Document:

Exhibit 10.1

 

EMPLOYMENT
AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (“Agreement”) is made effective  July 16, 2008 by and between ProUroCare
Inc., a Minnesota corporation with its principal place of business in Golden
Valley, Minnesota (the “Company”), and Richard C. Carlson (“Employee”).

 

WHEREAS, the Company is in the business of developing and
marketing products to treat prostate conditions;

 

WHEREAS, the Company desires to employ the Employee as its
Chief Executive Officer, in accordance with the following terms, conditions and
provisions; and,

 

WHEREAS, the Employee desires to perform such services for
the Company, all in accordance with the following terms, conditions and
provisions;

 

NOW THEREFORE, in consideration of the mutual covenants herein
contained, it is agreed as follows:

 

1.                                      EMPLOYMENT AND DUTIES.

 

The Company hereby continues the Employee’s
employment, and the Employee hereby accepts and agrees to serve the Company as
the Company’s Chief Executive Officer. 
The Employee’s duties shall be to direct the Company’s strategic
initiatives, oversee its operations, manage the Company’s relationships with
the investment community, participate in recruiting senior management, and
other reasonable duties subject to review and modification from time to time at
the direction of the Company’s Board of Directors. The Employee shall apply his
best efforts, and devote his full time and attention to the Company’s affairs.

 

2.                                      TERM.

 

Subject to Paragraph 5, the term of this Agreement and
the Employee’s employment under this Agreement shall commence on July 16,
2008, and shall continue thereafter until December 31, 2009. Upon the
expiration of the original term; this Agreement may be renewed by mutual
agreement.

 

3.                                      COMPENSATION.

 

The Company shall compensate the Employee for his
services at the following salary, bonus and benefits:

 

3.1          Base Salary.

 

The Employee shall be paid a
minimum annualized base salary of $150,000 per year, payable on the Company’s
normal payroll cycle, less all required and authorized withholdings and taxes,
through December 31, 2009. This base salary is the minimum salary during
the respective time period of the term of this Agreement, and may be 

 

 

increased
from time to time at the discretion of the Board of Directors. The Employee
shall be considered an exempt employee under federal and state law.

 

3.2          Bonus.

 

The Employee is eligible to
earn a bonus of up to 40% of his annual base salary, less all required and
authorized withholdings and taxes. The annual bonus criteria will be set by the
Compensation Committee of the Board of Directors.

 

3.3          Stock Options.

 

The Employee shall be
eligible to participate in the annual grant of Company stock options,
consistent with the terms and conditions of the 2002 and 2004 Stock Option
Plans, and with amounts of options, including exercise price and vesting
provisions, determined by the Compensation Committee of the Board of Directors
from time to time. The stock options are also subject to Sections 5 and 6 of
this Agreement.

 

3.4          Employee Benefits Plans.

 

Employee shall be eligible
for fringe benefits offered to other executive-level employees of the Company,
subject to the Company’s policies and the terms, restrictions, limitations and
requirements of any summary plan description and/or plan documents. Nothing
herein shall alter, modify or change any such policy, summary plan description
or plan document.

 

3.5          Life Insurance.

 

During the term of this
Agreement, the Company shall secure and pay the premium for a term life
insurance policy assignable to the Employee in the amount of two times the
Employee’s annual base salary or, at the Employee’s written request, the
Company shall reimburse the Employee for comparable premiums on an existing
policy for the same rating.

 

4.                                      EXPENSES.

 

The Company will reimburse the Employee for reasonable
expenses incurred by the Employee in connection with the business of the
Company upon presentation by the Employee of appropriate substantiation for
such expenses.

 

5.                                      TERMINATION.

 

This Agreement shall terminate upon the occurrence of
any of the following:

 

5.1.         Termination or Decision
Not to Renew this Agreement by the Company for Reasons Other than Cause.

 

The Company may terminate
this Agreement or not renew this Agreement prior to any renewal date for
reasons other than Cause, upon 30 days’ notice by the Company.  If 

 

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the
Company so terminates or fails to renew the Agreement, the Employee shall be
entitled to severance payments and benefits described in Section 6.

 

5.2.         Termination by Employee.

 

Employee may terminate this
Agreement at any time, upon 30 days’ notice to the Company.  In the event Employee terminates this
Agreement for other than Good Reason or Change in Control as set forth in
Sections 5.3 and 5.7 below, the Company shall pay Employee all salary, bonuses,
and other benefits earned and accrued up to the date of termination.

 

5.3.         Termination by the Employee for Good
Reason.

 

In the event Employee
Terminates this Agreement for Good Reason, Employee shall be entitled to
severance payments and benefits provided for in Section 6.  The Employee must provide notice of the
existence of the Good Reason condition within a period not to exceed 90 days of
its initial existence.  Upon receiving
such notice, the Company shall have 30 days to remedy the Good Reason
condition.

 

For purpose of this
Agreement, “Good Reason” shall be defined as the occurrence of any of the
following events without the express written consent of Employee:

 

(a)   a
material reduction in Employee’s base salary during the initial term of this
Agreement;

 

(b)   a
change in Employee’s title or position or a material diminution in Employee’s
duties or the assignment of duties on a regular basis which are not customarily
associated with or consistent with the title of Chief Executive Officer; or

 

(c)   a
breach by the Company of any of its material payment obligations to Employee
under this Agreement or any Exhibits to this Agreement.

 

5.4.         Termination upon Employee’s Death.

 

Under circumstances of the
Employee’s death, the Company agrees to make any earned, but unpaid, salary and
bonus payments to the Employee’s designated beneficiaries. Additionally, any
unexercised, vested stock options which were available to the Employee
immediately prior to date of death shall be exercisable by beneficiaries in
accordance with the Company’s stock option plan.

 

5.5.         Termination in the Event of Disability.

 

The Company may terminate
this Agreement, upon 30 days’ notice, if the Employee is not able to perform
the essential functions of Employee’s position(s), with reasonable
accommodation, for a continuous period in excess of ninety (90) days.

 

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5.6.         Termination by the Company for Cause.

 

For purposes of this
Agreement, “Cause” shall be defined as:

 

(a)   Failure
of the Employee to substantially perform any duties reasonably required by the
Company that are consistent with the Employee’s position and failure to cure
the breach within ten (10) days of written notice of the breach by the
Company;

 

(c)   The
commission by the Employee of any criminal act, or act of fraud or dishonesty
by the Employee as determined solely by the Company to be related to or in
connection with his employment by the Company; or,

 

(c)   If the
Employee materially breaches the Employee’s other covenants contained in this
Agreement and fails to cure the breach within ten (10) days of written
notice of the breach by the Company.

 

5.7.                            Termination
Due to Change in Control.

 

(a)   If, during a one (1) year period subsequent to a “Change in
Control” as defined below, the Employee separates from employment with the then
controlling company for one of the following reasons, the then controlling
company agrees to continue Employee’s then current salary for six (6) months
and one (1) additional month for each full year of service with the
Company, with a maximum accumulated severance of twelve (12) months, and
immediately vest all unvested stock options held by Employee:

 

(i)            termination without “cause”;

 

(ii)           unacceptable demotion;

 

(iii)          Employee is asked to assume duties or responsibilities
which are substantially lower in status and unacceptable to the Employee; or

 

(iv)          the Employee is asked to relocate geographically to a
location more than 100 miles away from Employee’s work location prior to the
change of control and is unacceptable to Employee.

