Exhibit 10.02





Exhibit 10.2




SETTLEMENT AND LICENSE AGREEMENT




This SETTLEMENT AND LICENSE AGREEMENT (“Agreement”), effective as of the Effective Date (as
defined below), is made by and among LecTec Corporation, a Minnesota corporation having its
principal place of business at 1407 S. Kings Highway, Texarkana, TX 75501 (“LecTec”) and
Endo Pharmaceuticals Inc., a Delaware corporation having its principal place of business at 100
Endo Boulevard, Chadds Ford, PA 19317 (“Endo”). LecTec and Endo are hereinafter
collectively referred to as the “Parties”, and each individually as a “Party”.



RECITALS




WHEREAS, LecTec is the owner of United States Patent Nos. 5,536,263 and 5,741,510 (the
“Patents-In-Suit”);



WHEREAS, LecTec and Endo are litigants in a civil action pending in the United States District
Court for the Eastern District of Texas, captioned LecTec Corporation v. Chattem, Inc., Endo
Pharmaceuticals Inc., et al, Civil Action No. 5:08cv130 (DF) (the “Texas Litigation”);



WHEREAS, LecTec and Endo recognize the uncertainty of the outcome of disputed, complex
litigation such as the Texas Litigation, as well as the extended time it could take to resolve
matters by litigation, and have independently concluded that their respective interests are best
served by compromising and thereby terminating and concluding the Texas Litigation and all disputes
between them.



NOW, THEREFORE, in consideration of the covenants, conditions and obligations expressed
herein, and intending to be legally bound thereby, the Parties hereto agree as follows:



ARTICLE I.

DEFINITIONS





Section 1.1. Definitions. The following terms will have the meanings provided below:



“Affiliate” shall mean, with respect to any entity, any other entity that directly or
indirectly, through one or more intermediaries, controls, is controlled by or is under common
control with such first entity. The term “control” (including its correlative meanings “controlled
by” and “under common control with”) shall mean possession, directly or indirectly, of power to
direct or cause the direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise).




“Agreement” has the meaning specified in the introductory paragraph hereof.



“Covenant Not To Sue” has the meaning specified in Section 3.2.


 


 









 





“Covenant Patents” means (a) any and all United States and foreign patents and patent
applications owned or controlled by LecTec or its Affiliates as of the Effective Date, (b) all
continuations, continuations-in-part and divisionals thereof, (c) any United States patents
resulting from the reissue or reexamination of any of the patents and applications set forth in
clauses (a) or (b) above, and (d) any United States and foreign patents or patent applications
claiming common priority with any of the patents or applications set forth in clauses (a), (b) or
(c) above (whether claiming priority from such patents and patent applications or forming the basis
of priority for such patents and patent applications), in each case including all extensions
thereof.




“Covenant Term” has the meaning specified in Section 3.3(b).



“Dismissal Date” means the date on which the Texas Litigation is dismissed against
Endo pursuant to the Stipulation of Dismissal to be filed by the Parties pursuant to this
Agreement.



“Effective Date” means the latest date on which each Party has provided to the other a
fully executed counterpart of this Agreement.




“Endo” has the meaning specified in the introductory paragraph hereof.



“Endo Products” means any and all products offered for sale or sold by Endo or any of
its Affiliates at any time on or prior to the Effective Date.




“Endo Releasing Parties” has the meaning specified in Section 2.2(b).



“Field of Use” means any and all uses in connection with any and all prescription pain
medicines and treatments, in any dosage form, for humans or animals.




“LecTec” has the meaning specified in the introductory paragraph hereof.




“LecTec Releasing Parties” has the meaning specified in Section 2.2(a).




“License” has the meaning specified in Section 3.1.



“Licensed Patents” means the (a) Patents-In-Suit, (b) any continuations,
continuations-in-part or divisionals of the Patents-In-Suit and any United States patents resulting
from any reissue or reexamination of the Patents-In-Suit, (c) any United States or foreign patents
or patent applications claiming common priority to any of the patents or patent applications set
forth in clauses (a) and (b) above (whether claiming priority from such patents and patent
applications or forming the basis of priority for such patents and patent applications), and (d)
any foreign counterparts to any of the patents and patent applications set forth in clauses (a),
(b) and (c) above, in each case including all extensions thereof.




“License Fee” has the meaning set forth in Section 3.4.



“License Term” has the meaning specified in Section 3.3(a).


 


Page 2 of 18









 






“Orange Book” has the meaning specified in Section 3.5.



“Party” and “Parties” have the meanings specified in the introductory
paragraph hereof.




“Patents-In-Suit” has the meaning set forth in the recitals.



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




“Texas Litigation” has the meaning set forth in the recitals.



