SETTLEMENT, LICENSE AND RELEASE AGREEMENT

Exhibit 10.1

Protected by Fed. R. Evid. 408

SETTLEMENT, LICENSE AND RELEASE AGREEMENT

     This Settlement, License and Release Agreement (the “Agreement”) is made by and between Sutura, Inc., a corporation organized under the laws of Delaware, having a principal place of business at 17080 Newhope Street, Fountain Valley, California 92078 (“Sutura”); Abbott Laboratories, a corporation organized and existing under the laws of Illinois, having a principal place of business at 100 Abbott Park Road, Abbott Park, Illinois 60064-6057 (“Abbott Laboratories”); and Abbott Vascular Inc., a corporation organized and existing under the laws of Delaware, and a wholly owned subsidiary of Abbott Laboratories, having a principal place of business at 400 Saginaw Drive, Redwood City, California 94063 (“AVI”).

     WHEREAS, Sutura is the current assignee and owner of all right, title and interest in United States Letters Patent Nos. 5,860,990; 6,117,144; 6,245,079; 6,551,331; 6,562,052; and 7,004,952 (the “Nobles Patents”).

     WHEREAS, Abbott and its subsidiary, AVI, currently hold an exclusive license in United States Letters Patent Nos. 5,720,757; 5,810,850; and 6,348,059 (the “Hathaway Patents”), by virtue of a March 28, 1995 License Agreement between the Indiana University Foundation (“IUF”) and Perclose, Inc. (the “Hathaway License”), in which Abbott and AVI now hold all the rights of Perclose, Inc.

     WHEREAS, Sutura has asserted, in a suit styled Sutura, Inc. v. Abbott Laboratories and Perclose, Inc. , Civil No. 2:06-CV-536 (TJW) (the “Patent Litigation”), that Abbott and Perclose, Inc., infringe the Nobles Patents by making, using, marketing, selling and/or offering for sale products sold as The Closer, The Closer S, ProGlide and Perclose A-T.

     WHEREAS, Abbott and AVI have asserted counterclaims in the Patent Litigation alleging that Sutura infringe the Hathaway Patents by making, using, marketing, selling and/or offering for sale the SuperStitch.

     WHEREAS, Abbott and AVI deny infringing the Nobles Patents and raise other defenses to Sutura’s claims including, but not limited to defenses relating to the alleged invalidity of the Nobles Patents, and Sutura denies infringing the Hathaway Patents and raises other defenses to Abbott’s claims including, but not limited to defenses relating to the alleged invalidity of the Hathaway Patents.

     WHEREAS, the Parties hereto have mutually agreed to amicably settle their differences and the dispute between them on the terms and conditions set forth herein.

     NOW, THEREFORE, in consideration of the promises and covenants set forth herein, the receipt and sufficiency of which are hereby acknowledged, the Parties do hereby agree and covenant as follows:

Protected by Fed. R. Evid. 408

     As used herein, the following terms shall have the meanings set forth below:

     “ Abbott ” means Abbott Laboratories, together with its parents, subsidiaries, including without limitation Abbott Vascular Inc. and Perclose Inc., predecessors, successors, affiliates, divisions, assigns, present and former directors, officers, shareholders, partners, principals, agents, employees, representatives, attorneys, indemnitors, and insurers.

     “ Abbott Patents ” means (a) the Hathaway Patents; (b) all foreign counterparts, divisions, continuations, continuations-in-part, patents of addition, substitution, registrations, reissues, reexaminations or extensions of any kind with respect to any of the Hathaway Patents, and any other patents that claim priority to or provide priority for any patent application from which any of the Hathaway Patents derived. The titles, filing dates, and patent or serial numbers of the foregoing are set forth on Exhibit A; provided, however, that the failure to list a patent or counterpart on Exhibit A shall not exclude the omitted patent or counterpart from the Abbott Patent Rights. “Abbott Patents” shall not include any rights in any patents that Abbott acquires after the Effective Date of this Agreement with a right to license or sublicense unless they are presently pending and will automatically fall under the terms of the Hathaway License.

     “ Effective Date ” means the date of execution by the last Party hereto.

     “ Field Of Use ” means the field of closure of femoral vascular access sites.

