Exhibit 10.2

 

PROVIGIL SETTLEMENT AGREEMENT

 

THIS SETTLEMENT AGREEMENT (“Agreement”) is entered into effective this 1st day
of February, 2006, by and between CEPHALON, INC., a corporation organized and
existing under the laws of the State of Delaware, with its principal place of
business at 41 Moores Road, Frazer, Pennsylvania, and BARR LABORATORIES, INC., a
corporation organized and existing under the laws of the State of Delaware, with
its principal place of business at 400 Chestnut Ridge Road, Woodcliff Lake, New
Jersey.

 

WHEREAS, Cephalon is the owner by assignment of all right and title in U.S.
Reissue Patent No. RE37,516 (“the RE ‘516 Patent”), issued by the United States
Patent and Trademark Office on January 15, 2002 and expiring on October 6, 2014.

 

WHEREAS, Provigil, which is covered by claims of the RE ‘516 Patent, is the
commercial formulation of modafinil developed, manufactured and sold by Cephalon
pursuant to FDA approval of Cephalon’s NDA 20-717.

 

WHEREAS, by letter dated February 20, 2003, Barr notified Cephalon that Barr had
submitted ANDA No. 76-597 to the FDA under Section 505(j) of the Federal Food,
Drug and Cosmetic Act (21 U.S.C. § 355(j)), seeking approval to engage in the
commercial manufacture, use, and sale of tablets containing 100 mg and 200 mg of
modafinil, a generic version of Provigil tablets, before the expiration date of
the RE ‘516 Patent, and certifying that the RE ‘516 Patent is invalid,
unenforceable, or not infringed by Barr’s generic product.

 

WHEREAS, Cephalon timely filed suit against Barr and three other companies that
had also filed Paragraph IV ANDAs concerning Provigil in an action captioned
Cephalon, Inc. v. Mylan Pharmaceuticals Inc., et al., Civil Action No.
03-CV-1394 (JCL), in the United States

 

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**Portions of the Exhibit have been omitted and have been filed separately
pursuant to an application for confidential treatment filed with the Securities
and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as amended.

 

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District Court for the District of New Jersey, seeking, among other things, a
declaration that Barr’s making, using, offering to sell, selling, or importing
Barr ANDA Modafinil Tablets would infringe the RE ‘516 Patent, an order
providing that the effective date of any approval of Barr’s ANDA No. 76-597
shall be a date which is not earlier than the date of the expiration of the RE
‘516 Patent; and an order permanently enjoining Barr from making, using,
offering to sell, selling, or importing tablets as described in Barr’s ANDA No.
76-597 until after the date of the expiration of the RE ‘516 Patent.

 

WHEREAS, Barr answered Cephalon’s complaint by denying infringement, by
asserting an affirmative defense that incorporated by reference Barr’s
co-defendants’ allegations that the RE ‘516 patent is invalid and unenforceable,
and by filing a counterclaim seeking declaratory judgment of noninfringement.

 

WHEREAS, Cephalon and Barr have taken discovery, but no partial or final
judgment has entered as to any issue in dispute.

 

WHEREAS, to avoid the time and expense of further litigation, and in compromise
of the disputed claims set forth above, the parties now desire to resolve their
disputes by settlement.

 

WHEREAS, Cephalon desires to purchase and license from Barr, and Barr is willing
to sell and license to Cephalon on the terms and conditions set forth herein,
certain intellectual property rights owned by Barr.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and
conditions herein set forth, the receipt and sufficiency of which consideration
is hereby acknowledged, the parties agree as follows:

 

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**Portions of the Exhibit have been omitted and have been filed separately
pursuant to an application for confidential treatment filed with the Securities
and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as amended.

 

2

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1.                                      DEFINITIONS

 

1.1                                 “ACTION” SHALL MEAN CEPHALON, INC. V. MYLAN
PHARMACEUTICALS INC., ET AL., CIVIL ACTION NO. 03-CV-1394 (JCL), PENDING IN THE
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY.

 

1.2                                 “AFFILIATE” SHALL MEAN ANY CORPORATION,
PARTNERSHIP, JOINT VENTURE OR FIRM WHICH CONTROLS, IS CONTROLLED BY OR UNDER
COMMON CONTROL WITH A SPECIFIED PERSON OR ENTITY. FOR PURPOSES OF THIS
DEFINITION, “CONTROL” SHALL BE PRESUMED TO EXIST IF ONE OF THE FOLLOWING
CONDITIONS IS MET: (A) IN THE CASE OF CORPORATE ENTITIES, DIRECT OR INDIRECT
OWNERSHIP OF AT LEAST FIFTY PERCENT (50%) OF THE STOCK OR SHARES HAVING THE
RIGHT TO VOTE FOR THE ELECTION OF DIRECTORS AND (B) IN THE CASE OF NON-CORPORATE
ENTITIES, DIRECT OR INDIRECT OWNERSHIP OF AT LEAST FIFTY PERCENT (50%) OF THE
EQUITY INTEREST WITH THE POWER TO DIRECT THE MANAGEMENT AND POLICY DECISIONS OF
SUCH NON-CORPORATE ENTITIES.

