CEPH Cephalon (MM)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934

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CONSENT REVOCATION STATEMENT

CEPHALON, INC.

April 20, 2011

CONSENT REVOCATION STATEMENT

BY THE BOARD OF DIRECTORS OF CEPHALON, INC.
IN OPPOSITION TO
A CONSENT SOLICITATION BY
VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

        This Consent Revocation Statement and the enclosed WHITE Consent Revocation Card are furnished by the Board of Directors (the "Board") of Cephalon, Inc., a Delaware corporation (the "Company" or "Cephalon"), to the holders of outstanding shares of the Company's common stock, par value $0.01 per share, and the associated preferred stock purchase rights (the "Common Stock"), in connection with your Board's opposition to the solicitation of written stockholder consents (the "Valeant Consent Solicitation") by Valeant Pharmaceuticals International, Inc., a Canadian corporation ("Valeant"). This Consent Revocation Statement and the enclosed WHITE Consent Revocation Card are first being mailed to stockholders on or about April 20, 2011.

        On March 18, 2011, the Board received an unsolicited, non-binding proposal from Valeant to acquire all of the outstanding shares of Common Stock of the Company at a price of $73.00 per share in cash ("Alternative 1"). On March 25, 2011, the Board received a second letter from Valeant confirming its non-binding proposal for Alternative 1 and alternatively proposing the acquisition by Valeant of certain non-oncology related assets of Cephalon for a total consideration of $2.8 billion in cash ("Alternative 2"). On March 29, 2011, Valeant publicly announced that it had made a non-binding proposal to the Board to acquire Cephalon for $73.00 per share in cash (the "Valeant Non-Binding Proposal").

        On April 5, 2011, the Board unanimously concluded, after an analysis by its financial and legal advisors, that the Valeant Non-Binding Proposal is inadequate and not in the best interests of the Company's stockholders. On April 5, 2011, the Company sent a letter to Valeant and issued a press release setting forth the Board's conclusion. The letter also noted that the Company's Board and management will continue to review, develop and adapt the Company's plan to maximize value for the Company's stockholders.

        Valeant is soliciting your written consents to replace the directors that you duly elected with a slate of nominees chosen by Valeant (the "Valeant Nominees") in order to further Valeant's proposed acquisition of the Company. Valeant proposes to do this by soliciting your consent to three proposals, each of which is described in this Consent Revocation Statement. The Board believes that Valeant's proposals are intended to circumvent the Board's business judgment and to divert the Company from the continued execution of its business strategy to maximize stockholder value. In its public filings with the Securities and Exchange Commission ("SEC"), Valeant has stated its belief that the Valeant Nominees will, if elected and subject to their fiduciary duties, take actions to facilitate the acquisition of the Company by Valeant.

        A consent in favor of the Valeant Consent Solicitation would be a consent to replace all of your duly elected directors with the Valeant Nominees, who would then comprise the entire Cephalon Board and control the Company. Although the Valeant Nominees would, if elected, be subject to their fiduciary duties under Delaware law, they could facilitate Valeant's acquisition of the Company at a price and on terms determined by Valeant and the Valeant Nominees. Your duly elected Board has determined that the Valeant Non-Binding proposal is inadequate and believes, based on statements made by Valeant in its Consent Solicitation Statement, that the Valeant Nominees would commit the Company to a similarly inadequate proposal.

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        In considering the Valeant Non-Binding Proposal and the Valeant Consent Solicitation, the Board believes that it is important for the Company's stockholders to recognize that:

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Valeant has no duty to act in the best interests of the Company's stockholders (including when selecting potential nominees to serve on your Board);



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it would be in Valeant's and its stockholders' interest to buy Cephalon at the lowest possible price;



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if the Valeant Nominees are elected to replace the Board, it is possible that the Valeant Nominees would commit the Company to a sale transaction with Valeant at a price that your current Board has determined to be inadequate; and



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there is no guarantee that the Valeant Nominees will vigorously negotiate with Valeant on behalf of the Company's stockholders.