“Third Party” means any Person other than Endo and LecTec and their respective
Affiliates.



ARTICLE II.

SETTLEMENT; DISMISSAL OF ACTION; RELEASE




Section 2.1. Required Filings. On the Effective Date, LecTec and Endo will execute
and deliver to the other Party, or cause their respective attorneys of record in the Texas
Litigation to execute and deliver to the other Party, the Stipulation of Dismissal attached hereto
as Appendix A, pursuant to which the Parties will stipulate to the dismissal of the Texas
Litigation with prejudice and without costs. Promptly after the Effective Date, the attorneys for
Endo and LecTec shall submit such executed Stipulation of Dismissal to the court in the Texas
Litigation. Within sixty (60) days of the filing of the Stipulation of Dismissal, LecTec will
comply with Section 23 of the Agreed Protective Order with respect to all Endo Confidential
Discovery Material (as defined in the Protective Order), including without limitation by returning
to Endo (rather than destroying) all of Endo’s production documents received by LecTec.



Section 2.2. Releases. (a) Effective on the Dismissal Date, LecTec, on behalf of
itself and its past and present Affiliates and its and their respective successors and assigns
(collectively, the “LecTec Releasing Parties”), does hereby release and forever discharge
Endo and its respective past, present and future Affiliates and their respective successors and
assigns and their respective past, present and future employees, officers, directors, principals,
agents, attorneys, accountants, shareholders, licensees, sublicensees, customers, suppliers,
contractors, importers, manufacturers, distributors, insurers, or any heirs, administrators,
executors, predecessors, successors, affiliates, or assigns of the foregoing, from any and all
claims, rights, causes of action, counterclaims, defenses, damages and liabilities whatsoever,
whether based on federal, state, local, statutory or common law or any other law, rule or
regulation, whether known or unknown, whether accrued and existing or which may arise or accrue
after the date hereof, which (i) relate to any products sold or offered for sale by Endo and (ii)
either (a) were asserted or could have been asserted in the Texas Litigation by any LecTec
Releasing Party, or (b) in any way relate to, arise from, or are in any manner connected to the
Patents-In-Suit.


 


Page 3 of 18









 





(b) Effective on the Dismissal Date, Endo, on behalf of itself and its past and present
Affiliates and its and their respective successors and assigns
(collectively, the “Endo Releasing Parties”), does hereby release and forever
discharge LecTec and its respective past, present and future Affiliates and their respective
successors and assigns and their respective past, present and future employees, officers,
directors, principals, agents, attorneys, accountants, shareholders, licensees, sublicensees,
customers, suppliers, contractors, importers, manufacturers, distributors, insurers, or any heirs,
administrators, executors, predecessors, successors, affiliates, or assigns of the foregoing, from
any and all claims, rights, causes of action, counterclaims, defenses, damages and liabilities
whatsoever, whether based on federal, state, local, statutory or common law or any other law, rule
or regulation, whether known or unknown, whether accrued and existing or which may arise or accrue
after the date hereof, which were asserted or could have been asserted in the Texas Litigation by
any Endo Releasing Party which relate to the Patents-in-Suit or any products sold or offered for
sale by LecTec.



(c) LecTec and Endo agree and acknowledge that this Agreement is the result of a compromise
and shall never be construed as any admission by either of them of any liability, wrongdoing, or
responsibility on its part.



Section 2.3. Costs; Dismissals. All dismissals of all claims and counterclaims
specified in Section 2.1 will be without costs to either Party and will include an
irrevocable release by each Party, on behalf of itself and its Affiliates, of all claims for
attorneys’ fees. Each Party will bear its own costs in connection with entering into this
Agreement and the negotiation and submission of the dismissals specified in Section 2.1.



ARTICLE III.

LICENSE AND COVENANT NOT TO SUE




Section 3.1. License. LecTec hereby grants to Endo, and Endo hereby accepts, a
perpetual, irrevocable, non-terminable, fully paid-up, royalty-free and worldwide license (the
“License”), under the Licensed Patents, during the Licensed Term, to develop, make, have
made, use, sell, offer to sell, market, distribute, import and otherwise exploit any and all
current and future products, services, methods and processes. The License shall be exclusive to
Endo and sublicenseable by Endo within the Field of Use. The License shall be non-exclusive and
non-sublicenseable as to all fields outside of the Field of Use, except that Endo may grant
sublicenses outside of the Field of Use to manufacturers for the sole and limited purpose of making
Endo products and selling/importing such Endo products to Endo, which Endo ultimately re-sells
under this License. LecTec retains no rights under the Licensed Patents in the Field of Use. Endo
shall have the exclusive right to grant sublicenses under the License within the Field of Use (but
not outside the Field of Use) in its sole discretion.



