SETTLEMENT AND LICENSE AGREEMENT

Exhibit 10.1

SETTLEMENT AND LICENSE AGREEMENT

This Settlement and License Agreement (this “ Agreement ”) is entered into as of February 7, 2007, (the “ Effective Date ”) by and between CELSION CORPORATION , a corporation organized and existing under the laws of the State of Delaware and having its principal place of business at 10220-L Old Columbia Road, Columbia, Maryland 21046 (“ Celsion ”), and AMERICAN MEDICAL SYSTEMS, INC. (“ AMSI ”) and AMS RESEARCH CORPORATION (“ AMSRC ”), each a corporation organized and existing under the laws of the State of Delaware and having their principal place of business at 10700 Bren Road West, Minnetonka, Minnesota 55343 (AMSI and AMSRC are herein individually and together referred to as “ AMS ”). Celsion, AMSI and AMSRC are collectively, the “ Parties ” and each separately, a “ Party ”.

WHEREAS , Celsion is, in part, in the business of developing, making, marketing and selling products, therapies and technologies that use heat generated by microwave energy to treat benign prostatic hyperplasia, including a product currently sold under the brand Prolieve Thermodilation System ^® ;

WHEREAS , on September 28, 2006, AMS commenced an action against Celsion in the United States District Court for the District of Delaware (the “ Court ”), Civil Action No. 06-606-SLR (the “ Pending Action ”), alleging that Celsion infringed and is infringing AMS’ U.S. Patent Nos. 5,220,927, 6,216,703, 7,089,064 and 7,093,601, which action remains pending;

WHEREAS , on November 16, 2006, Celsion filed counterclaims for declaratory judgment in the Pending Action;

WHEREAS , on September 27, 2006, the United States District Court for the District of Minnesota dismissed a similar patent infringement action filed by AMS on April 27, 2006,

* The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934, as amended. The confidential portions have been submitted separately to the Securities and Exchange Commission.

against Celsion (Civil Action No. 06-1606 JMR/FLN) for lack of personal jurisdiction (the “ Prior Action ” and together with the Pending Action, the “ Action ”);

WHEREAS , Celsion denies that its products or other business activities infringe AMS’ patents and is prepared to defend against the Pending Action; and

WHEREAS , recognizing the costs, uncertainties and burdens of litigation, Celsion and AMS desire finally and forever to compromise, resolve and settle all asserted and unasserted claims relating to the allegations in the Action on mutually agreeable terms without admission of any liability by either, and without admission as to the merits of any of the contentions of the other.

NOW, THEREFORE , for and in consideration of the preambles set forth above and the mutual covenants, promises and agreements contained herein, the Parties, intending to be legally bound, do hereby agree as follows:

Article 1. Definitions

In addition to terms defined elsewhere in this Agreement, the following initially capitalized terms, whether used in the singular or plural, shall have the respective meanings set forth below:

Section 1.01    “ Affiliate ” shall mean any individual or entity which (directly or indirectly) is controlled by, controlling or under common control with a Party to this Agreement. For purposes of this definition, the direct or indirect ownership of fifty percent (50%) or more of the outstanding securities, membership interests or partnership interests of or by an entity, or the right to receive fifty percent (50%) or more of the profits or earnings of or by an entity, or the right to control the management or the board of directors or other governing body of or by an

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* The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934, as amended. The confidential portions have been submitted separately to the Securities and Exchange Commission.

entity shall be deemed to constitute control. “ AMS Parties ” shall mean AMSI, AMSRC and their respective Affiliates.

Section 1.03    “ Average Sales Price ” shall mean the average invoiced sales price at which the Celsion Parties have actually sold Disposable Kits to non-Affiliate third parties during * including in such calculation of average invoiced sales price the actual sales price for any standard warranty sold for the Disposable Kits but not including any rebates actually granted to a customer and any reasonable and customary charges for taxes and shipping actually collected by Celsion on behalf of third parties; provided that, if the “Average Sales Price” as calculated is * per Disposable Kit for * , the “Average Sales Price” for that * shall be deemed * per Disposable Kit, and further provided that, if the “Average Sales Price” as calculated is * per Disposable Kit, the “Average Sales Price” for that * shall be deemed * per kit.

Section 1.04    “ Celsion Parties ” shall mean Celsion and its Affiliates.

Section 1.05    “ Current Products ” of a Party shall mean products and components thereof commercially available from that Party or its Affiliates at or before the Effective Date in the Technology Field, which for Celsion is the Prolieve Thermodilation System (depicted in Exhibit A ) (“ Celsion Current Products ”) and for AMS is the TherMatrx System (depicted in Exhibit B ) (“ AMS Current Products ”). For purposes of clarity, a product that qualifies as of the Effective Date as a Current Product remains a Current Product even if the business or assets relating to such product line are sold to a permitted successor or assign to this Agreement.

