SETTLEMENT AND MUTUAL GENERAL RELEASE AGREEMENT

Exhibit 10.1

SETTLEMENT AND MUTUAL GENERAL RELEASE AGREEMENT

This Settlement and Mutual General Release Agreement is entered into by and among (1) NMT Medical, Inc. (formerly known as Nitinol Medical Technologies, Inc.), a Delaware corporation having its principal place of business at 27 Wormwood Street, Boston, Massachusetts, (2) Lloyd A. Marks, residing at 1021 Minisink Way, Westfield, New Jersey 07090, and (3) AGA Medical Corporation, a Minnesota corporation having its principal place of business at 682 Mendelssohn Avenue, Golden Valley, Minnesota (collectively “the PARTIES”).

WITNESSETH :

WHEREAS , the following lawsuits were initiated by the PARTIES to this Settlement and Mutual General Release Agreement:

(collectively “the LAWSUITS”);

WHEREAS , disputes have arisen among the PARTIES with respect to claims asserted in the LAWSUITS, and the PARTIES wish to compromise and settle all matters and issues in dispute between them in order to avoid the uncertainty, inconvenience and expense of litigation;

WHEREAS , the PARTIES have agreed to dismiss with prejudice all of their claims in the LAWSUITS, subject to and in accordance with the terms and conditions set forth in this Settlement and Mutual General Release Agreement;

WHEREAS , AGA (as hereinafter defined), in consideration of the settlement of the LAWSUITS and in consideration of the terms and conditions set forth in this Settlement and

Mutual General Release Agreement, wishes to obtain a fully-paid up, irrevocable, nonexclusive, world-wide right and license to make, have made, import, use, offer to sell and sell any products or practice any processes covered by the LICENSED PATENTS (as hereinafter defined), and NMT (as hereinafter defined) is willing to grant such a license to AGA, subject to the terms and conditions set forth in this Settlement and Mutual General Release Agreement;

NOW THEREFORE , in consideration of the mutual promises set forth herein, the PARTIES agree as follows:

ARTICLE I -- DEFINITIONS

As used in this Settlement and Mutual General Release Agreement, the following defined terms shall have the meanings set forth below:

1.1     “EFFECTIVE DATE” shall mean the date of the final execution of this Settlement and Mutual General Release Agreement by the PARTIES.

1.2     “NMT” shall mean and include Nitinol Medical Technologies, Inc. and NMT Medical, Inc., together with any parents, subsidiaries, divisions, affiliates, predecessor companies or proprietorships, and any real persons or business entities directly or indirectly owned by, controlling or controlled by Nitinol Medical Technologies, Inc. and/or NMT Medical, Inc. As used herein, the term “control” means possession of the power to direct, or to cause the direction of the management and policies of a real person, corporation or other business entity, whether through the ownership of voting securities, by contract or otherwise.

1.3     “AGA” shall mean and include AGA Medical Corporation, together with any parents, subsidiaries, divisions, affiliates, predecessor companies or proprietorships, and any real persons or business entities directly or indirectly owned by, controlling or controlled by AGA Medical Corporation.

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1.4     “MARKS” shall mean and include Lloyd A. Marks, together with his heirs and any other real persons or business entities directly or indirectly owned by, controlling or controlled by Lloyd A. Marks.

1.5     “LICENSED PATENTS” shall mean and include United States Patent No. 5,108,420 (titled “Aperture Occlusion Device”), issued April 28, 1992, on United States Patent Application Serial No. 07/649,593 (filed February 1, 1991), naming Lloyd A. Marks as the inventor, any divisions, continuations, continuations-in-part, reissues, reexaminations, renewals or extensions thereof, and any patents issuing thereon, together with any foreign patents or applications for foreign patents (including utility models or other registered rights) that correspond in whole or in part to any of the foregoing.

1.6     “LICENSED PRODUCTS” shall mean any products or processes that fall within the scope of any VALID CLAIM (as hereinafter defined) of the LICENSED PATENTS.

1.7     “VALID CLAIM” shall mean and include any issued, unexpired claim of the LICENSED PATENTS that NMT or MARKS has not expressly admitted in writing to be invalid or unenforceable, or that has not been held invalid or unenforceable by a court, tribunal or governmental agency of competent jurisdiction, or that has not been held invalid or unenforceable as a result of an opposition proceeding, reissue, reexamination, dedication, disclaimer or otherwise, and, in the case of a holding or decision, cannot be appealed or has not been appealed within the time allowed for appeal.

ARTICLE II -- SETTLEMENT OF PAST CLAIMS AND

LITIGATION, RELEASE AND COVENANT NOT TO SUE

2.1    NMT hereby irrevocably and perpetually releases and forever discharges AGA and its past and present suppliers, distributors, sales representatives, customers, successors, assigns, directors, officers, employees, agents, representatives, financial sponsors and all other

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persons and entities who were in active concert or participation with any of them from, and covenants not to sue any of them for any and all claims, liabilities and causes of action that were asserted or that could have been asserted in the LAWSUITS, and any and all patent infringement claims, demands, damages, liabilities, obligations, causes of action, agreements, suits, sums of money, and any other rights whatsoever, whether known or unknown, suspected or unsuspected, at law or in equity that now exist or that might hereafter accrue based upon any and all AGA products or processes that are in commercial or clinical use as of the EFFECTIVE DATE.