 

(b)   For purposes of this Agreement, a “Change in
Control” will be defined as follows:

 

(i)            When any “person” as defined in Section 3(a)(9) of
the Securities Exchange Act as used in Sections 13(d) and 14(d) thereof,
including a “group” as defined in Section 13(d) of the Securities
Exchange Act, but excluding the Company or any subsidiary or parent or any
employee benefit plan sponsored or maintained by the Company or any subsidiary
or parent (including any trustee of such plan acting as trustee), directly or
indirectly, becomes the “beneficial owner” (as defined in Rule 13d-3 under
the Securities Exchange Act, as amend time to time) of securities of the
Company 

 

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representing
greater than fifty (50) percent of the combined voting power of the Company’s
then outstanding securities; or,

 

(ii)           When, subsequent to the effective
date of this Agreement, the individuals who, at the beginning of such period,
constitute the Board of Directors (“Incumbent Directors”) cease for any reason
other than death to constitute at least a majority thereof, provided, however,
that a Director who was not a Director at the beginning of this period will be
deemed to have satisfied the definition of “Incumbent Director” if such
Director was elected by, or with the approval of at least sixty (60) percent of
the Directors who then qualified as Incumbent Directors; or,

 

(iii)          The approval by the shareholders of
any sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all or substantially all of the assets of the Company,
the adoption of any plan or proposal for the liquidation or dissolution of the
Company, or, any consolidation or merger involving the Company whereby the
Company is not the continuing or surviving entity or the Company’s shares are
converted into cash, securities or other property, provided, however, this
provision shall not apply if the shareholders of the Company have the same
proportionate share of the surviving entity after the transaction.

 

6.                                      SEVERANCE
PAYMENTS

 

6.1          Severance Pay

 

In
the event that the Company terminates or decides not to renew this Agreement
without Cause pursuant to Section 5.1 or that Employee terminates this
Agreement with Good Reason pursuant to Section 5.3, Employee shall be
entitled to severance payments and benefits as follows:

 

(a)   If
terminated or not renewed during any term of this Agreement, the Company shall
continue to pay to Employee the equivalent of Employee’s then current salary
for a continuation period of six (6) months plus one (1) month per
year of service up to a maximum of twelve (12) months, such continuation period
to include the 30 day notice provision in Section 5.1.

 

(b)   All
stock options granted but still subject to vesting at the time of termination
shall be immediately vested and shall be exercisable according to the terms of
the Stock Option Agreement.

 

(c)   The
Company shall pay to Employee all bonuses or other benefits earned and accrued
up to the date of termination or expiration upon nonrenewal.

 

(d)   The
Company shall continue to pay its portion of any contribution to Employee’s
health and life insurance premiums for six (6) months (including the 30
day notice provision in Section 5.1).

 

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6.2          Employee Service Date

 

For
purposes of computing years of service pursuant to Section 5.7(a) and
6.1(a), the Employee’s date of hire shall be January 1, 2005.

 

7.                                      RESTRICTIVE
COVENANTS, TRADE SECRETS AND PROPRIETARY RIGHTS.

 

7.1          Definitions.

 

The following phrases, when
used in this Agreement, will have the meanings set forth below:

 

(a)   “Confidential
Information” means materials, records, data and other information that is not
generally known about or that is personal, sensitive or proprietary to the
Company, its shareholders, the Company’s clients, prospective clients and their
dependents, and information that the Company is obligated to treat as
proprietary or confidential. This information includes, without limitation:

 

(i)            trade secret information about the Company and its
products, planned and/or future products;

 

(ii)           “Inventions,” as defined in Section 7.1(b) below;

 

(iii)          information concerning the Company’s business, as the
Company has conducted it, or as it may conduct it in the future;

 

(iv)          information concerning any of the Company’s past, current,
planned or future products, services, costs, prices and other financial
information, including (without limitation) information about the Company’s
research, development, engineering, purchasing, servicing, finances, marketing
or selling;

 

(v)           the identity of the Company’s clients, prospective clients
and their dependents, and their pricing, buying history, tendency, and their
health information;

 

(vi)          information that the Company’s clients, prospective clients
and their dependents consider confidential, whether notified by the client,
prospective client or dependent or not, so long that a prudent person would
consider the information confidential;

 

(vii)         information regarding any patents developed, owned or used
by or licensed to the Company; and,

 

(viii)        the Company’s procedures, manuals,
financial, cost and sales data, business opportunities for new or developing
business, reports, . customer lists and contracts.

 

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(b)   “Inventions”
means any discoveries, modifications, designs, methods, know-how, systems or
improvements (whether or not they are in writing or reduced to practice) or
works of authorship (whether or not they can be patented or copyrighted) that
the Employee makes, authors, or conceives (either alone or with others) and
that:

 

(i)            concern the Company’s current, planned and/or future
products, research, testing or development;

 

(ii)           result from any work the Employee performs for the
Company; and/or

 

(iii)          in which the Company’s equipment, facilities, or trade
secret information were used.

 

“Inventions” does not
include discoveries, modifications, designs or improvements developed: (1) entirely
on the Employee’s own time which do not relate to any of the Company’s
products, including those in development stages, or services that the Company
provides to its clients; (2) in which the Company’s equipment, facilities,
supplies or trade secret information were not used in any way, and; (3) do
not directly relate to the Company’s business or the Company’s actual or
demonstrably anticipated research or development, or does not result from any
work the Employee performed under this Agreement.

 

(c)   “Comparable
Technology” means

 

(i)            any
pressure sensing technology or system that is used to measure the elasticity of
soft tissue in the prostate or related urologic organs (i.e., kidney, ureters
or bladder);

 

(ii)           any
pressure sensing technology or system that is used to create two or three
dimensional images for the purpose of identifying abnormal lesions and for
guiding biopsy in prostate or related urologic organs; and/or

 

(iii)          any
EIT (electrical impedance tomography) technology or system that is used for the
purpose of measuring heat propagation and/or electrical conductivity in the
prostate or related urologic organs.

 

(iv)          any
other applications for which the Company (1) has made a direct investment;
(2) has obtained licensing rights to acquire such technology; and (3) is
actively engaged in research and development (or has been so engaged during the
past twelve (12) months).

 

7.2          Return of Confidential Information.

 

The Employee will not,
during or after the Employee’s relationship with the Company, use any
Confidential Information (except as required by the Employee’s duties 

 

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with
the Company), or communicate, divulge or disclose any Confidential Information
to any person or organization, except as authorized in writing by the Board of
Directors of the Company. Upon termination of the Employee’s relationship with
the Company, Employee agrees to return and/or leave with the Company all
material concerning any Confidential Information in the Employee’s possession
or control, including, but not limited to, any records, manuals, books,
documents, letters, reports, data, and client lists, whether prepared by the
Employee or others, whether originals or copies, whether in -hard copy or
stored on a diskette or hard drive or otherwise, including drawings, blueprints
and other reproductions.

 

7.3          Property Rights.

 

With the exception of work,
tests, research, materials, processes or systems conducted, developed or used by
the Employee that do not directly or indirectly relate to the Company’s
business or the Company’s actual or demonstrably anticipated research and/or
development, the Company will own and have all right and title in all
Inventions, Confidential Information, work, tests, research, materials,
processes or systems conducted, developed or used by the Employee under this
Agreement or during the course of the performance of the Employee’s duties with
the Company prior to the date of this Agreement (collectively, the “Company
Works”).  To the extent that the Employee
retains any rights, title and/or interest, including, without limitation, all
ownership rights, copyright rights, trademark rights, patentable invention
rights, and trade secret rights in any Company Works (collectively, the “IP
Rights”), or acquires any such IP Rights, the Employee hereby forever assigns,
transfers and conveys to the Company all current and future ownership interest
and all current and future rights in, to and arising out of the such IP Rights
and grants to the Company an irrevocable, nonexclusive, worldwide, royalty-free
license to use, execute and copy any Company Works. The assignment, transfer,
grant, conveyance and setting over to the Company as made in the preceding
sentence shall include the assignment of all rights to recover all damages,
attorneys’ fees, and lost profits associated with the loss or infringement of
any of the IP Rights, as well as the right to seek injunctive relief (both
preliminary and permanent) with respect to the foregoing and the right to
receive any and all other remedies available at law or in equity. Employee
agrees not to disclose, use, market or sell, either directly or indirectly, any
Company Works to any person or entity. The Employee shall take reasonable
precautions and measures to protect the Confidential Information, Company Works
and IP Rights related thereto. The rights and obligations under this Section 7.3
are perpetual in nature.

