Exhibit 10.1

Execution Version

SETTLEMENT AND LICENSE AGREEMENT

This Settlement and License Agreement (this “Agreement”) is entered into by and
between Endo Pharmaceuticals Inc. (“Endo”), Teikoku Pharma USA, Inc. (“TPU”),
Teikoku Seiyaku Co., Ltd. (“Teikoku Seiyaku,” and together with TPU, “Teikoku”,
and collectively with Endo, “Endo/Teikoku”), on the one hand, and Watson
Laboratories, Inc. (“Watson”), on the other hand. Endo, TPU, Teikoku Seiyaku and
Watson are individually referred to herein by name or the term “Party” and are
referred to collectively herein as the “Parties.” This Agreement is entered into
on and is effective as of May 28, 2012 (the “Effective Date”).

WHEREAS, Watson has filed Abbreviated New Drug Application (“ANDA”) No. 20-675
(“Watson’s ANDA”) with the United States Food and Drug Administration (“FDA”)
seeking approval to manufacture, market, and sell Watson’s Generic Product (as
defined below), which product is intended to be an AB-rated generic version of
Endo/Teikoku’s drug product Lidoderm®;

WHEREAS, Watson seeks approval to manufacture, market and sell Watson’s Generic
Product before the expiration of United States Patent No. 5,827,529 (the “’529
patent”), United States Patent No. 5,741,510 (the “’510 patent”), United States
Patent No. 6,096,333 (the “’333 patent”), United States Patent No. 6,096,334
(the “’334 patent”), United States Patent No. 5,536,263 (the “’263 patent”), and
United States Patent No. 6,361,790 (the “’790 patent”);

WHEREAS, in response to the filing of Watson’s ANDA, Endo/Teikoku filed suit
against Watson in the United States District Court for the District of Delaware
alleging infringement of the ’529 patent, styled Endo Pharmaceuticals Inc., et
al. v. Watson Laboratories, Inc., Civil Action No. 1:10-cv-138-GMS (the “’529
Lawsuit”);

WHEREAS, Endo also filed suit against Watson in the United States District Court
for the District of Delaware alleging infringement of the ’510 patent, the ’333
patent, and the ’334 patent styled Endo Pharmaceuticals Inc. v. Watson
Laboratories, Inc., Civil Action No. 11-cv-575-GMS (the “Rolf Lawsuit”, together
with the ’529 Lawsuit, the “Litigation”); and

WHEREAS, no Party admits liability, but each desires to resolve, compromise and
settle the Litigation on the terms and conditions set forth herein.

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

1. Definitions

 

  (a)

“Affiliate” means any current or future entity that directly or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with a given entity. For purposes of this definition, “control”
of a corporation or business entity means (i) the direct or indirect ownership
of fifty percent (50%) or more of the voting stock or other voting interests of

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  such corporation or business entity, or (ii) the ability in the ordinary
course to otherwise control and direct the election of fifty percent (50%) or
more of the board of directors or other governing body for such entity, whether
by the ownership of securities, by contract or otherwise.

 

  (b) “AG Product” means a generic version of the Brand Product that is
manufactured and sold under the Brand Product NDA without a trademark or using a
trademark other than Lidoderm® or a successor trademark thereto.

 

  (c) “Applicable Law” means all applicable statutes, ordinances, regulations,
rules or orders of any kind whatsoever of any Government Authority, including
the Federal Food, Drug, and Cosmetic Act, Prescription Drug Marketing Act,
Generic Drug Enforcement Act of 1992 (21 U.S.C. § 335a et. seq.) and
Anti-Kickback Statute (42 U.S.C. § 1320a-7b et. seq.) and all counterparts
thereto in other jurisdictions, all as amended from time to time.

 

  (d) “Brand Product” means the product that is approved for distribution and
sale under the Brand Product NDA and sold under the trademark Lidoderm® or any
successor trademark.

 

  (e) “Brand Product NDA” means New Drug Application No. 20-612 and any
amendments or supplements thereto.

 

  (f) “Bundled Sale” means, as defined in 42 C.F.R. § 447.502, an arrangement
regardless of physical packaging under which the rebate, discount, or other
price concession is conditioned upon the purchase of the same drug, drugs of
different types (that is, at the nine-digit National Drug Code (“NDC”) level) or
another product or some other performance requirement (for example, the
achievement of market share, inclusion or tier placement on a formulary), or
where the resulting discounts or other price concessions are greater than those
that would have been available had the bundled drugs been purchased separately
or outside the bundled arrangement.

 

  (g) “Expiration Date” means the date of expiration of the last to expire
Licensed Patent.

 

  (h) “Final Packaging” means the Labeling and packaging of Watson’s Generic
Product in accordance with Applicable Law and Watson’s ANDA, including the
package inserts and other components reasonably necessary for the sale or
distribution of the Finished Product to the ultimate consumer.

 

  (i) “Finished Product” means Watson’s Generic Product in its finished form for
Final Packaging, ready for sale to the market.

 

  (j)

“First Commercial Sale” means, with respect to Watson, the first date on which
Watson’s Generic Product is sold by or on behalf of Watson or its

 

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  Affiliates to wholesalers, distributors, retailers or through mail order in or
for the Territory or otherwise to any Third Party. “First Commercial Sale”
means, with respect to a Person other than Watson or its Affiliates, the first
date on which such Person’s Generic Product is sold by or on behalf of such
Person or its Affiliates to wholesalers, distributors, retailers or through mail
order in or for the Territory or otherwise to any Third Party.

 

  (k) “Generic Product” means (i) a generic equivalent of the Brand Product
approved under an Abbreviated New Drug Application or pursuant to an application
under 21 U.S.C. § 355(b)(2), including Watson’s Generic Product, or (ii) an AG
Product.

 

  (l) “Gross Profit” means the Net Sales of Watson’s Generic Product in a
calendar quarter or, if Watson’s royalty obligations under Section 3(a)
terminate prior to the end of a calendar quarter, a partial calendar quarter,
less an amount equal to the Manufacturing Cost of such Watson’s Generic Product
multiplied by the number of units of Watson’s Generic Product sold by Watson or
its Affiliates (other than its Wholesaler Affiliate) in such calendar quarter or
partial calendar quarter.

 

  (m) “Label”, “Labeled”, or “Labeling” means all labels and other written,
printed or graphic matter upon (i) any packing, container or wrapper utilized
with Watson’s Generic Product, or (ii) any written material accompanying
Watson’s Generic Product, including package inserts; or as the context requires,
the act of applying and/or using the same.

 

  (n) “Launch” means the First Commercial Sale of any Generic Product in the
Territory.

 

  (o) “Licensed Patents” means any and all patents now and in the future owned,
controlled, assigned, or licensed to Endo or Teikoku that are necessary for
Watson to make, have made, use, import, sell and offer for sale, Watson’s
Generic Product in or for the Territory, including, but not limited to the ’529
patent, ’510 patent, ’333 patent, ’334 patent, ’263 patent and ’790 patent, and
any current and future continuations, continuation-in-parts, divisionals,
reexaminations, and/or reissues of such patents.

 

  (p) “License Term” means the period commencing on the Start Date and ending on
the Expiration Date.

 

  (q) “Manufacturing Cost” with respect to Watson’s Generic Product means
(except as otherwise provided in this Agreement, including but not limited to
Section 4) the aggregate cost to manufacture, Label and package Watson’s Generic
Product, calculated as follows:

 

  i. If Watson’s Generic Product is manufactured and/or Labeled by Watson or an
Affiliate of Watson, Watson’s internal and external costs incurred in carrying
out the Processing Activities, facility charges for the Watson facility where
Watson’s Generic Product is manufactured (but excluding any allocations for
underutilized capacity of such facility), transporting and/or storing such
Watson’s Generic Product (including product testing activities relating to
quality assurance, quality control and regulatory compliance) to the extent
related and allocable to Watson’s Generic Product; and

 

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  ii. If Watson’s Generic Product is manufactured and/or Labeled by a Third
Party manufacturer, the amount paid or payable to such Third Party manufacturer
for any of the Processing Activities carried out by such Third Party
manufacturer attributable to a specified quantity of such Watson’s Generic
Product.

All costs included in Manufacturing Costs shall be a component of “Cost of
Sales” and shall be determined in accordance with United States generally
accepted accounting principles (“GAAP”), as consistently applied by Watson in
accordance with its past practice and in the ordinary course of its business and
on a basis consistent with Watson’s annual audited financial statements.

 

  (r) “Net Sales” means the gross amounts invoiced from the sale of Watson’s
Generic Product by Watson and its Affiliates to independent Third Parties in an
arms-length transaction, in each case after subtracting the following to the
extent specifically and solely allocated to Watson’s Generic Product and
actually taken, paid, accrued, allowed, included or allocated in the gross sales
prices with respect to such sales (and consistently applied as set forth below):

 

  i. all normal and customary discounts of any type or nature (such as
retroactive price reductions, cash discounts, volume discounts, chargebacks,
allowances, rebates, administrative fees, returns and credits given solely for
Watson’s Generic Product, excluding commissions for commercialization);

 

  ii. compulsory payments and cash rebates solely related to the sales of
Watson’s Generic Product paid to a government authority (or agent thereof)
pursuant to governmental regulations by reason of any national or local health
insurance program or similar program (such as Medicaid and Supplemental State
Program rebates, and Medicare Part D “Donut Hole” Coverage Gap rebates), to the
extent allowed and taken; and

 

  iii. one and one-half percent (1.5%) of the Watson gross Watson Generic
Product revenues on a quarterly basis to account for freight, shipping and
insurance costs incurred in shipping Watson’s Generic Product, and excise taxes,
use taxes, sales taxes and custom duties and/or government charges imposed on
the sales of Watson’s Generic Product.

 

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Notwithstanding the foregoing, Net Sales shall be determined in accordance with
GAAP in the Territory, consistently applied by Watson in accordance with its
past practice and in the ordinary course of its business and on a basis
consistent with Watson’s annual audited financial statements. All such
discounts, allowances, credits, rebates, and other deductions shall be fairly
and equitably allocated to Watson’s Generic Product and other generic products
of Watson and its Affiliates such that Watson’s Generic Product does not bear a
disproportionate portion of such deductions. For the avoidance of doubt,
inclusion of Watson’s Generic Product in Watson’s portfolio rebate program or
substantially similar customer rebate programs shall be permitted, provided that
such program does not discount Watson’s Generic Product at a rate or percentage
that is greater than the rate or percentage of discount applied to other generic
products in the same program. Watson’s Wholesaler Affiliate shall not be deemed
to be an Affiliate of Watson for purposes of this definition of “Net Sales”. For
the purpose of calculating Net Sales to its Wholesaler Affiliate, Net Sales of
Watson’s Generic Product sold by Watson or its Affiliates to its Wholesaler
Affiliate, shall be deemed to have been made at the higher of:

 

  A. the invoice price charged from Watson or its Affiliates to Watson’s
Wholesaler Affiliate, or

 

  B. the average Net Sales price of such Watson’s Generic Product based on sales
to Third Parties other than its Wholesaler Affiliate during the month in which
the sale was made.