2.2    MARKS hereby irrevocably and perpetually releases and forever discharges AGA and its past and present suppliers, distributors, sales representatives, customers, successors, assigns, directors, officers, employees, agents, representatives, financial sponsors and all other persons and entities who were or are in active concert or participation with any of them from, and covenants not to sue any of them for, any and all claims, liabilities and causes of action that were asserted or that could have been asserted in the LAWSUITS, and any and all patent infringement claims, demands, damages, liabilities, obligations, causes of action, agreements, suits, sums of money, and any other rights whatsoever, whether known or unknown, suspected or unsuspected, at law or in equity that now exist or that might hereafter accrue based upon any and all AGA products or processes that are in commercial or clinical use as of the EFFECTIVE DATE.

2.3    AGA hereby irrevocably and perpetually releases and forever discharges NMT and MARKS and their suppliers, distributors, sales representatives, customers, successors, assigns, directors, officers, employees, agents, representatives and all other persons and entities in active concert or participation with any of them from, and covenants not to sue any of them for any and all claims, liabilities and causes of action that were asserted or that could have been asserted in the LAWSUITS, and any and all patent infringement claims, demands, damages, liabilities, obligations, causes of action, agreements, suits, sums of money, and any other rights

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whatsoever, whether known or unknown, suspected or unsuspected, at law or in equity that now exist or that might hereafter accrue based upon any and all NMT and MARKS products or processes that are in commercial or clinical use as of the EFFECTIVE DATE.

2.4    Within five (5) business days after AGA pays or causes to be paid the sum of thirty million dollars ($30,000,000) due to NMT under this Settlement and Mutual General Release Agreement, NMT, MARKS, and AGA shall cause to be filed a Stipulated Order of Dismissal with Prejudice of the LAWSUITS in the form annexed hereto as Exhibit A. Each PARTY shall bear its own costs and attorneys’ fees incurred in connection with the LAWSUITS.

ARTICLE III -- GRANT OF LICENSE

3.1    NMT and MARKS hereby grant to AGA for its full use and enjoyment an irrevocable, nonexclusive, fully paid-up, world-wide right and license under the LICENSED PATENTS to make, have made, import, use, offer to sell, sell and authorize others to use LICENSED PRODUCTS.

3.2    The license granted in Paragraph 3.1 shall be effective as of the EFFECTIVE DATE of this Settlement and Mutual General Release Agreement.

3.3    The license rights provided herein are not assignable by AGA to anyone; provided, however, if fifty and one-tenth percent (50.1%) or more of the stock or assets of AGA is sold or transferred to or merged with a third party, AGA may assign or transfer the license rights to such third party and/or merged entity. AGA shall provide NMT written notice of any assignment or transfer planned pursuant to this Paragraph 3.3 thirty (30) days prior to the assignment or transfer, and an assignment or transfer pursuant to this Paragraph 3.3 shall have full force and effect thirty (30) days after such notice is provided to NMT.

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ARTICLE IV -- PAYMENT

4.1    In consideration of the settlement of past claims, the settlement of the LAWSUITS, the PARTIES’ mutual releases and covenants not to sue, and the provisions of this Settlement and Mutual General Release Agreement relating thereto, AGA shall pay or cause to be paid to NMT a total of twenty nine million dollars ($29,000,000) by wire transfer within twenty (20) days of the execution of this Agreement and upon receipt of proper wire instructions by NMT to AGA. NMT and MARKS agree that AGA shall have no responsibility as to how such payment is allocated between NMT and MARKS, but that MARKS shall receive at least some portion of said payment as consideration of the rights and obligations incurred pursuant to this subparagraph.

4.2    In consideration of the rights and license granted herein to AGA and the provisions of this Settlement and Mutual General Release Agreement relating thereto, AGA shall pay or cause to be paid to NMT a total of one million dollars ($1,000,000) by wire transfer within twenty (20) days of the execution of this Agreement and upon receipt of proper wire instructions by NMT to AGA. NMT and MARKS agree that AGA shall have no responsibility as to how such payment is allocated between NMT and MARKS, but that MARKS shall receive at least some portion of said payment as consideration for the rights and obligations incurred pursuant to this subparagraph.

4.3    AGA’s rights and license granted herein to AGA shall become effective as of the date that NMT receives the entire sum of thirty million dollars ($30,000,000) due to NMT under this Settlement and Mutual General Release Agreement. AGA’s failure to pay or cause to be paid to NMT the sum of thirty million dollars ($30,000,000) due to NMT shall be deemed a material breach of this Settlement and Mutual General Release Agreement, and AGA shall not receive any rights in, or license to, the LICENSED PATENTS.

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4.4    AGA’s payment of the sum of twenty nine million dollars ($29,000,000) to NMT in return for the past claims and rights relating thereto set forth in Paragraph 4.1 and the sum of one million dollars ($1,000,000) to NMT for the future license and rights relating thereto set forth in Paragraph 4.2 shall be up-front, final, complete, non-refundable, and irrevocable payments for the rights granted herein to AGA. NMT shall be entitled to keep the entire sum of thirty million dollars ($30,000,000) regardless of any future judicial or administrative determination of any of the LICENSED PATENTS’ validity or invalidity, or enforceability or unenforceability.

ARTICLE V -- CONFIDENTIALITY

5.1    The PARTIES agree that the terms and conditions of this Settlement and Mutual General Release Agreement, and all matters discussed during settlement negotiations between the PARTIES, are and shall remain strictly confidential and shall not be voluntarily disclosed to any third party, except as provided in Paragraphs 5.2 - 5.9 of this Article V.

5.2    If any of the PARTIES in connection with any legal proceeding receives a discovery request or subpoena requesting that it produce a copy of this Settlement and Mutual Release Agreement or that it disclose one or more of its terms, such PARTY shall make a timely objection to the request and as soo