Section 3.2. Covenant Not To Sue. During the Covenant Term, LecTec, on behalf of
itself and its Affiliates and their respective successors and assigns (including any successors and
assigns of the Covenant Patents), covenant that they will not sue, assert any claim or counterclaim
against, or otherwise participate in any action or proceeding against Endo or any of its Affiliates
or any of their respective past, present and future employees, officers, directors, principals,
agents, attorneys, accountants shareholders, licensees, sublicensees, customers, suppliers,
contractors, importers,
manufacturers, distributors, insurers, or any heirs, administrators, executors, predecessors,
successors, affiliates, or assigns of the foregoing, or cause, authorize or assist any Person to do
any of the foregoing, in each case relating to any Endo Products with respect to any Covenant
Patents anywhere in the world (the “Covenant Not to Sue”).


 


Page 4 of 18









 





Section 3.3. License Term; Covenant Term. (a) The term of the License (“License
Term”) will commence on the Effective Date and will continue until the expiration of the last
to expire claims of the Licensed Patents.



(b) The term of the Covenant Not To Sue (“Covenant Term”) will commence on the
Effective Date and will continue until the expiration of the last to expire claims of the Covenant
Patents.



Section 3.4. License Fee. Conditioned upon the Dismissal Date having occurred, Endo
shall pay to LecTec a one-time, non-refundable license fee equal to $23,000,000 (twenty three
million dollars) on or before December 15, 2009 (such amount, the “License Fee”), by wire
transfer of immediately available funds to the following account:



	 	 	 
	Receiving Bank Name:

	 	 National City Bank of Michigan/Illinois
	 

	 	 755 West Big Beaver Road
	 

	 	 Troy, MI 48084
	 
	 	 
	Receiving Bank ABA#

	 	 072000915
	 
	 	 
	Beneficiary Account Name:

	 	 RADER, FISHMAN & GRAUER PLLC
	 
	 	 
	Beneficiary Account Number:

	 	 
	 
	 	 
	Swift:

	 	 






It is hereby agreed that the foregoing payment is accepted by LecTec as the sole consideration for
the execution of this Agreement and the License, covenants and releases set forth herein. LecTec
shall be solely responsible for any and all taxes, duties, levies or fees charged or owing with
respect to the License Fee. Endo agrees that the License Fee is non-refundable, including in the
event that any of the Licensed Patents are subsequently adjudicated to be invalid or unenforceable.



Section 3.5. Patent Listing. If requested by Endo, LecTec shall reasonably cooperate
in effecting the listing of the Patents-In-Suit on the U.S. Food and Drug Administration’s Orange
Book: Approved Drug Products with Therapeutic Equivalence Evaluations or any successor thereto (the
“Orange Book”). Any such listing shall be at Endo’s sole discretion.



Section 3.6. Assignment. Neither LecTec nor any of its Affiliates may assign or
transfer (whether by operation of law, contract or otherwise) the Licensed Patents or Covenant
Patents without first requiring the proposed assignee or transferee to acknowledge and agree in
writing to the terms and conditions of this Agreement,
including the License and Covenant Not To Sue, relating to the Licensed Patents and Covenant
Patents, a copy of such written agreement to be promptly provided to Endo.


 


Page 5 of 18









 





Section 3.7. Bankruptcy Rights. All rights and licenses granted under or pursuant to
this Agreement by LecTec are, and shall otherwise be deemed to be, for purposes of Section 365(n)
of the U.S. Bankruptcy Code, licenses of rights to “intellectual property” as defined under Section
101 of the U.S. Bankruptcy Code. The Parties agree that Endo, as a licensee of intellectual
property under this Agreement, shall retain and may fully exercise all of its rights and elections
under the U.S. Bankruptcy Code. The Parties further agree that, in the event of a rejection of
this Agreement by LecTec in any bankruptcy proceeding by or against such Party under the U.S.
Bankruptcy Code, LecTec shall not interfere with Endo’s rights to intellectual property and all
embodiments of intellectual property, and shall assist and not interfere with Endo in obtaining
intellectual property and all embodiments of intellectual property from another entity. The term
“embodiments” of intellectual property includes all tangible, intangible, electronic or other
embodiments of rights and licenses hereunder, including all compounds and products embodying
intellectual property, regulatory filings and related rights, and Licensed Patents and Covenant
Patents.



ARTICLE IV.

MAINTENANCE; ENFORCEMENT





Section 4.1. Maintenance.