 

1.3                                 “[**] APPLICATION” SHALL MEAN [**].

 

1.4                                 “BARR” SHALL MEAN BARR LABORATORIES, INC., A
CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF DELAWARE, WITH
ITS PRINCIPAL PLACE OF BUSINESS AT 400 CHESTNUT RIDGE ROAD, WOODCLIFF LAKE, NEW
JERSEY, AND ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS AND REPRESENTATIVES,
PREDECESSORS, SUCCESSORS, AND ASSIGNS (INCLUDING WITHOUT LIMITATION ANY ASSIGNEE
OF THE BARR MODAFINIL ANDA); ITS SUBSIDIARIES, DIVISIONS, GROUPS, AND THE
RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, AGENTS AND REPRESENTATIVES,
SUCCESSORS, AND ASSIGNS OF EACH.

 

1.5                                 “BARR ANDA MODAFINIL PRODUCT” SHALL MEAN
[**].

 

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**Portions of the Exhibit have been omitted and have been filed separately
pursuant to an application for confidential treatment filed with the Securities
and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as amended.

 

3

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1.6                                 “BARR MODAFINIL ANDA” SHALL MEAN ANDA NO.
76-597.

 

1.7                                 “CEPHALON” SHALL MEAN CEPHALON, INC., A
CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF DELAWARE, WITH
ITS PRINCIPAL PLACE OF BUSINESS AT 41 MOORES ROAD, FRAZER, PENNSYLVANIA, AND ITS
DIRECTORS, OFFICERS, EMPLOYEES, AGENTS AND REPRESENTATIVES, PREDECESSORS,
SUCCESSORS, AND ASSIGNS; ITS SUBSIDIARIES, DIVISIONS, GROUPS, AND THE RESPECTIVE
DIRECTORS, OFFICERS, EMPLOYEES, AGENTS AND REPRESENTATIVES, SUCCESSORS, AND
ASSIGNS OF EACH.

 

1.8                                 “EFFECTIVE DATE” SHALL MEAN THE DATE FIRST
WRITTEN ABOVE.

 

1.9                                 “INTELLECTUAL PROPERTY RIGHTS” SHALL MEAN
ANY AND ALL UNITED STATES AND FOREIGN PATENT APPLICATIONS, INCLUDING, WITHOUT
LIMITATION, ALL PROVISIONAL APPLICATIONS, CONTINUATIONS, CONTINUATIONS-IN-PART
(BUT NOT CONTINUATIONS-IN-PART CLAIMING PATENTABLY DISTINCT SUBJECT MATTER) AND
DIVISIONALS, AND ANY AND ALL LETTERS PATENT, WHETHER UNITED STATES OR FOREIGN,
THAT ARE OR MAY BE GRANTED THEREFROM, INCLUDING, WITHOUT LIMITATION, ALL
REISSUES, EXTENSIONS, SUBSTITUTIONS, CONFIRMATIONS, RE-REGISTRATIONS,
RE-EXAMINATIONS, VALIDATIONS, SUPPLEMENTARY PROTECTION CERTIFICATES AND PATENTS
OF ADDITION, AND THE UNDERLYING INVENTIONS DESCRIBED THEREIN.

 

1.10                           “LISTED PATENTS” SHALL MEAN [**].

 

1.11                           “MODAFINIL LICENSE AND SUPPLY AGREEMENT” SHALL
MEAN THE MODAFINIL LICENSE AND SUPPLY AGREEMENT ATTACHED HERETO AS EXHIBIT A.

 

1.12                           “PATENT IN SUIT” SHALL MEAN THE RE ‘516 PATENT.

 

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**Portions of the Exhibit have been omitted and have been filed separately
pursuant to an application for confidential treatment filed with the Securities
and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as amended.

 

4

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1.13                           “PROVIGIL” MEANS THE COMMERCIAL FORMULATION OF
MODAFINIL DEVELOPED, MANUFACTURED AND, AS OF THE DATE OF THIS AGREEMENT, SOLD BY
CEPHALON PURSUANT TO FDA APPROVAL OF CEPHALON’S NDA 20-717.

 

1.14                           “SUBJECT MODAFINIL PRODUCT” SHALL MEAN [**].