In no event shall the royalties payable under Section 3(a) be taken as a
deduction from Net Sales.

 

  (s) “Officially Discontinue” means any of: (i) delisting the Brand Product
with the FDA; (ii) delisting the ‘529 patent and/or ‘510 patent from the Orange
Book; (iii) seeking action with the FDA to withdraw Brand Product from the
market, unless required, requested or recommended by the FDA or another
governmental authority to do so; or (iv) deleting, removing or canceling any
National Drug Code(s) for the Brand Product from the applicable National Drug
File.

 

  (t) “Person” means any person, corporation, partnership, joint venture,
association, joint-stock company, trust or unincorporated organization.

 

  (u)

“Processing Activities” means activities relating to production of Watson’s
Generic Product, including purchasing raw materials, manufacturing, processing,
quality control, filling, Labeling, packaging, finishing, release and

 

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  storage, and other activities required to be undertaken by Watson or its
suppliers and its permitted subcontractors in order to produce Finished Product,
and the tests and analyses conducted in connection therewith.

 

  (v) “Start Date” means the earliest of: (i) September 15, 2013; (ii) the date
of Launch of any Generic Product other than Watson’s Generic Product; or
(iii) the last day before Watson would forfeit its 180-day generic drug
exclusivity with respect to Watson’s Generic Product due to the operation of 21
U.S.C. 355(j)(5)(D)(ii) as a result of a forfeiture event under 21 U.S.C.
355(j)(5)(D)(i)(I).

 

  (w) “Territory” means the United States, including its territories,
possessions and the Commonwealth of Puerto Rico.

 

  (x) “Third Party” means any individual, sole proprietorship, partnership,
limited partnership, limited liability partnership, corporation, limited
liability company, business trust, joint stock company, trust, incorporated
association, joint venture or similar entity or organization, including a
government or political subdivision, department or agency of a government, other
than Endo/Teikoku and Watson and their respective Affiliates.

 

  (y) “Watson’s Generic Product” means Lidocaine Patch 5% that is the subject of
Watson’s ANDA, and all amendments and supplements thereto, and which is intended
to be AB-rated to the Brand Product.

 

  (z) “Wholesaler Affiliate” means a subsidiary or Affiliate of a Party whose
primary business is wholesale distribution of pharmaceutical products. For
purposes of this Agreement, Watson’s Wholesaler Affiliate as of the Effective
Date is Anda, Inc., Anda Pharmaceuticals, Inc., and Valmed Pharmaceuticals,
Inc., and shall include future such Affiliates from time to time.

2. Grant of Licenses

 

  (a) License. Subject to the terms and conditions of this Agreement,
Endo/Teikoku hereby grant to Watson a non-exclusive (other than pursuant to
Section 2(b)), royalty-bearing, non-transferable (other than pursuant to
Section 21) and non-sublicensable (other than pursuant to Section 2(c)) license
to the Licensed Patents to make, have made, import, use, sell, and offer for
sale Watson’s Generic Product in the Territory solely during the License Term.

 

  (b) AG Product. The license granted pursuant to Section 2(a) shall be
partially exclusive for a period of time in that Endo/Teikoku and their
respective Affiliates shall not market or sell a Generic Product, or authorize
or license a Third Party to market or sell an AG Product at any time before the
earlier of (i) seven and a half (7.5) months from the Start Date, and (ii) the
Launch of any Third Party Generic Product in the Territory.

 

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  (c) Sub-Licenses. Watson shall have the right to sub-license the license
granted pursuant to Section 2(a) to its Affiliates, but not to any Third Party,
provided that any such sub-license shall be subject to Endo’s prior written
consent, not to be unreasonably withheld or delayed.

 

  (d) Preparation For Generic Launch. Notwithstanding anything to the contrary
in this Agreement, Endo/Teikoku agree that Watson and its Affiliates may, in
advance of September 15, 2013, manufacture, have manufactured, import, store and
otherwise take such steps necessary to develop inventory of Watson’s Generic
Product, solely for the purpose of preparing for the First Commercial Sale of
Watson’s Generic Product on or after September 15, 2013. Endo/Teikoku further
agree that, beginning no earlier than forty-five (45) days prior to
September 15, 2013, Watson and its Affiliates (including its Wholesaler
Affiliate) may engage in taking orders or in any related pre-marketing
activities (including the disclosure of the September 15, 2013 date of the
Launch of Watson’s Generic Product to prospective customers) solely for the
purpose of preparing for such date.

 

  (e) Watson Sale Commencement Date. Subject to Section 2(d), Watson agrees, on
behalf of itself and its Affiliates, that, prior to the Start Date, it and its
Affiliates shall not directly or indirectly market, offer to sell, sell, have
sold, import, manufacture or have manufactured in the Territory any of Watson’s
Generic Product. Watson acknowledges and agrees that each of Endo and Teikoku
would be irreparably harmed should Watson breach this Section 2(e). Nothing in
this Agreement shall prohibit or preclude Watson from exercising its rights
under 35 U.S.C. § 271(e)(1).

 

  (f) No Implied Consents/Rights. Nothing herein will be deemed to be a consent
to or approval by Endo/Teikoku of any ANDA or similar application or filing by
Watson or any of its Affiliates in any foreign jurisdiction, or to permit Watson
or any of its Affiliates the right to reference or cross-reference any
Endo/Teikoku NDA or similar application or filing.

Moreover, except as expressly provided in Sections 2(a), 3(e) and 6,
Endo/Teikoku do not grant to Watson or any of its Affiliates or any other Person
any license, right or immunity, whether by implication, estoppel or otherwise,
other than as expressly granted herein. No rights are granted under this
Agreement by Endo/Teikoku to Watson to any patents (other than the Licensed
Patents) or to the use of any of Endo/Teikoku’s or their respective Affiliates’
know-how, trademarks, trade dress or any other trademark or trade dress
confusingly similar thereto, and all rights to those patents, trademarks and
trade dress are expressly reserved by Endo/Teikoku, as the case may be. Nothing
herein will be deemed to require Endo/Teikoku to provide any know-how or other
confidential information to Watson.

 

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  (g) Licensed Patents. As among the Parties, Endo/Teikoku will have the sole
right, but not the obligation, to prosecute, maintain, enforce and defend the
Licensed Patents in their respective sole discretion. Watson will have no right
to prosecute, maintain, enforce or defend any Licensed Patent.

 

  (h) No Challenge to Licensed Patents. From and after the Effective Date,
Watson agrees, on behalf of itself and its Affiliates, that it and its
Affiliates shall not, directly or indirectly, challenge (a) the validity or
enforceability of the Licensed Patents, (b) Endo/Teikoku’s ownership of or
license right to the Licensed Patents, or (c) that the manufacture, use, sale or
importation of Watson’s Generic Product infringes the Licensed Patents,
including by suing, directly or indirectly, Endo or Teikoku or any of their
respective Affiliates in any action in any forum seeking an order or decision
that any of the Licensed Patents is invalid or unenforceable or that the
manufacture, use or sale of Watson’s Generic Product does not infringe the
Licensed Patents. Further, from and after the Effective Date Watson will not,
and will cause its Affiliates to not, directly or indirectly, voluntarily
participate in or support any such challenges relating to any Generic Product by
any Person. For the avoidance of doubt, any assistance provided to Third Parties
prior to the Effective Date shall not be deemed a breach of this Section 2(h).
Notwithstanding the foregoing, nothing herein shall prevent Watson from
(i) maintaining the Paragraph IV Certifications contained in Watson’s ANDA,
(ii) amending Watson’s ANDA to include a Paragraph IV Certification to any
patents that may be listed after the Effective Date in the FDA’s Approved Drug
Products with Therapeutic Equivalence Evaluations (Orange Book) for the Brand
Product, or (iii) contesting the validity, enforceability or alleged
infringement of the Licensed Patents in any future causes of action or
litigation initiated against Watson or its Affiliates with respect to a product
or products other than Watson’s Generic Product.

 

  (i) Governmental Approvals. Endo/Teikoku make no representation that Watson
will be able to launch any Watson’s Generic Product as of the Start Date. Watson
agrees that, notwithstanding anything to the contrary herein, it and its
Affiliates will not sell any Watson’s Generic Product prior to obtaining FDA
approval to sell Watson’s Generic Product under Watson’s ANDA. Watson will be
solely responsible for, and will bear all costs involved in, the registration
and approval of Watson’s Generic Product with any governmental regulatory
agency.

 

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3. Royalty and Brand Product Supply

 

  (a) Beginning with the First Commercial Sale of Watson’s Generic Product and
until the date of the occurrence of the First Commercial Sale by a Third Party
or Endo/Teikoku or their Affiliates of a Generic Product or AG Product in the
Territory, Watson shall pay to Endo royalty payments equal to twenty-five
percent (25%) of all Gross Profit of Watson’s Generic Product. For the avoidance
of doubt, this royalty obligation is terminated entirely on the date of the
First Commercial Sale by a Third Party or Endo/Teikoku or their Affiliates of a
Generic Product or AG Product in the Territory, so that Watson will owe no
royalty as of that first date, other than royalties then accrued but not yet
paid. Watson’s obligation to make the payments in this Section 3(a) is triggered
upon the execution of this Agreement and is in no way dependent upon the number
of Licensed Patents that are in force at the time that a specific payment
becomes due, but shall expire on the Expiration Date or as provided above in
this Section 3(a).

Fifteen (15) days prior to the end of each calendar quarter for which royalties
are to be paid, Watson shall provide to Endo a good faith forecast of Gross
Profit, including a detail of Net Sales and Manufacturing Cost for that calendar
quarter. Ten (10) days after the end of each calendar quarter, Watson shall
provide a preliminary calculation of royalties due. Forty-five (45) days after
the end of each calendar quarter, Watson shall provide a final calculation of
royalties due based on actual quarterly Gross Profit, including a detail of
Gross Profit, Net Sales and Manufacturing Cost.

Payment of the amount due under this Section 3(a) shall be made by Watson to
Endo within forty-five (45) days following the end of each calendar quarter (or
the next business day thereafter) following the sale of the applicable Watson’s
Generic Product.

Watson agrees to keep, and shall cause its Affiliates (excluding its Wholesaler
Affiliate) to keep, accurate books of account and records in sufficient detail
to enable the royalties payable hereunder to be determined, and not more
frequently than once per year, duly authorized independent auditors selected by
Endo and acceptable to Watson, the acceptance of which shall not be unreasonably
withheld or delayed, shall have the right at all reasonable business hours on
reasonable advance notice to Watson, but subject to a non-use and nondisclosure
agreement reasonably acceptable to Watson, to perform an inspection of such
books of account and records. Such books of account and records shall be kept
available for at least three (3) years after the relevant Watson’s Generic
Product is sold. Royalties found to be due as a result of Endo’s examination of
Watson’s books of accounts shall be paid immediately. If such underpayment
exceeds five percent (5%) of the total amount owed to Endo for the period then
being audited, Watson shall reimburse Endo for the reasonable fees and expenses
of such independent auditor performing the

 

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audit. The audit rights and payments due, with interest, according to this
paragraph shall be Endo’s sole remedy for any Watson miscalculation or
underpayment of royalties due hereunder.