(a) LecTec shall maintain the Licensed Patents during the term of this Agreement. LecTec
shall keep Endo apprised of the continuing maintenance of the Licensed Patents. Payment of all
fees and costs relating to the maintenance of the Licensed Patents shall be the sole responsibility
of LecTec. LecTec promptly shall provide to Endo copies of all patent-related documents that it
files with any patent office with respect to the Licensed Patents. In the event LecTec decides not
to continue to maintain any United States or foreign patent comprised within the Licensed Patents,
LecTec timely shall notify Endo in writing of such decision so that Endo may continue said
maintenance of such Licensed Patents at its own expense. In such case, such Licensed Patents shall
be assigned, and hereby are assigned, to Endo.



(b) Enforcement. Endo shall have the sole and exclusive right to prosecute, at its
own expense and utilizing counsel of its choice, any infringement of the Licensed Patents within
the Field of Use, and to control any lawsuits or other actions relating thereto.



(i) The total cost of any such action commenced by Endo shall be borne by Endo. Any damages
or settlement payments resulting from any such action commenced by Endo, whether in an out-of-court
settlement or through legal adjudication of such action, shall be retained solely by Endo.



(ii) In any infringement action Endo may institute pursuant to this Section 4.1(b),
LecTec shall, at the request of Endo, cooperate in all respects and, to the
extent possible, have its employees testify when requested and make available relevant
records, papers, information, samples, specimens, and the like. Endo shall reimburse LecTec for
its reasonable out-of-pocket costs and expenses incurred in providing such cooperation.


 


Page 6 of 18









 





Section 4.2. Cooperation. In furtherance of Section 4.1, LecTec agrees, if
necessary under the applicable law to be legally joined as a party in any suit, action or
proceeding that is the subject of such Sections, at the expense of Endo, and Endo shall have the
right to control and settle any such litigation. LecTec shall have no right to require Endo to
join in any suit.



ARTICLE V.

CONFIDENTIALITY




Section 5.1. The Parties shall issue press releases in the form attached as Appendix B to this
Agreement on or after the Effective Date. No Party may make any press release or public disclosure
(written or oral) concerning the existence of, or the transactions contemplated by, this Agreement,
prior to issuing that press release. The Parties shall be permitted to make any filings required
by the Securities and Exchange Commission.



ARTICLE VI.

REPRESENTATIONS AND WARRANTIES




Section 6.1. Representations by Endo. Endo hereby represents and warrants to LecTec
as follows:



(a) it has the corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder, and the execution, delivery and performance of this Agreement
has been duly and validly authorized by it. Upon execution and delivery of this Agreement by it,
this Agreement will constitute a legal, valid and binding agreement, enforceable in accordance with
its terms, subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforceability of creditors’ rights generally and other general equitable principles
which may limit the right to obtain certain remedies;



(b) neither the execution and delivery of this Agreement, nor consummation of the transactions
contemplated herein requires it to obtain any permits, authorizations or consents from any
governmental body or from any other Person other than such permits, authorizations or consents as
it has already obtained; and



(c) it has not assigned or otherwise transferred to any Person any of its claims, rights,
causes of action, counterclaims or defenses that are covered by the release granted under
Section 2.2(b).


 


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Section 6.2. Representations by LecTec. LecTec represents and warrants to Endo as
follows:



(a) It has the corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder, and the execution, delivery and performance of this Agreement
has been duly and validly authorized by it. Upon execution and delivery of this Agreement by
LecTec, this Agreement will constitute a legal, valid and binding agreement of LecTec, enforceable
in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforceability of creditors’ rights generally and other general
equitable principles which may limit the right to obtain certain remedies;



(b) neither the execution and delivery of this Agreement nor consummation of the transactions
contemplated herein requires LecTec to obtain any permits, authorizations or consents from any
governmental body or from any other Person;



(c) LecTec has not assigned or otherwise transferred to any Person any of its claims, rights,
causes of action, counterclaims or defenses that are covered by the release granted under
Section 2.2(a);



(d) Subject to its agreements with the Mentholatum Company and Novartis, LecTec exclusively
owns all right, title, and interest in and to the Licensed Patents, including all right, title, and
interest to sue for infringement thereof, and has the right and ability to grant the License and
Covenant Not To Sue, in each case free and clear of any liens, encumbrances, claims and charges.
LecTec has obtained and properly recorded all assignment agreements as necessary to fully perfect
its rights and title in the Licensed Patents in accordance with governing law in each respective
jurisdiction. LecTec is the owner of record with the U.S. Patent and Trademark Office and all
other applicable patent offices of the Licensed Patents;



(e) There is no obligation imposed on LecTec or any prior owner to license any of the Licensed
Patents on particular terms or conditions. Other than the rights granted to the Mentholatum
Company and Novartis in their respective agreements, no licenses or other rights under the Licensed
Patents have been granted by LecTec, any prior owners, or inventors;



