This
Agreement, including the exhibits hereto, is the entire, integrated agreement
between the Parties, and any and all discussions, understandings, and
agreements heretofore had by the Parties with respect to the subject matter
hereof are merged into this Agreement, which alone fully and completely
expresses the Parties’ agreement, except as set forth in the other documents
executed by the Parties. No amendments, waivers, or termination can be made
except in a writing signed by each of the Parties.

          17.          This
Agreement shall be governed by and construed in accordance with the laws of the
State of Minnesota, without regard to the conflicts of law provisions thereof.

          18.          Other
than to announce that the parties have amicably settled the Action, neither
party hereto nor its attorneys shall disclose to any third party any
information with respect to the terms and provisions of this Agreement except:
(i) to the extent necessary to comply with the law or a valid order of a court
of competent jurisdiction, in which event(s) the party making such disclosure
shall so notify the other as promptly as practicable (if possible, prior to
making such disclosure), and shall seek confidential treatment of such
information and/or in camera review, (ii) to the extent necessary to comply
with the S.E.C. or other regulatory authorities or similar disclosure
requirements under any applicable laws, (iii) as part of its normal business
activities or reporting or review procedures to its parent and affiliated
companies (other than Valassis), banks, auditors, attorneys, accountants,
insurers and similar professionals, provided, however, that such companies,
banks, auditors, attorneys, accountants, insurers and similar professionals
agree to be bound by the provisions of this paragraph, (iv) as required by the
Internal Revenue Service or by any state tax authority, and (v) in any
proceeding to enforce this Agreement. 

          19.          All
confidential information that the parties disclose to each other pursuant to
the Settlement Agreement or Exclusive Selling Agreement, including but not limited
to the terms of their respective agreements with retailers, shall be kept
confidential by the receiving party and not shared with any competitors,
including Valassis. The receiving party shall treat the other party’s
confidential information with the same care and take the same precautions that
the receiving party uses to maintain the confidentiality of their own
confidential and competitively sensitive documents and information.

25

          20.          No
provision of this Agreement may be waived, amended, supplemented, terminated or
repealed in whole or in part, except only by the written consent of all
Parties. Any waiver, amendment or supplement agreed to by the Parties will
apply only to the instance or circumstance expressly provided therein, and not
to any other instance or circumstance, whether similar or dissimilar.

          21.          The
Parties each represent and warrant to the other that the persons executing this
Agreement on their respective behalves are authorized to do so. All terms and
conditions of this Agreement are binding upon and will inure to the benefit of
the Parties and their respective members, transferees, successors and assigns.
Plaintiff acknowledges that it sought and obtained approval to enter into this
settlement from its board of directors. Defendants acknowledge that they sought
and obtained approval to enter into this settlement from the board of directors
of News Corp. No provision of this Agreement gives any third persons any right
of subrogation or action against any party hereto. All representations,
warranties, indemnities, covenants and agreements in this Agreement shall
survive execution and delivery of this Agreement and continue to be binding.

          22.          It
is agreed that this Agreement was prepared by counsel for each of the Parties
hereto. Each of the Parties acknowledges that each signed this document
voluntarily, without duress, undue influence or oppression and each represents
to the other that it acts voluntarily and with full advice of counsel. Each
Party recognizes and acknowledges that its knowledge may not be full and
complete. Each Party elects to assume the risk of partial knowledge and elects
to settle on the terms stated herein. Each Party further acknowledges to the
other that it does not rely upon any representations of any kind or character
made by or on behalf of the other, including by way of illustration and not of
limitation, any representation about the nature or extent of any claims,
demands, damages, rights or defenses which one Party may have against the other
Parties, and that no Party relies upon any representations of the other
Parties, its officers, agents, directors, employees or attorneys in entering
into this Agreement, except as set forth in this Agreement. Each Party
acknowledges that the consideration received has been actual and adequate. This
Agreement may be executed in counterparts and facsimile copies of signatures
shall be treated as originals for all purposes.

26

          IN WITNESS
WHEREOF, this Agreement was executed the 9th day of February, 2011. 

INSIGNIA
SYSTEMS, INC.

By: /s/
Scott Drill

Its: CEO

SCOTT DRILL

/s/ Scott Drill

NEWS AMERICA
MARKETING IN-STORE SERVICES L.L.C. 

By: /s/
Eugenie Gavencek

Its: Senior
Vice President

27

	
  

 	
  

 	
  

 
	
 FOR SETTLEMENT PURPOSES ONLY

 	
 EXHIBIT A

 	
  

 

CONFIDENTIAL – TO BE DISTRIBUTED ON AN AS NEEDED BASIS ONLY

INSIGNIA –NEWS AMERICA MARKETING

TERM SHEET

February 9, 2011

	
  

 	
  

 
	
 1.

 	
 Exclusive
 Selling Agent. Insignia will purchase the exclusive
 selling rights for placement of a sign with price (including NAM’s
 Price Pop Guaranteed product) for the Term (defined below) in NAM’s
 network of retailers for a purchase price equal to $4,000,000. The amount
 of $4,000,000 may be subtracted from the settlement payment. 

 
	
  

 	
  

 
	
 [ * ]

 
	
  

 	
  

 
	
 2.

 	
 Term.
 The initial term (“Term”) of the agreement shall be for a period of ten (10)
 years. The term may be extended upon mutual agreement of the parties. 

 
	
  

 	
  

 
	
 [ * ]

 

*Indicates
confidential information which has been omitted and filed separately with the
Commission under Rule 24b-2.

28

EXHIBIT B

UNITED STATES DISTRICT COURT

DISTRICT OF MINNESOTA

	
  

 	
  

 	
  

 
	
  

 	
 :

 	
  

 
	
 INSIGNIA SYSTEMS, INC.,

 	
 :

 	
 Civil No. 04 4213 (JRT/AJB)

 
	
  

 	
 :

 	
  

 
	
 Plaintiff,

 	
 :

 	
  

 
	
  

 	
 :

 	
 STIPULATED ORDER DISMISSING CASE WITH PREJUDICE

 
	
 v.

 	
 :

 	
  

 
	
  

 	
 :

 	
 Judge: Hon.
 John R. Tunheim

 
	
 NEWS AMERICA MARKETING

 	
 :

 	
  

 
	
 IN-STORE, INC.,

 	
 :

 	
Complaint
 Filed: Sept. 23, 2004

 
	
  

 	
 :

 	
 Trial Date:
 February 7, 2011

 
	
 Defendant.

 	
 :

 	
   

 
	
  

 	
 :

 	
  

 

STIPULATION TO DISMISS CASE WITH PREJUDICE

          Plaintiff
Insignia Systems, Inc., on the one hand, and Defendant News America Marketing
In-Store L.L.C. (sued in the Action as News America Marketing In-Store, Inc.),
on the other hand, by and through their attorneys of record (collectively, “the
Parties”), hereby AGREE AND STIPULATE that the above-captioned case, together
with all of Plaintiff’s claims against Defendant which are contained therein or
which could have been contained therein as of the date of this Stipulation, is
hereby DISMISSED WITH PREJUDICE, with each party to bear its own costs.

          The
Parties further AGREE AND STIPULATE that the Protective Order filed in the
above-captioned case shall remain in effect and govern the conduct of the
Parties, including the provision that all Confidential Material (as that term
is defined in the Protective Order) shall be destroyed. For the avoidance of
doubt, the Parties STIPULATE AND AGREE that all Confidential Material
(including but not limited to discovery responses, documents and things
produced, depositions, summaries of the foregoing, and motion papers filed with
the Court incorporating or attaching Confidential Material) that are in the
possession, custody or control of the Parties, their attorneys and/or their
experts and consultants shall be destroyed on or before March 30, 2011.

29

I STIPULATE TO ENTRY OF THE ABOVE ORDER:

	
  

 	
  

 	
  

 
	
 Dated: February
 9, 2011

 

 By: /s/ Stephen A. Wood

 

 Stephen A. Wood

 KELLEY DRYE & WARREN LLP

 333 West Wacker Drive

 Suite 2600

 Chicago, IL 60606

 Phone: (312) 857-2311 

 Fax: (312) 857-7095

 swood@kelleydrye.com

 

 Attorneys for Plaintiff

 Insignia Systems, Inc.

 	
  

 	
 Dated: February
 9, 2011

 

 By: /s/ Richard L. Stone

 

 Richard L. Stone (pro hac vice)

 HOGAN LOVELLS US LLP

 1999 Avenue of the Stars

 Suite 1400

 Los Angeles, CA 90067

 (310) 785-4600 (phone)

 (310) 785-4601 (facsimile)

 richard.stone@hoganlovells.com

 

 Attorneys for Defendant 

 News America Marketing In-Store, Inc

 

30

UNITED STATES DISTRICT COURT

DISTRICT OF MINNESOTA

	
  

 	
  

 	
  

 
	
  

 	
 :

 	
  

 
	
 INSIGNIA SYSTEMS, INC.,

 	
 :

 	
 Civil No. 04 4213 (JRT/AJB)

 
	
  

 	
 :

 	
  

 
	
 Plaintiff,

 	
 :

 	
  

 
	
  

 	
 :

 	
 STIPULATED ORDER DISMISSING CASE WITH PREJUDICE

 
	
 v.

 	
 :

 	
  

 
	
  

 	
 :

 	
 Judge: Hon.
 John R. Tunheim

 
	
 NEWS AMERICA MARKETING

 	
 :

 	
  

 
	
 IN-STORE, INC.,

 	
 :

 	
  

 
	
  

 	
 :

 	
 Complaint
 Filed: Sept. 23, 2004

 
	
 Defendant.

 	
 :

 	
 Trial Date:
 February 7, 2011

 
	
  

 	
 :

 	
  

 

ORDER DISMISSING CASE WITH PREJUDICE

          IT
IS HEREBY ORDERED that that the above-captioned case, together with all of
Plaintiff’s claims against Defendant which are contained therein or which could
have been contained therein as of the date of this Stipulation, is hereby
DISMISSED WITH PREJUDICE, with each party to bear its own costs.

          IT
IS FURTHER ORDERED that the Protective Order filed in the above-captioned case
shall remain in effect and govern the conduct of the Parties. Confidential
Material (including but not limited to discovery responses, documents and
things produced, depositions, summaries of the foregoing, and motion papers
filed with the Court incorporating or attaching Confidential Material) that are
in the possession, custody or control of the Parties, their attorneys and/or their
experts and consultants shall be destroyed on or before March 30, 2011.

IT IS SO ORDERED.

	
  

 	
  

 	
  

 
	
 Date: February 10, 2011

 	
  

 	
 s/
 John R. Tunheim

 
	
 at Minneapolis, Minnesota.

 	
  

 	
 JOHN
 R. TUNHEIM

 
	
  

 	
  

 	
 United
 States District Judge

 

31

EXHIBIT C

UNITED
STATES DISTRICT COURT

DISTRICT OF MINNESOTA

	
  

 	
  

 	
  

 
	
  

 	
 :

 	
  

 
	
 INSIGNIA SYSTEMS, INC.,

 	
 :

 	
 Civil No. 04 4213 (JRT/AJB)

 
	
  

 	
 :

 	
  

 
	
 Plaintiff,

 	
 :

 	
  

 
	
  

 	
 :

 	
 STIPULATION TO APPOINT MASTER

 
	
 v.

 	
 :

 	
  

 
	
  

 	
 :

 	
 Judge: Hon.
 John R. Tunheim

 
	
 NEWS AMERICA MARKETING

 	
 :

 	
  

 
	
 IN-STORE, INC.,

 	
 :

 	
  

 
	
  

 	
 :

 	
 Complaint
 Filed: Sept. 23, 2004

 
	
 Defendant.

 	
 :

 	
 Trial Date:
 February 7, 2011

 
	
  

 	
 :

 	
  

 

STIPULATION
TO APPOINT MASTER

          Plaintiff
Insignia Systems, Inc. and former counter-defendant Scott Drill, on the one
hand, and Defendant News America Marketing In-Store, Inc., on the other hand,
by and through their attorneys of record (collectively, “the Parties”), hereby
AGREE AND STIPULATE, subject to the approval of the Court, that the United
States District Court of Minnesota shall retain jurisdiction to enforce the Parties’
settlement agreement and Exclusive Selling Agreement entered on February 9,
2011, and the Honorable Arthur J. Boylan shall serve as a special master
pursuant to 28 U.S.C. § 636, Fed.R.Civ.P. 53 and Local Rule 72.1 to enforce and
interpret the Parties’ settlement agreement and Exclusive Selling Agreement
attached as Exhibit A to the parties’ settlement agreement.