If Watson fails to pay any amounts when due, the payment shall accrue interest
from the date due through and including the date upon which Endo has received
payment in immediately available funds at a rate equal to the lower of one
percent (1%) per month or the highest rate allowed by Applicable Law.

All payments shall be made by wire transfer in United States Dollars to such
United States bank account as may be designated from time-to-time by Endo in
writing to Watson.

 

  (b) Endo/Teikoku shall provide, at no cost, to Watson’s Wholesaler Affiliate
Brand Product of value totaling twelve million dollars ($12,000,000) per month,
as measured at the time of each delivery by the then-prevailing Wholesale
Acquisition Cost as defined in the Red Book or, if the Red Book is not
available, any other comparable U.S. price listing (“WAC”), on the first
business day of each month beginning January 1, 2013 and ending August 1, 2013
(for a total of eight (8) months) for Watson’s Wholesaler Affiliate’s disposal
as provided in Section 3(e). Endo shall provide to Watson’s Wholesaler Affiliate
an invoice with respect to such Brand Product, which invoice shall reflect the
transfer of Brand Product to Watson’s Wholesaler Affiliate at no cost.
Notwithstanding the foregoing, Endo/Teikoku’s obligations under this
Section 3(b) shall terminate immediately upon the Launch of any Third Party
Generic Product in the Territory. The Brand Product provided to Watson’s
Wholesaler Affiliate by Endo/Teikoku shall have the same NDC number as the Brand
Product sold by Endo. In any month in which Endo/Teikoku has provided to
Watson’s Wholesaler Affiliate any Brand Product under this Section 3(b), and in
which a Third Party has Launched a Generic Product in the Territory, Watson
shall either (i) return to Endo a pro rata quantity of the Brand Product
delivered by Endo/Teikoku during such month, or (ii) reimburse Endo in cash for
the value of the Brand Product (based on the WAC measured at the time of
delivery by Endo/Teikoku to Watson’s Wholesaler Affiliate), in either case for
the pro rata portion of the month on and after such Launch computed as the
product of (A) (x) in the case of a return of Brand Product to Endo under clause
(i), the quantity of Brand Product delivered by Endo/Teikoku during such month,
or (y) in the case of a cash reimbursement to Endo under clause (ii), the value
of the Brand Product delivered by Endo/Teikoku, and (B) the number of days in
the month on and after such Launch divided by (C) the total number of days in
the month. Such return or reimbursement shall be made by Watson to Endo within
five (5) business days of the date of the Launch of a Generic Product in the
Territory.

 

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  (c) In the event that Watson does not receive final FDA approval for Watson’s
Generic Product by January 1, 2014, Endo/Teikoku shall provide, at no cost, to
Watson’s Wholesaler Affiliate Brand Product of value totaling six million six
hundred sixty-six thousand six hundred and sixty-seven dollars ($6,666,667), per
month, as measured at the time of each delivery by the then-prevailing WAC, on
the first business day of each month beginning January 1, 2014 and ending on the
earlier of (i) the first to occur of (x) the final approval by the FDA of
Watson’s Generic Product or (y) the Launch of any Generic Product by a Third
Party in the Territory, or (ii) December 1, 2014 (for a total of up to twelve
(12) months), for Watson’s Wholesaler Affiliate’s disposal as provided in
Section 3(e). Endo shall provide to Watson’s Wholesaler Affiliate an invoice
with respect to such Brand Product, which invoice shall reflect the transfer of
Brand Product to Watson’s Wholesaler Affiliate at no cost. The Brand Product
provided to Watson’s Wholesaler Affiliate by Endo/Teikoku shall have the same
NDC number as the Brand Product sold by Endo. For avoidance of doubt,
Endo/Teikoku’s obligations under this Section 3(c) shall terminate immediately
upon the earlier of the final approval by the FDA of Watson’s Generic Product or
the Launch of any Generic Product by a Third Party in the Territory. In any
month in which Endo/Teikoku has provided to Watson’s Wholesaler Affiliate any
Brand Product under this Section 3(c), and in which the FDA has finally approved
Watson’s Generic Product or a Third Party has Launched a Generic Product in the
Territory, Watson shall either (i) return to Endo a pro rata quantity of the
Brand Product delivered by Endo/Teikoku during such month, or (ii) reimburse
Endo in cash for the value of the Brand Product (based on the WAC measured at
the time of delivery by Endo/Teikoku to Watson’s Wholesaler Affiliate), in
either case for the pro rata portion of the month on and after such approval or
Launch computed as the product of (A) (x) in the case of a return of Brand
Product to Endo under clause (i), the quantity of Brand Product delivered by
Endo/Teikoku during such month, or (y) in the case of a cash reimbursement to
Endo under clause (ii), the value of the Brand Product delivered by
Endo/Teikoku, and (B) the number of days in the month on and after such approval
or Launch divided by (C) the total number of days in the month. Such return or
reimbursement shall be made by Watson to Endo within five (5) business days of
the earlier of the date of final approval by the FDA of Watson’s Generic Product
or Launch of a Generic Product by a Third Party in the Territory.

 

  (d)

In the event that Watson does not receive final FDA approval for Watson’s
Generic Product by January 1, 2015, Endo/Teikoku shall provide, at no cost, to
Watson’s Wholesaler Affiliate Brand Product of value totaling seven million one
hundred eleven thousand one hundred and eleven dollars ($7,111,111) per month,
as measured at the time of each delivery by the then-prevailing WAC, on the
first business day of each month beginning January 1, 2015 and ending on the
earlier of (i) the first to occur of (x) the final approval by the FDA of
Watson’s Generic Product or (y) the Launch of any Generic Product by a Third
Party in the Territory, or (ii) September 1, 2015 (for a total

 

11

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  of up to nine (9) months), for Watson’s Wholesaler Affiliate’s disposal as
provided in Section 3(e). Endo shall provide to Watson’s Wholesaler Affiliate an
invoice with respect to such Brand Product, which invoice shall reflect the
transfer of Brand Product to Watson’s Wholesaler Affiliate at no cost. The Brand
Product provided to Watson’s Wholesaler Affiliate by Endo/Teikoku shall have the
same NDC number as the Brand Product sold by Endo. For avoidance of doubt,
Endo/Teikoku’s obligations under this Section 3(d) shall terminate immediately
upon the earlier of the final approval by the FDA of Watson’s Generic Product or
the Launch of any Generic Product by a Third Party in the Territory. In any
month in which Endo/Teikoku has provided to Watson’s Wholesaler Affiliate any
Brand Product under this Section 3(d), and in which the FDA has finally approved
Watson’s Generic Product or a Third Party has Launched a Generic Product in the
Territory, Watson shall either (i) return to Endo a pro rata quantity of the
Brand Product delivered by Endo/Teikoku during such month, or (ii) reimburse
Endo in cash for the value of the Brand Product (based on the WAC measured at
the time of delivery by Endo/Teikoku to Watson’s Wholesaler Affiliate), in
either case for the pro rata portion of the month on and after such approval or
Launch computed as the product of (A) (x) in the case of a return of Brand
Product to Endo under clause (i), the quantity of Brand Product delivered by
Endo/Teikoku during such month, or (y) in the case of a cash reimbursement to
Endo under clause (ii), the value of the Brand Product delivered by
Endo/Teikoku, and (B) the number of days in the month on and after such Launch
divided by (C) the total number of days in the month. Such return or
reimbursement shall be made by Watson to Endo within five (5) business days of
the earlier of the date of final approval by the FDA of Watson’s Generic Product
or Launch of a Generic Product by a Third Party in the Territory.

 

  (e) The Brand Product supplied by Endo/Teikoku to Watson’s Wholesaler
Affiliate under Sections 3(b) through (d) may be resold solely by Watson’s
Wholesaler Affiliate to Third Parties for use solely in the Territory on pricing
and other terms determined by Watson’s Wholesaler Affiliate in its sole
discretion, provided that neither Watson nor any of its Affiliates (including
its Wholesaler Affiliate) shall sell, distribute or dispose of Branded Product
in any manner that would constitute a Bundled Sale. Watson agrees that its
Wholesaler Affiliate will honor all Endo price-related contracts as communicated
to all Endo wholesalers from time to time in the ordinary course of business,
provided that the price related contracts do not impose any requirements on
Watson’s Wholesaler Affiliate that would be inconsistent with requirements
imposed upon other Lidoderm® wholesalers, and further provided that such
price-related contracts shall not conflict with the terms of this Agreement.
Watson shall comply with all Applicable Laws in connection with its resale of
the Brand Product.

 

  (f)

The Brand Product to be supplied to Watson’s Wholesaler Affiliate pursuant to
Sections 3(b) through (d) shall be delivered to Watson’s Wholesaler

 

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  Affiliate according and subject to the schedule, shipping arrangements and
other terms set forth in Exhibit B, and Watson’s Wholesaler Affiliate’s resale
of the Brand Product shall be subject to the terms set forth in Exhibit B.
Watson hereby agrees, on behalf of itself and its Affiliates (including its
Wholesaler Affiliate), to comply with the terms of Exhibit B. Watson shall be
fully responsible and liable for any breach by its Affiliates (including its
Wholesaler Affiliate) of Exhibit B. Watson promptly shall notify Endo in writing
of any new Watson Wholesaler Affiliate established after the Effective Date.

 

  (g) The Brand Product delivered to Watson’s Wholesaler Affiliate pursuant to
Sections 3(b), 3(c) and 3(d) shall have, at the time of delivery, a remaining
shelf-life of not less than twenty-four (24) months.

 

  (h) Endo may request from time to time, and upon such request Watson shall
promptly provide, and shall cause its Wholesaler Affiliate to promptly provide,
to Endo all data relating to sales made by Watson’s Wholesaler Affiliate of
Brand Product that is reasonably necessary, as determined by Endo, for Endo to
comply with its obligations under Applicable Law. In the event of any change in
Applicable Law after the Effective Date that would result in the transactions
contemplated under this Section 3 to affect Endo’s “best price” under 42 U.S.C.
1396r-8 for the Brand Product, Watson agrees to negotiate in good faith with
Endo amendments to this Agreement to mitigate the effects of such change in
Applicable Law. Notwithstanding the foregoing, Watson and its Wholesaler
Affiliate shall not be required to provide data that would identify the unit
prices paid by a specific customer for Brand Product unless required by
Applicable Law, and then only in such manner as would ensure that such data is
disclosed only to such Endo employees who have a need to receive such data in
order to comply with Applicable Law and are obligated to maintain such data as
confidential. In no event shall such data be disclosed to any individual who has
any commercial responsibility for selling or marketing Brand Product.

 

  (i) Endo/Teikoku and Watson agree that the Brand Product provided by
Endo/Teikoku to Watson’s Wholesaler Affiliate hereunder is a good-faith,
bargained-for resolution of the claims at issue in the Litigation. The Brand
Product provided hereunder is not contingent on any past or future purchase of
any product from Endo or Teikoku by Watson or any of its Affiliates.