Section 1.06    “ Days ” or “days” shall mean calendar days.

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* The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934, as amended. The confidential portions have been submitted separately to the Securities and Exchange Commission.

Section 1.07    “ Dismissal Order ” shall mean an Order of the Court dismissing the Pending Action in accordance with the provisions of Article 6 below, which order has become final and no longer subject to appeal or reconsideration.

Section 1.08    “ Disposable Kits ” shall mean the disposable catheter kit component of the Licensed Products. Disposable Kits do not include control units and other reusable apparatus or accessories that are marketed for use in connection with the Licensed Products. For the sake of clarity, the Disposable Kit component of the Celsion Current Products is depicted in Exhibit A hereto.

Section 1.09    “ Disposable Kit Sold ” shall mean a Disposable Kit that has been invoiced to a non-Affiliate third party by a Celsion Party, including Disposable Kits distributed for no consideration (but excluding a reasonable number of Disposable Kits distributed for no consideration solely for clinical trials and up to an additional one hundred (100) Disposable Kits distributed for no consideration).

Section 1.10    “ Excluded Technology ” shall mean products and methods that are designed or intended for use with or constitute any of the following:

For the sake of clarity, while the license and covenant not to sue granted to Celsion herein do not cover Excluded Technology, nothing in this Agreement prohibits or restricts Celsion or its permitted successors or assigns with respect to Excluded Technology, and nothing in this Agreement prohibits or restricts AMS or its permitted successors or assigns from asserting claims against Excluded Technology.

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* The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934, as amended. The confidential portions have been submitted separately to the Securities and Exchange Commission.

Section 1.11    “ Including ” shall mean, whether or not capitalized, including without limitation.

Section 1.12    “ Licensed Patent(s) ” shall mean (a) all of the claims of AMS’ patents and applications existing or filed as of the Effective Date that include subject matter directed to the Technology Field, including all of the claims of the issued patents listed on Exhibit C hereof (including the 927 Patent, the 703 Patent, the 064 Patent and the 601 Patent); and (b) continuations, continuations in part (to the extent of the part within the Technology Field and to the extent entitled to priority before the Effective Date), divisionals, reexaminations, reissuances, extensions and foreign counterparts of any of the foregoing, provided , however , that “Licensed Patent(s)” shall not include any patent that has expired or has been invalidated or canceled or declared unenforceable or any claims in any patent that have been invalidated, declared unenforceable or canceled where all right to appeal any such order of cancellation, unenforceability or invalidity has elapsed and the order has become final. “Licensed Patent(s)” shall include applications beneficially owned or controlled by an AMS Party as of the Effective Date even if then pending in the name of the inventors or another assignee and not yet formally assigned to the AMS Party.

Section 1.13    “ Licensed Products ” shall mean Celsion Current Products and Reasonable Modifications thereof developed, manufactured, used, marketed, offered for sale, sold, imported, licensed or distributed by or on behalf of a Celsion Party or a permitted successor or assign under this Agreement, directly or through their respective manufacturers, distributors, contractors, resellers, and other intermediaries. “Licensed Products” shall not include Excluded Technology.

Section 1.14    “ 927 Patent ” shall mean United States Patent No. 5,220,927 while it is in effect.

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* The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934, as amended. The confidential portions have been submitted separately to the Securities and Exchange Commission.

Section 1.15    “ 703 Patent ” shall mean United States Patent No. 6,216,703 while it is in effect.

Section 1.16    “ 064 Patent ” shall mean United States Patent No. 7,089,064 while it is in effect.

Section 1.17    “ 601 Patent ” shall mean United States Patent No. 7,093,601 while it is in effect.

Section 1.18    “ Product Related Activities : shall mean, research, development, testing, scale-up, clinical, prototyping, trial, sales, marketing and other business activities undertaken in the process of creating, seeking approval for and commercializing products.

Section 1.19    “ Reasonable Modifications ” shall mean improvements or modifications to Current Products primarily to improve materials, dimensions, software, manufacturability, quality or cost, provided such improvements or modifications are consistent with the function and treatment provided by the party’s Current Products as of the Effective Date. For the sake of clarity, Reasonable Modifications to a party’s current Treatment Catheter do not include, for example, adding (in the case of AMS) or removing (in the case of Celsion) an integrated compression balloon.

Section 1.20    “ Returned Products ” shall mean Disposable Kits (1) returned by non-Affiliate third parties to whom the Disposable Kits were sold and (2) for which Celsion has fully refunded to the third party (or extended a credit for) all consideration received for the returned Disposable Kits (with the exception of reasonable and customary shipping or handling charges, if applicable).

