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 in accordance with that certain Provigil Settlement Agreement dated February 1, 2006 between the Parties (the “ Provigil Settlement Agreement ”).

WHEREAS, in connection with such settlement, Cephalon wishes to grant to Barr, and Barr wishes to receive, certain rights and licenses, subject to the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the foregoing and for good and valuable consideration, the receipt and adequacy of which is hereby affirmed, and intending to be legally bound hereby, the Parties hereby agree as follows.

1.              DEFINITIONS

1.1            “ Affiliate ” means 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.

1.2            “ ANDA ” means an Abbreviated New Drug Application, as defined under 21 U.S.C. § 355 (j) et seq .

1.3            “ Barr ” means 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 07677, 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.

1.4            “ Barr ANDA Modafinil Product ” means [**].

1.5            “ Barr Generic Modafinil Product ” means a Barr ANDA Modafinil Product or a Cephalon Supplied Modafinil Product.

1.6            “ Barr Indemnitees ” has the meaning assigned in Section 8.1.

1.7            “ Barr Modafinil ANDA ” means ANDA No. 76-597.

1.8            “ Cephalon ” means 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,

**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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successors, and assigns; its subsidiaries, divisions, groups, and the respective directors, officers, employees, agents and representatives, successors, and assigns of each.

1.9            “ Cephalon Indemnitees ” has the meaning assigned in Section 8.2.

1.10          “ Cephalon Supplied Modafinil Product ” means Subject Modafinil Product sold by Cephalon to Barr for ultimate resale in the United States pursuant to the terms and conditions of a separate supply agreement between the Parties as described in Article 4.

1.11          “ Commercially Reasonable Efforts ” means efforts and resources that would normally be expected to be used by a pharmaceutical company to develop, seek required FDA approvals for, manufacture, control and assure quality of, introduce into markets and otherwise commercialize a drug product owned by it or to which it has rights, which is of similar market potential at a similar stage of development or product life, taking into account issues of safety and efficacy, competitiveness in the marketplace, the proprietary position of the drug product, the regulatory structure(s) involved, the profitability of the drug product, and other material and relevant factors.

1.12          “ Confidential Information ” has the meaning assigned in Section 7.1.

1.13          “ Date Certain ” means the later of: (a) October 6, 2011 (which is three years prior to the expiration of the RE ‘516 Patent); or (b) in the event that Cephalon obtains a pediatric extension of the RE ‘516 Patent, April 6, 2012 (which is three years prior to the expiration of Pediatric Exclusivity, if obtained).

1.14          “ FDA ” means the United States Food and Drug Administration.

1.15          “ Independent Auditor ” has the meaning assigned in Section 3.7.

1.16          “ Listed Patents ” means [**].

1.17          “ Modafinil License Effective Date ” has the meaning assigned in Section 2.2.

1.18          “ Modafinil Litigation ” means (a)  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; (b)  Cephalon, Inc. v. Carlsbad Tech., Inc. , Civil Action No. 05-CV-1089 (JCL), pending in the United States District Court for the District of New Jersey; and (c) any action filed under Title 35, United States Code, 35 U.S.C. §§ 271 and 281 against any Modafinil Paragraph IV ANDA Filing Entity.

1.19          “ Modafinil Paragraph IV ANDA Filing Entity ” shall mean any entity that has notified or subsequently notifies Cephalon that it has filed an ANDA with a Paragraph IV certification concerning a product containing modafinil as an active ingredient for which Provigil is the reference listed drug.

**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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1.20          “ NDA ” means New Drug Application, as defined under 21 U.S.C. § 355(b)  et seq .

1.21          “ Net Profits ” means the gross receipts derived in arm’s-length transactions from the sale of Barr Generic Modafinil Product in the United States by Barr (or by its Affiliates), to independent third parties in the United States, less the sum of the following items:

(a)            Import, export, excise and sales taxes and custom duties paid or allowed by the selling party and any other governmental charges imposed upon the production, importation, use or sale of Barr Generic Modafinil Product by Barr and/or its Affiliates;

(b)            Credits for returns, refunds, rebates and allowances, or trades to customers for returned or recalled Barr Generic Modafinil Product;

(c)            Trade, quantity and cash discounts actually allowed;

(d)            Transportation, freight and insurance allowances;

(e)            Rebates to wholesalers, administrative fees in lieu of rebates paid to managed care and other similar institutions, chargebacks and retroactive price adjustments, including Shelf Stock Adjustments, and any other similar allowances which effectively reduce the net selling price; and

(f)             The purchase price paid to Cephalon for such Barr Generic Modafinil Product that is Cephalon Supplied Modafinil Product or Barr’s direct and reasonable costs of making such Barr Generic Modafinil Product that is Barr ANDA Modafinil Product, as applicable.

Gross and Net Profits shall be calculated according to US GAAP. Sales or transfers between or among Barr and its Affiliates shall be excluded from the computation of Net Profits except where such Affiliates are end users, but Net Profits shall include the subsequent final sales to third parties by such Affiliates.

Where (i) Barr Generic Modafinil Product is sold as one of a number of items without a separate price; or (ii) the consideration for the Barr Generic Modafinil Product shall include any non-cash element; or (iii) the Barr Generic Modafinil Product shall be transferred in any manner other than an invoiced sale, the gross sales applicable to any such transaction shall be deemed to be the selling party’s average gross sales for the applicable quantity of Barr Generic Modafinil Product during the calendar quarter. If there are no independent gross sales of Barr Generic Modafinil Product in the United States at that time, then Barr and Cephalon shall mutually agree on a surrogate measure to be used in lieu thereof.