 

  (j)

Endo/Teikoku shall not be liable for delay or nonperformance in whole or in part
under Sections 3(b), 3(c) and 3(d) where Endo/Teikoku’s performance has been
prevented or delayed by a condition beyond Endo/Teikoku’s reasonable control,
including fires, floods, embargoes, shortages, epidemics, quarantines, war, acts
of war (whether war be declared or not), terrorism, insurrections, riots, civil
commotion, strikes, lockouts or other labor disturbances, acts of God or acts,
omissions or delays in acting by any

 

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  governmental authority; provided that if prevented or delayed by such a
condition Endo/Teikoku shall, within ten (10) days of its occurrence, give
notice to Watson stating the nature of the condition, its anticipated duration
and any action being taken to avoid or minimize its effect. The suspension of
performance shall be of no greater scope and no longer duration than is
reasonably required and Endo/Teikoku shall use commercially reasonable efforts
to remedy its inability to perform. If Endo/Teikoku is the owner and/or
beneficiary under an insurance policy that covers such business interruption,
and pursuant to that policy Endo/Teikoku is compensated for any losses with
respect to the Brand Product suffered as a result of the conditions described
above, Endo/Teikoku shall reimburse Watson’s Wholesaler Affiliate out of such
insurance policy compensation, on a pro rata basis relative to the losses
suffered by each of the Parties, for Watson’s losses resulting from
Endo/Teikoku’s delay or non-performance as described in this Section 3(j). Such
reimbursement shall constitute Watson’s and its Affiliates’ sole and exclusive
remedy for Endo/Teikoku’s delay or non-performance in whole or in part under
Sections 3(b), 3(c) and 3(d), to the extent caused by a condition described in
this Section 3(j).

 

  (k) Watson shall use best efforts to obtain final FDA approval for Watson’s
Generic Product.

4. Manufacturing Cost Adjustment. The Manufacturing Cost adjustment for Watson’s
Generic Product applicable with respect to any calendar quarter shall be set not
later than the last day of the prior calendar quarter, beginning with Q3 2013
(i.e., set not later than June 30, 2013). Manufacturing Cost will be adjusted at
the time the applicable Manufacturing Cost is set by Watson in the ordinary
course consistent with past practice for its products, but in no event less
frequently than on a calendar quarter basis, solely to reflect any increase or
decrease in actual Manufacturing Cost for Watson’s Generic Product.

5. Non-Interference

 

  (a)

Up to and until the FDA’s approval of any Generic Product, including Watson’s
Generic Product, Endo/Teikoku and their Affiliates will not (i) submit or cause
others to submit any new Citizen Petition that would prevent, delay, or
otherwise hinder Watson’s ability to obtain FDA approval for Watson’s Generic
Product; (ii) amend or submit new filings related to Citizen Petition Docket No.
FDA-2006-P-0346-0006; or (iii) change or amend the indication of the Brand
Product. Endo/Teikoku will not at any time bring suit against FDA or Watson
regarding or relating in any way to Watson’s Generic Product to or with an
effect that would interfere with, hinder, or prevent Watson’s ability to receive
and/or maintain FDA approval of Watson’s Generic Product. Nothing in this
provision shall prohibit Endo/Teikoku or their respective Affiliates from
responding to questions from FDA or a Third Party regarding Citizen Petition
Docket No. FDA-2006-P-0346-0006; taking any action, or causing others to take
any action, required, requested or

 

14

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  recommended by the FDA or other governmental authority; intervening in any
lawsuit relating to the Brand Product or any Generic Product; or taking any
action, or causing others to take any action as required by Applicable Law. If
Endo/Teikoku intervenes in any lawsuit pursuant to this provision, Endo/Teikoku
will not make any affirmative statements specifically against Watson’s Generic
Product, including, but not limited to, the FDA approvability thereof.

 

  (b) Watson and its Affiliates will not submit or cause others to submit any
Citizen Petition relating in any way to Watson’s Generic Product. Watson and its
Affiliates will not submit or cause others to submit any data or information to
FDA related to Citizen Petition Docket No. FDA-2006-P-0346-0006 unless FDA
requests such information or data from Watson or otherwise requires Watson to
provide such information or data as a condition to obtaining approval of
Watson’s ANDA. Further, at no time will Watson or its Affiliates bring or cause
others to bring suit against Endo/Teikoku regarding or relating in any way to
Citizen Petition Docket No. FDA-2006-P-0346-0006. Nothing in this provision
shall prohibit Watson from taking any action, or causing others to take any
action, required or recommended by the FDA or other governmental authority or as
required by Applicable Law.

 

  (c) Endo/Teikoku shall not Officially Discontinue the Brand Product prior to
the expiration of the Licensed Patents, unless required, requested or
recommended in writing by the FDA or other governmental authority or Applicable
Law. For avoidance of doubt, nothing in this Paragraph obligates Endo/Teikoku to
engage in any marketing or selling activities or make any expenditures for the
Brand Product at any time, nor prohibits Endo/Teikoku from taking any action, or
causing others to take any action, reasonably necessary to provide for the
safety and efficacy of, or improve, any Endo or Teikoku (including their
Affiliates) product.

6. Covenant Not to Sue. Effective as of the Start Date, Endo/Teikoku covenants
to Watson that Endo/Teikoku and their Affiliates will not sue, assert any claim
or counterclaim against, otherwise participate in any action or proceeding
against Watson and its Affiliates or any of their shareholders, licensees,
sublicensees, customers, suppliers, importers, manufacturers, distributors,
insurers, or any heirs, administrators, executors, predecessors, successors, or
assigns of the foregoing, or cause, assist, or authorize any person or entity to
do any of the foregoing, in each case claiming or otherwise asserting that
Watson’s Generic Product or the manufacture, use, sale, offer for sale, or
importation of Watson’s Generic Product, in or for the Territory, as permitted
under this Agreement, infringes any Licensed Patents (“Covenant Not To Sue”).
The Covenant Not To Sue is non-exclusive, and its term is coextensive with the
License Term. Endo/Teikoku shall impose this Covenant Not To Sue on any Third
Party to which Endo/Teikoku or any of their respective Affiliates may after the
Effective Date assign, license or otherwise transfer or grant any patent rights
subject to the foregoing Covenant Not To Sue.

 

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7. Releases.

 

  (a) Subject to the terms and conditions of this Agreement, and effective upon
the entry of both Joint Stipulated Orders of Dismissal Without Prejudice
attached as Exhibit A, each of Endo, TPU, and Teikoku Seiyaku, for (i) itself,
(ii) each of its respective Affiliates and (iii) the predecessors, successors
and assigns of Endo, TPU, and/or Teikoku Seiyaku and each of their respective
Affiliates (collectively, the “Endo/Teikoku Releasors”), hereby fully, finally,
and forever releases and discharges (A) Watson, (B) its Affiliates, and (C) the
predecessors, successors, assigns, customers, consumers, distributors,
manufacturers, and importers of Watson and its Affiliates (collectively, the
“Watson Releasees”) from any and all claims, causes of action, suits,
liabilities, damages, judgments, costs, expenses, losses, or other obligations
whatsoever, known or unknown, asserted or unasserted, suspected or unsuspected,
choate or inchoate, in law or equity, from the beginning of the world to the
Effective Date, arising from or relating to the claims, counterclaims and
defenses brought in the Litigation, the filing and prosecution of the
Litigation, the submission to the FDA of any patent for listing in the FDA’s
Orange Book or any Citizen’s Petition or amendment thereto, or the filing of
Watson’s ANDA seeking approval of Watson’s Generic Product, including without
limitation any antitrust or unfair competition claims (collectively, “Released
Claims”), except with respect to the representations, agreements, rights, and
obligations of the Parties under this Agreement.

 

  (b) Subject to the terms and conditions of this Agreement, and effective upon
the entry of both Joint Stipulated Orders of Dismissal Without Prejudice
attached as Exhibit A, Watson, for (i) itself, (ii) each of its Affiliates, and
(iii) the predecessors, successors, and assigns of itself and its Affiliates
(collectively, the “Watson Releasors” and, collectively with the Endo/Teikoku
Releasors, the “Releasors”), fully, finally, and forever hereby releases and
discharges (A) Endo/Teikoku, (B) their Affiliates, and (C) the predecessors,
successors, and assigns of Endo/Teikoku and each of their Affiliates
(collectively, the “Endo/Teikoku Releasees” and, together with the Watson
Releasees, the “Releasees”) from any and all claims, causes of action, suits,
liabilities, damages, judgments, costs, expenses, losses, or other obligations,
whatsoever, known or unknown, asserted or unasserted, suspected or unsuspected,
choate or inchoate, in law or equity, from the beginning of the world to the
Effective Date, arising from or relating to Released Claims, except with respect
to the representations, agreements, rights, and obligations of the Parties under
this Agreement.

 

  (c) It is the intention of each Releasor to fully, finally, and forever
release all Releasees from all Released Claims. The releases contained in this
Section 7 will be and remain in effect notwithstanding the discovery subsequent
to the Effective Date of any presently existing fact, and further, mistakes of
fact or law will not constitute grounds for modification, avoidance, or
rescission.

 

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  (d) Covenant Not to Sue Regarding Released Claims. Each Party covenants and
agrees that neither such Party nor any Releasor on whose behalf such Party has
released any claims hereunder will sue or bring any action or cause of action,
including, without limitation, by way of third party claim, cross-claim or
counterclaim, regarding any Released Claim, except as contemplated by the second
paragraph of Section 9 and by Section 14(c).

8. Dismissal of Litigation. No later than three (3) days after the Effective
Date, each Party will execute and deliver to the other Parties, or cause their
respective attorneys of record in the Litigation to execute and deliver to the
other Parties, the Joint Stipulated Orders of Dismissal Without Prejudice
attached hereto as Exhibit A, and the attorneys for Endo/Teikoku shall submit
such executed Joint Stipulated Orders of Dismissal Without Prejudice to the
court in the Litigation. If for any reason the court in the Litigation does not
approve the Joint Stipulated Orders of Dismissal Without Prejudice and enter
them as orders of the court, the Parties agree to confer promptly in good faith
in an effort to modify the Joint Stipulated Orders of Dismissal Without
Prejudice and this Agreement or take such other action as is required to
overcome the court’s objections.

9. Regulatory Compliance. No later than ten (10) business days after the
Effective Date, the Parties each shall submit this Agreement (including all
attachments and exhibits hereto) to the U.S. Federal Trade Commission (“FTC”)
and U.S. Department of Justice (“DOJ”) (collectively, the “Agencies”) in order
to comply with the requirements of Title XI, Subtitle B of the Access to
Affordable Pharmaceuticals Act (the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003, Pub. L. 108-173), as amended. Each of the Parties
will use its reasonable efforts to fully cooperate with any investigation that
may ensue as a result of such submission. If any government investigation or
litigation is instituted, each Party will use its reasonable efforts to defend
this Agreement in any such investigation or litigation, and to resist and
contest any proposals or efforts to materially alter the terms thereof so as to
permit the Parties to fulfill their obligations under and to obtain the full
benefits contemplated by this Agreement, including using their reasonable
efforts to promptly meet in good faith to renegotiate and modify this Agreement,
provided that such modifications do not materially change the transactions
contemplated hereby. Each Party reserves the right to communicate with the FTC
or DOJ regarding such filings as it believes appropriate. Each Party shall keep
the other Parties reasonably informed of such communications and shall not
disclose any confidential information of any other Party without such other
Party’s consent, which will not be unreasonably withheld or delayed.