 

2.                                      EFFECTIVENESS

 

2.1                                 THIS AGREEMENT SHALL BECOME EFFECTIVE ON THE
EFFECTIVE DATE.

 

3.                                      OBLIGATIONS OF THE PARTIES

 

3.1                                 BARR AGREES THAT IT WILL NOT CHALLENGE THE
VALIDITY OR THE ENFORCEABILITY OF THE PATENT IN SUIT. BARR AGREES THAT THE
PATENT IN SUIT WOULD BE INFRINGED BY MAKING, USING, OFFERING TO SELL, OR SELLING
BARR ANDA MODAFINIL PRODUCT BY BARR AND/OR ITS AFFILIATES WITHIN THE UNITED
STATES, OR BY IMPORTING OR CAUSING TO BE IMPORTED ANY BARR ANDA MODAFINIL
PRODUCT BY BARR AND/OR ITS AFFILIATES INTO THE UNITED STATES, WITHOUT A LICENSE
TO DO SO. BARR AGREES THAT THE PATENT IN SUIT WOULD BE INFRINGED BY ACTIVELY
INDUCING ANY OTHER ENTITY TO MAKE, USE, OFFER TO SELL, OR SELL BARR ANDA
MODAFINIL PRODUCT WITHIN THE UNITED STATES, OR TO IMPORT OR CAUSE TO BE IMPORTED
ANY BARR ANDA MODAFINIL PRODUCT INTO THE UNITED STATES, WITHOUT A LICENSE TO DO
SO. BARR AND ITS AFFILIATES SHALL MAKE NO REPRESENTATION OR ASSERTION TO THE
CONTRARY IN ANY FORUM OR CONTEXT AT ANY TIME.

 

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

**Portions of the Exhibit have been omitted and have been filed separately
pursuant to an application for confidential treatment filed with the Securities
and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as amended.

 

5

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3.2                                 BARR AGREES THAT IT WILL NOT SELL SUBJECT
MODAFINIL PRODUCT IN THE UNITED STATES PRIOR TO THE EFFECTIVE DATE OF THE
LICENSE GRANTED BY CEPHALON TO BARR PURSUANT TO THE TERMS OF THE MODAFINIL
LICENSE AND SUPPLY AGREEMENT.

 

3.3                                 ON [**], CEPHALON SHALL MAKE A [**] PAYMENT
TO BARR OF [**], IN RECOGNITION OF THE SAVINGS INURING TO CEPHALON IN TERMS OF
THE AVOIDANCE OF COSTS, EXPENDITURE OF TIME AND RESOURCES, DISRUPTION AND BURDEN
ASSOCIATED WITH PROSECUTING THE ACTION AGAINST BARR.

 

3.4                                 TRANSFERS OF INTELLECTUAL PROPERTY

 

(a)                                  Barr hereby sells and assigns to Cephalon
its entire right, title, and interest throughout the world in and to the [**]
Application and the inventions claimed therein. Barr also hereby grants to
Cephalon and its Affiliates a non-exclusive, non-royalty-bearing, world-wide
license (including the right to sublicense) to all Intellectual Property Rights
owned or controlled by Barr that are related to the [**] Application and
necessary to permit Cephalon to practice the inventions claimed in the [**]
Application (the “[**] Intellectual Property Rights”) to manufacture, have
manufactured, develop, formulate, use, sell, offer to sell, and import API and
finished pharmaceutical products.

 

(b)                                 Cephalon hereby grants to Barr and its
Affiliates a non-exclusive, non-royalty-bearing, world-wide license to the [**]
Application and the inventions claimed therein to manufacture, have
manufactured, develop, formulate, use, sell, offer to sell, and import API and
finished pharmaceutical products.

 

(c)                                  In consideration of the sale, assignment
and license set forth in Section 3.4(a) above, Cephalon shall make a lump sum
payment to Barr in the amount of [**]. This payment

 

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

**Portions of the Exhibit have been omitted and have been filed separately
pursuant to an application for confidential treatment filed with the Securities
and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as amended.

 

6

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shall be made [**].

 

(d)                                 Barr represents and warrants that, as of the
Effective Date: (i) it owns all right, title, and interest in and to the [**]
Application; (ii) it has the right to enter into this agreement with respect to
the [**] Intellectual Property Rights; (iii) it has not granted and will not
grant during the term of this agreement rights in or to the [**] Intellectual
Property Rights that are inconsistent with the rights granted herein; (iv) to
Barr’s knowledge, there are no claims of third parties that would call into
question the rights of Barr to grant to Cephalon the rights contemplated
hereunder; (v) except for the Intellectual Property Rights related to the [**]
Application, as of the Effective Date, Barr does not own, control, or have any
rights to any patents or patent applications that would dominate any practice of
the Intellectual Property Rights related to the [**] Application; and (vi) to
Barr’s knowledge, there are no threatened or pending actions, suits,
investigations, claims, or proceedings in any way relating to the Intellectual
Property Rights related to the [**] Application.