        Each member of the Board was selected for nomination through a process designed to foster good corporate governance practices. Please see the discussion in this Consent Revocation Statement under the heading "Information About the Company and its Directors and Officers—Governance of the Company." Although Valeant has stated its belief that the Valeant Nominees would be independent for purposes of the Company's standards and the requirements of NASDAQ, three of the eight Valeant Nominees were recently affiliated with Valeant. Each of these three Valeant Nominees are former directors of Valeant Pharmaceuticals International, Inc., a Delaware corporation ("Old Valeant"), which merged with Biovail Corporation to form Valeant in September 2010.

        We believe that your interests will be best served if the current Board, acting independently of Valeant, continues to be responsible for evaluating all of the alternatives and options available to the Company. We believe that the current Board—which is composed predominantly of independent and disinterested directors—is better able to evaluate what action is in the best interests of the Company's stockholders, and better able to decide on a course of action that will protect and enhance stockholder value, than the Valeant Nominees. Therefore, we are soliciting the revocation of any consents that may have been given in response to the Valeant Consent Solicitation.

        YOUR BOARD UNANIMOUSLY OPPOSES THE VALEANT CONSENT SOLICITATION. YOUR BOARD, WHICH IS COMPOSED PREDOMINANTLY OF INDEPENDENT AND DISINTERESTED DIRECTORS, IS COMMITTED TO ACTING IN THE BEST INTERESTS OF ALL OF THE COMPANY'S STOCKHOLDERS.

         YOUR BOARD URGES YOU NOT TO SIGN ANY GOLD CONSENT CARD SENT TO YOU BY VALEANT BUT INSTEAD TO SIGN AND RETURN THE WHITE CONSENT REVOCATION CARD INCLUDED WITH THESE MATERIALS.

        If you have previously signed and returned Valeant's gold consent card, you have every right to change your vote and revoke your consent. Whether or not you have signed the gold consent card, we urge you to mark the " YES, REVOKE MY CONSENT " boxes on the enclosed WHITE Consent Revocation Card and to sign, date and mail the card in the postage-paid envelope provided. Although submitting a consent revocation will not have any legal effect if you have not previously submitted a consent card, it will help us keep track of the progress of the consent process. Regardless of the number of shares you own, it is important for you to deliver a WHITE Consent Revocation Card. Please act today.

        In accordance with the Company's Bylaws, the Board set April 8, 2011 as the record date (the "Record Date") for the determination of the Company's stockholders who are entitled to execute, withhold or revoke consents relating to the Valeant Consent Solicitation. Only holders of record as of the close of business on the Record Date may execute, withhold or revoke consents with respect to the Valeant Consent Solicitation.

        If you have any questions about giving your consent revocation or require assistance, please call:

Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, NY 10022

Stockholders Call Toll Free: (877) 800-5186
(banks and brokers call collect at (212) 750-5833)

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FORWARD LOOKING STATEMENTS

        This Consent Revocation Statement contains "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 which may be identified by their use of words like "plans," "expects," "will," "anticipates," "intends," "projects," "estimates" or other words of similar meaning. All statements that address expectations or projections about the future, including statements about the Company's strategy for growth, product development, market position, expenditures, and financial results, are forward-looking statements.

        Forward-looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions. Many factors, including those discussed more fully in documents filed with the SEC by the Company, particularly under the heading "Risk Factors" in Part 1, Item 1A of Cephalon's Annual Report on Form 10-K, for the year ended December 31, 2010 and subsequent filings with the SEC, as well as others, could cause results to differ materially from those stated. These factors include, but are not limited to:

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the acceptance of our products by physicians and patients in the marketplace, particularly with respect to our recently launched products;



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our ability to obtain regulatory approvals to sell our product candidates, including any additional future indications for TREANDA, FENTORA and NUVIGIL, and to launch such products or indications successfully;



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scientific or regulatory setbacks with respect to research programs, clinical trials, manufacturing activities and/or our existing products;



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the timing and unpredictability of regulatory approvals;



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unanticipated cash requirements to support current operations, expand our business or incur capital expenditures;