 

7.4          Inventions.

 

(a)   The
Employee agrees that all Inventions that the Employee: (1) makes, develops
or collaborates on during the term of this Agreement; or, (2) made,
developed or collaborated on during the course of his work with the Company
starting in January 2005, before the term of this Agreement, are the sole
and exclusive property of the Company. Upon executing this Agreement, the
Employee. will, with respect to any such Invention:

 

8

 

(i)            provide the Company with current, accurate, and complete
records of any and all Invention(s) which records will belong to the
Company and be kept and stored on the Company’s premises by the Company;

 

(ii)           promptly and fully disclose the existence and describe the
nature of any Invention(s) to the Company in writing (and without
request);

 

(iii),         assign, and the Employee does hereby
assign, to the Company any and all of the Employee’s rights to the
Invention(s), and applications the Employee makes for patents or copyrights in
any country, and any patents or copyrights granted to the Employee in any
country.

 

(iv)          acknowledge and deliver promptly to the Company any written
instruments, and perform any other reasonable acts necessary in the Company’s
opinion and at its expense to preserve property rights in the Invention(s) against
forfeiture, abandonment, or loss and to obtain and maintain letters patent
and/or copyrights on the Invention(s) and to vest the entire right and
title to the Invention(s) in the Company, provided that the Employee makes
no warranty or representation to the Company as to rights against third parties
hereunder.

 

(b)   The
Employee hereby represents and agrees that at the time of entering this
Agreement there are no Inventions which relate to the business of the Company
or to the Company’s research or development that the Employee has an obligation
to assign to anyone except the Company.

 

(c)   The
Employee hereby represents and agrees that at the time of entering this
Agreement there are no Inventions which relate to the business of the Company
or to the Company’s research or development that the Employee made or conceived
prior to the Employee’s employment by the Company,.

 

7.5          Covenants Against Competition and
Solicitation.

 

In view of the unique value
to the Company of the services to be performed by the Employee, in
consideration of the Confidential Information to be obtained by or disclosed to
the Employee, and as a material inducement to the Company to enter into this
Agreement and to pay and provide the Employee the compensation and benefits
provided for herein, the Employee covenants and agrees that, from and after the
date hereof and until one (1) year after the Employee’s employment with
the Company terminates for whatever reason, the Employee will not; directly or
indirectly, anywhere in the world in which the Company is conducting business
during the term of Employee’s employment:

 

(a)   own,
manage, operate or control, prepare or plan to own, manage, operate or control,
or participate in the ownership, management, operation or control of any
business engaged in the research, development, production or marketing of any
Comparable Technology;

 

9

 

(b)   conduct
or assist any person or entity to conduct any business engaged in the research,
development, production or marketing of any Comparable Technology;

 

(c)   seek,
accept or act, either as an employee, shareholder, partner, member, joint
venturer, agent or other equity holder of or consultant or advisor, to business
engaged in the research, development, production or marketing of any Comparable
Technology;

 

(d)   solicit
or divert, attempt to solicit or divert, or otherwise interfere in any fashion
with, any former or existing customer, client, account, partner or other
business source, or business prospect for the purpose of selling to such person
any product or service of any Comparable Technology; or,

 

(e)   induce,
influence, solicit, hire, or engage or attempt to induce, influence, solicit,
hire or engage any employee of, or consultant to, the Company to do any of the
foregoing or to discontinue such person’s association with the Company or
obtain such person as an employee, consultant or in a similar capacity for any
other business.

 

Employee acknowledges that
the covenants in this Section 7.5 are fair, necessary, and
reasonable, in both scope and duration, for the consideration provided for in
this Agreement.

 

7.6          Blue Pencil Doctrine.

 

If the duration or geographical extent of, or business activities
covered by Section 7.5 are in excess of what is valid and enforceable
under applicable law, then such provision shall be construed to cover only that
duration, geographical extent or activities that are valid and enforceable.
Employee acknowledges the uncertainty of the law in this respect and expressly
stipulates that this Agreement be given the construction which renders its
provisions valid and enforceable to the maximum extent (not exceeding its
express terms) possible under applicable law.

 

7.7          Breach.

 

The Employee acknowledges
that any breach, violation or evasion by the Employee of the terms of Section 7
may result in an immediate and irreparable injury and harm to the Company, and
will cause the Company to suffer damages in amounts difficult to ascertain.
Accordingly, the Company shall be entitled to the remedies of injunction and
specific performance, or either of such remedies, as well as other legal or
equitable remedies and damages to which the Company may be entitled. The
Company shall also be entitled to its costs and attorneys’ fees for any breach
of Section 7 by the Employee.

 

8.                                      OTHER BUSINESS ACTIVITIES.

 

The Employee may not serve as an officer or director
of any other organization without express prior written approval by the Company’s
Board of Directors.

 

10

 

9.                                      AGREEMENT AND ACKNOWLEDGEMENT.

 

The Employee represents that the Employee is free to
enter into this Agreement and the acceptance of the relationship with the
Company does not violate any agreement between the Employee and any third
party.

 

10.                               COOPERATION IN CLAIMS.

 

Both during Employee’s employment and thereafter, the
Employee agrees that in the event of a legal action against the Company, or
legal action initiated by the Company against another party, in which the
Employee is deemed by the Company to be a material witness or affiant, the
Employee agrees to make reasonable and best efforts to cooperate with the
Company in such matters. If the Employee is no longer employed, Company will
reimburse the Employee for time and expenses incurred as a result of
cooperation for this purpose.

 

11.                               INDEMNIFICATION.

 

The Company agrees to make its best efforts to
indemnify and hold harmless the Employee from liability incurred as a result of
performance of duties as an officer and member of the Board of Directors. This
includes but is not limited to applicable statute, as well as efforts to secure
coverage under pertinent insurance policies.

 

12.                               NOTICES.

 

All notices, requests, demands and other
communications provided for by this Agreement shall be in writing and shall be
deemed to have been given when mailed at any general or branch United States
Post Office enclosed in a certified postpaid envelope, return receipt
requested, and addressed to the address of the respective.

 

If to the Employee:

 

Richard C. Carlson

810 Lake Susan Hills Drive

Chanhassen, MN 55317

 

If to the Company:

 

Chairman of the Compensation Committee

ProUroCare Medical Inc.

5500 Wayzata Blvd., Suite 310

Golden Valley, MN 55416

 

Any notices of change of address shall only be
effective, however, when received.

 

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13.                               SUCCESSORS AND ASSIGNS.

 

This Agreement
shall inure to the benefit of, and be binding upon, the Company, its successors
and assigns, including, without limitation, any corporation which may acquire
all or substantially all of the Company’s assets and business or into which the
Company may be consolidated or merged, and the Employee, his heirs, executors,
administrators and legal representatives. The Employee may assign his right to payment,
and his obligations, under this Agreement.

 

14.                               APPLICABLE LAW.

 

This Agreement shall be governed by the laws of the
State of Minnesota without regard to any conflict of law analysis. The Parties
agree that any dispute arising out or related to this Agreement shall be venued
in the State of Minnesota and the Parties consent to the exclusive jurisdiction
of the Minnesota state or federal courts for such disputes.