(f) LecTec is not subject to any covenant not to sue or similar restrictions on its
enforcement or enjoyment of the Licensed Patents in the Field of Use as a result of any prior
transaction related to the Licensed Patents. The Licensed Patents are not subject to any
governmental or court order or decision of any kind. None of the Licensed Patents have been
created, developed or authored under any contract or other understanding with any governmental
entity or educational institution or utilizing the funding, facilities or resources of any
governmental entity or educational institution. LecTec has not invited any third party to enter
into a license under any of the Licensed Patents within the Field of Use;


 


Page 8 of 18









 





(g) None of the Licensed Patents has ever been found invalid, unpatentable, or unenforceable
for any reason in any administrative, arbitration, judicial or other proceeding. The Licensed
Patents are in good standing and have not expired,
been cancelled or abandoned. If any of the Licensed Patents are terminally disclaimed to
another patent or patent application, all patents and patent applications subject to such terminal
disclaimer are included in this transaction as Licensed Patents;



(h) All maintenance fees, annuities, and the like due or payable on the Licensed Patents have
been timely paid. For the avoidance of doubt, such timely payment includes payment of any
maintenance fees for which the fee is payable (e.g., the fee payment window opens) even if the
surcharge date or final deadline for payment of such fee would be in the future; and



(i) No representation or warranty made by LecTec in this Agreement contains any untrue
statement of a material fact or omits to state any material fact necessary to make any such
representation or warranty not misleading to a prospective buyer of the Licensed Patents and other
rights to be transferred under this Agreement seeking full information as to the Licensed Patents
and such other rights.



ARTICLE VII.

TERMINATION




Section 7.1. General. The Parties shall have the rights and remedies with respect to
the termination and/or enforcement of this Agreement which are set forth in this Article
VII.



Section 7.2. Term. The term of this Agreement shall commence on the Effective Date,
and unless earlier terminated pursuant to Section 7.3, shall remain in force through the
later of the License Term and the Covenant Term.



ARTICLE VIII.

MISCELLANEOUS




Section 8.1. Governing Law; Jurisdiction. The validity and interpretation of this
Agreement and the legal relations of the Parties to it will be governed exclusively by the internal
laws, and not the law of conflicts, of the Commonwealth of Pennsylvania. Each of the Parties
agrees to the non-exclusive jurisdiction of any state or federal court located in the Commonwealth
of Pennsylvania with respect to any action or dispute arising under or relating to this Agreement,
and waives personal service of any and all process upon it, and consents that all services of
process be made by registered mail, directed to it or him at its or his address as set forth in
Section 8.2, and service so made shall be deemed to be completed when received. Each of
the Parties waives any objection based on forum non conveniens and waives any objection to venue of
any action instituted hereunder. Nothing in this Section 8.1 shall affect the right of any
Party to serve legal process in any other manner permitted by law.


 


Page 9 of 18









 





Section 8.2. Notices. All notices, requests and other communications hereunder will
be in writing, will be addressed to the receiving Party’s address set forth below or to such other
address as a Party may designate by notice hereunder, and will be either (a) delivered by hand, (b)
made by facsimile transmission (to be followed with written confirmation by the delivering Party),
(c) sent by private courier service
providing evidence of receipt, or (d) sent by registered or certified mail, return receipt
requested, postage prepaid. The addresses and other contact information for the Parties are as
follows:



	 	 	 
	For Endo:

	 	Endo Pharmaceuticals Inc.
	 

	 	100 Endo Boulevard
	 

	 	Chadds Ford, PA 19317
	 
	 	 
	with a copy to:

	 	General Counsel
	 
	 	 
	For LecTec:

	 	Judd Berlin
	 

	 	LecTec Corporation

1407 South Kings Highway

Texarkana, Texas 75501
	 
	 	 
	with a copy to:

	 	R. Terrance Rader
	 

	 	Thomas E. Bejin
	 

	 	Glenn E. Forbis
	 

	 	RADER, FISHMAN & GRAUER PLLC
	 

	 	39533 Woodward Avenue, Suite 140
	 

	 	Bloomfield Hills, MI 48304






or to such other addresses as will have been subsequently furnished by written notice to the other
Parties.



Section 8.3. Entire Agreement; Waiver. This Agreement, including the Appendices
attached hereto, contains the entire agreement between the Parties with respect to the subject
matter hereof and supersedes all prior drafts or understandings, including without limitation the
Term Sheet executed November 6, 2009. No change, modification, amendment or waiver of any
obligation, term or provision contained herein will be valid or enforceable unless the same is
reduced to writing and signed by a duly authorized representative of each of the Parties to be
bound hereby. The waiver by a Party to this Agreement of a breach of any provision set forth
herein or of any right contained herein will not operate as or be construed as a continuing waiver
or a waiver of any subsequent breach or right granted herein.