If at any time this Agreement is rendered null and void with respect to the
Territory, or any portion thereof by the actions of a Third Party or government
entity, or if the Parties cannot fulfill their respective obligations with
respect to this Agreement, it is the intent of the Parties that no Party will be
in any way prejudiced with respect to its claims, causes of action, defenses and
counterclaims in the Litigation, and no consent judgment, order or dismissal
entered by a Party pursuant to this Agreement in the Territory or portion
thereof, as applicable, will be deemed an admission on the part of such Party,
and the Parties would be free to assert any and all claims and defenses with
respect to the reinstated portion of the Litigation in any future litigation.

 

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10. Fees and Costs. Each Party shall bear its own attorneys’ fees and costs
related to the dispute between the Parties, the Litigation, and this Agreement.

11. Representations and Warranties.

 

  (a) Each Party hereto represents and warrants to the other Parties, as of the
Effective Date, as follows:

 

  i. it has all requisite corporate power and authority to enter into this
Agreement and to perform its obligations hereunder and to grant the licenses,
releases, promises, covenants, and other rights contained herein;

 

  ii. all acts required to be taken by it to authorize the execution and
delivery and performance of this Agreement, and the consummation of the
transactions contemplated herein have been duly and properly taken, and no other
corporate proceedings on its part are necessary to authorize such execution,
delivery, and performance;

 

  iii. this Agreement has been duly executed and delivered by it and constitutes
a legal, valid, and binding obligation of it, enforceable against it in
accordance with its terms; and

 

  iv. this Agreement does not conflict with any other agreements to which it or
any of its Affiliates may be a party.

 

  (b) Each Party shall act in good faith, and shall cause its Affiliates to act
in good faith, to effectuate the intents and purposes of this Agreement, and
neither any Party nor any of their Affiliates shall act in a manner inconsistent
with the terms of this Agreement. For the avoidance of doubt, nothing herein
shall preclude Endo/Teikoku from asserting the validity, enforceability, and/or
infringement of the Licensed Patents in any future litigation concerning any
product that is not Watson’s Generic Product, and nothing herein shall preclude
Watson from challenging the infringement, validity and/or enforceability of any
of the Licensed Patents in defending any future allegation of infringement of
any of the Licensed Patents in any future litigation against Watson or its
Affiliates that does not involve Watson’s Generic Product.

 

  (c) Endo represents and warrants that it owns the ’510 patent, the ’333
patent, the ’334 patent, the ’263 patent, and the ’790 patent and has the right
to grant the licenses and covenants in this Agreement related thereto. Teikoku
Seiyaku represents and warrants that Teikoku Seiyaku owns the ’529 patent and
has the right to grant the licenses and covenants in this Agreement related
thereto.

 

  (d) Watson represents and warrants that its Wholesaler Affiliate, as of the
Effective Date, is Anda, Inc., Anda Pharmaceuticals, Inc., and Valmed
Pharmaceuticals, Inc.

 

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  (e) ENDO/TEIKOKU ARE LICENSING THE LICENSED PATENTS TO WATSON ON AN “AS IS”
BASIS. ENDO/TEIKOKU MAKE NO WARRANTIES EITHER EXPRESS OR IMPLIED OF ANY KIND,
AND HEREBY EXPRESSLY DISCLAIM ANY WARRANTIES, REPRESENTATIONS OR GUARANTEES OF
ANY KIND AS TO THE LICENSED PATENTS AND THE SUBJECT OF ANY LICENSE OR COVENANT
NOT TO SUE HEREUNDER, INCLUDING ANY WARRANTIES OF MERCHANTABILITY, FITNESS,
ADEQUACY OR SUITABILITY FOR A PARTICULAR PURPOSE, USE OR RESULT, AND ANY
WARRANTIES OF FREEDOM OF INFRINGEMENT OF ANY PATENTS, COPYRIGHTS, TRADE SECRETS
OR OTHER PROPRIETARY RIGHTS. NONE OF ENDO/TEIKOKU NOR ANY EMPLOYEE OR AGENT
THEREOF, SHALL HAVE ANY LIABILITY TO WATSON, ITS AFFILIATES, OR ANY OTHER PERSON
ARISING OUT OF THE USE OF THE LICENSED PATENTS, INCLUDING TO THE LACK OF
MERCHANTABILITY, NON-INFRINGMENT INADEQUACY OR UNSUITABILITY OF THE LICENSED
PATENTS FOR ANY PARTICULAR PURPOSE OR TO PRODUCE ANY PARTICULAR RESULT, OR FOR
ANY LATENT DEFECTS THEREIN.

12. Independent Contractor Status. The Parties hereto are entering into this
Agreement as independent contractors, and nothing herein is intended or shall be
construed to create between the Parties a relationship of principal and agent,
partners, joint venturers or employer and employee. No Party shall hold itself
out to others or seek to bind or commit the other Party in any manner
inconsistent with the foregoing provision of this Agreement.

13. Press Releases. Each of the Parties hereto shall issue press releases in the
form attached hereto as Exhibits C and D, respectively.

14. Term; Termination.

 

  (a) The term of this Agreement will commence on the Effective Date and, unless
terminated in accordance with this Agreement, will continue through the end of
the License Term.

 

  (b)

If any Party at any time materially fails to abide by or fails to perform in any
material respect any of the terms and conditions of this Agreement, each of the
other Parties will have the right to terminate this Agreement upon sixty
(60) days written notice specifying the default complained of, setting forth the
underlying reasons for its belief that a default has occurred and the remedy
sought, provided that such notice of termination will not be effective if the
defaulting Party has cured such breach within such sixty (60) day period. In the
event of a bona-fide dispute as to whether a default has occurred and if either
Party has initiated in good faith a legal proceeding in a court of competent
jurisdiction challenging the occurrence of such default, the above

 

19

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  cure period shall be tolled during any such proceeding concerning such
bona-fide dispute. For the avoidance of doubt, the Parties understand and agree
that any material breach by any Party’s Affiliates and/or sublicensees shall
constitute a material breach of this Agreement. Endo/Teikoku shall have the
right to terminate the Agreement upon written notice effective immediately if
(i) Watson or any of its Affiliates challenges the infringement, validity or
enforceability of the Licensed Patents, or if Watson or any of its Affiliates
participates in or supports, directly or indirectly, any such challenges by any
Third Party, except Watson shall be permitted to maintain the Paragraph IV
certifications contained in Watson’s ANDA and except Watson shall be permitted
to contest the validity, enforceability or alleged infringement of the Licensed
Patents to the extent permitted by Section 2(h)(iii); or (ii) Watson or any of
its Affiliates makes, has made, uses, offers for sale, sells or imports in the
U.S., directly or indirectly, Watson’s Generic Product or assists or authorizes
any Third Party to do any of the foregoing or otherwise breaches Section 2(e)
prior to the Start Date, subject to Watson’s allowed pre-Start Date activities
outlined in Section 2(d). A termination of this Agreement by one Party shall be
deemed to be a termination of this Agreement as to all Parties.

 

  (c) If this Agreement is terminated for any reason: (i) Endo/Teikoku will have
the right to recommence or refile the Litigation before the United States
District Court for the District of Delaware; (ii) each Party consents, with
respect to any such refiled Litigation or declaratory judgment action, to
(A) the jurisdiction of the United States District Court for the District of
Delaware, and irrevocably and unconditionally waives any objection to the laying
of venue in such court or that the Litigation or declaratory judgment action has
been brought in an inconvenient forum, (B) waive any statute of limitations
defenses in connection with such recommenced or refiled Litigation or
declaratory judgment action, and (C) have the Court enter a decision in the ‘529
Lawsuit based upon the evidence and argument previously presented at trial in
such Lawsuit; (iii) the licenses and Covenant Not To Sue granted herein
automatically and immediately will terminate; (iv) Watson will have the right to
defend itself on any basis, including challenging the infringement, validity and
enforceability of the Licensed Patents; and (v) the Agreement will not be
available as evidence in any proceeding. Termination or expiration of this
Agreement shall not release any Party from liability (in an action at law or
otherwise) for any obligations, liabilities or damages incurred prior to such
termination and arising out of a breach of any of its representations,
warranties, covenants or agreements set forth in this Agreement.

 

  (d) Sections 2(f), 9 (second paragraph), 10, 11(d) and 14(c) will survive the
expiration or termination of this Agreement.

15. Entire Agreement. This Agreement (including all attachments hereto)
constitutes the entire agreement and understanding between the Parties with
respect to the

 

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matters contained herein, and there are no prior oral or written promises,
representations, conditions, provisions, or terms related thereto other than
those set forth in this Agreement. No Party is relying on any promises,
representations, conditions, provisions, or terms other than those set forth in
this Agreement. The Parties may modify the provisions of this Agreement only by
mutual agreement in writing signed by all Parties.

16. Severability. If any provision of this Agreement or the application of any
such provision to any person or circumstance is declared judicially or by
arbitration to be invalid, unenforceable, or void, such decision shall not have
the effect of invalidating or voiding the remainder of this Agreement, and it is
the intent and agreement of the Parties that this Agreement shall be deemed
amended by modifying such provision to the extent necessary to render it valid,
legal, and enforceable while preserving as much as possible its intent or, if
such modification is not possible, by replacing it with another provision that
is legal and enforceable and that achieves similar objectives.

17. Non-Waiver; Equitable Relief; Remedies Cumulative

 

  (a) The failure of any Party to enforce any provision of this Agreement at any
time shall not be construed as a present or future waiver of such provision, or
any other provision of this Agreement. The express waiver by any Party of any
provision or requirement hereunder shall neither be deemed nor operate as a
future waiver of such or any other provision or requirement.

 

  (b) All rights, remedies, undertakings, obligations and agreements contained
in this Agreement shall be cumulative, and none of them shall be a limitation of
any other remedy, right, undertaking, obligation or agreement of the Parties.

18. Drafting and Negotiation. The Parties agree and acknowledge that this
Agreement is the product of all Parties and shall not be construed against any
Party.

19. Applicable Law. The validity and interpretation of this Agreement and the
legal relations of the Parties to it shall be governed by the laws of the State
of Delaware applicable to contracts entered into and intended to be enforced in
such jurisdiction, including its statutes of limitation and repose, without
regard to any otherwise applicable principles of conflict of laws, provided
that, with respect to resolution of patent disputes, the validity and
interpretation of this Agreement and the legal relations of the Parties shall be
governed by the laws of the United States as interpreted by the U.S. Court of
Appeals for the Federal Circuit.

20. Further Assurances. Each Party agrees to do and perform all such further
acts and things and shall execute and deliver such other agreements,
certificates, instruments, and documents necessary or that any other Party may
deem advisable in order to carry out the intent and accomplish the purposes of
this Agreement and to better evidence, perfect, or otherwise confirm its rights
hereunder.