32

I STIPULATE TO ENTRY
OF THE ABOVE ORDER:

	
  

 	
  

 	
  

 
	
 Dated: February
 9, 2011

 

 By: /s/ Stephen A. Wood

 

 Stephen A. Wood

 KELLEY DRYE & WARREN LLP

 333 West Wacker Drive

 Suite 2600

 Chicago, IL 60606

 Phone: (312) 857-2311 

 Fax: (312) 857-7095

 swood@kelleydrye.com

 

 Attorneys for Plaintiff

 Insignia Systems, Inc.

 and Scott Drill

 	
  

 	
 Dated: February
 9, 2011

 

 By: /s/ Richard L. Stone

 

 Richard L. Stone (pro hac vice)

 HOGAN LOVELLS US LLP

 1999 Avenue of the Stars

 Suite 1400

 Los Angeles, CA 90067

 (310) 785-4600 (phone)

 (310) 785-4601 (facsimile)

 richard.stone@hoganlovells.com

 

 Attorneys for Defendant 

 News America Marketing In-Store, Inc

 

33

UNITED
STATES DISTRICT COURT

DISTRICT OF MINNESOTA

	
  

 	
  

 	
  

 
	
  

 	
 :

 	
  

 
	
 INSIGNIA SYSTEMS, INC.,

 	
 :

 	
 Civil No. 04 4213 (JRT/AJB)

 
	
  

 	
 :

 	
  

 
	
 Plaintiff,

 	
 :

 	
  

 
	
  

 	
 :

 	
 STIPULATED ORDER TO APPOINT SPECIAL MASTER

 
	
 v.

 	
 :

 	
  

 
	
  

 	
 :

 	
 Judge: Hon.
 John R. Tunheim

 
	
 NEWS AMERICA MARKETING

 	
 :

 	
  

 
	
 IN-STORE, INC.,

 	
 :

 	
  

 
	
  

 	
 :

 	
 Complaint
 Filed: Sept. 23, 2004

 
	
 Defendant.

 	
 :

 	
 Trial Date:
 February 7, 2011

 
	
  

 	
 :

 	
  

 

ORDER
APPOINTING MASTER

          IT
IS ORDERED that the United States District Court for Minnesota shall retain
jurisdiction to enforce the Parties’ settlement agreement and Exclusive Selling
Agreement entered on February 9, 2011, and pursuant to 28 U.S.C. § 636,
Fed.R.Civ.P. 53 and Local Rule 72.1, the Honorable Arthur J. Boylan is hereby
designated to serve as a special master for any disputes that arises between
the parties regarding enforcement or interpretation of the Parties’ settlement
agreement and Exclusive Selling Agreement appended as Exhibit A to the parties’
settlement agreement.

IT IS SO ORDERED.

	
  

 	
  

 	
  

 
	
 Date: February 10, 2011

 	
  

 	
 s/
 John R. Tunheim

 
	
 at Minneapolis, Minnesota.

 	
  

 	
 JOHN
 R. TUNHEIM

 
	
  

 	
  

 	
 United
 States District Judge

 

34Exhibit
10.1

CERTAIN INFORMATION INDICATED BY [ * * * ] HAS BEEN
DELETED FROM THIS EXHIBIT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT UNDER RULE 24b-2.

LICENSE
AGREEMENT

          THIS
LICENSE AGREEMENT (this “Agreement”) is entered into this 6th day of
September, 2011 (the “Effective Date”), by and among Medtronic, Inc., a
Minnesota corporation (“Medtronic”), Medtronic VidaMed, Inc., a Delaware
corporation and wholly-owned subsidiary of Medtronic (“VidaMed”) and
Urologix, Inc., a Minnesota corporation (“Urologix”). Medtronic, VidaMed
and Urologix may each be referred to in this Agreement individually as a “Party”
and collectively as the “Parties.”

          WHEREAS,
Medtronic, together with VidaMed, owns certain Patents, Trademarks and Other
Intellectual Property, as well as Licensed-In Intellectual Property Rights and
Other Medtronic Business Intellectual Property (all as defined below) in
connection with the operation of the business of manufacturing, marketing and
distribution of Medtronic’s minimally-invasive radio-frequency treatment for
symptomatic benign prostatic hyperplasia (“BPH”) (the “Prostiva®
RF Therapy System”); and

          WHEREAS,
Medtronic, on behalf of itself and its Affiliates, desires to grant to Urologix
a worldwide license under the Patents, Trademarks, Other Intellectual Property
and Other Medtronic Business Intellectual Property for Urologix to manufacture,
market and distribute the Prostiva products in the Field of Use (as defined
below), and Urologix desires such license; and

          WHEREAS,
Medtronic, on behalf of itself and its Affiliates, also desires to grant to
Urologix a worldwide sublicense of its rights in the Licensed-In Intellectual
Property Rights to manufacture, market and distribute the Prostiva products in
the Field of Use, and Urologix desires such sublicense, on terms set forth in
the sublicense agreements that the parties are simultaneously entering into as
of the Effective Date (each a “Sublicense” and collectively the “Sublicenses”);
and 

          WHEREAS,
to facilitate the transition of the Prostiva Business to Urologix and the
potential acquisition of VidaMed by Urologix, the parties are simultaneously
entering into a Transition Services and Supply Agreement, an Asset Purchase
Agreement and an Acquisition Option Agreement all of even date herewith. 

NOW, THEREFORE, in consideration of the mutual
covenants contained in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Parties agree as follows:

Section
1

Definitions

          Unless
otherwise specifically provided herein, the following terms, when used with a
capital letter at the beginning, will have the following meanings:

          1.1     “Acquisition
Option Agreement” has the meaning assigned in Section 4.1.

          1.2     “Affiliate”
means any business entity that directly or indirectly controls, is controlled
by, or is under common control with a Party. For the purpose of this
definition, “control” shall mean (i) ownership of at least 50% of the voting
power of the business entity, (ii) the possession of the power to direct the
management, business decisions and policies of such entity through the
ownership of securities, but in no event shall the foregoing be true where a
Party owns 20% or less of the voting power of a business entity, or (iii) the
possession of the power to direct the management, business decisions and
policies of such entity by contract or written agreement.

          1.3     “Asset
Purchase Agreement” has the meaning assigned in Section 4.3.

          1.4     “Confidential
Information” shall mean all trade secrets or confidential or proprietary
information, of or in the possession of a Party (including all Affiliates),
whether disclosed to another Party in writing, orally, or electronically.
Confidential Information may include, but is not limited to, any and all
accounting and financial information, know-how, proprietary information regarding
patents, products, services, patients (to the extent permitted by law),
collections, pricing strategies, methods (including business methods),
production volumes, sales, costs, suppliers, internal operating procedures,
cost estimations, processes, marketing, inventions, whether disclosed orally or
in the form of documents, drawings, schematics, layouts, samples, software,
prototypes, or information stored in electronic medium or other forms. “Confidential
Information” does not include information that: (i) is now in the public
domain or subsequently enters the public domain by publication or otherwise
through no action or fault of the recipient party; (ii) is known to the
recipient party prior to receipt thereof under this Agreement from its own
independent sources as evidenced by the recipient party’s records, (iii) is
received by the recipient party from a third party without breach of a duty to
the disclosing party and without any obligation of confidentiality; (iv) is
independently developed by the recipient party without use of, or resort to,
Confidential Information of the disclosing party; or (v) is required to be
disclosed pursuant to law.

          1.5     “Contract
Year” means, (a) in the case of the first Contract Year, the period
commencing on the Effective Date and ending twelve months thereafter, and (b)
in the case of each subsequent Contract Year, the period of 12 months
commencing on the day following the end of the immediately preceding Contract
Year during the Term.

          1.6     “Control”
or “Controlled by” means, in the context of a covenant regarding,
license to or ownership of intellectual property, the ability on the part of a
Party to grant a covenant regarding, access to, or a license of such
intellectual property as provided for herein without violating the terms of any
agreement or other arrangement with any third party existing at the time such
Party would be required hereunder to grant such covenant, access or license.

          1.7     “Covenant
Field” means the use solely in RF (radio frequency) treatment of BPH.

          1.8     “Current
Product” or “Current Products” means the therapy delivery system or
the components thereof, including the generator, footswitch, and the disposable
and telescope, as described on Exhibit E and commercialized by Medtronic
under the Prostiva® trademark as of 

-2-

the Effective Date or the date of the Regulatory
Transfer to Urologix, together with any Improvements that do not result in a
change to the system’s (or a component of the system’s) intended use,
indication, control mechanism, operating principle, or energy type. For
clarity, Current Product and Current Products do not include New Indication
Products, RF Improved Products, or Wet Electrode Products.

          1.9     “Earned
Royalties” has the meaning set forth in Section 3.2.

          1.10   “FDA”
means the Food and Drug Administration of the United States Department of
Health and Human Services, or any successor agency thereto. 

          1.11   “Field
of Use” means RF (radio frequency) treatment of the prostate, including,
without limitation, the treatment of BPH. 

          1.12   “Improvements”
means any upgrade, update, improvement, enhancement, or modification of a
Product. 

          1.13   “In-Office”
means any facility at which the required procedure is performed and for which
an overnight hospital stay would normally not be required, including, without
limitation, a physician’s office, an ambulatory surgical center (ASC),
outpatient or same day surgery center or mobile treatment facility. 

          1.14   “License
Fee” has the meaning set forth in Section 3.1.

          1.15   “Licensed-In
Agreements” means the license agreements listed on Exhibit D.

          1.16   “Licensed-In
Intellectual Property Rights” means the intellectual property rights
licensed to Medtronic or its Affiliates as of the Effective Date under the
license agreements listed on Exhibit D and sublicensed to Urologix under the
Sublicenses. 

          1.17   “Medtronic
Covenant Patents” means the patents and patent applications Controlled by
Medtronic as of the Effective Date, and those Controlled as of the Effective
Date by Medtronic’s Affiliates (solely as defined in Section 1.2(i)) who were
Affiliates as of June 30, 2011, and any patents that issue anywhere in the
world from such patent applications, and any and all divisional, continuation,
continuation-in-part (solely to the extent
the claims are supported without reliance on new matter), reissue,
re-examination and extension applications of any of the foregoing and any
patents issuing thereon, but excluding Patents.

          1.18   “Medtronic
Bovie Generator Intellectual Property” means the intellectual property
(other than any patents) Owned and Controlled by Medtronic that was developed
by Bovie Medical Corporation (“Bovie”) pursuant to that certain
Development and Supply Agreement between Medtronic and Bovie having an
effective date of September 15, 2003, as amended (“Bovie Agreement”),
relating to the Generator or Generators (as those terms are defined in the
Bovie Agreement), except software and firmware, including the source code of
the FPGA employed in manufacturing the Generator or components thereof,
described in Section II.5.D(2) of the Bovie Agreement (such software and firmware
hereinafter “Bovie SW/FW Manufacturing 

-3-

IP”).
For clarity, Medtronic Bovie Generator Intellectual Property includes the
Medtronic Prostiva Generator Intellectual Property.

          1.19   “Medtronic
Prostiva Generator Intellectual Property” means the Medtronic Bovie
Generator Intellectual Property as used in the manufacture, use, and sale of
the Prostiva Generator.

          1.20   “Net
Sales” means the total gross revenues earned or accrued by Urologix
(determined in accordance with United States generally accepted accounting
principles (“GAAP”) consistently applied) from the sale of Products in
the applicable country by Urologix or any of its Affiliates or any of their
respective sublicensees (other than distributors) to a third party, including
without limitation, to distributors, less only the sum of the following (as
applicable): (a) all trade and quantity discounts, product returns, credits
issued for any recalled product or product subject to field action, and rebates
allowed and taken by customers; (b) excise, sales, use, tariffs, duties, import
and export fees, and equivalent taxes directly imposed and with reference to
particular sales; (c) shipping, freight, transportation, storage and insurance
charges, and (d) to the extent the Products included in Net Sales, only during
the two years following the Effective Date, consist of generators or telescopes
that were invoiced to end users or unrelated third parties at Urologix cost or
below Urologix cost, the cost to Urologix of such items. “Net Sales”
excludes any Products shipped by Urologix in replacement or exchange for
Products sold by Medtronic prior to the Effective Date. In the event that a
Product is sold in combination as a single product with another product or
component, Net Sales from such sales for purposes of calculating the Earned
Royalty amounts due under Section 3.2 below shall calculated by multiplying the
Net Sales of that combination by the fraction A/(A + B), where A is the gross
selling price of the Product sold separately and B is the gross selling price
of the other product or component.