     “ Hathaway License ” means the certain License Agreement dated March 28, 1995, by and between the Indiana University Foundation on behalf of Indiana University and Perclose, as amended and as assigned to ARTI, now known as IURTC. A copy of the Hathaway License is annexed hereto as “Exhibit C.”

     “ IURTC ” means the Indiana University Research & Technology Corporation, together with its parents, subsidiaries, predecessors, successors, affiliates, divisions, assigns, present and former directors, officers, shareholders, partners, principals, agents, employees, representatives, attorneys, indemnitors, and insurers.

     “ Minor Modification ” means in reference to an existing device a change in the dimensions, proportions, materials, or the general location of existing features of the existing device, provided that such change(s) do not alter the basic configuration or operation of the device. A change that extends the use of a device outside the Field of Use is not a Minor Modification.

     “ Parties ” means Sutura, Abbott Laboratories and Abbott Vascular Inc., each individually referred to as a “Party.”

     “ Sutura ” means Sutura, Inc., together with its parents, subsidiaries, predecessors, successors, affiliates, divisions, assigns, present and former directors, officers, shareholders, partners, principals, agents, employees, representatives, attorneys, indemnitors, and insurers.

Protected by Fed. R. Evid. 408

     “ Sutura Patents ” means (a) the Nobles Patents; (b) all foreign counterparts, divisions, continuations, continuations-in-part, patents of addition, substitution, registrations, reissues, reexaminations or extensions of any kind with respect to any of the Nobles Patents, and any other patents that claim priority to or provide priority for any patent application from which any of the Nobles Patents derived. The titles, filing dates, and patent or serial numbers of the foregoing are set forth on Exhibit B; provided, however, that the failure to list a patent or counterpart on Exhibit B shall not exclude the omitted patent or counterpart from the Sutura Patent Rights. “Sutura Patents” shall not include any rights in any patents that Sutura acquires after the Effective Date of this Agreement with a right to license or sublicense.

     “ Net Sales ” shall have the meaning ascribed to it in the Hathaway license, and that meaning shall be the gross revenues actually received by Sutura upon sales of a Licensed Product, which sales would, but for the license granted hereunder, infringe a Valid Claim in the country for which the Licensed Product is sold, less (a) normal and customary rebates, and cash and trade discounts, (b) sales, use and/or other excise taxes or duties actually paid, (c) outbound shipping and insurance charges paid or allowed, (d) import and/or export duties actually paid, and (e) amounts allowed or credited due to returns or retroactive price decrease.

     2.1 License to Abbott . Sutura hereby grants to Abbott a nonexclusive, paid-up, worldwide license under the Sutura Patents to make, have made, use, market, offer for sale, sell and have-sold, devices in the Field Of Use. The rights granted under this License do not include the right to grant sublicenses.

     2.2 License to Sutura . Abbott hereby grants to Sutura a nonexclusive, royalty bearing, worldwide license and sublicense under the Abbott Patents to make, have made, use, market, offer for sale, sell and have-sold, devices in the Field Of Use. The rights granted under this License do not include the right to grant sublicenses.

     2.3 No Knock-Offs . The licenses and sublicense granted under Sections 2.1 and 2.2 above do not extend to any product made by either Party that is a copy of or is otherwise substantially identical to a product of the other Party.

     2.4 Retained Rights . This Agreement shall not be construed as granting a license under any intellectual property rights of Sutura, on the one hand, and Abbott, on the other hand, other than as expressly set forth hereunder.

     3.1 Royalties Payable by Sutura . Beginning with the first accrual of Net Sales on which a royalty is due hereunder, Sutura shall provide to Abbott a quarterly royalty report as follows: Within fifteen (15) days after the end of each calendar quarter, Sutura shall deliver to Abbott a true and accurate report, giving such particulars of the business conducted by Sutura, if any, during such calendar quarter as are pertinent to an account for payments hereunder. Such report shall include at least (a) the total of Net Sales by Sutura; (b) the calculation of royalties; and (c) the total royalties so calculated and due Abbott. Simultaneously with the delivery of each such report, Sutura shall pay to Abbott the total royalties, if any, due to Abbott for the

Protected by Fed. R. Evid. 408

period of such report. If no royalties are due, Sutura shall so report. The requirements and obligations of this Section apply only to the manufacture, use, marketing, offer for sale or sale of products, in the Field Of Use, following the Effective Date of this Agreement. If the Hathaway License is amended to provide Abbott with royalty te