Section 1.21    “ Technology Field ” shall mean the field of microwave therapy for treating benign prostatic hyperplasia (“BPH”) and prostatitis.

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* The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934, as amended. The confidential portions have been submitted separately to the Securities and Exchange Commission.

Section 1.22    “ Treatment Catheters ” shall mean urethral catheters for applying heat or microwave energy to prostatic tissue.

Article 2. License Grant and Other Covenants

Section 2.01    Subject to the provisions herein, from the Effective Date, AMS, for itself and its Affiliates, hereby grants to Celsion and its Affiliates a perpetual, irrevocable (except for termination expressly permitted in Section 6 of this Agreement), non-exclusive, worldwide right and license under the Licensed Patents only within the Technology Field (excluding Excluded Technology) to (a) undertake Product Related Activities for Licensed Products and (b) develop, make, have made, market, use, authorize others to use, import, distribute, sell, have sold and offer to sell Licensed Products, for the life of the Licensed Patents (the “ License ”).

Section 2.02    Celsion and its Affiliates may not sublicense the licensed rights granted above, but may engage third party contractors, consultants, outsourcers and agents to undertake Product Related Activities for Licensed Products and to exercise the licensed rights on their behalf such as, for example, in the manufacturing, assembly, sale, importation and marketing of Licensed Products.

Section 2.03    AMS represents that, as of the Effective Date, AMS is the sole owner of all title and interest to each of the Licensed Patents.

Section 2.04    AMS agrees (a) to provide to Celsion, promptly upon reasonable written request, information regarding the status of the Licensed Patents, including information on any new applications filed or patents issued or abandoned anywhere and any adverse claims made by third parties against any of the Licensed Patents, and (b) to take commercially reasonable steps to prosecute and maintain in effect the Licensed Patents.

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* The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934, as amended. The confidential portions have been submitted separately to the Securities and Exchange Commission.

Section 2.05    Celsion and Affiliates will take commercially reasonable steps to comply with the marking provisions of 35 U.S.C. §287 with respect to Licensed Products and the Licensed Patents, consistent with Celsion’s standard labeling practices.

Section 2.06    In order to maintain separate identity between the Current Products (and Reasonable Modifications thereof) being sold contemporaneously in the marketplace by each of the Parties, each of AMS and Celsion agrees from and after the Effective Date not to develop, make, use, sell, offer for sale or import Treatment Catheters in the Technology Field that are confusingly similar with respect to protectable packaging features and external trade dress to the Current Products available from the other Party as of the Effective Date. In the event a party reasonably believes that a product of the other in the Technology Field violates this Section, it shall provide prompt written notice to the other, describing the nature of the perceived violation and what in its view would cure the violation. The Party receiving the notice shall have a period of forty-five (45) days to investigate the allegation and respond to the other Party in writing with either a denial of the allegations, a request for further information or a proposed curative course of action. If the party responding to the notice requests further information, the Party who sent the notice shall promptly provide it and the time to respond shall commence again once the information is provided. If the curative action proposed by the Party who received the notice is acceptable to the other Party, the Party who received the notice shall have a reasonable period of time to implement the curative actions, taking into account factors such as the need for regulatory approvals for any changes. In the event the Party who received the notice denies the allegations and/or does not propose a remedy therefor that is reasonably acceptable to the other Party, the Party who sent the notice shall submit the matter to binding arbitration in accordance with the arbitration provisions of Section 8.05 (and subject to Section 6.02). The Parties will not,

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* The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934, as amended. The confidential portions have been submitted separately to the Securities and Exchange Commission.

pending the opinion of the arbitration panel, seek interim relief. Each Party acknowledges and agrees that the products in the Technology Field commercially available as of the Effective Date from the other are not confusingly similar. For purposes of this Section 2.06, AMSI and AMSRC shall be deemed one Party.

Section 2.07    Except as stated in this Section and in Article 6 below, while the License is in effect, Celsion agrees not to challenge, or support or participate in a challenge of, the validity or enforceability of the Licensed Patents, including by initiating, participating or supporting a request for reexamination of the Licensed Patents, or by raising such claims in defense of a claim by AMS for a breach by Celsion of the provisions of this Agreement. Notwithstanding any other provision of this Agreement, the covenant in the prior sentence shall not apply and Celsion shall be free to bring claims and raise defenses (a) in connection with a claim by AMS for infringement relating to the Licensed Products in the event that AMS is seeking to terminate or has terminated the license grant in Section 2.01 above, or (b) with respect to products other than Licensed Products, including any Excluded Technology products, or (c) in the event AMS breaches a material provision of the Agreement such as the covenant not to assert or the release, or (d) if compelled by law or court order (such as a subpoena).