          1.21   “New
Indication Products” means Current Products that receive regulatory
approval for a new indication in the Field of Use, and any Improvements to such
New Indication Products.

          1.22   “Other
Intellectual Property” means the intellectual property Owned and Controlled
by Medtronic or VidaMed as of the Effective Date, other than any patents, as
set forth on Exhibit C. 

          1.23   “Other
Medtronic Business Intellectual Property” means the intellectual property
Owned and Controlled by Medtronic or its Affiliates as of the Effective Date,
other than any patents, as set forth on Exhibit G. 

          1.24   “Owned
and Controlled” means, with respect to an intellectual property right, that
a party owns a particular right and has the current right to grant a covenant
regarding, access to, or a license to such intellectual property right as
provided for herein without violating the terms of any agreement or other
arrangement with any third party existing at the time such Party would be
required hereunder to grant such covenant, access or license.

          1.25   “Patents”
means the rights in (a) the patents set forth on Exhibit A, (b) the
patent applications set forth on Exhibit A and all patents that issue
anywhere in the world from those 

-4-

patent applications, and (c) any and all division,
continuation, reissue, re-examination, and extension applications of any of (a)
and (b) above and any patents issuing thereon.

          1.26   “Person”
or “person” includes any individual, partnership, joint venture,
corporation, trust, unincorporated organization or government or any department
or agency thereof. 

          1.27   “Products”
means the Current Products, New Indication Products, RF Improved Products, and
Wet Electrode Products.

          1.28   “Prostiva®
Business” means the operation of the business of manufacturing, marketing
and distribution of the Prostiva® RF Therapy System by Medtronic and VidaMed as
of the Effective Date.

          1.29   “Prostiva
Generator” means the generator, identified as the Model 8930 Radio
Frequency Generator, supplied to Medtronic by Bovie, as of the Effective Date.

          1.30   “Regulatory
Approval” means any and all approvals, licenses, regulations or
authorizations by an applicable government regulatory authority involved in
granting approvals for the development, manufacturing, commercialization,
reimbursement or pricing of a Product, including without limitation, the FDA,
that are necessary for the commercial sale of a Product in a country in the
Territory. 

          1.31   “Related
Agreements” means the Acquisition Option Agreement, the Asset Purchase
Agreement, Sublicenses and the Transition Services Agreement and Supply
Agreement, together with the exhibits, schedules, and appendices to each such
agreement.

          1.32   “RF
Improved Products” means Current Products that are Improved for use in the
Covenant Field in a way that results in a change to the Current Product’s
intended use, indication, control mechanism, operating principle, or energy
type.

          1.33   “Transition
Services and Supply Agreement” or “TSSA” has the meaning set forth
in Section 4.2.

          1.34   “Term”
has the meaning set forth in Section 6.1.

          1.35   “Territory”
means worldwide.

          1.36   “Trademarks”
means the trademark rights in the registered trademarks and pending trademark
applications owned by Medtronic or its Affiliates set forth on Exhibit B.

          1.37   “Wet
Electrode Products” means the therapy delivery system or the components
thereof, including the generator, footswitch, and the disposable and telescope,
as described on Exhibit E and commercialized by Medtronic under the Prostiva®
trademark as of date of the Regulatory Transfer to Urologix that
subsequently are Improved to incorporate wet electrode technology for use in
the Covenant Field, as contemplated by Medtronic or VidaMed prior to the
Effective Date and described on Exhibit H (“Wet Electrode Platform
Improvement”)

-5-

          1.38   “ZoMed
License” means that Cross License Agreement between VidaMed and ZoMed
International, Inc. having an effective date of August 2, 1994, a copy of which
has been provided to Urologix.

Section
2

Licenses

          2.1     License
Grants. 

                    2.1.1   (a)
Subject to the terms and conditions of this Agreement, Medtronic, on behalf of
itself and its Affiliates, hereby grants to Urologix for the Term a worldwide
license under Patents, Trademarks, and Other Intellectual Property to make,
have made, develop, use, import, export, distribute, market, promote, offer for
sale and sell Products solely in the Field of Use, to practice methods covered
by the Patents solely in the Field of Use, and to otherwise exploit the Patents
solely in the Field of Use. The license granted to Urologix in this Section
2.1.1(a) shall be exclusive except to the extent rights have been granted under
the Patents, Trademarks or Other Intellectual Property under the ZoMed License
or as noted on Exhibit A. 

                               (b)
Subject to the terms and conditions of this Agreement, Medtronic, on behalf of
itself and its Affiliates, hereby grants to Urologix for the Term a
non-exclusive (except as to the Medtronic Prostiva Generator Intellectual
Property, which shall be exclusive) worldwide license under the Other Medtronic
Business Intellectual Property to make, have made, develop, use, import,
export, distribute, market, promote, offer for sale and sell the Products
solely in the Field of Use (provided that such license shall be perpetual
following Urologix’s exercise of its rights under the Acquisition Option
Agreement).

                               (c)
Subject to the terms and conditions of this Agreement, Medtronic on behalf of
itself and its Affiliates hereby grants to Urologix and its Affiliates an
exclusive right to use in the Field of Use the documents or other tangible
embodiments of the Other Intellectual Property, an exclusive right to use the
Assets in the Field of Use (as that term is defined in the Asset Purchase
Agreement), and an exclusive worldwide right to use in the Field of Use the
documents or other tangible embodiments of the Other Medtronic Business
Intellectual Property, in each case as to those documents or other tangible
embodiments that are delivered to Urologix pursuant to the TSSA during the Term
(provided that Urologix shall not use any Personal Data, as defined in Exhibit
C).

                               (d)
Contemporaneously with this Agreement, Medtronic grants to Urologix those
sublicense rights set forth in the Sublicense Agreements on the terms set forth
therein.

                    2.1.2   Urologix
acknowledges the Patents, Trademarks, and Other Intellectual Property are
subject to the ZoMed License Agreement and other third party rights noted on
Exhibits A or C, respectively. Urologix further acknowledges that all of the
Licensed-In Intellectual Property is subject to the terms of the Licensed-In
Agreements. Notwithstanding anything else in this Agreement, Urologix agrees
that the rights granted to Urologix under this Agreement and the Sublicenses
are expressly subject to any limitations, conditions or restrictions 

-6-

imposed by the Licensed-In Agreements, and
furthermore, do not include any rights that are licensed or reserved to any
party under the terms of the Licensed-In Agreements and are otherwise subject
to those agreements to the extent such rights to Urologix would be in
contravention of those agreements. 

          2.2     Sublicensing
and Distribution. Subject to Section 2.1.2, Urologix shall have the right
to sublicense its rights under Section 2.1.1(a) to which Medtronic or its
Affiliates have the right to grant sublicenses as provided in the Licensed-In
Agreements, and to enter into distribution, OEM and other relations with third
parties with respect to Products in the Field of Use, provided that (i) such
sublicense or other agreement with a sublicensee or third party (“Other
Agreement”) shall obligate such sublicensee or third party to assume and
abide by all duties, obligations and restrictions provided under this
Agreement; and (ii) any such sublicense or third party relationship granted by
Urologix shall terminate automatically upon the termination of this Agreement,
other than a termination in connection with the Acquisition Closing under the
Acquisition Option Agreement in which case such sublicenses and third party
relationships will survive termination of this Agreement.

          2.3     Restrictive
Covenants. 

          2.3.1  During
the Term, and if there is an Acquisition Closing described in the Acquisition
Option Agreement, then for a period ending two years after the Acquisition
Closing, Medtronic and its Affiliates, other than Salient Technologies and PEAK
Surgical (the “Excluded Affiliates”), shall not directly or indirectly
sell, market or manufacture for sale in the Territory any product, system or
treatment with labeling that covers transurethral treatment of BPH performed
In-Office (“Competing Products”). Notwithstanding the foregoing, (a)
should either Excluded Affiliates acquire any other Affiliate (“After Acquired
Affiliate”) the restrictions herein (as well as the exceptions in 2.3.2) shall
apply to such After Acquired Affiliate; and (b) should either Excluded
Affiliates acquire assets that another Person was using to derive revenues from
a Competing Product (“After Acquired Assets”), the restrictions herein (as well
as the exceptions in 2.3.2) shall apply to each Excluded Affiliate with respect
to the After Acquired Assets.

          2.3.2  Notwithstanding
the foregoing, the restrictions in Section 2.3.1 shall not apply with respect
to the sale, marketing or manufacture of a Competing Product acquired by
Medtronic or any Affiliate, including with respect to an After Acquired
Affiliate of an Excluded Affiliate and each Excluded Affiliate acquiring After
Acquired Assets, as a result of the consummation of (a) the acquisition of an
entity by Medtronic, an Affiliate, or an Excluded Affiliate after the Effective
Date, if less than twenty (20%) of the annual revenues of such entity arose
from sales of Competing Products in the fiscal year immediately preceding the
acquisition of such entity; or (b) the acquisition of assets by Medtronic, an
Affiliate, or an Excluded Affiliate after the Effective Date, if less than
twenty (20%) of the annual revenues derived from such acquired assets arose
from sales of Competing Products in the fiscal year immediately preceding the
acquisition of such assets. For clarity, the exception set forth in this
Section 2.3.2 shall apply to a Competing Product whether or not it has been
commercially released, provided that it in development on the effective date of
the acquisition.

-7-

          2.3.3  For
purposes of this Section 2.3.3, the term “Affiliates” shall have only the
definition set forth in Section 1.2(i) of this Agreement. 

	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 In addition, Medtronic, on behalf of itself and each
 of its Affiliates who were Affiliates as of June 30, 2011 (but only for so
 long as such Affiliates remain Affiliates of Medtronic), hereby covenants it
 will not bring a lawsuit or cause of action against, or directly or
 indirectly challenge, or otherwise voluntarily assist a third party in any
 way to challenge, Urologix or any of its Affiliates, in any venue or in any
 manner, based on patent infringement, or any other patent claims of any kind
 or nature arising from any Covenant Patent, relating to any making, having
 made, selling, offering to sell, using, or importing of (i) Current Products
 in the Field of Use, including for this purpose New Indication Products but
 not Improvements to such New Indication Products, (ii) RF Improved Products
 in the Covenant Field, and (iii) Wet Electrode Products in the Covenant
 Field.

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 In addition, Medtronic, on behalf of itself and each
 of its Affiliates, including Affiliates acquired by Medtronic after June 30,
 2011 (but only for so long as such Affiliates remain Affiliates of Medtronic)
 hereby covenants it will not bring a lawsuit or cause of action against, or
 directly or indirectly challenge, or otherwise voluntarily assist a third
 party in any way to challenge, Urologix or any of its Affiliates, in any
 venue or in any manner, based on patent infringement, or any other patent
 claims of any kind or nature arising from any patent Controlled by Medtronic
 or an Affiliate (other than the “Patents” as defined herein) relating to any
 making, having made, selling, offering to sell, using, or importing of
 therapy delivery system or the components thereof, including the generator,
 footswitch, and the disposable and telescope, as described on Exhibit E
 and commercialized by Medtronic under the Prostiva® trademark
 before and as of date of the Regulatory Transfer to Urologix, in the Covenant
 Field.

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 The covenants granted in this Section 2.3.3 shall
 last in perpetuity; provided, however, that these covenants shall
 automatically terminate on the date that this License Agreement expires or is
 terminated prior to Urologix having exercised its rights under the
 Acquisition Option Agreement. It is agreed and acknowledged that a mandatory
 response to any judicial process, including, for example, subpoenas, does not
 constitute a “challenge” or voluntary third party assistance hereunder.

 
	
  

 	
  

 	
  

 
	
  

 	
 (d)

 	
 In the event of a Change of Control of Urologix, the
 covenants granted in Section 2.3.3(a) above shall automatically, as of the
 effective date of such Change in Control, be limited in scope to (i) the
 Current Products for their then-current indications in the Field of Use,
 including for this purpose New Indication Products but not Improvements to
 such New Indication 

 

-8-

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Products in the Field of Use, (ii) the specific
 versions of the Wet Electrode Products that were commercially released as of
 the effective date of such Change of Control in the Covenant Field; and (iii)
 the specific versions of the RF Improved Products that were commercially
 released as of the effective date of such Change of Control in the Covenant
 Field.