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a finding that our patents are invalid or unenforceable or that generic versions of our marketed products do not infringe our patents or the "at risk" launch of generic versions of our products;



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the Company has granted to certain parties a non-exclusive royalty-bearing license to market and sell a generic version of PROVIGIL in the United States, effective in April 2012, subject to applicable regulatory considerations and has agreed with Teva to generally allow for entry in October 2012 outside of the United States; the Company expects that PROVIGIL sales will erode beginning in April 2012 and beyond, and it is possible that NUVIGIL sales will also be affected by PROVIGIL generic competition;



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the Company cannot give any assurance that its applications to market for new indications of existing products or for product candidates will be submitted for approval or reviewed in a timely manner or that the FDA will approve such new indications or product candidates on the basis of the data contained in the applications; in addition, even if an approval is granted to market a new indication or a product candidate, there can be no assurance that the Company will be able to successfully commercialize the product in the marketplace or achieve a profitable level of sales;



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the loss of key management or scientific personnel;



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the activities of our competitors in the industry;



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regulatory, legal or other setbacks or delays with respect to the settlement agreements with the USAO, the DOJ, the OIG and other federal entities, the state settlement agreements and

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Corporate Integrity Agreement related thereto, the settlement agreements with the Offices of the Attorneys General of Connecticut and Massachusetts, our settlements of the PROVIGIL patent litigation and the ongoing litigation related to such settlements, and certain other patent infringement lawsuits and proceedings;

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the Company's ability to integrate successfully technologies, products and businesses we acquire (or have a right to acquire) and realize the expected benefits from those acquisitions, including our recent acquisitions of Mepha GmbH, Ception Therapeutics, Inc. and BioAssets Development Corporation, Inc., our option to acquire Alba Therapeutics Corporation, our expected second quarter 2011 acquisition of Gemin X Pharmaceuticals, Inc., our equity position in, and possible acquisition by takeover bid of, ChemGenex Pharmaceuticals Limited and our strategic alliance with Mesoblast Ltd.;



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adverse decisions of government entities and third-party payers regarding reimbursement for our products;



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unanticipated conversion of our convertible notes by our note holders;



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market conditions generally or in the biopharmaceutical industry that make raising capital or consummating acquisitions difficult, expensive or both;



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the effect of volatility of currency exchange rates;



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enactment of new government laws, regulations, court decisions, regulatory interpretations or other initiatives that are adverse to us or our interests; and



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pending, threatened or future legal proceedings, including in connection with the Valeant Non-Binding Proposal and the Valeant Consent Proposals.

        Any forward-looking statement made by us in this Consent Revocation Statement speaks only as of the date on which we make it. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. Except as required by applicable law, we undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise.

DESCRIPTION OF THE VALEANT CONSENT SOLICITATION

        As set forth in its consent solicitation materials filed with the SEC, Valeant is soliciting consents in favor of the following proposals (collectively, the "Valeant Consent Proposals"):

        (1)   that any changes to the amended and restated bylaws of the Company filed with the SEC on March 16, 2011, be repealed (the "Bylaw Restoration Proposal");

        (2)   that each member of the Board as of the time this proposal becomes effective, and each person, if any, nominated, appointed or elected by the Company Board prior to the effectiveness of this Proposal to become a member of the Company Board at any future time or upon any event, be removed (the "Removal Proposal"); and

        (3)   to elect each of the following eight (8) individuals to serve as a director of the Company: Santo J. Costa, Abe M. Friedman, Richard H. Koppes, Lawrence N. Kugelman, Anders Lönner, John H. McArthur, Thomas G. Plaskett and Blair H. Sheppard (the "Election Proposal").

        We believe that the Valeant Consent Proposals are solely designed to enable Valeant to take control of your Board in order to facilitate Valeant's acquisition of Cephalon pursuant to a proposal that your Board has determined is inadequate and not in the best interests of the Company's stockholders. The Removal Proposal and the Election Proposal, taken together, are designed to enable the Valeant Nominees to take over the entire Board and control the Company. The Bylaw Restoration

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Proposal is designed to nullify unspecified provisions of the Company's amended and restated Bylaws which may be adopted by the Board in its efforts to act in and protect the best interests of the Company and its stockholders. As of the date of this Consent Revocation Statement, the Company has not amended its Bylaws subsequent to March 16, 2011.