Section 8.4. Counterparts. This Agreement may be executed in counterparts, each of
which will be deemed be an original, but all of which together will constitute one agreement.



Section 8.5. No Third Party Beneficiaries. Except as expressly provided herein,
nothing is intended or will be construed to confer upon any Person other than the Parties hereto
and their successors or assigns, any rights or remedies under or by reason of this Agreement.


 


Page 10 of 18









 





Section 8.6. 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 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) 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
8.6, and also shall inure to the benefit of and be binding upon any permitted assignee or
transferee of this Agreement.



Section 8.7. Limitation of Liability. In no event shall either party be liable to the
other Party for any indirect, incidental, special, punitive or consequential damages of any kind
arising out of or in connection with this Agreement.



Section 8.8. Expenses. Each Party will pay its own expenses incurred in connection
with its negotiation of this Agreement and the consummation of the transactions contemplated
hereby.



Section 8.9. Headings. The headings contained in this Agreement are for convenience
of reference only and will not affect the meaning or interpretation of this Agreement.



Section 8.10. Rules of Construction. (a) The definitions of the terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and neuter forms. 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 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.



(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 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
or Appendices, unless otherwise specifically provided, shall be construed to refer to
Articles, Sections and Appendices of this Agreement.


 


Page 11 of 18









 





IN WITNESS WHEREOF, the Parties have executed this Agreement on the date first above written.



	 	 	 	 	 	 	 
	ENDO PHARMACEUTICALS INC.	 	 
	 
	 	 	 	 	 	 
	By:	 	/s/ David Holveck	 	 
	 	 	 	 	 
	 

	 	Name and Title:
	 	David Holveck, Chief Executive Officer	 	 
	Date: November 11, 2009	 	 
	 
	 	 	 	 	 	 
	LECTEC CORPORATION	 	 
	 
	By:	 	/s/ Judd Berlin	 	 
	 	 	 	 	 
	 

	 	Name and Title:
	 	Judd Berlin, Chief Executive Officer and	 	 
	 

	 	 	 	Chairman of Board of Directors	 	 
	Date: November 11, 2009	 	 
	 
	 	 	 	 	 	 
	By:	 	/s/ C. Andrew Rollwagon	 	 
	 	 	 	 	 
	 

	 	Name and Title:
	 	C. Andrew Rollwagon, Member of Board of Directors	 	 
	Date: November 11, 2009	 	 
	 
	 	 	 	 	 	 
	By:	 	/s/ Daniel Sigg	 	 
	 	 	 	 	 
	 

	 	Name and Title:
	 	Daniel Sigg, Member of Board of Directors	 	 
	Date: November 11, 2009	 	 
	 
	 	 	 	 	 	 
	By:	 	/s/ Sanford Brink	 	 
	 	 	 	 	 
	 

	 	Name and Title:
	 	Sanford Brink, Member of Board of Directors	 	 
	Date: November 11, 2009	 	 






 


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APPENDIX A


STIPULATION OF DISMISSAL


IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS

TEXARKANA DIVISION




	 	 	 	 	 
	LECTEC CORPORATION

	 	§	 	 
	 

	 	§	 	 
	Plaintiff,

	 	§	 	 
	 

	 	§
	 	No. 5:08cv130 (DF)
	v.

	 	§	 	 
	 

	 	§
	 	JURY
	CHATTEM, INC.; ENDO

	 	§	 	 
	PHARMACEUTICALS, INC.

	 	§	 	 
	JOHNSON & JOHNSON CONSUMER

	 	§	 	 
	COMPANY, INC.; THE MENTHOLATUM

	 	§	 	 
	COMPANY, INC. and PRINCE OF PEACE

	 	§	 	 
	ENTERPRISES, INC.,

	 	§	 	 
	 

	 	§	 	 
	Defendants.

	 	§	 	 






WHEREAS, plaintiff LecTec Corporation (“Plaintiff”) is the assignee and owner of United
States Patent Nos. 5,536,263 and 5,741,510 (the “Patents-In-Suit”);



WHEREAS, Plaintiff and Endo Pharmaceuticals, Inc. (“Defendant”) are parties to litigation
relating to the Patents-In-Suit; and



WHEREAS, Plaintiff and Defendant have entered into a Settlement and License Agreement, dated as of
November
 _____, 2009 (“Settlement Agreement”), pursuant to which the parties have resolved
the above-referenced actions and Plaintiff has granted to Defendant an exclusive license under the
Patents-In-Suit.