 
	
  

 	
  

 	
  

 
	
  

 	
 (e)

 	
 Unless otherwise licensed under this License
 Agreement, the Covenant of this Section 2.3.3 shall not be deemed to be a
 license of any intellectual property rights.

 

          2.4     Urologix
Efforts. Upon transfer or receipt of any required Regulatory Approval,
Urologix shall use commercially reasonable efforts which are commensurate with
those efforts used by Urologix to manufacture, promote and sell its own
products of similar nature, to manufacture, promote and sell the Products in
the Field of Use in those countries of the Territory designated on Exhibit F.

          2.5     No
Additional Rights. Except as otherwise expressly provided in this Agreement
or the Related Agreements, under no circumstances shall a Party hereto, as a
result of this Agreement, obtain any ownership interest, license in or other
right to any technology, know-how, patents, patent applications, products,
materials or other intellectual property of the other Party, including, but not
limited to, items owned, Controlled or developed by the other Party, at any
time pursuant to this Agreement. This Agreement does not create, and shall
under no circumstances be construed or interpreted as creating, an obligation
on the part of either Party to grant any license to the other Party other than
as expressly set forth herein. Any further contract or license agreement
between the Parties shall be in writing.

          2.6     Goodwill;
Ownership of Trademarks.

                    2.6.1     Urologix
acknowledges that the Trademarks have been used in commerce and extensively
advertised and promoted by various means; they are well known and recognized
and have gained a high reputation with the general public, which high
reputation and goodwill has been and continues to be a unique benefit to
Medtronic. Urologix recognizes the value of the goodwill associated with the
Trademarks and acknowledges that, as between Urologix and Medtronic, the
Trademarks and all rights therein and goodwill pertaining thereto belong
exclusively to Medtronic. 

                    2.6.2      Urologix
agrees to cooperate fully and in good faith with Medtronic for the purpose of
securing and preserving Medtronic’s rights in and to the Trademarks. If any of
the Trademarks shall not be registered in all applicable class of goods or services
in the Patent and Trademark Office or other applicable foreign trademark
office, Urologix acknowledges that Medtronic may register the Trademarks for
the Products in its own name, and that Urologix’s use thereof shall inure to
the benefit of Medtronic for such purposes and all other purposes. Urologix
shall cooperate with Medtronic in any such registration or application.
Urologix agrees that without the prior consent of Medtronic, it will not, for
its benefit, directly or indirectly, register or apply for registration of the
Trademarks or any mark which is, in Medtronic’s reasonable opinion, the same as
or confusingly similar to the Trademarks.

-9-

                    2.6.3   Urologix
agrees that all usage of the Trademarks will include proper markings as may be
specified by Medtronic from time to time so as to indicate Medtronic’s
trademark rights. Where the Trademarks of Medtronic appear in connection with
the Products, there shall be displayed an “®” adjacent to the mark for
registered marks or a “tm” for unregistered marks (or registered marks when
used in a manner not covered by registration) as indicated from time to time by
Medtronic.

          2.7    Quality.

                    2.7.1   Urologix
acknowledges that if its use of the Trademarks fails to meet or exceed the
reasonable quality standards set by Medtronic, or otherwise are not consistent
with Medtronic’s image and reputation for overall high quality products and
service, then the substantial goodwill which Medtronic has built up and now
possesses in the Trademarks would be impaired. Accordingly, it is an essential
condition of this license and Urologix hereby covenants and agrees that its use
of the Trademarks (including all promotional material and advertising) shall be
of high standards and of such quality and appearance as shall be (in the
reasonable judgment of Medtronic) reasonably adequate to maintain the goodwill
associated with the Trademarks; and that such use of the Trademarks shall be
provided in accordance with all applicable laws and shall in no manner reflect
adversely upon the good name of Medtronic or any of its products or the
Trademarks. Observance by Urologix of the quality standards practiced by
Medtronic in the operation of the Prostiva Business immediately prior to the
Effective Date shall be deemed to meet the standards set forth in this Section
2.7.1.

                    2.7.2   Upon
completion of the Regulatory Transfer as defined in the Transition Services and
Supply Agreement, the Products, as sold, marketed or distributed by Urologix,
shall be of a quality which is at least equal to comparable products marketed
by Medtronic and VidaMed in the Prostiva® Business, and in
conformity with the nature, quality and style of the goods and promotional
materials supplied by Medtronic under the Transition Services and Supply
Agreement. If requested by Medtronic, Urologix will furnish Medtronic samples
of all Products manufactured for Urologix by third parties, samples of
advertising and promotional materials related to the Products, and such
additional Product information as may be deemed reasonably necessary from time
to time by Medtronic. If Medtronic disapproves of any item submitted by
Urologix under this Section 2.7.2, Medtronic will suggest to Urologix, if reasonably
possible, how the item could be modified to meet the requirements of this
Section 2.7. 

          2.8    Acknowledgement
of Ownership. Urologix acknowledges the ownership rights of Medtronic and
VidaMed in the Patents, Trademarks and Other Intellectual Property, subject to
any restrictions or exceptions noted by Medtronic in its representation in
Section 5.1(a) of this Agreement, and Urologix agrees that it will do nothing
inconsistent with such ownership. Urologix further agrees that it will not challenge,
or assist or encourage others to challenge, Medtronic’s and VidaMed’s title to
the Patents, Trademarks and Other Intellectual Property, or the validity,
enforceability, or distinctiveness thereof. 

-10-

Section
3

Consideration

          3.1    License
Fee. As partial consideration for the right to the Patents, Trademarks,
Other Intellectual Property, and Other Medtronic Business Intellectual Property
in the Field of Use, Urologix shall pay to Medtronic the non-refundable amount
of One Million Dollars ($1,000,000) ( less the Purchase Price under the Asset
Purchase Agreement and less any credit issued under Section 3.2(a)(i) of the
TSSA) (the “License Fee”). Five Hundred Thousand Dollars ($500,000) of
the License Fee is to be paid immediately upon execution of this Agreement. The
remaining Five Hundred Thousand Dollars ($500,000) (less the Purchase Price
under the Asset Purchase Agreement and any credit issued under Section
3.2(a)(i) of the TSSA ) shall be paid by Urologix to Medtronic on the twelve (12)
month anniversary of the Effective Date, subject to Sections 2.2(a)(v),
4.1(d)(ii) and 4.1(d)(iii) of the TSSA.

          3.2    Earned
Royalties. Except as provided in Section 3.3.2 or Section 3.8, Urologix
shall pay Medtronic earned royalties (“Earned Royalties”) equal to [ * *
* ] percent ([ * * * ]%) of Net Sales during the first three (3) Contract
Years, and [ * * * ] percent ([ * * * ]%) of Net Sales during each Contract
Year of the Term thereafter. Earned Royalties shall be due and payable within
thirty (30) days of the end of each Contract Year during which they become
payable. Earned Royalty payments shall be accompanied by a written report to
Medtronic stating the Net Sales of Products and total sales made in the
Contract Year for which the payment is being made, which shall include a
sufficient and reasonable level of detail on how Net Sales was calculated from
total sales. The obligation to pay Medtronic Earned Royalties under this
Section 3.2 is imposed only once on each unit of Product. There shall be no
obligation to pay Medtronic a royalty on the sale or transfer of a Product
between Urologix and its Affiliates, but in such instances, the royalty shall
be due and calculated upon Urologix’s or its Affiliates’ sale to the first
unrelated third party. Distributors that purchase Product from Urologix are not
deemed sublicensees for purposes of this Section 3.2, and the Earned Royalties
will accrue on the sale by Urologix to the distributors and not on the sale by
the distributors to third parties.

          3.3    Minimum
Royalties; Maximum Royalties.

                   3.3.1    Subject
to Section 3.8, commencing in the third Contract Year and continuing in each
succeeding Contract Year during the Term, Urologix shall pay Medtronic minimum
annual royalties equal to [ * * * ] (the “Minimum Royalties”); provided,
however, in the event the Medicare Part B Non-facility national average
reimbursement rate for the CPT code for RF ablation of the prostate (currently
53852) at any point during any Contract Year is less than $1,600 per procedure,
there shall be no Minimum Royalty due for such Contract Year. If the total of
all Earned Royalties for a particular Contract Year in which Earned Royalties
are due is less than the applicable Minimum Royalty, then within 90 days after
the end of such Contract Year, Urologix shall pay to Medtronic the amount of
the shortfall between the Minimum Royalty and the Earned Royalties for such
Contract Year (the “Shortfall Payment”). 

                    3.3.2    In
no event shall Urologix have any obligation to pay Earned Royalties for any
Contract Year in excess of [ * * * ].

-11-

                    3.3.3    If
the total payments made by Urologix to Medtronic under this Agreement other
than the License Maintenance Fee, but including the License Fee actually paid,
all Earned Royalties actually paid, any Shortfall Payment actually paid, and
any payment made by Urologix under the Asset Purchase Agreement, reach an
aggregate of $10 million, no further payments will be due Medtronic, and
Urologix will thereafter have a fully paid up, royalty-free and perpetual right
and license under the licenses granted to Urologix under Section 2.1 above
for the Term. 

          3.4    Mode
of Payment/Currency. All payments under this Agreement shall be made by
deposit of Dollars in the requisite amount to such bank account as Medtronic
may from time to time designate by notice to Urologix. All dollar amounts
appearing in this Agreement are stated in United States dollars. All payments to
be made under this Agreement will be paid in U.S. dollars, provided that Earned
Royalties due on Net Sales computed in the currency of countries foreign to the
United States will be calculated and paid in the foreign currency.

          3.5    Interest
on Late Payments. Any payments due to Medtronic under this Agreement that
are not paid within thirty (30) days of the due date shall be subject to
interest at the annual rate of 100 basis points above the prime rate as
reported on the first business day of the month such payment was first due in
The Wall Street Journal, Eastern Edition, such interest to run from the date
upon which payment of such sum became due until payment thereof in full
together with such interest. This Section 3.5 shall in no way limit any other
remedies available to the Party owed interest under this Section 3.5. 

          3.6    Records
and Inspections. Urologix shall, and shall cause its Affiliates and
sublicensees to, maintain accurate records containing sufficient data from
which Earned Royalties due Medtronic under this Agreement may be calculated.
Urologix shall, and shall cause its Affiliates and sublicensees to, maintain
those records for two (2) years after the end of the Contract Year to which
those records relate. Upon reasonable notice from Medtronic, Urologix shall,
and shall cause its Affiliates and sublicensees to, permit examination of those
records during regular business hours by qualified Medtronic personnel or an
independent firm of accountants selected by Medtronic and reasonably acceptable
to Urologix. The fees and expenses of such independent accountants shall be
paid by Medtronic (provided that any accountants retained by Medtronic to
review amounts pursuant to this Agreement shall be paid by Medtronic on an hourly
or fixed (rather than on a contingency basis)) unless the audit reveals an
underpayment of more than five percent (5%) from the reported amounts, in which
case Urologix shall bear the cost of the independent accountants. Medtronic may
not conduct more than one such audit during any Contract Year (unless a
previous audit during such 12-month period revealed an underpayment with
respect to such period or Urologix restates or revises such books and records
for such 12-month period), and any such audit may not cover a period of more
than two (2) Contract Years. If such audit concludes that additional payments
were owed or that excess payments were made during such period, Urologix shall
pay the additional amounts with interest from the date originally due in accordance
with Section 3.5, or Medtronic shall reimburse such excess payments with
interest from the date originally paid, in either case, within thirty (30) days
after the date on which such audit is completed and the conclusions thereof are
notified to the Parties. All records disclosed to those accountants will be
deemed to be Confidential Information under this Agreement. Medtronic’s
accountants may not disclose to 

-12-

Medtronic any Confidential Information relating to the
business of Urologix, except as should properly be contained in any summary to
Medtronic under Section 3.2.

          3.7    License
Maintenance Fee. Urologix shall pay Medtronic an annual license maintenance
fee (“License Maintenance Fee”) of $65,000, payable on the first anniversary of
the Effective Date and annually thereafter during the Term. In the event this
License Agreement is terminated for any reason, the annual License Maintenance
Fee will be pro-rated for any partial year of the Term, and Urologix shall pay
Medtronic the pro rata payment on the effective date of termination. The
License Maintenance Fee shall not be taken into account in calculating the
License Fee or Royalties payable hereunder, nor will it count toward the
calculations of the total payments set forth in Section 3.3.3. 