 

(e)                                  At Cephalon’s request, Barr shall timely
execute any and all documents necessary to reflect the sale and assignment set
forth in Sections 3.4(a) above, including confirmatory patent assignments.

 

(f)                                    Cephalon shall have the sole right, but
not the obligation, to apply for, prosecute, maintain, renew, extend, abandon,
disclaim in whole or in part, or otherwise dispose of, including without
limitation the right to prosecute, defend, settle, resolve or otherwise dispose
of any patent litigation or any patent interference with any third party’s
patent rights, including without limitation any patent rights of Cephalon,
whether before the United States Patent and Trademark Office (“PTO”) or any
United States court (all of the foregoing, to “Prosecute”), the

 

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

**Portions of the Exhibit have been omitted and have been filed separately
pursuant to an application for confidential treatment filed with the Securities
and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as amended.

 

7

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[**] Application and all other Intellectual Property Rights related to the [**]
Application, using counsel selected by Cephalon. All reasonable costs and
expenses of the Prosecution of the [**] Application and all other Intellectual
Property Rights related to the [**] Application (including all governmental
filing fees) shall be paid by Cephalon.

 

3.5                                 CEPHALON AND BARR HAVE ENTERED INTO THE
MODAFINIL LICENSE AND SUPPLY AGREEMENT.

 

3.6                                 CEPHALON COVENANTS THAT IT WILL NOT SUE BARR
FOR INFRINGEMENT UNDER THE LISTED PATENTS, OR ANY OTHER PATENTS NOW OWNED OR
SUBSEQUENTLY ACQUIRED BY CEPHALON, FOR ANY SALES BY BARR IN THE UNITED STATES OF
A PRODUCT THAT IS MANUFACTURED OR SOLD PURSUANT TO AN ANDA FOR WHICH THE
REFERENCE LISTED DRUG IS PROVIGIL, PROVIDED THAT ANY SUCH SALES ARE IN
ACCORDANCE WITH THE TERMS OF THIS AGREEMENT. BARR AGREES THAT IT WILL NOT
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THE LISTED PATENTS IN ANY CONTEXT OR
FORUM. CEPHALON AGREES THAT IT WILL NOT ASSERT THE LISTED PATENTS AGAINST BARR
IN ANY CONTEXT OR FORUM, INCLUDING WITH REGARD TO ANY PHARMACEUTICAL PRODUCT,
EXCEPT IN THE EVENT OF A BREACH BY BARR OF THIS SECTION 3.6 OR ANY PROVISION OF
SECTIONS 3.1 OR 3.2 OF THIS AGREEMENT. CEPHALON AGREES TO PROVIDE [**] NOTICE TO
BARR PRIOR TO LISTING ANY PATENT OTHER THAN [**]

 

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

**Portions of the Exhibit have been omitted and have been filed separately
pursuant to an application for confidential treatment filed with the Securities
and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as amended.

 

8

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4.                                      DISMISSAL

 

4.1                                 UPON THE EFFECTIVE DATE, CEPHALON AND BARR
SHALL EXECUTE AND FILE WITH THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
NEW JERSEY A JOINT STIPULATION FOR DISMISSAL, IN THE FORM ATTACHED HERETO AS
EXHIBIT B. EACH PARTY SHALL BEAR ITS OWN COSTS WITH RESPECT TO THE SETTLEMENT OF
THE ACTION.

 

4.2                                 CEPHALON AND BARR WAIVE ANY RIGHT TO APPEAL
ANY ORDER PREVIOUSLY ENTERED IN THE ACTION.

 

5.                                      MUTUAL RELEASES

 

5.1                                 BARR, ON BEHALF OF ITSELF AND ITS
SUBSIDIARIES, SUCCESSORS, AND ASSIGNS, HEREBY RELEASES, ACQUITS, AND FOREVER
DISCHARGES CEPHALON FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, LIABILITIES,
CAUSES OF ACTION, DAMAGES, DUTIES, OR OBLIGATIONS ARISING UNDER, CONCERNING, OR
RELATING TO THE PATENT IN SUIT, INCLUDING, WITHOUT LIMITATION, ANY CLAIM FOR
DECLARATORY JUDGMENT THAT THE PATENT IN SUIT IS INVALID, UNENFORCEABLE, OR WOULD
NOT BE INFRINGED BY ANY BARR ANDA MODAFINIL PRODUCT, BUT SPECIFICALLY EXCLUDING
A BREACH BY CEPHALON OF ITS COVENANTS AND OBLIGATIONS UNDER THIS AGREEMENT.

