SUE CARLSBAD AND/OR WATSON FOR
INFRINGEMENT UNDER THE LISTED PATENTS, OR ANY OTHER PATENTS NOW OWNED OR
SUBSEQUENTLY ACQUIRED BY CEPHALON, OR ANY OTHER PATENTS TO WHICH CEPHALON NOW
HAS OR SUBSEQUENTLY ACQUIRES LICENSE RIGHTS, FOR ANY SALES BY CARLSBAD AND/OR
WATSON IN THE TERRITORY OF A GENERIC MODAFINIL PRODUCT, PROVIDED THAT ANY SUCH
SALES ARE IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.
CARLSBAD AND WATSON
AGREE THAT THEY WILL NOT CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THE PATENT
IN SUIT.
CEPHALON COVENANTS THAT IT WILL NOT SUE CARLSBAD AND/OR WATSON FOR
INFRINGEMENT UNDER THE PATENT IN SUIT FOR ANY SALES IN THE TERRITORY BY CARLSBAD
AND/OR WATSON OF A PRODUCT CONTAINING MODAFINIL AS AN API THAT IS MANUFACTURED
OR SOLD [**].
4.
DISMISSAL
4.1.
UPON THE EXECUTION OF THIS AGREEMENT, CEPHALON AND CARLSBAD SHALL
EXECUTE AND FILE IN THE ACTION THE DISMISSAL ORDER.
EACH PARTY SHALL BEAR ITS
OWN COSTS WITH RESPECT TO THE SETTLEMENT OF THE ACTION.
**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.
4.2.
CEPHALON AND CARLSBAD WAIVE ANY RIGHT TO APPEAL ANY ORDER
PREVIOUSLY ENTERED IN THE ACTION.
5.
INDEMNIFICATION BY CEPHALON
5.1.
CEPHALON SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS CARLSBAD AND/OR
WATSON AND THEIR RESPECTIVE AFFILIATES AND SUBSIDIARIES, AND THE OFFICERS,
DIRECTORS, AND EMPLOYEES OF EACH OF THEM (COLLECTIVELY, THE "INDEMNITEES"), FROM
AND AGAINST ANY AND ALL LOSSES, LIABILITIES, PENALTIES, OBLIGATIONS (INCLUDING
THOSE ARISING OUT OF SETTLEMENT), CLAIMS, AND DAMAGES, AND FROM ANY DIRECT OR
INDIRECT COSTS OR EXPENSES (INCLUDING ATTORNEYS' FEES AND EXPERT FEES), ARISING
FROM OR IN CONNECTION WITH ANY ACTION, INVESTIGATION, INQUIRY, DEMAND, LAWSUIT
OR (FORMAL OR INFORMAL) PROCEEDING BROUGHT OR THREATENED BY A GOVERNMENTAL
ENTITY OR THIRD PARTY AGAINST AN INDEMNITEE ("PROCEEDING") RELATED TO OR ARISING
FROM THE ENTERING INTO OF THIS AGREEMENT OR THE SETTLEMENT OF THE ACTION,
PROVIDED THAT EACH OF THE FOREGOING LOSSES, LIABILITIES, PENALTIES, OBLIGATIONS,
CLAIMS, AND DAMAGES, AND COSTS OR EXPENSES HAVE BEEN OR ARE REASONABLY AND IN
GOOD FAITH INCURRED BY OR ON BEHALF OF THE INDEMNITEES.
THIS INDEMNIFICATION
ALSO REQUIRES THAT CARLSBAD AND/OR WATSON HAS GIVEN CEPHALON NOTICE OF SUCH
PROCEEDING AS SET FORTH IN SECTION 5.2 BELOW. NOTWITHSTANDING THE FOREGOING, THE
FAILURE TO GIVE TIMELY NOTICE TO CEPHALON AS REQUIRED IN SECTION 5.2 SHALL NOT
RELEASE CEPHALON FROM ANY LIABILITY TO AN INDEMNITEE EXCEPT TO THE EXTENT
CEPHALON IS PREJUDICED THEREBY.
CEPHALON'S OBLIGATIONS UNDER THIS SECTION 5.1
TO INDEMNIFY THE INDEMNITEES SHALL [**].
5.2.
(A)
CARLSBAD AND/OR WATSON SHALL PROVIDE WRITTEN NOTICE
TO CEPHALON OF ANY PROCEEDING FOR WHICH INDEMNIFICATION WILL BE SOUGHT BY THE
INDEMNITEES WITHIN TWENTY (20) BUSINESS DAYS OF CARLSBAD'S AND/OR WATSON'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