          3.8    Abatement
of Minimum Royalties/Suspension of Earned Royalty. 

          (a)     Should
a person that asserts or institutes a patent infringement claim or suit in any
country of the Territory against Urologix or an Affiliate or sublicensee of
Urologix obtain an injunction or other prohibition or limitation that precludes
the manufacture, use, or sale of any Product by Urologix or any of its
Affiliates or sublicensees, Urologix may suspend the obligation of the Earned
Royalties to Medtronic under Section 3 with respect to the manufacture, use, or
sale of such Products in that country during the period that it is precluded
from selling Product, and a pro rata amount of the Minimum Royalties will be
adjusted based upon the portion of the Contract Year in which Earned Royalties
were abated, and the portion of total sales represented by sales in such
country in the year immediately prior to such injunction.

          (b)    If,
in lieu of terminating this Agreement under Section 6.3 for a Major Breach by
Medtronic, Urologix provides the written Cure Notice contemplated by Section
6.3 and states in the Cure Notice its intent to continue this Agreement and the
Related Agreements under this Section 3.8(b), and Medtronic fails to cure the
Major Breach within the Cure Period, the Earned Royalties rate shall be reduced
by 50% for the 12-month period beginning on the day following the expiration of
the Cure Period, and the Minimum Royalty obligation shall be eliminated for the
12-month period beginning on the day following the expiration of the Cure
Period. The limitation on Medtronic’s liability set forth in Section 8.6.2
shall not excuse or limit the reduction of Earned Royalties or elimination of
the Minimum Royalty obligation set forth in this Section, and such reductions
of the Earned Royalties and elimination of the Minimum Royalty shall not be
credited in the calculation of Medtronic’s aggregate total liability under
Section 8.6.2 for purposes of claims for breaches other than claims arising
under Section 6.3 for a Major Breach.

          (c)    Each
of the Parties has an option to receive an additional license (each an
“Option”) from Bovie under the terms of Section 8 of a letter agreement dated
August 31, 2011 (the “Bovie Letter”). If Medtronic and Bovie each exercise
their rights under Section 8 of the Bovie Letter (whether the Parties exercise
their rights simultaneously, or whether one Party exercises its rights before
the other does), the Parties agree that they shall do a “true up” payment
between them such that Medtronic ultimately pays [ * * * ] and Urologix
ultimately pays [ * * * ] of the total consideration paid to Bovie under
Section 8 for such rights. If Urologix elects to exercise its Option, and
Medtronic does not elect to exercise its own Option, then Urologix will 

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pay [ * * * ] directly to Bovie, and Urologix and
Medtronic will treat [ * * * ] of Urologix’ cost (but in no event more than [ *
* * ]) as a prepayment against Earned Royalties which would be applied at the
rate of [ * * * ]% per dollar of Net Sales beginning in the fourth Contract
Year, effectively holding the Earned Royalties on Net Sales at the rate of [ *
* * ]% until such time as the prepayment has been fully applied. 

Section
4

Related Agreements

          4.1    Put
Option; Call Option. Simultaneous with the execution of this Agreement,
Urologix and Medtronic are entering into an Acquisition Option Agreement of
even date herewith (the “Acquisition Option Agreement”).

          4.2    Transition
Services and Supply Agreement. Simultaneous with the execution of this
Agreement, Medtronic and Urologix are entering into a Transition Services and
Supply Agreement (the “Transition Services and Supply Agreement” or
“TSSA”).

          4.3    Asset
Purchase Agreement. Simultaneous with the execution of this Agreement,
Medtronic and Urologix are entering into an Asset Purchase Agreement (the “Asset
Purchase Agreement”).

          4.4    Sublicense
Agreements. Simultaneous with the execution of this Agreement, Medtronic
and Urologix are entering into the Sublicense Agreements.

Section
5

Representations, Warranties, and Covenants

          5.1    Representations
and Warranties of Medtronic and VidaMed. Medtronic and VidaMed, jointly and
severally, hereby represent and warrant to Urologix that, as of the Effective
Date: 

          (a)   Medtronic
or VidaMed are the owners of the Patents, Trademarks, Other Intellectual
Property, and the Other Medtronic Business Intellectual Property listed in
Section 4 of Exhibit G in the Field of Use, free and clear of liens and third
party rights except as set forth on Exhibit A, and the owners of the Other
Medtronic Business Intellectual Property listed in Section 5 of Exhibit G in
the Field of Use, free and clear of liens and third party rights granted or
created by Medtronic; 

          (b)    Each
of Medtronic and VidaMed has the right to grant Urologix the licenses granted
in Section 2.1 of this Agreement;

          (c)    Each
of Medtronic and VidaMed is a corporation duly organized, validly existing and
in good standing under the laws of the State of Minnesota and the State of
Delaware, respectively, and has all requisite corporate power and authority to
enter into, execute and deliver this Agreement and no other proceedings are
necessary to authorize Medtronic’s or VidaMed’s execution, delivery or
performance of this Agreement or any Related Agreement;

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          (d)    The
execution of this Agreement by each of Medtronic and VidaMed and performance of
Medtronic’s and VidaMed’s obligations under this Agreement do not conflict
with, cause a default under, or violate any existing contractual obligation
that may be owed by Medtronic or VidaMed to any third party named in Exhibit A
or Exhibit D or any other contractual obligation to a third party that would
materially adversely impact Urologix’s operation of the Prostiva Business as it
was conducted by Medtronic and VidaMed as of the Effective Date;

          (e)    Except
with respect to the ZoMed License or as otherwise set forth on Exhibit A, no
third party has any rights in the Patents, Trademarks or Other Intellectual
Property in the Field of Use;

          (f)     As
of the Effective Date, to Medtronic’s knowledge there is no actual or
threatened infringement or misappropriation of the Patents, Trademarks, or
Other Intellectual Property by any Person in the Field of Use;

          (g)    In
the past 3 years, no claim or litigation has been brought or, to Medtronic’s
knowledge, threatened by any Person alleging that any of the Patents are
invalid or unenforceable, other than office actions received from a national
patent office with respect to an application, if any;

          (h)    To
Medtronic’s and VidaMed’s knowledge, the manufacture, use and sale of the
Products as undertaken by VidaMed or Medtronic as of the Effective Date do not
infringe, nor does Medtronic or VidaMed know of any reasonable basis for a
claim that such activities may infringe, the intellectual property rights of
any Person;

          (i)     There
is no pending, or to Medtronic’s or VidaMed’s knowledge, threatened, claim,
action, suit, or proceeding alleging infringement with respect to the Patents,
Trademarks, or Other Intellectual Property in the Field of Use;

          (j)     Neither
Medtronic nor VidaMed is in material breach of any of the terms of the
Licensed-In Agreements and to the knowledge of Medtronic, such Licensed-In
Agreements are in full force and effect;

          (k)     Medtronic
has made available to Urologix its material regulatory files for the Products,
including all material correspondence received from the FDA which relates to
the Products, or which impacts the manufacture, marketing or the sale of the
Products in the Field of Use in the Territory. All documentation,
correspondence, data, and certifications relating to or regarding the Products,
filed or delivered on behalf of Medtronic or VidaMed to the FDA, were true and
accurate in all material respects when so filed or delivered, and to the
knowledge of Medtronic, remain true and accurate in all material respects as of
the date hereof, subject to the matters addressed in the 510(k) Work Schedule
referenced in Section 4.1(a) of the TSSA. Since 2009, neither Medtronic nor its
Affiliates have implemented or received notice of any field action or recall of
any Product or received notice of any product liability claims concerning the
Products; and

-15-

          (l)      Medtronic
has provided Urologix lists of all distributors in the countries listed on
Exhibit F, a list of all customers in the United States, and all customer
contracts related to the Prostiva Business in the United States. Medtronic is
not bound by any other written customer terms and conditions, pricing
agreements or rebate policies related to the Prostiva Business, other than as
set forth in Schedule 5.1.1(l) or that would have a material adverse impact on
Urologix’s operation of the Prostiva Business.

          5.1.2  Covenants
of Medtronic and VidaMed. 

          (a)      Medtronic
and VidaMed hereby covenant to Urologix that if, during the term of the TSSA,
Urologix identifies additional rights that Medtronic and its Affiliates own or
license that are used in or were developed in connection with the operation of
the Prostiva Business prior to the Effective Date (other than patents), and
that should have been included in “Other Intellectual Property” or “Other
Medtronic Business Intellectual Property Rights,” under this Agreement,
Medtronic will negotiate in good faith an amendment to Exhibit C or G, as
applicable, to include such additional rights hereunder.

          (b)      If
requested by Urologix in writing, Medtronic will request the transfer of
information and pay Bovie the fee for the “Second Transfer” described in Section
7 of the Bovie Letter (as referenced in Section 3.8(c) of this Agreement).

          (c)      Within
sixty five (65) days after the Effective Date, Medtronic will deliver to
Urologix the following financial information, in each case, as of and for Medtronic’s
two (2) previous fiscal years and the interim period from the beginning of
Medtronic’s most recent fiscal year to the end of its most recent fiscal
quarter:

                    (i)        statements
of net assets acquired and liabilities assumed by Urologix relating to the
Prostiva Business; and

                    (ii)       statement
of revenues and direct expenses of the Prostiva Business including revenues
that were generated in the Prostiva Business, less expenses directly
attributable to the Prostiva Business, and allocations of operating costs
incurred within Medtronic relating to the Prostiva Business. Direct expenses
include selling, marketing and manufacturing costs, depreciation and other
expenses directly attributable to the Prostiva Business, but do not include any
allocation of general costs incurred for support (such as general marketing,
accounting, treasury, tax and legal support) nor an allocation of interest and
income taxes.

Such information shall be true and accurate as of the
dates shown in such information and as of the date(s) of delivery by Medtronic.
The financial information for the two fiscal years shall be audited and the
interim period shall be unaudited. Medtronic shall cause its independent
auditors to provide its report and required consent with respect to the
foregoing audited financial information to be included in Urologix’ Form 8-K
reporting the transactions contemplated hereby and in the Related Agreements.
Upon receipt of the financial information and an invoice, Urologix shall pay
directly, or reimburse Medtronic, for the direct costs of a third party auditor
to 

-16-

audit the financial information, up to a maximum of
$75,000. Urologix’ sole remedy for Medtronic’s failure to deliver the financial
information set forth above within sixty five (65) days following the Effective
Date shall be that Urologix shall be excused from paying or reimbursing
Medtronic for such direct costs.

          5.2    Disclaimer
and Limitation of Warranties. 

            5.2.1     EXCEPT
FOR THE EXPRESS WARRANTIES SET FORTH IN SECTION 5.1 OR ANY EXPRESS WARRANTIES
IN THE RELATED AGREEMENTS, MEDTRONIC AND VIDAMED DO NOT MAKE ANY REPRESENTATION
OR GRANT ANY WARRANTY, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF
LAW, BY STATUTE OR OTHERWISE, AND MEDTRONIC AND VIDAMED SPECIFICALLY DISCLAIM
ANY OTHER WARRANTIES, WHETHER WRITTEN OR ORAL, OR EXPRESS OR IMPLIED, INCLUDING
ANY WARRANTY OF QUALITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR
PURPOSE OR ANY WARRANTY AS TO THE VALIDITY OF ANY PATENTS, TRADEMARKS, OTHER
INTELLECTUAL PROPERTY OR LICENSED-IN INTELLECTUAL PROPERTY RIGHTS, THE
NON-INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES, THE
SCOPE OF THE PATENTS, TRADEMARKS, OTHER INTELLECTUAL PROPERTY OR LICENSED-IN
INTELLECTUAL PROPERTY RIGHTS, OR THAT THE PATENTS, TRADEMARKS, OTHER
INTELLECTUAL PROPERTY OR LICENSED-IN INTELLECTUAL PROPERTY RIGHTS MAY BE
EXPLOITED WITHOUT INFRINGING THIRD PARTY INTELLECTUAL PROPERTY RIGHTS. 

          5.3          Representations,
Warranties and Covenants of Urologix. Urologix hereby represents and
warrants to Medtronic that, as of the Effective Date:

                         5.3.1     The
execution of this Agreement and the Related Agreements by Urologix and
performance of Urologix’s obligations under this Agreement and the Related
Agreements do not conflict with, cause a default under, or violate any existing
contractual obligation that may be owed by Urologix to any third party.