 

5.2                                 CEPHALON, ON BEHALF OF ITSELF AND ITS
SUBSIDIARIES, SUCCESSORS, AND ASSIGNS, HEREBY RELEASES, ACQUITS, AND FOREVER
DISCHARGES BARR FROM ANY AND ALL CLAIMS, DEMANDS, LIABILITIES, CAUSES OF ACTION,
DAMAGES, DUTIES, OR OBLIGATIONS ARISING UNDER, CONCERNING, OR RELATING TO
INFRINGEMENT OF THE PATENT IN SUIT BY THE FILING OF THE BARR MODAFINIL ANDA WITH
A PARAGRAPH IV CERTIFICATION, BUT SPECIFICALLY EXCLUDING A BREACH BY BARR OF ITS
COVENANTS AND OBLIGATIONS UNDER THIS AGREEMENT.

 

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

**Portions of the Exhibit have been omitted and have been filed separately
pursuant to an application for confidential treatment filed with the Securities
and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as amended.

 

9

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6.                                      CONFIDENTIALITY

 

6.1                                 CEPHALON AND BARR SHALL CONTINUE TO BE BOUND
BY AND TO COMPLY WITH THE TERMS OF THE STIPULATED PROTECTIVE ORDER PREVIOUSLY
EXECUTED IN THE ACTION.

 

6.2                                 CEPHALON AND BARR AGREE THAT THE TERMS OF
THIS AGREEMENT SHALL REMAIN CONFIDENTIAL AND SHALL NOT BE DISCLOSED TO THIRD
PARTIES EXCEPT SUBJECT TO A NONDISCLOSURE AGREEMENT, AND PURSUANT TO BUSINESS
DISCUSSIONS RELATING TO ASSET SALES, MERGERS, OR CHANGE OF CONTROL TRANSACTIONS,
OR UPON ORDER OF A COURT OF COMPETENT JURISDICTION OR TO THE EXTENT REQUIRED BY
LAW OR GOVERNMENTAL REGULATION; PROVIDED THAT CEPHALON AND BARR MAY ISSUE
MUTUALLY AGREEABLE PRESS RELEASES AND MAKE PUBLIC STATEMENTS CONSISTENT WITH THE
TEXT OF THOSE PRESS RELEASES. CEPHALON AND BARR AGREE THAT THEY WILL NOT
OTHERWISE PUBLICIZE THE TERMS AND CONDITIONS OF THIS AGREEMENT OR MAKE ANY
STATEMENTS OR COMMENTS TO ANY NEWS MEDIA AND/OR TRADE PUBLICATION, OR ANY THIRD
PERSON OR ENTITY (EXCEPT AS SET FORTH ABOVE) REGARDING THE TERMS AND CONDITIONS
OF THIS AGREEMENT. INFORMATION OTHERWISE IN THE PUBLIC DOMAIN IS NOT SUBJECT TO
THE PROVISIONS OF THIS SECTION.

 

7.                                      INDEMNIFICATION BY CEPHALON

 

7.1                                 IN THE EVENT THAT BARR BECOMES THE SUBJECT
OF A CIVIL COMPLAINT, STATE OR FEDERAL INQUIRY, OR OTHER GOVERNMENTAL PROCEEDING
OR INVESTIGATION (“PROCEEDING”) ARISING FROM THIS AGREEMENT (EXCLUDING ANY
ACTION TO ENFORCE THE TERMS OF THIS AGREEMENT), CEPHALON SHALL INDEMNIFY BARR,
ITS AFFILIATES AND SUBSIDIARIES, THE OFFICERS, DIRECTORS, AND EMPLOYEES OF EACH
OF THEM, AND BARR’S CURRENT SUPPLIER OF MODAFINIL API, CHEMAGIS LTD. AND ITS
APPLICABLE AFFILIATES, (COLLECTIVELY, THE “BARR INDEMNITEES”), FOR EXPENSES
REASONABLY AND IN GOOD FAITH INCURRED BY OR

 

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

**Portions of the Exhibit have been omitted and have been filed separately
pursuant to an application for confidential treatment filed with the Securities
and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as amended.

 

10

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on behalf of the Barr Indemnitees in responding to, or defending against, any
such Proceeding (including court costs, reasonable attorneys’ fees, economists’,
accountants’, and other experts’ fees, or other related expenses of litigation
or other proceedings), provided that Barr has given Cephalon notice of such
Proceeding as set forth in Section 7.2 below.