 

15.                               OTHER AGREEMENTS.

 

This Agreement supersedes all prior understandings and
agreements between the parties. It may be amended only by a writing signed by
the parties hereto.

 

16.                               NON-WAIVER.

 

No delay or failure by either party in exercising any
right under this Agreement, and no partial or single exercise of that right,
shall constitute a waiver of that or any other right.

 

17.                               HEADINGS.

 

Headings in this Agreement are for convenience only
and shall not be used to interpret or construe its provision.

 

18.                               COUNTERPARTS.

 

This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

 

19.                               SURVIVORSHIP.

 

The Parties’ obligations and rights set forth in
Sections 7, 10, 11 12, 13, 14, 15, and 16 shall survive the termination of this
Agreement.

 

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  PROUROCARE INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/David F. Koenig

  
	
   

  	
   

  	
   David F. Koenig

  
	
   

  	
   

  	
   Its:  Chairman,
  Compensation Committee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMPLOYEE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Richard C. Carlson

  
	
   

  	
  Richard C. Carlson

  

 

13Exhibit
10.2

 

LICENSE AGREEMENT

 

THIS LICENSE AGREEMENT (the “Agreement”) is made and entered into the
25th day of July, 2008 to be effective as of the effective date (the “Effective
Date”), between Artann Laboratories, Inc., (“Artann”) a Delaware corporation,
and ProUroCare Medical Inc., (“ProUroCare”) a Nevada corporation.

 

WITNESSETH:

 

WHEREAS, ProUroCare has expertise and intellectual property in the
field of urologic products and applications; and

 

WHEREAS, Artann has developed expertise and intellectual property in
the area of a prostate mechanical imaging system; and

 

WHEREAS,  ProUroCare and Artann
desire to enter into (i) this Agreement and (ii) a Development and
Commercialization Agreement of even date herewith (the “Development and
Commercialization Agreement”) whereby ProUroCare and Artann will develop and
commercialize various prostate mechanical imaging systems (the “PMI Systems”);
and

 

WHEREAS, Artann desires to grant to ProUroCare certain patent and
technology license rights with respect to the PMI System.

 

AGREEMENTS:

 

NOW THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained herein, and for other valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties mutually agree as follows:

 

ARTICLE 1

DEFINITIONS

 

1.1           Specific
Definitions.  As used in this
Agreement, the following terms shall have the meanings set forth or as
referenced below:

 

“2008
ProUroCare Offering” means one or more public or private equity offerings that
raises at least Four Million Dollars ($4,000,000.00) by ProUroCare after the
date of signing of this Agreement.

 

“2008 Offering
Price” means the weighted average price that ProUroCare shares have traded
over the forty five (45) day period prior to the date of the closing of the
2008 ProUroCare Offering.

 

“510K” means an application filed with FDA pursuant to § 510(k) of
the Medical Device Amendments of 1976 to the Federal Food, Drug and Cosmetic
Act to initiate marketing and sales in the U.S.

 

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“Agreement” means this Agreement and all Exhibits hereto.

 

“Artann” means Artann Laboratories, Inc.

 

“Artann Patents”  means patents listed on Exhibit A
attached hereto (including all additions, divisions, continuations,
continuations-in-part, substitutions, extensions, patent form extensions,
reissues and renewals thereof) that are owned by Artann or under which Artann
has rights and patent applications listed on Exhibit A attached hereto
(including patents issued thereon) that are owned by Artann or under which
Artann has rights.

 

“Artann Technology” means all expertise, inventions, concepts,
processes, procedures, data, materials, know-how and information (other than
the Artann Patents and Artann Trade Secrets) which are used or useful in the
use, manufacture or sale of a PMI System and to which Artann has rights.

 

“Artann Trade Secrets” means the Confidential Information of
Artann (e.g., software source code) that are used or useful in the use,
manufacture or sale of a PMI System and which provide a sustainable competitive
technology and which qualify fully as trade secret information within the
normal and common meaning of that term under the laws of the State of New
Jersey.

 

“CE Mark Approval” means approval of the right to affix the CE
Mark on Products for their exploitation in the European Economic Area by
performing all necessary tasks under the then-current Medical Device Directive,
as promulgated by the European Union.

 

“Confidential Information” means know-how, trade secrets, and
unpublished information disclosed (whether before or during the term of this
Agreement) by one of the parties (the “disclosing party”) to the other party
(the “receiving party”) or generated under this Agreement, excluding
information which:

 

(a)           was already in the
possession of receiving party prior to its receipt from the disclosing party
(provided that the receiving party is able to provide the disclosing party with
reasonable documentary proof thereof);

 

(b)           is or becomes part
of the public domain by reason of acts not attributable to the receiving party;

 

(c)           is or becomes
available to receiving party from a source other than the disclosing party
which source, to the best of receiving party’s knowledge, has rightfully
obtained such information and has no obligation of non-disclosure or
confidentiality to the disclosing party with respect thereto;

 

(d)           is made available by
the disclosing party to a third party unaffiliated with the disclosing party on
an unrestricted basis;

 

(e)           has been
independently developed by the receiving party without breach of this Agreement
or use of any Confidential Information of the other party; or

 

2

 

(f)            has been or must be
publicly disclosed by reason of legal, accounting or regulatory requirements
beyond the reasonable control, and despite the reasonable efforts of the
receiving party.

 

All Confidential Information disclosed by one party to the other under
this Agreement with the exception of PMI Documentation and Artann Trade Secrets
shall be in writing and bear a legend “Company Confidential” or words of
similar import or, if disclosed in any manner other than writing, shall be
preceded or followed by an oral statement indicating that the information is Company
proprietary or confidential, with an identification of the particular
information that is Company proprietary or confidential.  PMI Documentation and Artann Trade Secrets
will be considered Confidential Information by default.

 

“Effective Date” means ten (10) days after close of the
2008 ProUroCare Offering or November 30, 2008, whichever is first to
occur.

 

“Expired” means, with respect to a particular patent, the patent’s
expiration, abandonment, cancellation, disclaimer, lapse due to the failure to
pay maintenance fees or annuities, award to another party other than Artann in
an interference proceeding, or declaration of invalidity or unenforceability by
a court or other authority of competent jurisdiction (including final rejection
in a re-examination or re-issue proceeding) in an unappealed or unappealable
decision.  “Unexpired” means a
patent that has not Expired.

 

“FDA” means the United States Food and Drug Administration or
any successor entity thereto.

 

“FDA Approval” means approval by the FDA of a 510K or PMA to
commercially sell a Product.

 

“Field of Use” means diagnosis or treatment of urologic
disorders of the prostate, kidney or liver.

 

“Generation V PMI System” means the most current PMI System
existing as of the Effective Date of the Agreement.

 

“Invention” means any invention, discovery, know-how, trade
secret, data, information, technology, process or concept, whether or not
patented or patentable, and whether or not memorialized in writing.

 

“Licensed Product” means the Product which:

 

i)              but for the license granted herein, the manufacture,
use or sale would infringe any Valid Claim of an Artann Patent, or

 

ii)             is produced through the use of an Artann Trade Secret.

 

“Licensed Product Royalty” means the royalty payable under Section 3.2
for the license set forth in Section 2.1(a) to Artann Patents and
Artann Trade Secrets.

 

3

 

“Licensed Technology Royalty” means the royalty payable under Section 3.2
for the license set forth in Section 2.1(b) to Artann Technology.

 

“Liens” means liens, mortgages, charges, security interests,
claims, voting trusts, pledges, encumbrances, assessments, restrictions or
spousal interests of any nature.