                         5.3.2     Urologix
is a corporation duly organized, validly existing and in good standing under
the laws of the State of Minnesota and has all requisite corporate power and
authority to enter into, execute and deliver this Agreement and the Related
Agreements, and no other proceedings are necessary to authorize its execution,
delivery or performance of this Agreement or any Related Agreement.

Section
6

Term and Termination

          6.1          Term.
Unless terminated earlier under the provisions of this Section 6, the term (the
“Term”) of this Agreement will begin on the Effective Date and will
continue for a period of (a) ten (10) years ending on September 5, 2021, or (b)
the Acquisition Closing Date as defined in the Acquisition Option Agreement, if
earlier. 

-17-

          6.2          Termination
by Medtronic. Medtronic may, at its option, terminate this Agreement upon
written notice to Urologix upon the occurrence of any of the following events:

          (a)           In
the event of a breach by Urologix of its material obligations under this
Agreement or a Related Agreement, provided that (i) Medtronic provides at least
90 days (45 days in the event of failure to make payment) prior written notice
(the “Cure Notice”), which notice must state the nature of the breach in
reasonable detail and (ii) Urologix has failed to cure (or, in the event of a
breach other than failure to pay, that cannot, by its nature, be cured within
such period, Urologix has failed to begin substantial efforts to cure) the
alleged breach within the 90-day (or 45-day) period, as the case may be
following its receipt of the Cure Notice (the “Cure Period”); or

          (b)           The
filing in any court or agency pursuant to any statute or regulation of any
state, country or jurisdiction, a petition in bankruptcy or insolvency or for
reorganization or for an arrangement or for the appointment of a receiver or
trustee or if Urologix is served with an involuntary petition against it, filed
in any insolvency proceeding, and such petition is not dismissed within sixty
(60) days after the filing thereof, or if Urologix becomes a party to any
dissolution or liquidation, or if Urologix makes an assignment for the benefit
of its creditors, or if at any time Urologix enters into proceedings for
winding up or dissolution of business.

          6.3          Termination
by Urologix. Urologix may, at its option, terminate this Agreement in the
event of a breach by Medtronic of its material obligations under this Agreement
or a Related Agreement, provided that (i) Urologix provides at least ninety
(90) days’ prior written notice (the “Cure Notice”), which notice must
state the nature of the breach in reasonable detail and (ii) Medtronic has
failed to cure (or, in the event of a breach, that cannot, by its nature, be
cured within such period, Medtronic has failed to begin substantial efforts to
cure) the alleged breach within the 90-day period following its receipt of the
Cure Notice (the “Cure Period”). For any Medtronic breach in the first
Contract Year of a material obligation under this Agreement or a Related
Agreement that causes Urologix to be unable to ship Product for 45 days or more
or would result in Urologix incurring additional out of pocket costs or
reasonably expected additional out of pocket costs directly related to such
breach, individually or in the aggregate of $350,000 or more (a “Major
Breach”), then as Urologix’ sole remedy for such Major Breach: (y) Urologix
may elect to terminate this Agreement in accordance with this Section 6.3, and
Medtronic shall reimburse Urologix an amount equal to 50% of the aggregate
License Fees and Earned Royalties paid by Urologix prior to the effective date
of termination (up to a maximum of $500,000), or (z) alternatively, Urologix
may elect to forego termination and the Earned Royalties, and Minimum Royalties
will be adjusted as set forth in Section 3.8(b) of this Agreement. The
limitation on Medtronic’s liability set forth in Section 8.6.2 shall not excuse
or limit Medtronic’s obligation to reimburse Urologix an amount equal to 50% of
the aggregate License and Earned Royalties should Urologix pursue the sole
remedy set forth in subsection (y) above, and such reimbursement shall not be
credited in the calculation of Medtronic’s aggregate total liability under
Section 8.6.2 for purposes of claims for breaches other than claims arising
under this Section 6.3 for a Major Breach. 

          6.4          Other
Termination. In the event the TSSA is terminated because of a Major
Challenge or by Licensee under Section 2.2(a)(v) of the TSSA, this License
shall automatically 

-18-

terminate as of the effective date of termination of
the TSSA in accordance with the procedures set forth in the TSSA.

          6.5          Effects
of Termination.

                         6.5.1     Upon
a termination of this Agreement in its entirety under Section 6.2:

          (a)          Urologix’s
rights to the Patents, Trademarks, Other Intellectual Property and Licensed-In
Intellectual Property Rights and Other Medtronic Business Intellectual Property
granted hereunder and all use thereof will immediately terminate, except as set
forth in Section 6.5.6, and any and all rights in the Patents, Trademarks,
Other Intellectual Property, Licensed-In Intellectual Property Rights and Other
Medtronic Business Intellectual Property will revert back to Medtronic and its
Affiliates; 

          (b)          Urologix
will provide Medtronic access to the current Product specifications and other
Confidential Information used exclusively in the Prostiva Business and customer
lists for purchasers of the Products, as reasonably requested and necessary for
the manufacture, marketing and distribution of the Products (“Prostiva
Business Confidential Information”) as of the effective date of such
termination. Urologix hereby grants to Medtronic a worldwide, royalty free,
perpetual and irrevocable, sublicensable, non-exclusive license to the
intellectual property rights relating to any Improvements to Products that were
commercially released as of the effective date of the termination, solely for
the Field of Use, and provided that Medtronic may not exercise its rights
under such license until the effective date of termination of this Agreement.

          (c)          The
Transition Services and Supply Agreement and the Acquisition Option Agreement
will immediately terminate; and

          (d)          If
Urologix has purchased the Assets under the Asset Purchase Agreement, Medtronic
shall have the option, exercisable on notice within 60 days following the
effective date of termination of this Agreement, to re-purchase the Assets from
Urologix in exchange for payment of the amounts Urologix paid to Medtronic for
such Assets.

                         6.5.2     In
the event Urologix elects to terminate for Medtronic breach as provided in
Section 6.3: 

          (a)          Urologix’s
rights to the Patents, Trademarks, Other Intellectual Property and Licensed-In
Intellectual Property Rights and Other Medtronic Business Intellectual Property
granted hereunder and all use thereof will immediately terminate, except as set
forth in Section 6.5.6, and any and all rights in the Patents, Trademarks,
Other Intellectual Property, Licensed-In Intellectual Property Rights and Other
Medtronic Business Intellectual Property will revert back to Medtronic and its
Affiliates; and

          (b)          The
Transition Services and Supply Agreement, the Asset Purchase Agreement (if the
transactions contemplated thereby have not been consummated) and the
Acquisition Option will automatically terminate.

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          6.5.3       In
the event the Agreement is terminated as a result of the termination of the
TSSA pursuant to Section 6.4 hereto:

          (a)          Urologix’s
rights to the Patents, Trademarks, Other Intellectual Property, Licensed-In
Intellectual Property Rights, and Other Medtronic Business Intellectual
Property granted hereunder and all use thereof will immediately terminate,
except as set forth in Section 6.5.6, and any and all rights in the Patents,
Trademarks, Other Intellectual Property, Licensed-In Intellectual Property
Rights and Other Medtronic Business Intellectual Property will revert back to
Medtronic and its Affiliates; 

          (b)          The
Acquisition Option Agreement and the Asset Purchase Agreement(if the
transactions contemplated thereby have not been consummated) will automatically
terminate; and

          (c)          Urologix
will provide Medtronic access to the Prostiva Business Confidential Information
as of the effective date of such termination. Urologix hereby grants to
Medtronic a worldwide, royalty free, perpetual and irrevocable, sublicensable,
non-exclusive license to the intellectual property rights relating to any
Improvements to Products that were commercially released as of the effective
date of the termination, solely for the Field of Use, and provided that Medtronic
may not exercise its rights under such license until the effective date of
termination of this Agreement. 

          6.5.4       Expiration
or termination of the Agreement will not release either party from any
obligation that accrued prior to the effective date of such expiration or termination.
For clarity, in the event of a termination of this Agreement by Urologix for a
Major Breach, or any termination under Section 6.4, Urologix be obligated to
pay only the pro rata portion of the License Maintenance Fee as set forth in
Section 3.7, and shall not have any payment obligation for any Minimum Royalty
for a partial Contract Year, any License Fee not then due and payable (except
as set forth in Section 6.5.6, and any obligation to purchase Transferred
Prostiva Assets under the Acquisition Option Agreement or to purchase Assets
under the Asset Purchase Agreement. 

          6.5.5       Upon
expiration or termination of this Agreement, sections 2.3, 3.6, 5.1, 5.2, 5.3,
6.5, 7.3, 7.4, 7.5, 8, 9, and 10 will, with related definitions, survive and remain
in full force and effect. 

          6.5.6       In
addition, in the event of termination of this Agreement, Urologix shall (i)
return to Medtronic all finished goods inventory of Product consigned to it
pursuant to the TSSA and (ii) provide Medtronic the right to purchase, at
Urologix’ cost, all finished goods inventory of Product owned by Urologix which
have been manufactured for, or are held or used primarily for, the conduct of
the Prostiva Business and which are new, unexpired and not due to expire within
six (6) months of the date of termination. In the event Medtronic does not
exercise its right to purchase the Urologix owned inventory, Urologix shall
have an additional 90 days after termination of this Agreement to sell the
inventory under the licenses granted herein, as though 

-20-

this Agreement had not terminated with respect to such
inventory. For the avoidance of doubt, Urologix shall continue to pay Earned
Royalties on such sales as provided in Section 3.2.

Section
7

Protection of Licensed Rights

          7.1          Patent
and Trademark Prosecution

            7.1.1        Medtronic
and VidaMed shall be solely responsible for and shall make all decisions
regarding filing, prosecuting and maintaining the Patents and Trademarks in
their sole discretion. With respect to all patents and patent applications
designated by Urologix on Exhibit A (the “Designated Patents”) and all
trademark applications and trademark registrations designated by Urologix on Exhibit
B (the “Designated Trademarks”), Medtronic shall furnish Urologix
with copies of material correspondence relating to the Patents that are
intended to be filed with a patent office, and an opportunity to promptly
provide comments, before submitting any such correspondence to such patent office.
Medtronic and/or VidaMed shall consider Urologix’ comments, but shall not be
required to implement them. Before allowing any application or patent within
the Patents to lapse, Medtronic or VidaMed will provide Urologix with notice of
the intention to allow the application or patent to lapse at least one month
before the final deadline to take action to prevent such lapse. Medtronic will
allow Urologix the opportunity to take over control of prosecution or
maintenance of such patent application or patent at sole Urologix’ expense.
Medtronic shall not abandon any trademark application or trademark registration
of Designated Trademarks without obtaining written approval of Urologix.
Medtronic shall have no obligation to consult with Urologix before abandoning
any patents or patent applications on Exhibit A that are not Designated
Patents or any trademark applications or registrations on Exhibit B that
are not Designated Trademarks. At any time during the Term, Urologix may
request Medtronic, at Urologix’ sole expense, by thirty (30) days advance
written notice, to include claims proposed by Urologix in either a pending
application included in the Designated Patents or to file a continuation or
divisional application of one of the applications of the Designated Patents
with new claims. Urologix’s sole and exclusive remedy for any failure by
Medtronic or VidaMed to comply with the notice obligations of this Section
7.1.1 is for Medtronic to take all reasonable steps, including without
limitation payment of all fees and penalties, to revive any patent or patent
application abandoned without providing Urologix the appropriate notice.

            7.2       Enforcement
of Patents. 

                        7.2.1     If
either Party becomes aware of any infringement, anywhere in the Territory, of
any issued patent within the Patents, such Party may notify the other Party in
writing to that effect.