 

7.2                                 (A)                                  BARR
SHALL PROVIDE WRITTEN NOTICE TO CEPHALON OF ANY PROCEEDING FOR WHICH
INDEMNIFICATION WILL BE SOUGHT BY THE BARR INDEMNITEES WITHIN TWENTY (20)
BUSINESS DAYS OF BARR’S RECEIPT OF NOTICE OF SUCH PROCEEDING. THIS NOTICE TO
CEPHALON (“INDEMNIFICATION NOTICE”) SHALL INCLUDE:  (I) A REQUEST FOR
INDEMNIFICATION PURSUANT TO THE TERMS OF THIS SECTION; (II) A COPY OF ANY
INFORMAL OR FORMAL NOTICE OF INVESTIGATION, SUMMONS, SUBPOENA, COMPLAINT, OR
OTHER DOCUMENT RELATING TO SUCH PROCEEDING WITH WHICH ANY OF THE BARR
INDEMNITEES ARE SERVED; AND (III) ANY OTHER DOCUMENTATION AND INFORMATION
AVAILABLE TO BARR AS IS REASONABLY NECESSARY TO DETERMINE WHETHER AND TO WHAT
EXTENT THE BARR INDEMNITEES ARE ENTITLED TO INDEMNIFICATION UNDER THIS SECTION.
HOWEVER, THE PARTIES ACKNOWLEDGE AND AGREE THAT THE FAILURE BY BARR TO PROVIDE
SUCH NOTICE WITHIN THE SIX MONTHS AFTER THE EXPIRATION OF THE 20-DAY TIME PERIOD
SET FORTH ABOVE SHALL NOT DEPRIVE THE BARR INDEMNITEES OF THEIR RIGHT TO
INDEMNIFICATION, PROVIDED THAT THE DELAY IN THE PROVISION OF SUCH NOTICE DOES
NOT IN ANY WAY PREJUDICE CEPHALON. IT IS UNDERSTOOD AND AGREED, HOWEVER, THAT IF
CEPHALON HAS ACTUAL KNOWLEDGE OF THE PROCEEDING FOR WHICH INDEMNIFICATION IS
BEING SOUGHT WITHIN SAID SIX MONTH PERIOD, THEN THE FAILURE BY BARR TO PROVIDE
NOTICE WITHIN THE SIX MONTH PERIOD SHALL NOT DEPRIVE THE BARR INDEMNITEES OF
THEIR RIGHT TO INDEMNIFICATION.

 

(b)                                 Within ten (10) business days of Cephalon’s
receipt of an Indemnification Notice from Barr, Cephalon shall provide a written
acknowledgement to Barr (“Indemnification

 

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**Portions of the Exhibit have been omitted and have been filed separately
pursuant to an application for confidential treatment filed with the Securities
and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as amended.

 

11

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Acknowledgement”) in which Cephalon shall:  (i) agree that the Barr Indemnitees
are entitled to indemnification under this Section in connection with the
Proceeding; or (ii) dispute that the Barr Indemnitees are entitled to such
indemnification.

 

(c)                                  During the thirty (30) day period following
the date of an Indemnification Acknowledgement that reflects a dispute, Cephalon
and Barr shall use good faith efforts to resolve the dispute. In the absence of
an agreement, such dispute shall be resolved in accordance with Section 8.4 of
this Agreement.

 

7.3                                 BARR SHALL HAVE THE RIGHT TO SELECT ITS OWN
LEGAL COUNSEL IN CONNECTION WITH SUCH PROCEEDING, SUBJECT TO CEPHALON’S CONSENT
WHICH SHALL NOT BE UNREASONABLY WITHHELD. BARR SHALL NOTIFY AND KEEP CEPHALON
APPRISED IN WRITING OF SUCH PROCEEDING, AND SHALL CONSIDER AND TAKE INTO ACCOUNT
CEPHALON’S REASONABLE INTERESTS AND REQUESTS REGARDING SUCH PROCEEDING. CEPHALON
SHALL HAVE THE RIGHT, IN CEPHALON’S SOLE DISCRETION AND AT CEPHALON’S EXPENSE,
TO JOIN OR OTHERWISE PARTICIPATE IN SUCH PROCEEDING, WITH LEGAL COUNSEL SELECTED
BY CEPHALON. NOTWITHSTANDING THE ABOVE, NOTHING IN THIS SECTION SHALL BE
CONSTRUED AS LIMITING OR INTERFERING WITH BARR’S RIGHT TO PURSUE ITS OWN
INTERESTS IN THE CONDUCT OF SUCH PROCEEDING.