 

“Net Sales” with
respect to a particular period means the amounts that ProUroCare, or its
sublicensees invoice third parties for sales, lease or use (excluding use in
clinical trials or prior to the time of FDA approval of the Product) of Product
during such period, less:  (a) any
refunds, credits and any customer allowances actually granted to the customer; (b) discounts
and rebates actually taken; (c) commissions actually paid to third party
sales agents or representatives; (d) any sales, use, occupation or excise
taxes, duties or other governmental charges imposed on the sale of Products, to
the extent included in the invoice price and not reimbursed by a third party;
and (e) any freight, postage or insurance included therein, in each case
as determined from the books and records of ProUroCare and sublicensees.

 

“PMA” means a pre-market approval application filed with the FDA
as more fully defined under 21 U.S.C. Section 360(e), to obtain permission
to initiate marketing and sales in the U.S.

 

“PMI Documentation” means software and software source code (if,
and to the extent such code is not maintained as an Artann Trade Secret); any
and all drawings, schematics, assembly information, methods, specifications,
know how, procedures, processes, designs, technical data and engineering
reports necessary and/or useful in the development, use and manufacture of a
PMI System.

 

“PMI System” means the Artann’s prostate mechanical imaging
system consisting of a 1) transrectal probe with pressure sensor arrays, 2)
positioning system, 3) data processing unit, 4) real time imaging display, and
5) operating system, as generally outlined in the journal article entitled “Prostate
Mechanical Imaging:  A New Method for
Quantitative Prostate Assessment” by Weiss, et al.

 

“Product” means a PMI System including all improvements and
modifications applicable thereto, except for improvements and modifications
that are developed for a different medical device which have only tangential
application to a PMI System and which were developed independently of any
activities conducted under this Agreement and/or the Development and
Commercialization Agreement.

 

“ProUroCare” means ProUroCare Medical, Inc.

 

“Territory” means anywhere and everywhere in the world.

 

“Valid Claim” means any claim in an issued, unexpired patent
which has not been held unenforceable or invalid by a court of competent
jurisdiction or an administrative agency having authority over patents, in a
final judgment that is unappealable or unappealed within the time allowed for
approval.

 

4

 

1.2           Definitional Provisions.

 

(a)           The words “hereof,” “herein,”
and “hereunder” and words of similar import, when used in this Agreement, shall
refer to this Agreement as a whole and not to any particular provisions of this
Agreement.

 

(b)           Terms defined in the
singular shall have a comparable meaning when used in the plural, and
vice-versa.

 

(c)           References to an “Exhibit”
or to a “Schedule” are, unless otherwise specified, to one of the Exhibits or
Schedules attached to or referenced in this Agreement, and references to an “Article”
or a “Section” are, unless otherwise specified, to one of the Articles or
Sections of this Agreement.

 

(d)           The term “person”
includes any individual, partnership, joint venture, corporation, trust,
unincorporated organization or government or any department or agency thereof.

 

ARTICLE 2

LICENSE

 

2.1           Grant of License.

 

(a)           Subject to the terms
and conditions of this Agreement, including but not limited to Sections 3.1 –
3.10, 4.1(b) and 4.2(b), 6.1 – 6.3, Artann hereby grants to ProUroCare an
exclusive, worldwide, sublicensable license to Artann Patents and Artann Trade
Secrets to (i) make, have made, use, market, offer for sale, sell, have
sold, distribute, have distributed, import, have imported and otherwise exploit
Products in the Field of Use, and (ii) practice methods covered by the
Artann Patents and Artann Trade Secrets to make, have made, use, market, offer
for sale, sell, have sold, distribute, have distributed, import, have imported
and otherwise exploit Products in the Field of Use.

 

(b)           Subject to the terms
and conditions of this Agreement, including but not limited to Sections 3.1 –
3.10, 4.1(b) and 4.2(b), 6.1 – 6.3, Artann hereby grants to ProUroCare a
non-exclusive, worldwide, sublicensable license to the Artann Technology to (i) make,
have made, use, market, offer for sale, sell, have sold, distribute, have
distributed, import, have imported and otherwise exploit Products in the Field
of Use, and (ii) practice methods covered by the Artann Technology to
make, have made, use, market, offer for sale, sell, have sold, distribute, have
distributed, import, have imported and otherwise exploit Products in the Field
of Use.

 

2.2           Sublicenses.  The license under Section 2.1 includes
the right to sublicense within the scope thereof, subject to the right of
Artann to approve each such sublicense which right shall not be withheld except
for good and justifiable cause. 
ProUroCare shall promptly notify Artann of the grant of each sublicense
and provide Artann with a copy of the final executed sublicense agreement.  During the Term of this Agreement, ProUroCare
shall be responsible for the failure by its sublicensees to comply with, and
during the Term of this Agreement ProUroCare shall have the obligation to
guarantee the compliance by each of its sublicensees with all relevant
restrictions, limitations and obligations in this Agreement.  Any sublicense granted by 

 

5

 

ProUroCare
shall survive any expiration or termination of this Agreement and be
automatically assigned to Artann, including the right of Artann to receive
directly from the sublicensee(s), all compensation due under these respective
sublicenses.

 

2.3           Patent
Applications.  Unless otherwise
specified, Artann shall have the right to apply for, prosecute, or cause the
issuance, amendment, abandonment, maintenance, re-examination or reissue of any
patents on or relating to Products and shall bear the expense related
thereto.  In the event that Artann
declines to apply for a patent upon an invention made by Artann, its employees,
agents and/or representatives on or relating to Products that ProUroCare
believes is patentable and should be patented, ProUroCare, upon provided 30
days written notice, shall have the option of proceeding to obtain patent(s),
upon such invention as its sole cost and expense.  Artann shall cooperate with ProUroCare and
provide such documentation and assistance and shall execute any documents as
may be reasonably necessary to facilitate obtaining such patent(s).  Any and all such patents whether obtained by
Artann or ProUroCare shall be owned by Artann but shall be encompassed within
the license grant of Section 2.1(a).

 

2.4           Access
to PMI Documentation.  ProUroCare
shall have full access and the right to use all PMI Documentation and shall
treat all such PMI Documentation as Confidential Information, whether or not
marked as Artann Property, Artann Confidential or words of similar import and
shall not disclose such PMI Documentation to any third parties except as may be
needed or useful to Artann employees and agents and facilitate the development,
refinement, use, manufacture or marketing and sale of Product and except under
conditions under which these employees, agents or third parties are bound in
writing to maintain the confidentiality of such PMI Documentation or as
required by law or FDA.

 

2.5           Generation V PMI Systems.  Artann shall transfer possession of the five (5) fully
functional Generation V PMI Systems existing as of the Effective Date of the Agreement
for use in 1) the conduct of FDA approved clinical trials, 2) for inventor
presentations, and 3) contract manufacturer assessment.  The use of each of the five (5) Generation
V PMI Systems shall be mutually acceptable to Artann and ProUroCare and shall
be in accord with any NIH grant requirements applicable to the development of
the Product.  Artann shall use best
efforts to effect the transfer of each of these five (5) Generation V PMI
Systems for the user specified above as quickly after the effective date of the
Agreement as reasonably possible. 
Ownership to these five (5) Generation V PMI Systems shall transfer
from Artann to ProUroCare upon the date of first commercial sale of the
Generation V PMI System, subject to the inventory and accountability
requirements as specified by the Department of Health and Human Services.  It is understood that all chosen
investigational sites shall be acceptable to Artann, shall not conflict with
the NIH grant objectives.