21. Assignment. This Agreement will be binding upon and inure to the benefit of
the Parties and their permitted successors and assigns. This Agreement and the
rights granted herein may not be assigned or transferred (whether by contract,
operation of law or otherwise) by any

 

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Party without the prior written consent of the other Parties, provided that this
Agreement shall be assignable by a Party in connection with the sale of all or
substantially all of the assets of the business of such Party to which this
Agreement relates, and provided further that (a) the Party whose assets are
being sold notifies the other Parties of any such assignment of this Agreement
in writing (including the identity of the assignee) no later than five
(5) business days prior to such assignment, and (b) the purchaser of those
assets provides written confirmation that it agrees to assume all of the
assigning Party’s obligations hereunder. The covenants, rights and obligations
of each Party under this Agreement shall remain binding upon such Party
notwithstanding any assignment or transfer of this Agreement by such Party as
permitted by this Section 21, and also shall inure to the benefit of and be
binding upon any permitted assignee or transferee of this Agreement.

22. Notices. All notices hereunder shall be in writing and shall be deemed to
have been duly given if delivered personally, one day after delivery to a
nationally recognized overnight delivery service, charges prepaid, or three days
after sent by registered or certified mail, postage prepaid:

 

For Endo:    Endo Pharmaceuticals Inc.    Attention: Chief Legal Officer    100
Endo Boulevard    Chadds Ford, PA 19317

with a copy to (which shall not constitute notice hereunder):

   Dechert LLP    Cira Centre   

2929 Arch Street

Philadelphia, PA 19104-2808

Attention: Martin Black

For TPU:    Teikoku Pharma USA, Inc.    Attention: Legal Department   

1718 Ringwood Avenue

San Jose, California 95131-1711

with a copy to (which shall not constitute notice hereunder):

   Squire Sanders LLP    275 Battery Street, Suite 2600    San Francisco,
California 94111    Attention: Noriyuki Shimoda For Teikoku    Teikoku Seiyaku
Co., Ltd.        Seiyaku:    Attention: Legal Department    567 Sanbonmatsu,   
Higashikagawa, Kagawa 769- 2695    Japan

 

22

--------------------------------------------------------------------------------

In the case of Watson:    Watson Laboratories, Inc.    Attention: Legal
Department    400 Interpace Parkway    Parsippany, NJ 07054

with copies to (which shall not constitute notice hereunder):

   Winston & Strawn LLP    35 W. Wacker Drive    Chicago, IL 60601    Attention:
Michael K. Nutter

Such addresses may be altered by written notice.

23. Counterparts. This Agreement may be executed in any number of counterparts,
including by facsimile or other electronic signature, and execution by each of
the Parties of any one of such counterparts will constitute due execution of
this Agreement. Each such counterpart hereof shall be deemed to be an original
instrument, and all such counterparts together shall constitute but one
agreement.

24. Irreparable Harm. Each Party acknowledges and agrees that, in the event of
any threatened or actual breach by it of any provision of this Agreement
(including Sections 2(e) and 2(h)), the other Parties will suffer immediate and
irreparable injury not fully compensable by monetary damages and for which the
other Parties may not have an adequate remedy at law. Accordingly, each Party
agrees that if one of the other Parties institutes an action or proceeding to
enforce any provisions of this Agreement, such other Party or Parties will be
entitled to seek injunctive or other equitable relief as may be necessary or
appropriate to enjoin, prevent or curtail any such breach or threatened breach
without the requirement of posting any bond. The foregoing will be in addition
to and without prejudice to such other rights as each Party may have under this
Agreement, at law or in equity.

25. Rules of Interpretation and Construction. In this Agreement, except to the
extent expressly provided otherwise:

 

  (a)

The definitions of the terms herein shall apply equally to the singular and
plural forms of the terms defined. Neutral pronouns and any variations thereof
shall be deemed to include the feminine and masculine and all terms used in the
singular shall be deemed to include the plural, and vice versa, as the context
may require. The words “include”, “includes” and “including” shall be deemed to
be followed by the phrase “without limitation”. The word “will” shall be
construed to have the same meaning and effect as the word “shall”. The word
“any” shall mean “any and all” unless otherwise clearly indicated by context.
“$” as used in this Agreement means the lawful

 

23

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  currency of the United States of America. Where either Party’s consent is
required hereunder, except as otherwise specified herein, such Party’s consent
may be granted or withheld in such Party’s sole discretion. Derivative forms of
any capitalized term defined herein shall have meanings correlative to the
meaning specified herein.

 

  (b) Unless the context requires otherwise: (i) any definition of or reference
to any agreement, instrument or other document herein shall be construed as
referring to such agreement, instrument or other document as from time to time
amended, supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein or therein), (ii) any
reference to any laws herein shall be construed as referring to such laws as
from time to time enacted, repealed or amended, (iii) any reference herein to
any Person shall be construed to include the Person’s successors and permitted
assigns, (iv) the words “herein”, “hereof” and “hereunder”, and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, and (v) all references herein to Articles,
Sections, Appendices or Exhibits, unless otherwise specifically provided, shall
be construed to refer to Articles, Sections, Appendices or Exhibits of this
Agreement.

[signatures begin on next page]

 

24

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In witness whereof, this Agreement is signed as of the Effective Date as
indicated below by duly authorized representatives of Endo, TPU, Teikoku
Seiyaku, and Watson, respectively.

 

ENDO PHARMACEUTICALS INC. By:  

/s/ David P. Holveck

Name:  

David P. Holveck

Title:  

President and Chief Executive Officer

TEIKOKU PHARMA USA, INC.

By:  

/s/ Masahisa Kitagawa

Name:  

Masahisa Kitagawa

Title:  

President & CEO

TEIKOKU SEIYAKU CO., LTD.

By:  

/s/ Misako Fujioka

Name:  

Misako Fujioka

Title:  

President & CEO

WATSON LABORATORIES, INC.

By:  

/s/ David A. Buchen

Name:  

David A. Buchen

Title:  

Chief Legal Officer & Secretary

 

25

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EXHIBIT A

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF DELAWARE

 

ENDO PHARMACEUTICALS INC.,

TEIKOKU PHARMA USA, INC. and

TEIKOKU SEIYAKU CO., LTD.,

 

Plaintiffs/Counterclaim Defendants,

 

v.

   )

)

)

)

)

)

)

  

 

 

    Civil Action No. 1:10-cv-138-GMS

   )   

WATSON LABORATORIES, INC.,

 

Defendant/Counterclaim Plaintiff.

   )

)

)

)

)

  

JOINT STIPULATED ORDER OF DISMISSAL WITHOUT PREJUDICE

WHEREAS, Plaintiffs Endo Pharmaceuticals Inc., Teikoku Pharma USA, Inc., and
Teikoku Seiyaku Co., Ltd. (collectively “Plaintiffs”) filed Civil Action
No. 1:10-cv-138-GMS asserting, inter alia, that the filing of Abbreviated New
Drug Application No. 20-675 (the “Watson ANDA”) by Defendant Watson
Laboratories, Inc. (“Watson”) with the United States Food and Drug
Administration, including Watson’s request to engage in the commercial
manufacture, use, importation, sale and/or offer for sale of a generic version
of Plaintiffs’ Lidoderm® product prior to the expiration of United States Patent
No. 5,827,529 (“’529 patent”), was an act of patent infringement;

WHEREAS, Watson denied infringement of the ’529 patent and asserted defenses and
counterclaims related thereto;

WHEREAS, Plaintiffs agree to dismiss without prejudice any and all of its claims
and defenses against Watson in the instant action, and Watson agrees to dismiss
without prejudice any and all of its counterclaims and defenses in the instant
action;

 

26

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WHEREAS, the Plaintiffs and Watson have entered into a Settlement and License
Agreement, dated as of May 28, 2012 (“Settlement and License Agreement”),
pursuant to which the parties have resolved the above-referenced action and
Plaintiffs have granted to Watson and its affiliates party thereto a license
under the ‘529 Patent in the United States;

WHEREAS, the Parties have submitted their underlying agreement to the Court
under seal.

NOW, THEREFORE, the Parties stipulate that:

 

  1. Watson covenants that Watson, its Affiliates and their respective officers,
agents, servants, employees and attorneys, and those persons in active concert
or participation with Watson, shall not, until the applicable Start Date (as
defined in the Settlement and License Agreement) manufacture, use, market, offer
for sale, or sell in the United States, or import into the United States, any
product that is marketed and/or sold under the Watson ANDA, except that Watson
shall be permitted to manufacture and market (but not use or sell) such products
for a reasonable period of time prior to the applicable Start Date solely for
the purpose of selling such products only on or after the Start Date, as set
forth in the Settlement and License Agreement. This covenant shall terminate
automatically upon the applicable Start Date as defined in the Settlement and
License Agreement.

 

  2. The Court retains jurisdiction over this Stipulated Order of Dismissal, and
the interpretation of the Settlement and License Agreement as it pertains to
this Stipulated Order of Dismissal, in the event of any dispute concerning it.

 

27

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IT IS HEREBY STIPULATED AND AGREED that all claims, including counterclaims, and
defenses in this action are hereby dismissed without prejudice on the terms of
the parties’ agreement, with each party bearing its own costs and fees.

SO ORDERED, this      day of             , 2012.

 

 

Gregory M. Sleet United States District Judge

JOINTLY SUBMITTED BY

 

BY: MORRIS, NICHOLS, ARSHT & TUNNELL LLP     BY: PHILLIPS, GOLDMAN & SPENCE,
P.A.

 

   

 

Jack B. Blumenfeld (#1014)

Julia Heaney (#3052)

1201 North Market Street

P.O. Box 1347

Wilmington, DE 19899

(302) 658-9200

jheaney@mnat.com

Attorneys for Plaintiffs Endo Pharmaceuticals Inc., Teikoku Pharma USA, Inc.,
and Teikoku Seiyaku Co., Ltd.

   

John C. Phillips, Jr. (#110)

Megan C. Haney (#5016)

1200 North Broom Street

Wilmington, DE 19806

(302) 655-4200 (telephone)

(302) 655-4210 (facsimile)

jcp@pgslaw.com

Attorneys for Defendant Watson Laboratories, Inc.

 

28

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF DELAWARE

 

ENDO PHARMACEUTICALS INC.,

 

Plaintiff/Counterclaim Defendant,

 

v.

   )

)

)

)

)

)

  

 

 

    Civil Action No. 1:11-cv-575 (GMS)

WATSON LABORATORIES, INC.,

 

Defendant/Counterclaim Plaintiff.