 

7.4                                 IN ORDER TO OBTAIN PAYMENT FOR ANY
INDEMNIFIED EXPENSES PURSUANT TO THIS SECTION, BARR SHALL SUBMIT TO CEPHALON
(EITHER PERIODICALLY WHILE THE PROCEEDING IS ONGOING, OR AFTER FINAL DISPOSITION
OF SUCH PROCEEDING) A STATEMENT OF THE EXPENSES ACTUALLY INCURRED BY OR ON
BEHALF OF THE BARR INDEMNITEES IN CONNECTION WITH A PROCEEDING. SUCH STATEMENT
SHALL INCLUDE A COPY OF ANY INVOICES REFLECTING EXPENSES FOR WHICH BARR IS
SEEKING PAYMENT FROM CEPHALON. CEPHALON SHALL MAKE PAYMENT TO BARR WITHIN THIRTY
(30) DAYS AFTER THE RECEIPT BY CEPHALON OF EACH SUCH STATEMENT FROM BARR.

 

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

**Portions of the Exhibit have been omitted and have been filed separately
pursuant to an application for confidential treatment filed with the Securities
and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as amended.

 

12

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7.5                                 IN THE EVENT THAT EITHER THE FTC OR THE DOJ
THREATENS TO INSTITUTE ITS OWN JUDICIAL OR ADMINISTRATIVE PROCEEDING AGAINST
EITHER OF THE PARTIES RELATED TO THIS AGREEMENT, THE PARTIES SHALL PROMPTLY MEET
IN GOOD FAITH TO DISCUSS THE FEASIBILITY OF POSSIBLE MODIFICATIONS TO THIS
AGREEMENT.

 

8.                                      MISCELLANEOUS

 

8.1                                 THE TERMS OF THIS AGREEMENT SHALL BE BINDING
UPON AND INURE TO THE BENEFIT OF THE PARTIES HERETO, THEIR RESPECTIVE
SUCCESSORS, HEIRS, AND ASSIGNS.

 

8.2                                 NO PARTY SHALL ASSIGN ANY OF ITS RIGHTS OR
OBLIGATIONS HEREUNDER TO ANY NON-AFFILIATED THIRD PARTY WITHOUT FIRST OBTAINING
THE WRITTEN CONSENT OF THE OTHER PARTY HERETO, WHICH CONSENT MAY NOT BE
UNREASONABLY WITHHELD.

 

8.3                                 THE AGREEMENT SHALL BE INTERPRETED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF DELAWARE.

 

8.4                                 CEPHALON AND BARR AGREE THAT THE UNITED
STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY SHALL BE THE PROPER AND
EXCLUSIVE FORUM FOR ANY ACTION TO ENFORCE THIS AGREEMENT. EACH PARTY CONSENTS TO
THE PERSONAL JURISDICTION OF THAT COURT FOR SUCH PURPOSES.

 

8.5                                 NOTICES UNDER THIS AGREEMENT SHALL BE SENT
BY OVERNIGHT OR FIRST CLASS MAIL, RETURN RECEIPT OR OTHER PROOF OF DELIVERY
REQUESTED, TO THE FOLLOWING:

 

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

**Portions of the Exhibit have been omitted and have been filed separately
pursuant to an application for confidential treatment filed with the Securities
and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as amended.

 

13

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If to Cephalon:

 

Legal Department

Cephalon, Inc.

41 Moores Road

Frazer, PA  19355

Attn:  John E. Osborn

Sr. Vice President, General Counsel & Secretary

Telephone: (610) 738-6337

Fax:           (610) 738-6590

 

If to Barr:

 

Barr Laboratories, Inc.

400 Chestnut Ridge Road

Woodcliff Lake, NJ 07677

Attention:  President

Facsimile:  (201) 930-3335

 

8.6                                 THIS AGREEMENT MAY NOT BE MODIFIED, AMENDED,
SUPPLEMENTED, OR REPEALED EXCEPT BY WRITTEN AGREEMENT EXECUTED BY DULY
AUTHORIZED REPRESENTATIVES OF THE PARTIES.

 

8.7                                 THIS AGREEMENT AND ITS ATTACHMENTS REPRESENT
THE ENTIRE AGREEMENT BETWEEN CEPHALON AND BARR WITH RESPECT TO THE SUBJECT
MATTER OF THIS AGREEMENT AND SUPERSEDES ALL PRIOR OR CONTEMPORANEOUS AGREEMENTS,
PROPOSALS, OR UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, BETWEEN CEPHALON AND BARR
WITH RESPECT TO THAT SUBJECT MATTER.

 

8.8                                 IF ONE OR MORE PROVISIONS OF THIS AGREEMENT
ARE RULED WHOLLY OR PARTLY INVALID OR UNENFORCEABLE BY A COURT OR OTHER
GOVERNMENT BODY OF COMPETENT JURISDICTION, THEN THE VALIDITY AND ENFORCEABILITY
OF ALL OTHER PROVISIONS OF THIS AGREEMENT SHALL NOT IN ANY WAY BE AFFECTED OR
IMPAIRED.