 

ARTICLE 3

LICENSE FEE, ROYALTIES AND OTHER CONSIDERATION

 

3.1           Up
Front License Fee.  At the Effective Date,
ProUroCare shall pay to Artann an “Up Front License Fee” of Six Hundred
Thousand Dollars ($600,000.00) and equity (i.e., shares of stock) in ProUroCare
having a value of approximately Five Hundred Thousand Dollars ($500,000.00) as
of the date such equity is provided to Artann. 
The exact number of shares of 

 

6

 

stock in ProUroCare provided to Artann hereby
shall equal 500,000 divided by the 2008 Offering Price per share of ProUroCare
stock in a 2008 ProUrocare Offering.  The
PMI Documentation possessed by Artann on the Generation V PMI System is
provided to ProUroCare upon confirmed receipt of the Up Front License Fee.

 

3.2           License
Royalty.  ProUroCare shall pay Artann a
royalty equal to the Licensed Product Royalty plus the Licensed Technology
Royalty.  Such royalty payments are to be
made within thirty (30) days following each calendar quarter end.

 

(a)           The Licensed Product
Royalty shall apply to Licensed Product and shall equal four percent (4%) on
the first Thirty Million Dollars ($30,000,000.00) of Net Sales, three percent
(3%) on the next Seventy Million Dollars ($70,000,000.00) of Net Sales and two
percent (2%) on Net Sales over One Hundred Million Dollars ($100,000,000.00) of
Licensed Product.

 

(b)           The Licensed
Technology Royalty shall apply from the date of first commercial sale of
Product until the earlier of December 31, 2016 or the date of last
commercial sale of Product and shall equal one percent (1%) of such Net Sales.

 

3.3           Minimum
Royalties.  ProUroCare agrees that the
minimum annual royalty payable under Section 3.2 shall be equal to Fifty
Thousand Dollars ($50,000.00) per year for each of the first two (2) years
after FDA approval for commercial sale and One Hundred Thousand Dollars
($100,000.00) per year for each year thereafter until termination or expiration
of this Agreement.  Each such minimum
royalty payment shall be made within thirty (30) days following the period for
which such annual royalty payment is due. 
These minimum annual royalty payments are nonrefundable but fully
creditable against any royalty due and payable for that year pursuant to Section 3.2.

 

3.4           Records
and Accounting.  ProUroCare shall keep complete
and accurate records of the latest three (3) years that this Agreement is
in effect.  Artann shall have the right
annually at its own expense to have an independent, certified public
accountant, review such records upon reasonable notice and during reasonable
business hours for the purposes of verifying the royalties payable to Artann
under Section 3.2.  Results of such
review shall be made available to both parties. 
If the review reflects an underpayment of royalties to Artann, such
underpayment shall be promptly remitted to Artann with interest at one and
one-half percent (1.5%) per month.  If
the underpayment is equal to or greater than five percent (5%) of the royalty
amount that was otherwise due, ProUroCare shall pay all of the costs of such
review.

 

3.5           Currency of Payments.  All royalty payments under this Agreement
shall be made in U.S. dollars by wire transfer to such bank account or bank
accounts as Artann shall designate from time to time.  Any payments due hereunder on sales outside
of the United States shall be payable in U.S. dollars at the rate of exchange
of the currency of the country in which the sales are made as reported in the
New York edition of The Wall Street Journal for the last business day of
the quarter for which the royalties are payable.

 

3.6           No
Patent challenge.  ProUroCare agrees not to
challenge the validity of any Patent on Exhibit A in any court or
administrative proceeding before the Patent and Trademark Office.

 

7

 

3.7           Grant
Back.  Subject to the terms and
provisions hereof, ProUroCare hereby grants to Artann a royalty-free
nonexclusive, worldwide patent license to make, use, sell, import, have
imported and otherwise exploit devices outside the Field of Use on inventions
made and patented by ProUroCare on the Product.

 

3.8           Sublicense
Income.  ProUroCare agrees to pay
Artann twenty-five percent (25%) of the net proceeds of any compensation it
receives from any sublicense granted under this Agreement.

 

3.9           Observation Rights.  Noune or Armen Sarvazyan shall be granted the
right to observe meetings of ProUroCare’s Board of Directors in person or via
telephone conference through calendar year 2011 and thereafter as mutually
agreed by the parties.  It shall be
Artann’s option as to which individual sits in on any Board meeting.  Notice of upcoming Board meetings shall be
provided to Artann at the same time that notice is given to members of
ProUroCare’s Board of Directors.

 

3.10         Future Patent Licenses.  ProUroCare shall have a “right of first
negotiation” with Artann regarding the grant of any patent or trade secret
license on the Product in the Field of Use that is not encompassed within the
license set forth in Section 2.1(a). 
The “right of first negotiation” means the right of ProUroCare to
negotiate exclusively with Artann for a period of ninety (90) days (the “period
of exclusivity”) from the date of first notice to ProUroCare by Artann.  If an agreement is not reached during this “period
of exclusivity”, Artann may provide a license to a third party, but only upon
terms which are better than those offered by ProUroCare during the “period of
exclusivity”.

 

ARTICLE 4

CERTAIN REPRESENTATIONS, WARRANTIES AND INDEMNITIES

 

4.1           Representations
and Warranties.

 

(a)           Artann represents
and warrants to ProUroCare that the execution and delivery by Artann of this
Agreement and the performance by Artann of its obligations hereunder have been
duly authorized by all requisite corporate action and will not violate any
provision of law, any order of any court or other agency of government, the
Articles of Incorporation or Bylaws of Artann, as amended, or any provision of
any indenture, agreement or other instrument to which Artann or any of its
properties or assets is bound, or conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument, or result in the creation or
imposition of any lien, charge, restriction, claim or encumbrance of any nature
whatsoever upon any of the properties or assets of Artann.  This Agreement has been duly executed and
delivered by Artann and constitutes the legal, valid and binding obligation of
Artann, enforceable in accordance with its terms, subject, as to the
enforcement of remedies, to the discretion of the courts in awarding equitable
relief and to applicable bankruptcy, reorganization, insolvency, moratorium and
similar laws affecting the rights of creditors generally.

 

(b)           ProUroCare
represents and warrants to Artann that the execution and delivery by ProUroCare
of this Agreement and the performance by ProUroCare of its obligations
hereunder 

 

8

 

have been duly
authorized by all requisite corporate action and will not violate any provision
of law, any order of any court or other agency of government, the Articles of
Incorporation or Bylaws of ProUroCare, as amended, or any provision of any
indenture, agreement or other instrument to which ProUroCare or any of its
properties or assets is bound, or conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument, or result in the creation or
imposition of any lien, charge, restriction, claim or encumbrance of any nature
whatsoever upon any of the properties or assets of ProUroCare.  This Agreement has been duly executed and
delivered by ProUroCare and constitutes the legal, valid and binding obligation
of ProUroCare, enforceable in accordance with its terms, subject, as to the
enforcement of remedies, to the discretion of the courts in awarding equitable
relief and to applicable bankruptcy, reorganization, insolvency, moratorium and
similar laws affecting the rights of creditors generally.

 

(c) Artann represents and warrants to ProUroCare that Artann is
the owner, or exclusive licensee with the right to sublicense, of all right,
title and interest in and to the Artann Patents, Artann Trade Secrets and
Artann Technology free and clear of any liens, charges, security interests,
mortgages, or adverse claims.  Artann
represents and warrants that it shall not grant any further licenses to
Licensed Product in the Field of Use and will not itself practice under the
Artann Patents in the Field of Use; Artann is not aware of any written third
party claims asserted against it alleging that the Licensed Product infringes
the intellectual property rights of any third party or that the Artann Patents
are invalid or unenforceable.  Artann has
no reasonable basis for believing that the Artann Patents, Artann Trade Secrets
or Artann Technology are invalid or unenforceable.  Artann represents and warrants that the
patents and patent applications on Exhibit A include all the patents and
patent applications on or for the Generation V PMI System owned by Artann or
under which Artann has rights and the PMI Documentation to which ProUroCare is
granted the right to use for the Generation V PMI System.