        The Board believes that the purpose of the Valeant Consent Proposals and the Valeant Consent Solicitation, including the imposition by Valeant of a May 12, 2011 deadline to deliver written consents (that is not required by law), is to unduly pressure the Board and the Company's stockholders, to limit the Board's and the Company's stockholders' options and flexibility in evaluating and responding to the Valeant Non-Binding Proposal and to prevent the Board from acting in the best interests of the Company and its stockholders. The Board believes that this pressure is not in your best interests.

        A consent in favor of the Valeant Consent Proposals would be a consent to replace all your duly elected directors with the Valeant Nominees, who would then comprise the entire Board and control the Company. Although the Valeant Nominees would, if elected, be subject to their fiduciary duties under Delaware law, they could facilitate Valeant's acquisition of the Company at a price and on terms determined by Valeant and the Valeant Nominees. Valeant would like you to believe that the Valeant Nominees, if elected, would be able to oversee the Company's business and pursue the best interests of the Company's stockholders free from conflicts of interest. However, the Board believes that the Company's stockholders should have concerns that the Valeant Nominees:

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may have conflicts of interest;



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will not have substantial and intimate knowledge of the Company, its day-to-day operations or its products and pipeline;



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may not independently evaluate and manage the Company's business to enhance value for all of the Company's stockholders; and



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may not undertake a comprehensive review of all of the Company's alternatives and options other than the Valeant Non-Binding Proposal.

        In considering the Valeant Non-Binding Proposal and the Valeant Consent Solicitation, the Board believes that the Company's stockholders must recognize that Valeant has no duty to act in the best interests of the Company's stockholders (including when selecting potential nominees to serve on your Board) and that, if all or some of the Valeant Nominees are elected to replace members of the Board, the Valeant Nominees may approve a sale of the Company to Valeant at a price your current Board has determined to be inadequate and without sufficiently exploring the Company's alternatives and options. It would be in Valeant's and its stockholders' interest to buy Cephalon at the lowest possible price. There is no guarantee that the Valeant Nominees will vigorously negotiate with Valeant on behalf of the Company's stockholders.

        The Board believes that your interests will be best served if the current Board, acting completely independent of Valeant, continues to be responsible for evaluating the alternatives and options available to the Company. In the exercise of its fiduciary duties, the Board is currently undertaking a review of all of the Company's alternatives and options. In this regard, we believe that the current Board—which is composed predominantly of independent and disinterested directors—is better able:

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to evaluate what action is in the best interests of the Company's stockholders; and



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to decide on a course of action that will protect and enhance stockholder value.

        Therefore, we are soliciting the revocation of any consents that may have been given in response to the Valeant Consent Solicitation.

        YOUR BOARD UNANIMOUSLY OPPOSES THE VALEANT CONSENT SOLICITATION. YOUR BOARD, WHICH IS COMPOSED PREDOMINANTLY OF INDEPENDENT AND

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DISINTERESTED DIRECTORS, IS COMMITTED TO ACTING IN THE BEST INTERESTS OF ALL OF THE COMPANY'S STOCKHOLDERS.

         YOUR BOARD URGES YOU NOT TO SIGN ANY GOLD CONSENT CARD SENT TO YOU BY VALEANT, BUT INSTEAD TO SIGN AND RETURN THE WHITE CONSENT REVOCATION CARD INCLUDED WITH THESE MATERIALS.

        If you have previously signed and returned Valeant's gold consent card, you have every right to change your mind and revoke your consent. Whether or not you have signed the gold consent card, we urge you to mark the " YES, REVOKE MY CONSENT " boxes on the enclosed WHITE Consent Revocation Card and to sign, date and mail the card in the postage-paid envelope provided. Although submitting a consent revocation will not have any legal effect if you have not previously submitted a consent card, it will help us keep track of the progress of the consent process. Regardless of the number of shares you own, it is important for you to deliver a WHITE Consent Revocation Card. Please act today.