 

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

**Portions of the Exhibit have been omitted and have been filed separately
pursuant to an application for confidential treatment filed with the Securities
and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as amended.

 

14

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8.9                                 NO WAIVER OF, FAILURE OF A PARTY TO OBJECT
TO, OR FAILURE OF A PARTY TO TAKE AFFIRMATIVE ACTION WITH RESPECT TO ANY
DEFAULT, TERM, OR CONDITION OF THIS AGREEMENT, OR ANY BREACH THEREOF, SHALL BE
DEEMED TO IMPLY OR CONSTITUTE A WAIVER OF ANY OTHER LIKE DEFAULT, TERM, OR
CONDITION OF THIS AGREEMENT, OR SUBSEQUENT BREACH THEREOF.

 

8.10                           NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED SO
AS TO RESULT IN A LICENSE UNDER, OR WAIVER OF, ANY RIGHT OF A PARTY, IN EACH
CASE, WITHOUT AN EXPRESS LICENSE OR WAIVER BY SUCH PARTY IN WRITING, EITHER
HEREUNDER OR IN A SEPARATE WRITING SIGNED BY THE PARTIES. FOR THE AVOIDANCE OF
DOUBT:

 

(a)                                  Nothing in this Agreement shall operate or
be construed as granting Barr a license under, or any other rights with respect
to, any patents owned by Cephalon other than the Listed Patents, except as
specifically stated in Sections 3.4(b) and 3.6; and

 

(b)                                 Nothing in this Agreement shall operate or
be construed as a waiver by Barr of any rights to challenge any patent owned by
Cephalon other than [**].

 

8.11                           CEPHALON AND BARR HAVE HAD ALL DESIRED COUNSEL,
LEGAL AND OTHERWISE, IN ENTERING INTO THIS AGREEMENT, AND DO SO IN ACCORDANCE
WITH THEIR OWN FREE ACTS AND DEEDS. THIS AGREEMENT SHALL THEREFORE BE DEEMED TO
HAVE BEEN NEGOTIATED AND PREPARED AT THE JOINT REQUEST, DIRECTION, AND
INSTRUCTION OF EACH OF THE PARTIES, AT ARMS LENGTH, WITH THE ADVICE AND
PARTICIPATION OF COUNSEL, AND WILL BE INTERPRETED IN ACCORDANCE WITH ITS TERMS
WITHOUT FAVOR TO EITHER PARTY.

 

8.12                           EACH PARTY REPRESENTS THAT IT IS DULY EXISTING;
THAT IT HAS THE FULL POWER AND AUTHORITY TO ENTER INTO THIS AGREEMENT AND THE
MODAFINIL LICENSE AND SUPPLY AGREEMENT; THAT THERE ARE NO OTHER PERSONS OR
ENTITIES WHOSE CONSENT TO THIS AGREEMENT AND THE MODAFINIL LICENSE

 

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

**Portions of the Exhibit have been omitted and have been filed separately
pursuant to an application for confidential treatment filed with the Securities
and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as amended.

 

15

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and Supply Agreement or whose joinder herein or therein is necessary to make
fully effective the provisions of this Agreement and the Modafinil License and
Supply Agreement; that this Agreement and the Modafinil License and Supply
Agreement do not and will not interfere with any other agreement to which it is
a party and that it will not enter into any agreement the execution and/or
performance of which would violate or interfere with this Agreement and the
Modafinil License and Supply Agreement.

 

8.13                           THIS AGREEMENT MAY BE SIGNED IN COUNTERPARTS,
EACH OF WHICH SHALL BE DEEMED AN ORIGINAL HEREOF, BUT ALL OF WHICH TOGETHER
SHALL CONSTITUTE ONE AND THE SAME INSTRUMENT.

 

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

**Portions of the Exhibit have been omitted and have been filed separately
pursuant to an application for confidential treatment filed with the Securities
and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as amended.

 

16

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

 

IN WITNESS WHEREOF, Cephalon and Barr have executed this Agreement effective as
of the date first written above.

 

 

CEPHALON, INC.

BARR LABORATORIES, INC.

 

 

By:

/s/ Frank Baldino, Jr., Ph.D.

 

By:

/s/ Paul M. Bisaro

 

 

 

 

Printed Name:

Frank Baldino, Jr., Ph.D.

 

Printed Name:

Paul M. Bisaro

 

 

 

 

Title:

Chairman and CEO

 

Title:

President

 

 

 

 

Date:

February 1, 2006

 

Date:

February 1, 2006

 

 

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

**Portions of the Exhibit have been omitted and have been filed separately
pursuant to an application for confidential treatment filed with the Securities
and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as amended.

 

17

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