 

4.2           Warranty Disclaimers and
Limitation of Liability.  EXCEPT AS EXPRESSLY
PROVIDED FOR HEREIN, ARTANN MAKES NO WARRANTY OF ANY KIND, WHETHER EXPRESS,
IMPLIED, STATUTORY OR OTHERWISE, INCLUDING WITHOUT LIMITATION ANY WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT, VALIDITY,
ENFORCEABILITY OR SCOPE OF THE ARTANN PATENTS OR THAT ARTANN HAS PROVIDED TO
PROUROCARE ALL ARTANN TRADE SECRETS AND/OR ARTANN TECHNOLOGY AND ANY WARRANTIES
THAT MAY ARISE DUE TO COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF
TRADE.

 

                ARTANN WILL NOT BE LIABLE FOR
ANY INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE
DAMAGES, INCLUDING BUT NOT LIMITED TO LOST PROFITS, BUSINESS INTERRUPTION, LOSS
OF GOODWILL, OR COSTS OF PROCUREMENT OF SUBSTITUTE PRODUCT OR SERVICES, OR
OTHERWISE, HOWEVER CAUSED AND UNDER ANY THEORY OF LIABILITY AND WHETHER OR NOT
A PARTY WAS ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

 

9

 

4.3           Indemnity.

 

(a)           Purposely left
blank.

 

(b)           Subject to the terms
and conditions of this Agreement, ProUroCare shall indemnify and hold Artann,
and each of its officers, directors, employees, agents or consultants harmless
from and against any third-party liability, losses, damages, claims, costs and
expenses (including reasonable fees of attorneys and other professionals and
court costs) (collectively “Liabilities”) arising out of or connected with (a) any
breach of this Agreement by ProUroCare or (b) the use by or administration
of the ProUroCare Product to any person that arises out of the use, manufacture,
sale, import or other exploitation of a ProUroCare Product by ProUroCare or a
ProUroCare sublicensee (except to the extent such liability resulted from any
gross negligence or willful misconduct of Artann in the design, specification
or manufacture of the Product). 
Additionally, ProUroCare shall obtain, maintain and provide Artann with
a copy of  commercially reasonable
product liability insurance, with such insurance being effective as of a date
no later than the date of first clinical use independently directed by
ProUroCare or commercial sale of Product, and shall have Artann listed as an
additional insured party on such policy.

 

(c)           Purposely left
blank.

 

(d)           As a condition to
ProUroCare’s obligation to indemnify, defend and hold harmless hereunder
against a claim arising out of a third party claim, Artann will (i) provide
prompt written notice of any claim giving rise to any Liability and (ii) tender
control of the defense and settlement of any such claim to ProUroCare.

 

ARTICLE 5

INFRINGEMENT AND INVENTIONS

 

5.1           Prosecution
of Infringement of Artann Patents, Artann Trade Secrets and Artann Technology
by Third Party.

 

(a)           Each of ProUroCare
and Artann shall promptly notify the other if it knows or has reason to believe
that rights to the Artann Patents, Artann Trade Secrets or Artann Technology
are being infringed or misappropriated by a third party or that such
infringement or misappropriation is threatened.

 

(b)           Prior to and
subsequent to the expiration of one hundred twenty (120) days from the date of
such notice, the obligation of ProUroCare to pay royalties or other fees, if
any, under this Agreement, shall continue unabated.  If Artann bring suit against a third party
infringer, Artann shall bear all the expenses of any suit brought by Artann and
shall retain all damages or other monies awarded or received in settlement of
such suit.  ProUroCare will cooperate
with Artann in any such suit as reasonably requested by Artann and shall have
the right to consult with Artann and be represented by its own counsel at its
own expense.

 

If after the expiration of said one hundred twenty days (120) days from
the date of such notice, Artann has not overcome the prima facie case of
infringement, obtained a discontinuance of such infringement, or brought suit
against the third party infringer, then ProUroCare shall have the right after
such one hundred twenty (120) day notice period, but not the obligation, to 

 

10

 

bring suit against such infringer and join
Artann as a party plaintiff, provided that ProUroCare shall bear all expenses
of such suit.  Artann will cooperate with
ProUroCare in any suit as reasonably requested by ProUroCare for infringement
of the Artann Patents, Artann Trade Secrets and Artann Technology brought by
ProUroCare against the third party, and shall have the right to consult with
ProUroCare and to participate in and be represented by independent counsel in
such litigation at its own expense.  ProUroCare
shall have the right to retain any damages or other monies awarded or received
in settlement of such suit provided, however, that ProUroCare shall have no
right to settle such suit without the written consent of Artann.

 

5.2           Protection
of Intellectual Property and Improvements. During the term of this
Agreement, Artann shall promptly inform ProUroCare of any Invention,
improvement, upgrading or modification relating to the Product in the Field of
Use.  If Artann obtains patents on any
such Inventions, it may, in its discretion, add them to Exhibit A and have
them included as Artann Patents for license and royalty purposes.

 

5.3           Mechanical Imaging of the Breast.  ProUroCare grants Artann a non-exclusive
fully paid up, sub-licensable, royalty free and worldwide license to the
patents owned by ProUroCare or under which ProUroCare has rights and that are
listed on Exhibit B attached hereto to make, use or sell any mechanical
imaging system for the diagnosis or treatment of disorders of the breast.

 

ARTICLE 6

TERM AND TERMINATION

 

6.1           Term.  Subject to earlier termination as provided in
Section 6.2 of this Agreement, this Agreement shall commence upon the
Effective Date and shall terminate upon the expiration of all royalty
obligations under Section 3.2.

 

6.2           Termination.  Notwithstanding the provisions of Section 6.1
above, this Agreement may be terminated in accordance with the following
provisions:

 

(a)           A party may
terminate this Agreement by giving notice in writing to the other party if the
other party is in breach of any material representation, warranty or covenant
of this Agreement and shall have failed to cure such breach within sixty (60)
days of receipt of written notice thereof from the first party;

 

(b)           In addition to the
right to terminate the Agreement pursuant to Section 6(a), if ProUroCare
fails to make a payment to Artann as specified in Sections 3.1 or 3.3 hereof
and Sections 3.1, 3.2 and 3.3 of the Development Agreement and such failure is
not cured within thirty (30) days of receipt of written notice thereof from
Artann, all licenses granted to ProUroCare shall automatically terminate and
ProUroCare shall immediately return all Artann Trade Secrets, Artann
Technology, and PMI Documentation to Artann. 
Additionally, if ProUroCare fails to make a payment to Artann as
specified in Sections 3.1 or 3.3 hereof and Sections 3.1, 3.2 and 3.3 of the
Development Agreement and such failure is not cured within five (5) days
of receipt of written notice thereof from Artann, the exclusive licenses
granted to ProUroCare shall immediately and automatically convert to
non-exclusive licenses.  If ProUroCare
pays the deficient funds to Artann within a sixty (60) day cure period, the
non-

 

11

 

exclusive
licenses shall convert back to exclusive licenses.  Neither party, Artann or ProUroCare, can
grant a license or sublicense to a third party during the sixty (60) day cure
period.

 

(c)           A party may
terminate this Agreement at any time by giving notice in writing to the other
party, which notice shall be effective upon dispatch, should the other party
become insolvent, make an assignment for the benefit of creditors, go into
liquidation or receivership or otherwise lose legal control of its business.

 

6.3           Effect of
Termination

 

(a)           Upon termination of
this Agreement for any reason, nothing herein shall be construed to release
either party from any obligation that matured prior to the effective date of
such termination.