                        7.2.2     Infringement
of Patents by Third Parties.

            (a)        In
the case of any infringement within the Field of Use of any Patent by any third
party during the Term of this Agreement, Urologix will have the first right,
but not the obligation, at Urologix’s expense, to cause such third party to
cease infringement and to otherwise enforce such Patent, or to defend the
Patent in any declaratory judgment action 

-21-

brought by third parties which alleges the invalidity,
unenforceability or non-infringement of the rights associated with the Patent
in the Field of Use. Urologix will have control of the conduct of any such
action that it brings, provided that Urologix will not enter into
any settlement, consent judgment or other voluntary disposition of any such
action without the prior written consent of Medtronic, which consent will not
be unreasonably withheld, delayed or conditioned, if the settlement would admit
the invalidity or unenforceability of any Patent owned by Medtronic. Medtronic
will, at the request and expense of Urologix, cooperate and provide such
reasonable assistance as Urologix may request in any action described in this
Section 7.2.2(a). Except for providing such reasonable assistance,
Medtronic will have no obligation regarding the legal actions described herein;
provided that if required to enable Urologix to initiate or continue
such action, Medtronic will join such action at Urologix’s request and expense.
Medtronic, however, will have the right to participate in any such action
through its own counsel and, except as provided in the next sentence, at its
own expense. Any recovery or compensation resulting from such proceeding will
first be used to reimburse Medtronic for any unreimbursed expenses in
connection with providing assistance or joining the proceeding at Urologix’s
request, then to reimburse Urologix for any expenses, and Medtronic for any
other expenses, in connection with the proceeding (including attorney’s fees,
expert witness fees, court fees, and related charges), and the remainder, if
any, will belong entirely to Urologix, as the Party with commercial interest in
the Field of Use, whose damages will be the basis of any recovery in the
enforcement action. 

            (b)        If
Urologix does not, within a reasonable period after becoming aware of such
infringement but no less than ninety (90) calendar days from the date of
receipt of written notice from Medtronic, (A) initiate legal proceedings
against such threatened or actual infringement, or defend legal proceedings
brought by a third party, as provided in Section 7.2.2(a) above, or (B) cause
such infringement to terminate, Medtronic may thereafter take such action as it
deems necessary to enforce its rights in the Patent, including, without
limitation, the right, but not the obligation, to bring, at its own expense, an
infringement action or file any other appropriate action or claim related to
such infringement against any third party. Medtronic will have control of the
conduct of any such action that it brings, provided that,
Medtronic will not enter into any settlement, consent judgment or other voluntary
disposition of any such action without the prior written consent of Urologix,
which consent will not be unreasonably withheld, delayed or conditioned, if the
settlement would admit the invalidity or unenforceability of any patent
licensed by Urologix. Urologix will, at the request and expense of Medtronic,
cooperate and provide reasonable assistance in any action described in this
Section 7.2.2(b) and, if required to enable Medtronic to initiate or continue
such action, will join such action at Medtronic’s request. Any recovery or
compensation resulting from such proceeding will first be used to reimburse
Urologix for any unreimbursed expenses in connection with providing assistance
at or joining the proceeding at Medtronic’s request, and then to reimburse
Medtronic for any expenses in connection with the proceeding (including
attorney’s fees, expert witness fees, court fees and related charges). The
remainder, if any, will belong entirely to Medtronic as the Party who has
funded the enforcement action.

            7.3       Confidential
Information. 

                         7.3.1     In
addition to the provisions in Section 2.3.2, Medtronic and Urologix will (a)
each keep the Confidential Information of the other Party disclosed to it under
this

-22-

Agreement or the Transition Services and Supply
Agreement (as applicable) in confidence, (b) not use any Confidential
Information of the other Party for any purpose other than for the purposes of
performance under this Agreement or the Transition Services and Supply
Agreement (subject to Section 6.4 hereof), and (c) not disclose any portion of
any Confidential Information of the other Party to any third party without the
prior written consent of the disclosing Party. Notwithstanding the foregoing,
(i) Urologix may disclose Confidential Information disclosed to it by Medtronic
hereunder only to a distributor or sublicensee of Urologix if such party has a
need to know such information for the purpose of Urologix’s operation of the
Prostiva Business, and provided that any such sublicensees or distributors
enter into a confidentiality agreement with Urologix containing non-disclosure
and use restrictions that are at least as restrictive as the ones set forth
herein, and (ii) either party may disclose the other Party’s Confidential
Information (x) to its agents or representatives who have a need to know such
information provided such agents or representatives are subject to an
obligation of confidentiality, and (y) to the extent required by law, including
the rules and regulations of the Securities and Exchange Commission. 

                         7.3.2     Each
Party’s obligations under Section 7.3.1 shall continue during the Term and
survive until the date that is two (2) years after (i) the termination or expiration
of this Agreement or (ii) the Acquisition Closing, whichever is later, except
with respect to any items of Confidential Information that no longer retain the
characteristics of Confidential Information during such period. In the event
the Acquisition Closing occurs, Urologix’s obligations with respect to
Confidential Information related to the Prostiva Business shall terminate.

                         7.3.3     Each
party acknowledges that any unauthorized disclosure or use of the other party’s
Confidential Information would cause irreparable harm and significant injury,
the degree of which will be difficult to ascertain. Accordingly, each Party
agrees that the disclosing Party is entitled to seek an immediate injunction
enjoining any breach of this Section 7, as well as the right to pursue all
other rights and remedies available at law or in equity for such a breach. 

                         7.3.4     The
Confidential Disclosure Agreement dated September 16, 2008 (the “CDA”)
shall, as of the Effective Date, be terminated and shall be superseded by the
obligations contained in this Section 7 with respect to Confidential
Information disclosed on or after the Effective Date; provided, however,
Confidential Information disclosed under the CDA prior to the Effective Date
hereof shall be treated as if it were Confidential Information disclosed
hereunder and shall be subject to the obligations set forth in this Section 7. 

            7.4       Use
of Names. Except as provided in the Transition Services and Supply
Agreement, neither Party may identify the other party in any promotional
advertising or other promotional materials to be disseminated to the public or
any portion thereof without the other Party’s prior written consent. 

            7.5       Publicity.
Neither Party will, and the Parties will not permit any of their respective
Affiliates, representatives or advisors to, issue or cause the publication of
any press release, or announcements to customers or vendors of such Party or
other third parties, related to the transactions contemplated by this Agreement
or any of the Related Agreements, without the prior written consent of the
other Party, provided that either Party may issue a press release or make a
filing required under the rules and regulations of the Securities and Exchange 

-23-

Commission as it deems necessary in its discretion so
long as it provides the other Party an opportunity to review and comment on the
proposed disclosure and seeks confidential treatment to the extent permitted by
the SEC.

            7.6       Confidentiality
of Prostiva Business Information. Medtronic shall not disclose to any third
party, without Urologix’s consent, any Prostiva Business Confidential
Information for any purpose, except that Medtronic may disclose Prostiva
Business Confidential Information (a) for any purpose outside the Field of Use;
(b) for Medtronic’s own business purposes inside the Field of Use; and (c) to
avail itself of or otherwise enforce Medtronic’s rights hereunder. The
permitted disclosure pursuant to subsection (b) shall not include use which
would violate the restrictive covenant in Section 2.3.1 of this Agreement; provided
further that the Excluded Affiliates shall be restricted from using any
Prostiva Business Confidential Information in the same manner that Medtronic is
restricted from using such Prostiva Business Confidential Information.

Section
8

Indemnification/Limitations

            8.1       Indemnification
by Urologix. Beginning on the Effective Date, Urologix shall indemnify
Medtronic, VidaMed, their Affiliates and their respective directors, officers,
employees and agents (collectively, “Medtronic Indemnitees”) and defend
and save each of them harmless, from and against any and all losses, damages,
liabilities, costs and expenses (including reasonable attorneys’ fees and
expenses) (collectively, “Losses”) in connection with any and all suits,
investigations, claims or demands of third parties (collectively, “Third
Party Claims”) to the extent arising from or occurring as a result of.

            (a)       the
breach by Urologix of any representation or warranty, or material breach of any
covenant, of this Agreement or any Related Agreement;

            (b)       the
selling, offering for sale, commercialization, distribution, promotion or
marketing of Products in the Territory by Urologix, its Affiliates or
sublicensees or any of its or their respective Affiliates after the Effective
Date (“Urologix Sales”);

            (c)       any
breach of or noncompliance by Urologix, its employees, agents or
representatives in any respect with applicable laws or regulations related to
regulatory approval for the commercial sale of the Products with regard to
Urologix Sales (and specifically excluding Medtronic Sales); and

            (d)       any
field action, recall or mandatory product change with regard to the Urologix
Sales.

            8.2       Indemnification
by Medtronic. Beginning on the Effective Date, Medtronic shall indemnify
Urologix, its Affiliates and their respective directors, officers, employees
and agents (collectively, “Urologix Indemnitees”), and defend and save
each of them harmless, from and against any and all Losses in connection with
any and all Third Party Claims to the extent arising from or occurring as a
result of:

-24-

            (a)       except
to the extent set forth in Section 7.1.1 regarding abandonment of patent
rights, the breach by Medtronic or VidaMed of any representation or warranty,
or material breach of any covenant of this Agreement or any Related Agreement;

            (b)       the
selling, offering for sale, commercialization, distribution, promotion or
marketing sale by Medtronic, VidaMed or other Medtronic Affiliates or
sublicensees (specifically excluding Urologix Sales) of the Products (“Medtronic
Sales”), other than Losses as the result of use of generators, hand held
devices, and probes which were originally included as part of a Medtronic Sale,
which use occurs more than twelve (12) months following the Effective Date;

            (c)       any
breach of or noncompliance by Medtronic or VidaMed, their employees, agents or
representatives in any respect with applicable laws or regulations related to
regulatory approval of the commercial sale of the Products with regard to
Medtronic Sales;

            (d)       any
field action, recall or mandatory product change with regard to Medtronic
Sales; and

            (e)       claims
arising out of the operation or dissolution of Medtronic’s distribution network
for the Products.

            8.3       Contribution.
With respect to any Third Party Claim for which Urologix has an obligation to
indemnify any Medtronic Indemnitee pursuant to Section 8.1 and Medtronic has an
obligation to indemnify any Urologix Indemnitee pursuant to Section 8.2, each
Party shall indemnify each of the other Party’s Indemnitees for the applicable
Losses to the extent of its responsibility, relative to the other Party, for
the facts underlying such Third Party Claim.

            8.4       Procedure
for Indemnification. The indemnified party will give prompt written notice
to the indemnifying party of any suits, claims or demands for Third Party
Claims which may give rise to any Loss for which indemnification may be
required under this Section 8. However, failure to give such notice will not
impair the obligation of the indemnifying party to provide indemnification
hereunder except if and to the extent that such failure materially impairs the
ability of the indemnifying party to defend the applicable suit, claim or
demand. The indemnifying party will be entitled to assume the control and
defense of any suit, claim or demand of any third party at its own cost and
expense; provided, however, that the other party will have the right to be
represented by its own counsel at its own cost in such matters. In the event that
the indemnifying party declines to assume control of any such suit, claim or
demand, the party entitled to indemnification is entitled to assume such
control, conduct the defense of, and settle such suit, claim or action, all at
the sole cost and expense of the indemnifying party. The indemnifying party may
not settle or dispose of any such matter in any manner which would adversely
impact the rights or interest of the indemnified party without the prior
written consent of the indemnified party, which consent may not be unreasonably
delayed or withheld.

            8.5       Sole Remedy. Other than equitable relief described in
Section 10.7, the rights of abatement set forth in Section 3.8, and the
termination rights set forth in Section 6, indemnification pursuant to this
Article 8 shall be a party’s sole remedy for Third Party Claims arising
hereunder. 