1.22          “ Other Modafinil Paragraph IV ANDA Filing Entity ” means any Modafinil Paragraph IV ANDA Filing Entity besides Barr or Cephalon or its and their Affiliates.

1.23          “ Party ” or “ Parties ” means a party, or the parties, to 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.

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1.24          “ Pediatric Exclusivity ” means exclusivity obtained in accordance with the requirements of Section 505(a) of the U.S. Federal Food, Drug, and Cosmetic Act (21 U.S.C. § 355(a)).

1.25          “ Providing Party ” has the meaning assigned in Section 7.1.

1.26          “ Provigil ” means the commercial formulation of modafinil developed, manufactured and, as of the Effective Date, sold by Cephalon pursuant to FDA approval of Cephalon’s NDA 20-717.

1.27          “ Receiving Party ” has the meaning assigned in Section 7.1 of this Agreement.

1.28          “ Shelf Stock Adjustment ” means the customary practice of providing a purchaser of Barr Generic Modafinil Product an adjustment to the net purchase price for on-hand inventory in response to an offer from a supplier of a competing Subject Modafinil Product.

1.29          “ Subject Modafinil Product ” shall mean [**].

2.              GRANT OF RIGHTS

2.1            Grant of License . Subject to Sections 2.2 and 2.3 below, Cephalon grants to Barr a royalty-bearing, non-exclusive license, without a right to sublicense, under the Listed Patents and any regulatory exclusivities, including Pediatric Exclusivity, to use, offer for sale, sell, distribute and have distributed, promote, market and advertise, import and have imported, the Barr Generic Modafinil Product, and to make and have made the Barr ANDA Modafinil Product, in the United States.

2.2            Modafinil License Effective Date . The license granted by Cephalon to Barr pursuant to Section 2.1 shall become effective upon the earliest of:

(a)            the Date Certain;

(b)            the sale of a Subject Modafinil Product in the United States pursuant to a license or authorization granted by Cephalon to a third party (other than a license or authorization granted to a third party, whether by settlement or otherwise, under circumstances similar to those that would trigger Barr’s license under Section 2.2(c) below, and that is subject to suspension provisions similar to those set forth in Section 2.3);

(c)            the sale of a Subject Modafinil Product by any Other Modafinil Paragraph IV ANDA Filing Entity in the United States that is not pursuant to a license or authorization granted by Cephalon (in which case, Barr would receive a license to enter the market which is subject to suspension as set forth in Section 2.3); and

(d)            the entry of a final, non-appealable judgment in the Modafinil Litigation declaring that one or more Other Modafinil Paragraph IV ANDA Filing Entities may sell or offer

**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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to sell Subject Modafinil Products in the United States without infringing any valid, enforceable claim of any Listed Patent on which Cephalon has brought suit in such litigation.

The earliest to occur of the dates in subsections (a) through (d) of this Section 2.2 shall constitute the “ Modafinil License Effective Date ”.

2.3            Suspension of License . If, at any time after the Modafinil License Effective Date (where such Modafinil License Effective Date is triggered as a result of an event set forth in Section 2.2(c)), (a) Cephalon obtains a temporary restraining order or other relief sufficient to stop further offers to sell or sales in the United States of Subject Modafinil Products by all Other Modafinil Paragraph IV ANDA Filing Entities, or (b) Cephalon prevails against all Other Modafinil Paragraph IV ANDA Filing Entities in any Modafinil Litigation, such that offers to sell or sales in the United States of Subject Modafinil Products by Other Modafinil Paragraph IV ANDA Filing Entities are admitted by such Other Modafinil Paragraph IV ANDA Filing Entities or held by the court to infringe one or more valid and enforceable claims of the Listed Patents, then (i) Barr’s license under Section 2.1 shall be suspended until the Date Certain, or, if applicable, the earlier occurrence of an event described in Section 2.2(b), (ii) Barr and/or its Affiliates shall immediately cease offering to sell and/or selling any Barr Generic Modafinil Product as of the earliest date on which such injunctive or other relief may be enforced, or otherwise when Cephalon prevails in the action described in subsection (b) above, and (iii) [**]. For purposes of clarity, nothing in this Agreement or in the Provigil Settlement Agreement shall obligate Cephalon to seek injunctive or other relief to stop any Other Modafinil Paragraph IV ANDA Filing Entity from offering to sell or selling Subject Modafinil Products in the United States.

2.4            Notification to FDA of License . Subject to Section 2.3, immediately upon the Modafinil License Effective Date, Cephalon shall reasonably cooperate with Barr in notifying the FDA that Cephalon has granted Barr the license set forth in Section 2.1, including, but not limited to, by filing with the FDA such documentation as is necessary to affirm such license.

2.5            Infringement .

(a)            Notice Regarding and Authority to Take Action Against Infringers . Barr shall promptly notify Cephalon of any known infringement by third parties of the rights licensed to Barr under this Agreement. If any of the Listed Patents are infringed, Cephalon shall have the sole and exclusive right, but not the obligation, to commence appropriate legal action to enjoin such infr