 

(b)           The provisions of Section 3.4
(Records and Accounting); Article 4 (Certain Representations, Warranties,
and Indemnities); Section 5.3 (Mechanical Imaging of the Breast); Section 6.2(b) (Return
of PMI Documentation) and Section 7.1 (Non-Disclosure) shall survive a
termination under Section 6.2.

 

ARTICLE 7

MISCELLANEOUS

 

7.1           Non-Disclosure.  Each party agrees not to disclose or use
(except as permitted or required for performance by the party receiving such
Confidential Information of its rights or duties hereunder or under the
Development Agreement or Supply Agreement) any Confidential Information of the
other party obtained during the term of this Agreement until (i) the end
of 2015; or (ii) the expiration of four (4) years after the
termination or expiration of this Agreement, whichever is last to occur.  Each party further agrees to take appropriate
measures to prevent any such prohibited disclosure by its present and future
employees, officers, agents, subsidiaries, or consultants during the term of
this Agreement and for a period of four (4) years thereafter or the end of
2015, whichever is last to occur.  Artann
Trade Secrets shall be kept confidential perpetually.

 

7.2           Assignment.  This Agreement shall be binding upon and
inure to the benefit of the parties hereto and the successors or assigns of the
parties hereto; provided, that (i) the rights and obligations of Artann
herein may not be assigned except in the case of a merger or sale of
substantially all of Artann’s assets or to any person who succeeds to
substantially all of Artann’s business, and (ii) the rights and
obligations of ProUroCare herein may not be assigned except in the case of a
merger or sale of substantially all of ProUroCare’s assets or to any person who
succeeds to all or a substantial portion of ProUroCare’s business to which this
Agreement relates.  Any attempted assignment
of this Agreement in violation of this Section 7.2 shall be null and void.

 

7.3           Entire
Agreement.  This Agreement and the
Development and Commercialization Agreement, and the agreements contemplated
herein and therein constitute the entire agreements of the parties with respect
to the subject matter of such agreements and supersede all previous 

 

12

 

proposals
or agreements, oral or written, and all negotiations, conversations or
discussions heretofore had between the parties related to the subject matter of
such agreements.

 

7.4           Governing
Law.  This Agreement shall be
governed by, and interpreted and construed in accordance with, the laws of the
State of New Jersey, without giving effect to principles of conflicts of
laws.  The parties hereby agree to submit
all disputes arising hereunder to the Federal District Court for New Jersey
where Artann is a resident.

 

7.5           Amendment,
Waiver, Discharge, etc.  This
Agreement may not be amended, released, discharged, abandoned, changed or
modified in any manner, except by an instrument in writing signed on behalf of
each of the parties to this Agreement by their duly authorized
representatives.  The failure of either
party to enforce at any time any of the provisions of this Agreement shall in
no way be construed to be a waiver of any such provision, nor in any way to
affect the validity of this Agreement or any part of it or the right of either
party after any such failure to enforce each and every such provision.  No waiver of any breach of this Agreement
shall be held to be a waiver of any other or subsequent breach.

 

7.6           Execution
in Counterparts.  This Agreement may
be executed in one or more counterparts, all of which shall be considered one
and the same agreement, and shall become a binding agreement when one or more
counterparts have been signed by each party and delivered to the other party.

 

7.7           Titles
and headings; Construction.  The
titles and headings to Sections herein are inserted for the convenience of reference
only and are not intended to be a part of or to affect the meaning or
interpretation of this Agreement.  This
Agreement shall be construed without regard to any presumption or other rule requiring
construction hereof against the party causing this Agreement to be drafted.

 

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

 

7.9           Notices.  All notices or other communications to a
party required or permitted hereunder shall be in writing and shall be
delivered personally or by facsimile (receipt confirmed) to such party (or, in
the case of an entity, to an executive officer of such party) or shall be given
by certified mail, postage prepaid with return receipt requested, addressed as
follows:

 

if to ProUroCare to:

 

ProUroCare Medical, Inc.

5500 Wayzata Boulevard, #310

Golden Valley, MN  55416

Attention: 
CEO

Phone: 
952-476-9093

Fax: 
763-591-5039

 

13

 

if
to Artann to:

 

Artann Laboratories, Inc.

1459 Lower Ferry Road

West Trenton, NJ 
08618-1414

Fax:  (609)
333-0710

Phone:  (609) 333-0712

 

Artann or ProUroCare may
change their respective above-specified recipient and/or mailing address by
notice to the other party given in the manner herein prescribed.  All notices shall be deemed given on the day
when actually delivered as provided above (if delivered personally or by
facsimile) or on the day shown on the return receipt (if delivered by mail).

 

7.10         Severability.  If any provision of this Agreement is held
invalid by a court of competent jurisdiction, such provision shall be enforced
to the maximum extent permissible and the remaining provisions shall
nonetheless be enforceable according to their terms.

 

7.11         Execution
of Further Documents.  Each party
agrees to execute and deliver without further consideration any further
applications, licenses, assignments or other documents, and to perform such
other lawful acts as the other party may reasonably request to fully secure
and/or evidence the rights or interests herein.

 

7.12         Purposely
left blank.

 

7.13         Compliance
with Laws.  The parties will, and
ProUroCare shall cause any permitted sublicensees of ProUroCare to, comply with
all applicable international, national, state, regional and local laws and
regulations, including all applicable import and export control laws, in
exercising rights or performing their duties under this Agreement.

 

7.14         Use of Name.  Except with the prior express written
permission, ProUroCare shall not use or reference Artann’s or Armen Sarvazyan’s
name in any marketing, sales or Product documents or materials.

 

14

 

IN WITNESS WHEREOF, each of the parties has caused this License
Agreement to be executed in the manner appropriate to each.

 

	
   

  	
  ARTANN LABORATORIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Noune Sarvazyan

  
	
   

  	
   

  	
   

  
	
   

  	
  Its: 

  	
  CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PROUROCARE MEDICAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/Richard C. Carlson

  
	
   

  	
   

  	
   

  
	
   

  	
  Its: 

  	
  CEO

  

 

Exhibits:

 

	
  Exhibit A: 

  	
  Artann Patents

  
	
  Exhibit B: 

  	
  ProUroCare Patents

  

 

15

 

Exhibit A: 
Artann Patents

 

	
  a.

  	
  Method and Device for Real Time Mechanical Imaging of Prostate, USA
  Patent Application No 11/123,999, Filing Date: May 6, 2005.

  
	
   

  	
   

  
	
  b.

  	
  Method and Dual-Array Transducer Probe for Real Time Mechanical
  Imaging of Prostate, USA Patent Application No 11/146,367, Filing Date:
  June 6, 2005.

  
	
   

  	
   

  
	
  c.

  	
  Prostate Mechanical Imaging probe, USA Patent Application No
  29/320,480, Filing Date: June 27, 2008.

  
	
   

  	
   

  
	
  d.

  	
  Calibration
  chamber for Prostate Mechanical Imaging probe, USA Patent Application No
  29/320.474, Filing Date: June 27, 2008.

  

 

16

 

Exhibit B: 
ProUroCare Patents

 

	
  a.

  	
  Method and
  apparatus for elasticity imaging, USA Patent No 5,524,636.

  
	
   

  	
   

  
	
  b.

  	
  Device for breast haptic examination, USA Patent No 5,833,633.

  
	
   

  	
   

  
	
  c.

  	
  Method and device for mechanical imaging of breast, USA Patent No
  5,860,934.

  
	
   

  	
   

  
	
  d.

  	
  Apparatus and
  Method for Mechanical Imaging of Breast, USA Patent 6,620,115.

  

 

17

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