Section 2.08    Nothing in this Agreement shall be construed as conveying any express or implied license or right, to any patent owned, controlled or licensed by a Party or its Affiliates, to any other Party, person or entity, except as expressly and specifically set forth in this Agreement.

Article 3. Payments

Section 3.01    In consideration of the license rights, releases and other covenants and promises under this Agreement, Celsion shall pay the following fees to AMS:

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* The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934, as amended. The confidential portions have been submitted separately to the Securities and Exchange Commission.

a.* in license fees due on the date of execution and delivery of this Agreement by all Parties and payable in full by February 20, 2007; and

b. Subject to Sections 3.02 and 3.03 below, a running royalty from * on Disposable Kits Sold of the lesser of: (i) * of the * or (ii) * per Disposable Kit Sold (the “ Royalty ”). The Royalty shall be automatically reduced to the lesser of (i) * of the * , or (ii) * per Disposable Kit Sold from and after the expiration or final cancellation, abandonment or invalidation date of the 927 Patent.

Section 3.02    The obligation to pay Royalties shall automatically cease and the License granted in Section 2.01 shall become fully paid-up and royalty-free from and after the earlier of (i) * , (ii) the expiration or cancellation, abandonment or invalidation of all of the Licensed Patents, or (iii) the prepayment of Royalties set forth in Section 3.03 below (such date, the “ End of the Royalty Payment Term ”).

Section 3.03    Celsion shall have the right to prepay all the Royalties payable under this Agreement at any time prior to the End of the Royalty Payment Term on a discounted net present value basis using (i) a mutually agreed to discount rate of * and (ii) * (a) * or (b)

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* The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934, as amended. The confidential portions have been submitted separately to the Securities and Exchange Commission.

* (the “ Prepaid Royalty ”). An example of the calculation of the Prepaid Royalty is provided in Exhibit D , which assumes the following for simplicity: (1) * (2) * (3) * (4) * . Celsion shall exercise the prepayment option by providing written notice thereof to AMS including its calculation of the Prepaid Royalty (the “ Prepayment Notice ”). The Parties agree that the Prepaid Royalty, if this option is exercised by * shall be no less than * . Thereafter, the Prepaid Royalty shall be * . Celsion shall pay the Prepaid Royalty to AMS within thirty (30) days of the date of its Prepayment Notice unless AMS notifies Celsion in writing within fifteen (15) days of the date of the Prepayment Notice that it disagrees with the calculation of the Prepaid Royalty. Failure of AMS to provide timely notice of disagreement shall constitute acceptance of the calculation of the Prepaid Royalty. The Parties shall endeavor expeditiously and in good faith to resolve any disagreements regarding the calculation of the Prepaid Royalty. If the Parties shall have been unable to agree on the amount of the Prepaid Royalty by the end of a thirty (30) day period from the date of the Prepayment Notice, the Parties shall engage an arbitrator to resolve the disagreement and determine on an expedited basis the Prepaid Royalty as of the date of the Prepayment Notice, with each side sharing equally in the costs and expenses of the arbitrator and the proceedings. The arbitrator shall have experience in royalty audits and calculations and the decision of the arbitrator shall be final and binding. Upon determination of the Prepaid Royalty after a dispute, Celsion shall pay the Prepaid Royalty if it

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* The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934, as amended. The confidential portions have been submitted separately to the Securities and Exchange Commission.

still wishes to pre-pay the Royalties based on the amount calculated by the arbitrator, and AMS shall provide a receipt thereof.

Section 3.04    Only one Royalty is payable per Disposable Kit Sold regardless of whether such product embodies, uses or practices one or more claims in the Licensed Patents. Royalties are non-refundable (provided that a Dismissal Order has been entered and subject to the provisions of this Agreement relating to termination). Royalties not paid when due shall bear interest from the due date at the rate of * . Celsion shall be entitled to off-set royalties paid on Returned Products against subsequent Royalty payments.

Section 3.05    Until the End of the Royalty Payment Term, Celsion will pay the Royalties * for Disposable Kits Sold during * . At that time, Celsion shall furnish to AMS a statement showing the volume of Disposable Kits Sold during * (including Disposable Kits distributed for no consideration) and the calculation of the amount of Royalties due. Until the End of the Royalty Payment Term, such statements shall be furnished to AMS whether or not there are any Disposable Kits Sold during * . AMS’ designated representative from a public accounting firm shall have the right, not more than once in each contract year during business hours with thirty (30) days’ prior written notice to audit, at the place where they are typically located, the relevant books and records of Celsion and any Affiliates selling Licensed Products in order to verify the accuracy of Royalties paid under this Agreement for the current contract year and the two years before. Such representative shall execute a confidentiality and non-disclosure agreement acceptable to Celsion and the Affiliates in order to protect information that is made available to the representative. The representative shall not use

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* The asterisk denotes that confidential portions of