   )

)

)

  

JOINT STIPULATED ORDER OF DISMISSAL WITHOUT PREJUDICE

WHEREAS, Plaintiff Endo Pharmaceuticals Inc. (“Endo”) filed Civil Action
No. 1:11-cv-575-GMS asserting, inter alia, that the filing of Abbreviated New
Drug Application No. 20-675 (the “Watson ANDA”) by Defendant Watson
Laboratories, Inc. (“Watson”) with the United States Food and Drug
Administration, including Watson’s request to engage in the commercial
manufacture, use, importation, sale and/or offer for sale of a generic version
of Endo’s Lidoderm® product prior to the expiration of United States Patent
No. 5,741,510, was an act of patent infringement and seeking a declaratory
judgment that Watson’s commercial manufacture, distribution, use and sale of a
generic version of Endo’s Lidoderm® product would infringe United States Patent
No. 6,096,333 and United States Patent No. 6,096,334 (collectively, the
“Asserted Patents”);

WHEREAS, Watson denied infringement and asserted defenses and counterclaims
related thereto;

WHEREAS, Endo agrees to dismiss without prejudice any and all of its claims and
defenses against Watson in the instant action, and Watson agrees to dismiss
without prejudice any and all of its counterclaims and defenses in the instant
action;

--------------------------------------------------------------------------------

WHEREAS, the Plaintiffs and Watson have entered into a Settlement and License
Agreement, dated as of May 28, 2012 (“Settlement and License Agreement”),
pursuant to which the parties have resolved the above-referenced action and
Plaintiffs have granted to Watson and its affiliates party thereto a license
under the Asserted Patents in the United States;

WHEREAS, the Parties have submitted their underlying agreement to the Court
under seal.

NOW, THEREFORE, the Parties stipulate that:

1. Watson covenants that Watson, its Affiliates and their respective officers,
agents, servants, employees and attorneys, and those persons in active concert
or participation with Watson, shall not, until the applicable Start Date (as
defined in the Settlement and License Agreement) manufacture, use, market, offer
for sale, or sell in the United States, or import into the United States, any
product that is marketed and/or sold under the Watson ANDA, except that Watson
shall be permitted to manufacture and market (but not use or sell) such products
for a reasonable period of time prior to the applicable Start Date solely for
the purpose of selling such products only on or after the Start Date, as set
forth in the Settlement and License Agreement. This covenant shall terminate
automatically upon the applicable Start Date as defined in the Settlement and
License Agreement.

2. The Court retains jurisdiction over this Stipulated Order of Dismissal, and
the interpretation of the Settlement and License Agreement as it pertains to
this Stipulated Order of Dismissal, in the event of any dispute concerning it.

 

2

--------------------------------------------------------------------------------

IT IS HEREBY STIPULATED AND AGREED that all claims, including counterclaims, and
defenses in this action are hereby dismissed without prejudice on the terms of
the parties’ agreement with each party bearing its own costs and fees.

SO ORDERED, this      day of             , 2012.

 

 

Gregory M. Sleet United States District Judge

JOINTLY SUBMITTED BY

 

BY: MORRIS, NICHOLS, ARSHT & TUNNELL LLP      BY: PHILLIPS, GOLDMAN & SPENCE,
P.A.

 

    

 

Jack B. Blumenfeld (#1014)

Julia Heaney (#3052)

1201 North Market Street

P.O. Box 1347

Wilmington, DE 19899

(302) 658-9200

jheaney@mnat.com

Attorneys for Plaintiff Endo Pharmaceuticals Inc.

    

John C. Phillips, Jr. (#110)

Megan C. Haney (#5016)

1200 North Broom Street

Wilmington, DE 19806

(302) 655-4200 (telephone)

(302) 655-4210 (facsimile)

jcp@pgslaw.com

Attorneys for Defendant Watson Laboratories, Inc.

 

3

--------------------------------------------------------------------------------

Exhibit B

 

  1. Shipment And Delivery.

 

  a. Unless otherwise agreed by Endo and Watson in writing, Endo will determine
the time, route, and carrier for all Brand Product shipments. Endo will use
commercially reasonable efforts to ship all Brand Product according to the
schedule set forth in Sections 3(b), (c) and (d) of the Agreement.

 

  b. Endo shall ship all orders freight prepaid FOB Shipping Point to Watson’s
Wholesaler Affiliate.

 

  c. Watson shall pay transportation costs associated with all Brand Product
shipments.

 

  d. Unless Watson’s Wholesaler Affiliate receives Endo’s prior written consent
to the contrary, Watson’s Wholesaler Affiliate shall (i) accept delivery of all
Brand Product and (ii) accept the entire shipment from the carrier as delivered,
and (iii) not reject or refuse any part of the shipment from the carrier for any
reason.

 

  e. Watson’s Wholesaler Affiliate shall visually inspect each shipment of Brand
Product for external damage or loss in transit and shall notify Endo in writing
(or by e-mail) of any shortage or other non-conformity in any order delivery
within five (5) business days of the delivery thereof. With respect to
non-conformities of Brand Product that by their nature are not discoverable upon
a reasonable visual inspection (“Hidden Defects”), the parties agree that:
(i) Watson’s Wholesaler Affiliate shall notify Endo promptly upon learning of or
discovering a Hidden Defect; and (ii) the Parties shall promptly discuss the
situation and agree on a reasonable and appropriate resolution under the
circumstances. Watson’s Wholesaler Affiliate shall not revoke its acceptance of
any shipment and acknowledges and agrees that risk of loss shall not pass back
to Endo because of any such shipping error, known damage, or known shortage, nor
for any other reason.

 

  f. Watson’s Wholesaler Affiliate shall not require the carrier to sort or
segregate any shipment made hereunder unless Watson’s Wholesaler Affiliate
accepts responsibility for all additional carrier charges.

 

  2. Handling And Storage of Brand Product.

 

  a. Watson’s Wholesaler Affiliate shall maintain and provide to Endo, upon
Endo’s request, documentation verifying that Watson’s Wholesaler Affiliate has
met all legal and regulatory license and similar requirements in accordance with
Federal, state, and local laws, including all applicable licenses or
certifications associated with pharmaceutical distribution in the Territory.

 

4

--------------------------------------------------------------------------------

  b. Watson’s Wholesaler Affiliate shall immediately notify Endo of any denial,
revocation or suspension of any such license or registration or any changes in
the type or class of products that Watson’s Wholesaler Affiliate is authorized
to distribute and that would have a material adverse effect on Watson’s
Wholesaler Affiliate’s ability to distribute Brand Product in the Territory. In
such an event, Watson shall have the right to designate an alternative
distributor or wholesaler or Watson Affiliate to distribute Brand Product under
the terms and conditions of this Agreement, and Watson shall cause such
alternative distributor, wholesaler or Watson Affiliate to comply with the terms
of this Exhibit B and Watson shall be fully responsible and liable for any
breach by such distributor, wholesaler or Watson Affiliate of this Exhibit B. In
the event Watson’s Wholesaler Affiliate notifies Endo of any such denial,
revocation, suspension or change, Endo shall have the right in its sole and
absolute discretion, upon written notice to Watson, to terminate or suspend
shipments of Brand Product until such time as such license or registration is
restored, or until Watson has made an alternative designation permitted above.

 

  c. Watson/Watson’s Wholesaler Affiliate shall maintain Brand Product according
to all Brand Product storage requirements and specifications, including, without
limitation, Brand Product labeling and other instructions from Endo. Further,
Watson shall not sell or return for credit damaged Product as a result of
Watson’s/Watson’s Wholesaler Affiliate’s noncompliance with the storage and
handling requirements set forth in this Section.

 

  d. Watson/Watson’s Wholesaler Affiliate shall not alter, modify, replace, or
reproduce any Brand Product labeling, trade dress, packaging, or advertising
without Endo’s prior written consent.

 

  e. Watson/Watson’s Wholesaler Affiliate shall notify Endo promptly, but in any
event no later than twenty-four (24) hours from receipt, of any notification of
any investigation or inspection by a Federal, state or local governmental agency
directed to Watson/Watson’s Wholesaler Affiliate relating to the Brand Product,
and shall notify Endo in writing in advance of any intended response.
Watson/Watson’s Wholesaler Affiliate shall allow Endo, at its discretion, to
assist in any such response. Watson/Watson’s Wholesaler Affiliate shall
immediately provide to Endo copies of any and all associated written
correspondence received from and provided to any governmental agency within two
(2) business days of the receipt or provision thereof. During the course of such
investigation or inspection, Watson/Watson’s Wholesaler Affiliate shall keep
Endo fully informed of the steps taken by Watson/Watson’s Wholesaler Affiliate
to resolve any outstanding issues with any governmental agency and the
anticipated timetable of resolution of such issues as it applies to Brand
Product. Watson’s/Watson’s Wholesaler Affiliate’s obligations under this Section
shall be performed to the extent permitted by Applicable Law.

 

5

--------------------------------------------------------------------------------

  3. Brand Product Returns.

 

  a. Endo shall have no liability for counterfeit goods, diverted goods or
adulterated goods returned to and accepted by Watson’s Wholesaler Affiliate.

 

  4. Adverse Events. In the event that Watson/Watson’s Wholesaler Affiliate is
notified by any Third Party of an Adverse Event (as defined below) concerning
Brand Product, Watson/Watson’s Wholesaler Affiliate shall immediately provide to
such party the Adverse Event reporting phone number listed on the Brand Product
package or insert. Watson/Watson’s Wholesaler Affiliate shall also report
Adverse Event information directly to Endo within twenty-four (24) hours of
notification of such Adverse Event utilizing the phone number listed on the
Brand Product package or insert. Unless Watson/Watson’s Wholesaler Affiliate is
required by law to report a complaint or Adverse Event, only Endo shall
(i) notify the appropriate federal, state and local authorities of any
complaints from Watson/Watson’s Wholesaler Affiliate, customer or end-users,
Adverse Events, or other occurrences regarding Brand Product that are required
to be reported, (ii) evaluate any and all written complaints from
Watson/Watson’s Wholesaler Affiliate, customer or end-users and Adverse Events,
and (iii) respond regarding such complaints and Adverse Events, as Endo deems
appropriate.

“Adverse Event” shall mean any event reportable under the Code of Federal
Regulations (“CFR”), Title 21, Section 314.80 (Post-marketing reporting of
adverse drug experiences).

 

  5. No License. Nothing in this Agreement shall be construed as granting or
implying the grant of a license to Watson under any patent, trademark or other
intellectual property rights held by Endo. Watson/Watson’s Wholesaler Affiliate
shall ensure that the Brand Product is distributed, sold, and advertised in the
form and with the labeling or marking designed by Endo and in accordance with
Applicable Laws, and Watson/Watson’s Wholesaler Affiliate shall not alter,
remove, or deface any trademark or label. Watson/Watson’s Wholesaler Affiliate
acknowledges that it shall have no right to distribute, transfer or sell any
item under Endo name or trademark if such item was not originally manufactured
or supplied by Endo/Teikoku.

 

  6. Representations, Warranties and Covenants of Watson/Watson’s Wholesaler
Affiliate.

 

  a. Watson’s Wholesaler Affiliate possesses the necessary capabilities,
facilities, personnel and expertise to distribute the Brand Product and perform
its other obligations and conduct its other activities under this Agreement.

 

6

--------------------------------------------------------------------------------

  b. Watson’s Wholesaler Affiliate has, and at all times during the License Term
shall maintain, all governmental licenses, permits and approvals required to
market, promote, distribute, offer for sale and sell Brand Product in the
Territory and to conduct all other activities required under this Agreement.