 


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NOW, THEREFORE, Plaintiff and Defendant stipulate that:




	 	1.	 	All claims and counterclaims in the above-referenced actions are dismissed with
prejudice.
	 
	 	2.	 	Each party shall bear its own costs, expenses and attorneys’ fees in connection with
the above-referenced actions.
	 
	 	3.	 	The parties waive any right of appeal from this Stipulation of Dismissal.






IT IS SO ORDERED, this                      day of November, 2009.



	 	 	 	 	 
	 	 	 
	 	  	
 	 
	 	 	Hon. David J. Folsom, U.S.D.J. 	 





Stipulated as to form and entry:



	 	 	 	 	 	 	 	 	 	 	 
	Dechert llp	 	 	 	Rader, Fishman & Grauer PLLC	 	 
	Attorneys for Defendant and Counterclaim Plaintiff	 	 	 	Attorneys for Plaintiff LecTec Corporation	 	 
	Endo Pharmaceuticals, Inc.	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Robert D. Rhoad
	 	 	 	By:	 	 	 	 
	 

	 	 

	 	 	 	 	 	 

	 	 
	Robert D. Rhoad	 	 	 	R. Terrance Rader	 	 
	902 Carnegie Center	 	 	 	Thomas E. Bejin	 	 
	Suite 500	 	 	 	Glenn E. Forbis	 	 
	Princeton, NJ 08540	 	 	 	39533 Woodward Ave., Suite 140	 	 
	Telephone: (609) 955-3200	 	 	 	Bloomfield Hills, MI 48304	 	 
	 	 	 	 	 	 	Telephone: (248) 594-0636	 	 






Martin J. Black

DECHERT LLP

Cira Centre

2929 Arch Street

Philedelphia, PA 19104-2808

Telephone: (215) 994-4000



 


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APPENDIX B


FORM OF PRESS RELEASES




ENDO PRESS RELEASE:




ENDO PHARMACEUTICALS AND LECTEC SETTLE PATENT DISPUTE




CHADDS FORD, Pa., Nov. 11, 2009 — Endo Pharmaceuticals (Nasdaq: ENDP) announced today that it has
reached a settlement with LecTec Corporation on outstanding patent litigation related to LecTec’s
U.S. Patent Nos. 5,536,263 and 5,741,510.



Endo Pharmaceuticals has agreed to make a one-time, $23 million payment for the exclusive license
to these two patents for use in the field of prescription pain medicines and treatment. “We are
pleased to add these patents to our IP inventory especially as they relate to Lidoderm®,” said
Caroline Manogue, executive vice president and chief legal officer of Endo Pharmaceuticals.



About Endo




Endo Pharmaceuticals is a specialty pharmaceutical company engaged in the research, development,
sale and marketing of branded and generic prescription pharmaceuticals used to treat and manage
pain, prostate cancer and the early onset of puberty in children, or central precocious puberty
(CPP). Its products include LIDODERM®, a topical patch to relieve the pain of
postherpetic neuralgia; Percocet® and Percodan® tablets for the relief of
moderate-to-moderately severe pain; FROVA® tablets for the acute treatment of migraine
attacks with or without aura in adults; OPANA® tablets for the relief of
moderate-to-severe acute pain where the use of an opioid is appropriate; OPANA® ER
tablets for the relief of moderate-to-severe pain in patients requiring continuous,
around-the-clock opioid treatment for an extended period of time; Voltaren® Gel, which
is owned and licensed by Novartis AG, a nonsteroidal anti-inflammatory drug indicated for the
relief of the pain of osteoarthritis of joints amenable to topical treatment, such as those of the
hands and the knees; VANTAS® for the palliative treatment of advanced prostate cancer;
SUPPRELIN® LA for the treatment of early onset puberty in children; and VALSTARTM for the
treatment of BCG-refractory carcinoma in situ (CIS) of the urinary bladder in patients for whom
immediate cystectomy would be associated with unacceptable medical risks. The company markets its
branded pharmaceutical products to physicians in pain management, urology, endocrinology, oncology,
neurology, surgery
and primary care. More information, including this and past press releases of Endo Pharmaceuticals,
is available at www.endo.com.


 