        In accordance with the Company's Bylaws, the Board set April 8, 2011 as the Record Date for the Valeant Consent Solicitation. Only holders of record as of the close of business on the Record Date may execute, withhold or revoke consents with respect to the Valeant Consent Solicitation.

        If you have any questions about giving your consent revocation or require assistance, please call Innisfree M&A Incorporated, toll-free at (877) 800-5186 (banks and brokers call collect at (212) 750-5833).

REASONS TO REJECT THE VALEANT CONSENT PROPOSALS

        The Removal Proposal and the Election Proposal, taken together, are designed to enable the Valeant Nominees to take over the entire Board and control the Company. The Bylaw Restoration Proposal is designed to nullify unspecified provisions of the Company's amended and restated Bylaws which may be adopted by the Board in its efforts to act in and protect the best interests of the Company and its stockholders. As of the date of this Consent Revocation Statement, the Company has not amended its Bylaws subsequent to March 16, 2011. The Board believes that the purpose of the Valeant Consent Proposals and the Valeant Consent Solicitation, including the imposition by Valeant of a May 12, 2011 deadline to deliver written consents (that is not required by law), is to unduly pressure the Board and the Company's stockholders, to limit the Board's and the Company's stockholders' options and flexibility in evaluating and responding to the Valeant Non-Binding Proposal and to prevent the Board from acting in the best interests of the Company and its stockholders. The Board believes that this pressure is not in your best interests.

The Valeant Consent Solicitation is an attempt to remove the directors who are acting in the best interests of the Company's stockholders.

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A consent in favor of the Valeant Consent Proposals would be a consent to replace all of your duly elected directors with the Valeant Nominees, who would then comprise the entire Board.



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The current Board has a strong track record of acting in the best interests of the Company's stockholders. The Board, which is composed predominantly of independent and disinterested directors, is committed to enhancing value for all of the Company's stockholders.



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Each of the Company's current directors has an intimate knowledge of the Company, its day-to-day operations and its products and pipeline. In contrast, Valeant and the Valeant Nominees do not have the same familiarity with the Company.



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The Board believes that the interests of the Company's stockholders will be best served if the Company's current directors, acting independently from (and without any connection to)

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Valeant, are given the opportunity to continue to review, develop and adapt the Company's plan to maximize value for all of the Company's stockholders. In the exercise of its fiduciary duties, the Board is currently undertaking a review of all of the Company's alternatives and options.

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In addition, the Board believes that Valeant is attempting to pressure the Company's stockholders in making a rushed judgment about the future of the Company by setting a May 12, 2011 deadline to deliver written consents (that is not required by law).

The Valeant Non-Binding Proposal is an attempt to cash out the Company's stockholders at a price your current Board has determined to be inadequate.

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On April 5, 2011, after carefully considering the Valeant Non-Binding Proposal, the Board unanimously concluded, after an analysis by its financial and legal advisors, that the Valeant Non-Binding Proposal is inadequate and not in the best interests of the Company's stockholders.



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Factors the Board considered in determining the Valeant Non-Binding Proposal to be inadequate included:



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The Valeant Non-Binding Proposal Does Not Fully Reflect the Company's Standalone Value.   The Board's belief, based on advice of its financial advisors, that Valeant's proposed price significantly undervalues the Company, including the greater value that the Board believes can be obtained from the Company's strategic plan, especially the value of the Company's diversified and robust portfolio of marketed and pipeline products.



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Valeant's Timing is Opportunistic.   The 30-day average share price of the Company's Common Stock of $56.74 on which Valeant based their proposal is near the stock's 52-week low. The Valeant Non-Binding Proposal represents virtually no premium to the Company's 52-week high.