 

  7. Representations, Warranties and Covenants of Endo/Teikoku.

 

  a. All Brand Product supplied by Endo/Teikoku will be in conformity with all
Brand Product specifications set forth in the approved Brand Product labeling
and with all other applicable state and Federal laws and regulations.

 

  b. Each shipment of Brand Product delivered pursuant to this Agreement may, as
of the date of delivery, be introduced or delivered into interstate commerce
pursuant to applicable Federal, state and local laws, including applicable
provisions of the Federal Food, Drug and Cosmetic Act, Sections 351 and 361 of
the Federal Public Health Service Act, 42 U.S.C.A. §§ 262 and 264, and their
implementing regulations, each as amended and in effect at the time of shipment
or delivery of such Brand Products.

 

  c. Each shipment of Brand Product will not, on the date of shipment or
delivery by Endo/Teikoku, be adulterated, misbranded or otherwise prohibited
under the laws set forth in Section b above, as amended and in effect at the
time of shipment or delivery of such Brand Product.

 

  d. As of the date of delivery of Brand Product to Watson/Watson’s Wholesaler
Affiliate, it will convey to Watson/Watson’s Wholesaler Affiliate good title to
the Brand Product, free and clear of any security interests, liens or other
encumbrances.

 

  e. THE WARRANTIES SET FORTH IN THIS SECTION ARE IN LIEU OF ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, AND ENDO/TEIKOKU EXPRESSLY DISCLAIMS ANY AND ALL
OTHER WARRANTIES, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY
OR FITNESS FOR ANY PARTICULAR PURPOSE.

 

7

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EXHIBIT C

Watson Press Release

 

LOGO [g359761ex10_1stamp56.jpg]

NEWS RELEASE

 

CONTACTS:   Investors:   Lisa DeFrancesco   (862) 261-7152   Media:   Charlie
Mayr   (862) 261-8030

Watson Announces Lidoderm® Patent Challenge Settlement

- Provides Select Distribution of Endo’s Branded Lidoderm® Product Beginning
January 1, 2013 -

- Allows Launch of Watson Lidocaine Patch on September 15, 2013 If Approved by
FDA-

- Adds significant exclusive value to both 2013 and 2014; removes uncertainty -

PARSIPPANY, NJ – May xx, 2012 – Watson Pharmaceuticals, Inc. (NYSE: WPI) today
announced that its subsidiary, Watson Laboratories, Inc., has entered into an
agreement with Endo Pharmaceuticals Inc. and Teikoku Seiyaku Co., Ltd to settle
all outstanding patent litigation related to Watson’s generic version of
Lidoderm®. The agreement allows Watson to launch its lidocaine topical patch 5%
product on September 15, 2013, if approved by the U.S. Food and Drug
Administration (FDA). The license will be exclusive as to an authorized generic
version of Lidoderm until the earlier of a third party generic launch or seven
and one half months after Watson’s launch of its generic product. Endo will
receive 25% of the gross profit generated on Watson’s sales of its generic
version of Lidoderm® during Watson’s period of exclusivity.

--------------------------------------------------------------------------------

Additionally, under the terms of the agreement, Watson will receive and be able
to distribute equal amounts of branded Lidoderm® product from Endo valued at a
total of up to approximately $96 million during the first eight months of 2013.
In the event that Watson has not received FDA approval to launch its own
lidocaine topical patch 5% by January 1, 2014, Watson will receive additional
quantities of branded Lidoderm® product to distribute valued at up to
approximately $80 million in 2014 over a period of twelve months and in the
event that Watson has not received FDA approval to launch its own lidocaine
topical patch 5% by January 1, 2015, up to approximately $64 million over a
period of nine months in 2015. Watson’s availability of brand product would
cease upon the launch of any generic version of Lidoderm®.

“The agreement provides a date certain launch of competition for Endo’s branded
Lidoderm, eliminating any risks involving current pending or future patent
litigation surrounding the product,” said Paul Bisaro, Watson’s President and
CEO. “By entering into this agreement, Watson ensures that consumers may benefit
from generic competition at least two years prior to the 2015 patent expiry on
Lidoderm® assuming FDA approval. Additionally, consumers and Watson shareholders
will benefit from the January 2013 distribution of select amounts of branded
Lidoderm product. We remain confident in our ability to obtain final FDA
approval of our generic version of Lidoderm prior to our agreed launch date. ”

For the twelve months ending March 31, 2012, Lidoderm® had total U.S. sales of
approximately $1.2 billion according to IMS Health data.

About Watson Pharmaceuticals, Inc.

Watson Pharmaceuticals, Inc. is an integrated global specialty pharmaceutical
company. The Company is engaged in the development, manufacturing, marketing and
distribution of generic pharmaceuticals and specialized branded pharmaceutical
products focused on Urology and Women’s Health. The Company is also developing
biosimilar products in Women’s Health and Oncology. Additionally, Watson
distributes generic and branded pharmaceuticals through its Anda, Inc.
distribution business. Watson has operations in many of the world’s established
and growing international markets.

--------------------------------------------------------------------------------

For press release and other company information, visit Watson Pharmaceuticals’
Web site at http://www.watson.com.

Forward-Looking Statement

Statements contained in this press release that refer to non-historical facts
are forward-looking statements that reflect Watson’s current perspective of
existing information as of the date of this release. It is important to note
that Watson’s goals and expectations are not predictions of actual performance.
Actual results may differ materially from Watson’s current expectations
depending upon a number of factors, risks and uncertainties affecting Watson’s
business. These factors include, among others, the difficulty of predicting the
timing or outcome of product development efforts, including FDA and other
regulatory agency approvals and actions, if any; the impact of competitive
products and pricing; the timing and success of product launches; risks that
resolution of patent infringement litigation through settlement could result in
investigations or actions by private parties or government authorities or
agencies; difficulties or delays in manufacturing; the availability and pricing
of third party sourced products and materials; successful compliance with FDA
and other governmental regulations applicable to Watson and its third party
manufacturers’ facilities, products and/or businesses; changes in the laws and
regulations, including Medicare and Medicaid, affecting among other things,
pricing and reimbursement of pharmaceutical products; and such other risks and
uncertainties detailed in Watson’s periodic public filings with the Securities
and Exchange Commission, including but not limited to Watson’s Quarterly Report
on Form 10-Q for the quarter ended March 31, 2012 and Watson’s Annual Report on
Form 10-K for the year ended December 31, 2011. Except as expressly required by
law, Watson disclaims any intent or obligation to update these forward-looking
statements.

Lidoderm® is a registered trademark of Hind Health Care, Inc.

--------------------------------------------------------------------------------

EXHIBIT D

Endo Press Release

 

LOGO [g359761ex10_1stamp59.jpg]

 

For Immediate Release    CONTACT: Investors/Media    Media Blaine Davis    Kevin
Wiggins (610) 459-7158    (610) 459-7281 Investors    Jonathan Neely    (610)
459-6645   

ENDO ANNOUNCES RESOLUTION OF PATENT LITIGATION WITH WATSON

PHARMACEUTICALS RELATED TO LIDODERM®

Agreement protects Lidoderm intellectual property and eliminates uncertainty

CHADDS FORD, Pa. May XX, 2012 – Endo (Nasdaq: ENDP) announced today that it has
reached an agreement with Watson Pharmaceuticals (Watson) resolving two patent
infringement lawsuits related to LIDODERM (lidocaine patch 5%). A trial was held
on the first of these cases in February 2012, and this resolution was reached
prior to the Judge issuing a decision in the case.

“We are pleased to have reached an agreement that protects Endo’s intellectual
property interests and eliminates the uncertainty of a court decision,” said
Dave Holveck, President and CEO of Endo. “We believe this agreement will benefit
consumers and resolving this issue is another step forward in establishing Endo
as the dynamic, diversified healthcare solutions company that we are today.”

The settlement agreement outlines the terms of the agreement, which include:

 

  •  

Watson is unable to market a generic version of Lidoderm until the U.S. Food and
Drug Administration (FDA) approves Watson’s abbreviated new drug application
(ANDA) for its lidocaine patch 5% product.

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  •  

If the FDA approves Watson’s ANDA prior to September 15, 2013, Watson must wait
until that day to market its generic product, except under certain limited
circumstances.

 

  •  

Endo will provide $12 million in branded Lidoderm product, based on wholesale
acquisition cost, to Watson each month from January through August of 2013.

 

  •  

If the FDA does not approve Watson’s ANDA by Dec. 31st, 2013, Endo will provide
$6.67 million in branded Lidoderm product, based on wholesale acquisition cost,
to Watson each month in 2014 that Watson’s ANDA has not received FDA approval.

 

  •  

If the FDA does not approve Watson’s ANDA by Dec. 31st, 2014, Endo will provide
$7.11 million in branded Lidoderm product, based on wholesale acquisition cost,
to Watson each month from January 2015 through September 2015 that Watson’s ANDA
has not received FDA approval.

 

  •  

The license to Watson is exclusive as to Endo’s launch of an authorized generic
(AG) version of Lidoderm until the earlier of 1) the introduction of a generic
version of Lidoderm by a company other than Watson, or 2) seven and a half
months after Watson launches its generic version of Lidoderm.

 

  •  

During any exclusivity period Watson may have following the launch of its
generic product, Watson will pay a 25% royalty on gross profit to Endo until
another generic enters the market including any authorized generic.

The agreement reflects the uncertainty created by the regulatory challenges
facing generic manufacturers seeking to market a generic version of Lidoderm. In
December 2006, Endo filed a Citizen Petition (CP) with FDA raising questions
about whether FDA’s proposed approval requirements for generic Lidoderm were
sufficient to determine bioequivalence. The CP raised a number of factors that
should be considered by FDA, including the appropriate safety and efficacy
metrics, in establishing bioequivalence for a locally acting topical drug that
produces a unique partial sensory block in patients suffering from Post Herpetic
Neuralgia (PHN). In March 2012, Endo submitted an amended CP highlighting the
scientific and regulatory support for requiring generic manufacturers to conduct
comparative clinical endpoint studies to demonstrate

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bioequivalence to locally acting topical products like Lidoderm. The Citizen
Petition is currently under review by FDA and the company continues to believe
in the merits of the arguments set forth in the CP.

Additional background information about Lidoderm and Endo’s amended CP can be
found at http://www.endo.com/investors/overview.

The company expects to take a charge in reported earnings in the second quarter
of 2012, which could be material, primarily related to the fair value on a
probability adjusted basis of branded Lidoderm product to be provided to Watson
under the terms of the settlement agreement. Endo has filed a Current Report on
a Form 8-K with the U.S. Securities and Exchange Commission containing further
details of the settlement as well as a copy of the settlement agreement.

About Endo

Endo Health Solutions Inc. (Endo) is a US-based diversified healthcare company
that is redefining healthcare value by finding solutions for the unmet needs of
patients along care pathways for pain management, pelvic health, urology,
endocrinology and oncology. Through our operating companies: AMS, Endo
Pharmaceuticals, HealthTronics and Qualitest, Endo is dedicated to improving
care through a combination of branded products, generics, devices, technology
and services that creates maximum value for patients, providers and payers
alike. Learn more at www.endo.com.

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our future financial results and could cause our actual results to differ
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