Exhibit 10.01
SETTLEMENT AGREEMENT AND MUTUAL
RELEASE
This
Settlement Agreement and Mutual Release (“Agreement”),
effective as of the date of the last signature appearing below
(“Effective Date”), is by and between LecTec
Corporation, a Minnesota corporation, having a principal place of
business at 1407 South Kings Highway, Texarkana Texas 75501
(“LecTec”), and The Mentholatum Company, a Delaware
corporation with its principal place of business at 707 Sterling
Drive, Orchard Park, New York 14127 (“Mentholatum”),
which is a wholly owned subsidiary of Rohto Pharmaceutical Co.,
Ltd., a Japanese corporation with its principal place of business
in Osaka, Japan (“Rohto”). LecTec and Mentholatum are
sometimes referred to herein individually as a “Party”
and collectively as “Parties.”
RECITALS
WHEREAS LecTec filed suit against Mentholatum
and four other defendants in the United States District Court for
the Eastern District of Texas, Civil Action Number 5:08-CV-00130-DF
(“The Litigation”) claiming infringement of
LecTec’s Re-Examined United States Patent Nos. 5,536,263 and
5,741,510 (“the ‘263 patent” and “the
‘510 patent,” respectively; collectively, the
“Patents-In-Suit”) by, in the case of Mentholatum,
selling certain WellPatch brand patches;
WHEREAS LecTec is willing to settle this case
against Mentholatum for an amount that is less than what LecTec
considers to be a reasonable royalty in exchange for Mentholatum
being the first defendant willing to settle The Litigation and at a
relatively early stage of the process;
WHEREAS Mentholatum is willing to settle this
case for more than it believes it would be obligated to pay to
LecTec in order to avoid the anticipated cost of continued
litigation; and
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WHEREAS LecTec and Mentholatum now desire to
resolve The Litigation, under the terms and conditions hereof,
without acknowledgement of liability by any Party.
AGREEMENTS
NOW
THEREFORE, in consideration of the mutual promises and covenants
contained herein, and for such other and further consideration, the
receipt and sufficiency of which is hereby acknowledged, the
Parties agree as follows:
1. Payment From Mentholatum to
LecTec. Mentholatum
shall pay LecTec the sum of $600,000 according to the following
schedule: (i) $100,000 upon execution of this Agreement, and (ii)
$100,000 sent on the first Friday of the five subsequent months,
i.e ., June through October 2009. These amounts shall
be due and owing irrespective of any further developments in The
Litigation, including any possible determination that either of the
Patents-In-Suit is invalid or unenforceable. Mentholatum shall make
each payment by check, made out jointly to LecTec and Rader,
Fishman & Grauer PLLC, delivered to Rader, Fishman & Grauer
PLLC on behalf of LecTec.
2. Termination of The
Litigation. Promptly
upon LecTec’s receipt of an original counterpart of this
Agreement, and payment of the $100,000 due upon execution of the
Agreement pursuant to Section 1(i), LecTec and Mentholatum
shall cause their representatives to file with the Court an Order
of Dismissal to terminate The Litigation as against Mentholatum
with prejudice, and shall cooperate fully to ensure entry by the
Court.
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3. Mutual General
Release. LecTec, on
behalf of itself and its officers, directors, employees, investors,
shareholders, administrators, predecessor and successor
corporations, attorneys, affiliates, agents, and assigns, hereby
fully and forever releases, acquits and discharges Mentholatum and
Rohto, their officers, directors, employees, investors,
shareholders, administrators, attorneys, predecessor and successor
corporations, affiliates, agents, and assigns, of and from any
claim, duty, obligation or cause of action relating to any matters
of any kind, whether presently known or unknown, suspected or
unsuspected, arising from the beginning of time to the date of this
Agreement, including but not limited to all claims related to the
matters alleged in the Lawsuit and any other matters connected in
any way with patch products sold by Mentholatum or Rohto or any of
their subsidiaries or affiliates anywhere in the world. LecTec
further releases and forever discharges the direct and indirect
customers and distributors of Mentholatum and Rohto, and any
subsidiaries or affiliates of either of them, of and from any
claim, duty, obligation or cause of action relating to any matters
of any kind, whether presently known or unknown, suspected or
unsuspected, arising from the beginning of time to the date of this
Agreement, related to any matters connected in any way with patch
products sold by Mentholatum or Rohto or any of their subsidiaries
or affiliates anywhere in the world. The foregoing release does not
extend to any prospective obligations incurred under this
Agreement. Further, the foregoing release does not extend to any
acts committed by future successor corporations, assigns,
subsidiaries or affiliates of Mentholatum or Rohto that were in the
business of making or selling patch products before becoming a
successor corporation, assignee, subsidiary or affiliate, including
without limitation any of the other four defendants in The
Litigation.
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Mentholatum and Rohto, on behalf of themselves
and their officers, directors, employees, investors, shareholders,
administrators, predecessor and successor corporations, attorneys,
affiliates, agents, and assigns, hereby fully and forever release,
acquit and discharge LecTec, its officers, directors, employees,
investors, shareholders, administrators, attorneys, predecessor and
successor corporations, affiliates, agents, and assigns, of and
from any claim, duty, obligation or cause of action relating to any
matters of any kind, whether presently known or unknown, suspected
or unsuspected, arising from the beginning of time to the date of
this Agreement, including but not limited to
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