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Safe Harbor Statement




This press release contains forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 regarding, among other things, the company’s financial position,
results of operations, market position, product development and business strategy, as well as
estimates of future net sales, future expenses, future net income and future earnings per share. 
Statements including words such as “believes,” “expects,” “anticipates,” “intends,” “estimates,”
“plan,” “will,” “may,” “intend,” “guidance” or similar expressions are forward-looking statements. 
Because these statements reflect our current views, expectations and beliefs concerning future
events, these forward-looking statements involve risks and uncertainties. Investors should note
that many factors could affect our future financial results and could cause our actual results to
differ materially from those expressed in forward-looking statements contained in this press
release. These factors include, but are not limited to: the possibility that the acquisition of
Indevus is not complementary to Endo; the inherent uncertainty of the timing and success of, and
expense associated with, research, development, regulatory approval and commercialization of our
products and pipeline products; competition in our industry, including for branded and generic
products, and in connection with our acquisition of rights to assets, including intellectual
property; government regulation of the pharmaceutical industry; our dependence on a small number of
products and on outside manufacturers for the manufacture of our products; our dependence on third
parties to supply raw materials and to provide services for certain core aspects of our business;
new regulatory action or lawsuits relating to our use of controlled substances in many of our core
products; our exposure to product liability claims and product recalls and the possibility that we
may not be able to adequately insure ourselves; our ability to protect our proprietary technology;
our ability to successfully implement our in-licensing and acquisition strategy; the availability
of third-party reimbursement for our products; the outcome of any pending or future litigation or
claims by the government; our dependence on sales to a limited number of large pharmacy chains and
wholesale drug distributors for a large portion of our total net sales; a determination by a
regulatory agency that we are engaging in inappropriate sales or marketing activities, including
promoting the “off-label” use of our products; the loss of branded product exclusivity periods and
related intellectual property; and exposure to securities that are subject to market risk including
auction-rate securities the market for which is currently illiquid; and other risks and
uncertainties, including those detailed from time to time in our periodic reports filed with the
Securities and Exchange Commission, including our current reports on Form 8-K, quarterly reports on
Form 10-Q and annual reports on Form 10-K, particularly the discussion under the caption “Item 1A,
RISK FACTORS” in our annual report on Form 10-K for the year ended December 31, 2008, which was
filed with the Securities and Exchange Commission on March 2, 2009. The forward-looking statements
in this press release and on the related conference call are qualified by these risk factors.
These are factors that, individually or in the aggregate, we think could cause our actual results
to differ materially from expected and historical results. We assume no obligation to publicly
update any forward-looking statements, whether as a result of new information, future developments
or otherwise.


 


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LECTEC PRESS RELEASE:




LecTec Corporation and Endo Pharmaceuticals Inc. Settle Patent Dispute




November 11, 2009 — Texarkana, Texas — LecTec Corporation (OTCBB: LECT) announced today that
it has reached a settlement with Endo Pharmaceuticals Inc. on outstanding patent litigation related
to LecTec’s U.S. Patent Nos. 5,536,263 and 5,741,510. Endo Pharmaceuticals has agreed to make a
one–time, $23 million payment for the exclusive license to these two patents for use in the field
of prescription pain medicines and treatment. “LecTec is pleased to have reached an agreement with
Endo Pharmaceuticals which avoids the uncertainties of litigation and provides LecTec with the
capital to explore the opportunities in its patent portfolio,” said Judd Berlin, chief executive
officer of LecTec.



LecTec filed a patent infringement action in U.S. District Court in July 2008 against Endo
Pharmaceuticals and others in the topical medicated patch business alleging patent infringement of
the core structure and composition claims of two of LecTec’s patents.



About LecTec Corporation




LecTec Corporation is an intellectual property licensing and holding company. The Company’s
primary focus is to derive royalty and other income from patents that the Company owns based on its
advanced skin interface technologies. The Company was an innovator in hydrogel–based topical
delivery of therapeutic over–the–counter medications, which provide alternatives to topical creams
and ointments. A hydrogel is a gel–like material having an affinity for water and similar
compounds. These gels are ideal for delivering medication onto the skin. The Company holds multiple
domestic and international patents on its hydrogel technology.


 


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Cautionary Statements




This press release contains forward–looking statements concerning possible or anticipated
future results of operations or business developments which are typically preceded by the words
“believes,” “wants,” “expects,” “anticipates,” “intends,” “will,” “may,” “should,” or similar
expressions. Such forward-looking statements are subject to risks and uncertainties, which could
cause results or developments to differ materially from those, indicated in the forward–looking
statements. Such risks and uncertainties include, but are not limited to, the Company’s dependence
on royalty payments from Novartis Consumer Health, Inc., which recently re–launched an adult vapor
patch licensed by the Company, the Company’s dependence on key personnel and Board of Director
members, the Company’s pending patent infringement litigation against
Chattem, Inc. (NASDAQ: CHTT), Johnson & Johnson Consumer Company, Inc., a subsidiary of Johnson &
Johnson (NYSE: JNJ), and Prince of Peace Enterprises, Inc., the issuance of new accounting
pronouncements, the availability of opportunities for licensing agreements related to patents that
the Company holds, limitations on market expansion opportunities, and other risks and uncertainties
detailed from time to time in the Company’s filings with the Securities and Exchange Commission,
and particularly as described in the “Risk Factors” included in our Form 10–K for the year ended
December 31, 2008.




 


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