-25-

            8.6       Exclusions/Limitations.
All claims arising under this Agreement and any of the Related Agreements,
including but not limited to direct claims and in the case of indemnification,
for Third Party Claims, will be subject to the following exclusions and
limitations:

            8.6.1   Except
in circumstances of intentional misconduct or fraud by a party or its
Affiliates (or in the case of Urologix, its sublicenees or distributors), no
party or any of their respective Affiliates shall be liable for punitive,
special, indirect, incidental or consequential damages, or for lost profits
(including any harm to its business or goodwill), whether in contract,
warranty, negligence, tort, strict liability or otherwise, arising out of or
otherwise relating to this Agreement, including in connection with (a) the
manufacture, development or other exploitation of the Product or any licensed
rights hereunder, or (b) any breach of or failure to perform any of the
provisions of this Agreement or any Related Agreement; provided, however,
that if a Third Party claim for which a Party is entitled to indemnification
includes the punitive, special, indirect, incidental or consequential damages,
or claims for lost profits of such Third Party, the limitations in this Section
8.6.1 shall not apply to such Third Party claims; and

            8.6.2   Other
than:

	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 claims for breach of the representations and warranties
 in (i) Sections 5.1(a), (b), and (c) of this Agreement, (ii) Section 8.2(a)
 of the Transition Services and Supply Agreement, and (iii) Sections 5.1 and
 5.2(a), (b) and (c) of the Acquisition Option Agreement (collectively, “Fundamental
 Representations”),

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 claims for indemnification arising under Sections
 8.2(b), (c), (d) and (e) of this Agreement,

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 claims for breach of Section 2.3.1 of this
 Agreement,

 
	
  

 	
  

 	
  

 
	
  

 	
 (d)

 	
 VidaMed Claims as described in the Acquisition
 Option Agreement, and

 
	
  

 	
  

 	
  

 
	
  

 	
 (e)

 	
 claims for breach of Section 9.1 of the Acquisition
 Option Agreement, 

 

	
  

 	
  

 
	
  

 	
 Medtronic’s aggregate total liability under this
 Agreement and the Related Agreements, including for indemnification or for
 direct damages, is subject to a cap equal to 50% of all payments actually
 received by Medtronic under this Agreement and the Related Agreements (“Aggregate
 Cap”); provided, however, that in the event the Aggregate Cap is
 insufficient to cover Urologix’s claims under (c) above for breaches of the
 Restrictive Covenant of Section 2.3.1, Urologix may recover additional
 amounts on account of such claims, up to a maximum amount of $10,000,000,
 less any amounts applied to the Aggregate Cap. For illustration, if the
 Aggregate Cap is $250,000, and Urologix has a claim of $500,000 for a breach
 of a Fundamental Representation (“Breach A”), a separate claim for
 $500,000 for breach unrelated to Breach A and unrelated to Section 2.3.1 (“Breach
 B”), and also holds a claim of $10,000,000 for breach of Section 2.3.1,
 Urologix will be entitled to recover $500,000 on account of Breach A, $0 for
 Breach B, and $9,500,000 on account of the breach of Section 2.3.1; 

 

-26-

            8.6.3   Except
for claims (i) specifically identified in the Acquisition Option Agreement, (ii)
for breach of Fundamental Representations, and (iii) claims arising under
Sections 8.2(b), (c), (d), and (e) of this Agreement, the period during which
Licensee may pursue claims for breaches of representations and warranties,
including claims for indemnification, will commence on the Effective Date and
terminate at 11:59 p.m. Minnesota time on the date that is twelve (12) months
after the Effective Date; and the period during which Licensee may pursue
claims arising under the TSSA will commence on the Effective Date and terminate
at 11:59 p.m. Minnesota time on the date that is twelve (12) months after the
expiration (or earlier termination) of the Term of the TSSA.

            8.6.4   No party shall be able to avoid the
limitations set forth in Article 8 of this Agreement, whether with respect to
Third Party Claims or with respect to direct claims, or with respect to claims
arising out of this Agreement or any Related Agreement, by electing to pursue
another remedy, except to the extent such remedy is, by its explicit terms, not
subject to this Article 8. 

Section
9

Disputes

            9.1      Senior
Representatives. The Parties will attempt in good faith to amicably and
promptly resolve any dispute arising out of or relating to this Agreement
through discussions between the General Manager of Medtronic Neuromodulation’s
Gastro/Urological business unit and the Chief Operating Officer of Urologix. If
the Parties are unable to resolve a dispute within thirty (30) days, the matter
will be escalated to senior representatives who have authority to settle the
controversy. These senior representatives shall be the Chief Executive Officer
of Urologix and the President of Medtronic Neuromodulation. These
representatives shall consult and negotiate with each other in good faith, and
recognizing their mutual interests, attempt to reach a solution satisfactory to
both Parties before resorting to dispute resolution as provided below.

            9.2      Stay
pending resolution. Except as set forth in Section 10.7, in the event of a
dispute between the Parties, all rights and obligations under this Agreement
shall continue during the dispute and any applicable Cure Period or remedy
period shall be stayed until the dispute is resolved by the Parties in writing,
or until the entry of final judgment in a court of competent jurisdiction.

Section
10

Miscellaneous

           10.1    Compliance
with Law. Each of Urologix and Medtronic agrees to comply with all
applicable laws, rules and regulations in performing its obligations under this
Agreement.

           10.2    Assignment;
Change of Control. This Agreement will be binding upon and will inure to
the benefit of each Party and each Party’s respective transferees, successors
and assigns. Neither Party shall assign or transfer this Agreement to a third
party without the prior written consent of the other Party. Notwithstanding the
foregoing, neither Party shall be required to obtain the prior written consent
of the other Party in the event of a Change in Control of such Party, provided
that the acquirer(s) assumes the acquired Party’s obligations
hereunder after such 

-27-

Change of Control. For the purposes of this paragraph,
“Change in Control” means (a) a merger or consolidation of Urologix, on the one
hand, or of Medtronic, Inc. or of Medtronic’s Neuromodulation Business Unit, on
the other hand, (b) a transaction or series of related transactions in which a
third party, together with its Affiliates, becomes the beneficial owner of
fifty percent (50%) or more of the combined voting power of the outstanding
securities of Urologix, on the one hand, or of Medtronic, Inc. or of
Medtronic’s Neuromodulation Business Unit, on the other hand, or (c) the sale
of all or substantially all of the assets of Urologix, on the one hand, or of
Medtronic’s Neuromodulation Business Unit on the other hand. Any attempted
assignment in contravention of this Section 10.2 will be null and void. 

           10.3    Entire
Agreement. This Agreement, together with the schedules and exhibits
attached hereto, and the Related Agreements, constitute the entire agreement
between the Parties hereto with respect to the subject matter hereof and
supersedes all previous and contemporaneous negotiations, commitments, and
writings with respect to such subject matter, whether oral or written. 

           10.4    Amendment.
No amendment, modification or supplement of any provision of this Agreement
will be valid or effective unless made in writing and signed by a duly
authorized officer of each Party.

           10.5    Notices.
Any notice required to be given pursuant to the provisions of this Agreement or
the Related Agreements will be in writing and will be deemed to have been given
at the earlier of the time when actually received as a consequence of any effective
method of delivery including, but not limited to, hand delivery, transmission
by fax, or delivery by a professional courier service or the time when sent by
certified or registered mail addressed to the party for whom intended at the
address below or at such changed address as the party will have specified by
written notice; provided that any notice of change of address
will be effective only upon actual receipt.

	
  

 	
  

 	
  

 
	
            If
 to Medtronic or VidaMed:

 
	
  

 	
  

 	
  

 
	
  

 	
 General
 correspondence to:

 
	
  

 	
 Medtronic, Inc.

 
	
  

 	
 World Headquarters

 
	
  

 	
 710 Medtronic Parkway

 
	
  

 	
 Minneapolis, MN 55432-5604

 
	
  

 	
  

 	
  

 
	
  

 	
 With
 copy to:

 
	
  

 	
 Attention:

 	
 General Counsel

 
	
  

 	
 FAX No.:

 	
 (763) 572-5459

 
	
  

 	
  

 	
  

 
	
  

 	
 And

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 Attention:

 	
 Vice President, Corporate 

 
	
  

 	
 Development

 	
  

 

-28-

	
  

 	
  

 	
  

 
	
  

 	
 FAX No.:

 	
 (763) 505-2542

 

	
  

 	
  

 	
  

 
	
            If
 to Urologix:

 
	
  

 	
  

 
	
  

 	
 General
 correspondence to:

 
	
  

 	
  

 	
 14405 21st Avenue North

 
	
  

 	
  

 	
 Minneapolis, MN 55447

 
	
  

 	
  

 	
 Attn: Greg Fluet

 
	
  

 	
  

 	
 Fax: (763) 475-1443

 
	
  

 	
  

 
	
  

 	
 With
 copy to:

 
	
  

 	
  

 	
 Lindquist
 & Vennum P.L.L.P.

 
	
  

 	
  

 	
 Attn:   Charles
 P. Moorse

 
	
  

 	
  

 	
            Barbara
 Rummel

 
	
  

 	
  

 	
 80 S. 8th
 Street, Suite 4200

 
	
  

 	
  

 	
 Minneapolis, MN 55402

 
	
  

 	
  

 	
 Fax: (612) 371-3207

 

           10.6    Governing
Law; Jurisdiction. This Agreement will be governed, construed, and
interpreted in all respects in accordance with the laws of the State of
Minnesota without regard to provisions regarding the conflict of laws. Each
Party hereby irrevocably submits to the exclusive jurisdiction of the federal
or state courts located in Hennepin County, Minnesota, in respect of any claim
relating to the interpretation and enforcement of the provisions of this
Agreement and of the Related Agreements, or otherwise in respect of the
transactions contemplated hereby and thereby, and hereby waives, and agrees not
to assert, as a defense in any action, suit or proceeding in which any such
claim is made that it is not subject thereto or that such action, suit or
proceeding may not be brought or is not maintainable in such courts or that the
venue thereof may not be appropriate or that this Agreement or any such document
may not be enforced in or by such courts. 

           10.7    Equitable
Relief. Notwithstanding anything herein to the contrary, nothing in this
Agreement shall preclude either Party from seeking equitable relief, including
permanent or provisional relief, including a temporary restraining order,
preliminary injunction, permanent injunction, specific performance,
interlocutory decree, preliminary receivership, or other equitable relief
concerning a Dispute in any court of competent jurisdiction. This Section 10.7
shall be specifically enforceable.

           10.8    Descriptive
Headings. The descriptive headings of this Agreement are for convenience
only and will be of no force or effect in construing or interpreting any of the
provisions of this Agreement.

           10.9    Independent
Contractors. Both Parties are independent contractors under this Agreement.
Nothing contained in this Agreement will be deemed to create an employment, 

-29-

agency, joint venture or partnership relationship between
the Parties hereto or any of their agents or employees, or any other legal
arrangement that would impose liability upon one Party for the act or failure
to act of the other Party. Neither Party will have any express or implied power
to enter into any contracts or commitments or to incur any liabilities in the
name of, or on behalf of, the other Party, or to bind the other Party in any
respect whatsoever.

           10.10    Severability.
If any provision in this Agreement should be held invalid, illegal or
unenforceable in any respect in any jurisdiction, then, to the fullest extent
permitted by law, all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in order to carry
out the intentions of the Parties as nearly as may be possible; provided, however, that nothing
herein shall be construed so as to defeat the overall intention of the Parties.

           10.11    Waiver
of Breach. The waiver or failure of either Party to enforce the terms of
this Agreement in one instance will not constitute a waiver of that Party’s
rights under this Agreement with respect to other violations. No waiver of any
of the terms of this Agreement will be binding unless it is in writing and
signed by the Party granting the waiver.

           10.12    Counterparts.
This Agreement may be executed in counterparts, any of which may be executed
and delivered via facsimile or other electronic delivery, each of which shall
be deemed an original, and all of which, taken together, shall constitute one
and the same instrument.

           10.13    Expenses.
Except as expressly provided herein, Urologix and Medtronic shall each pay
their own expenses incident to this Agreement and the Related Agreements and
the preparation for, and consummation of, the transactions provided for herein
and therein.

           10.14    Benefit.
Nothing in this Agreement, expressed or implied, is intended to confer on any
person other than the parties hereto or their respective successors or assigns,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement.

 [signatures follow]

-30-

          IN
WITNESS WHEREOF, the parties hereto have duly executed this License Agreement
as of the Effective Date.

	
  

 	
  

 	
  

 	
  

 
	
 MEDTRONIC, INC.

 	
 UROLOGIX, INC.

 
	
  

 	
  

 	
  

 	
  

 
	
 By: 

 	
 /s/ Thomas M. Tefft

 	
 By: 

 	
 /s/ Stryker Warren Jr.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Name: Thomas M. Tefft

 	
  

 	
 Name: Stryker Warren Jr. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Title: Senior Vice President & President,

          Neuromodulation

 	
  

 	
 Title: Chief Executive Officer

 
	
  

 	
  

 	
  

 	
  

 
	
 MEDTRONIC VIDAMED, INC.

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
 By:

 	
 /s/ Thomas M. Tefft

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Name: Thomas M. Tefft

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Title: President

 	
  

 	
  

 

[The following exhibits and schedules are omitted from
the copy of this agreement as filed with the Securities and Exchange
Commission, but will be furnished supplementally by Urologix, Inc. to the
Commission upon request:

Exhibit A –
Patents

Exhibit B – Trademarks

Exhibit C – Other Intellectual Property 

Exhibit D – Licensed-In Intellectual Property Rights

Exhibit E – Products

Exhibit F – “Material” Countries of the Territory

Exhibit G – Other Medtronic Business Intellectual
Property

Exhibit H – Wet Electrode Platform Improvement

Schedule 5.1.1(l) – Written Customer Terms, Agreements, Policies]

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