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The Valeant Non-Binding Proposal Ascribes Little to No Value to the Company's Pipeline.   The Company has created a broad product pipeline, with 10 late-stage product candidates targeted at novel and "best-in-class" therapeutics. These programs represent value that the Board believes is not reflected in the Valeant Non-Binding Proposal.



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In addition, the Valeant Non-Binding Proposal is non-binding and is conditioned on the negotiation of definitive transaction agreements. As of the date of this Consent Revocation Statement, Valeant has not announced that it has obtained committed financing for the Valeant Non-Binding Proposal.

The Board believes that the Valeant Nominees may not be in a position to best serve the interests of the Company's stockholders.

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A consent in favor of the Valeant Consent Proposals is a consent to replace all of your duly elected directors with the Valeant Nominees, who would then comprise the entire Board and control the Company. Although the Valeant Nominees would, if elected, be subject to their fiduciary duties under Delaware law, they could facilitate Valeant's acquisition of the Company at a price your current Board has determined is inadequate.



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In considering the Valeant Non-Binding Proposal and the Valeant Consent Solicitation, the Board believes that it is important for the Company's stockholders to recognize that Valeant has no duty to act in the best interests of the Company's stockholders (including when selecting potential nominees to serve on your Board). It would be in Valeant's and its stockholders' interest to buy Cephalon at the lowest possible price.



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While Valeant's consent solicitation materials describe its proposed slate of directors as "independent," the Board believes that all of them have been selected by Valeant simply to

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facilitate the acquisition of the Company by Valeant on terms that are as favorable to Valeant as possible. In fact, Valeant has stated its belief that the Valeant Nominees will, if elected and subject to their fiduciary duties, take actions to facilitate the acquisition of the Company by Valeant. There is no guarantee that the Valeant Nominees will vigorously negotiate with Valeant on behalf of the Company's stockholders.

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Even if the Company's stockholders consent to the replacement of the current Board with the Valeant Nominees, Valeant may choose not to continue to pursue or complete the acquisition of the Company contemplated by the Valeant Non-Binding Proposal. There is no guarantee that the Valeant Nominees will be able to manage the Company and enhance its value for the benefit of all of the Company's stockholders if the Valeant Non-Binding Proposal is not consummated for any reason.



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Valeant will pay each Valeant Nominee $50,000 (this is in addition to any compensation to which an Valeant Nominee would be entitled if elected to the Board and paid in accordance with the Company's current practices for director compensation). Please see the discussion in this Consent Revocation Statement under the heading "Director Compensation." Valeant has also agreed to pay for an independent legal counsel of the Valeant Nominees and indemnify the Valeant Nominees from and against any claims arising from any such person serving as an Valeant Nominee.



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Three of the eight Valeant Nominees are former directors of Old Valeant which merged with Biovail Corporation to form Valeant. Each of Messrs. Koppes, Kugelman and Lönner owned shares of common stock of Old Valeant that were converted into shares of common stock of Valeant in connection with the merger of Old Valeant and Biovail Corporation in September 2010. In addition, each of Messrs. Koppes, Kugelman and Lönner have a continuing right to be indemnified by Valeant and receive advancement of expenses for acts or omissions occurring at or prior to the completion of the merger of Old Valeant and Biovail Corporation. Valeant has not addressed the potential financial and personal conflicts of interest that each of Messrs. Koppes, Kugelman and Lönner could have in respect of Valeant, and which could potentially impact their views in respect of a sale of the Company to Valeant.

        In summary, the Board believes that the Valeant Nominees have been chosen by Valeant not to protect the interests of the Company's stockholders, but rather for the singular purpose of approving a transaction that the Board has already determined to be inadequate and not in the best interests of the Company's stockholders. In addition, the Board believes that that the Valeant Nominees may not be in a position to best serve the interests of the Company's stockholders.

         FOR THE FOREGOING REASONS, THE BOARD OF DIRECTORS OF THE COMPANY STRONGLY BELIEVES THAT THE VALEANT CONSENT SOLICITATION IS NOT IN THE BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS.

         WE URGE STOCKHOLDERS TO REJECT THE VALEANT CONSENT SOLICITATION AND REVOKE ANY CONSENT PREVIOUSLY SUBMITTED .

         DO NOT DELAY. IN ORDER TO HELP ENSURE THAT THE CURRENT BOARD IS ABLE TO ACT IN YOUR BEST INTERESTS, PLEASE SIGN, DATE AND RETURN THE ENCLOSED WHITE CONSENT REVOCATION CARD AS PROMPTLY AS POSSIBLE.

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BACKGROUND OF THE VALEANT CONSENT SOLICITATION

        On March 3, 2011, the Company's Chief Executive Officer, J. Kevin Buchi, met with Valeant's Chief Executive Officer, J. Michael Pearson. Mr. Buchi and Mr. Pearson had not met prior to this date. During this meeting Mr. Pearson expressed an interest in a consensual transaction involving Valeant and the Company.

        On March 18, 2011, Mr. Pearson met with Mr. Buchi. During this meeting, Mr. Pearson delivered to Mr. Buchi a letter addressed to the Board that set forth a non-binding proposal, later identified by Valeant on March 25, 2011 as Alternative 1, to acquire the Company for $73.00 per share in cash. The letter stated that the proposal was conditioned on confirmatory due diligence and the negotiation of definitive transaction agreements and requested a response by April 1, 2011.

        Also on March 18, 2011, Mr. Buchi communicated to William P. Egan, the Chairman of the Board, that he had received the proposal letter from Valeant and discussed the content of the letter with Mr. Egan.

        On March 19, 2011, representatives from Deutsche Bank Securities Inc. ("Deutsche Bank") and Valeant's financial advisor, Goldman Sachs & Co. ("Goldman Sachs") participated in a call to discuss the non-binding proposal for Alternative 1.

        On March 21, 2011, the Board was provided an update regarding Valeant's non-binding proposal for Alternative 1 and Valeant's letter was distributed to the members of the Board.

        Also on March 21, 2011, members of the Company's management met with the Company's financial and legal advisors to discuss the terms of the non-binding proposal for Alternative 1.

        On March 25, 2011, the Board received a second letter from Valeant confirming its non-binding proposal regarding Alternative 1 and alternatively including a proposal identified as Alternative 2 to acquire certain non-oncology related assets of Cephalon for a total consideration of $2.8 billion in cash. The letter did not specify in detail the specific assets contemplated to be acquired in connection with, or details of the transaction structure contemplated by, Alternative 2. In addition, the letter stated that Alternative 1 and Alternative 2 were conditioned on confirmatory due diligence and the negotiation of definitive transaction agreements. The letter also shortened Valeant's deadline for the Company's response from April 1, 2011 to March 29, 2011.

        On March 26, 2011, a member of Valeant's board of directors contacted a member of the Board during his medical leave to discuss Alternative 1 and Alternative 2.

        On March 27, 2011, representatives from Deutsche Bank and Goldman Sachs participated in a call to discuss the timeline presented by Valeant in Valeant's March 25th letter. During this call, representatives from Deutsche Bank stated that the Board would be in a position to respond to Valeant by the middle of the week of April 4th.

        On March 28, 2011, the Company sent a letter to Valeant stating that the Board would carefully consider each of Alternative 1 and Alternative 2 with its financial advisors. The letter noted Valeant's shortened timeline from April 1st to March 29th and stated that the Company would provide Valeant with the Board's response expeditiously following a thorough analysis of Alternative 1 and Alternative 2.

        Also on March 28, 2011, Mr. Buchi called Mr. Pearson to discuss the Board's proposed timeline for reviewing Alternative 1 and Alternative 2 and representatives of Deutsche Bank called representatives of Goldman Sachs to engage in similar discussions.

        On March 29, 2011, members of the Company's management met with the Company's financial and legal advisors to review Valeant's non-binding proposals for Alternative 1 and Alternative 2.

        Also on March 29, 2011, representatives of Deutsche Bank called representatives of Goldman Sachs to discuss certain questions regarding the details of Valeant's non-binding proposal for Alternative 2. During that call, the representatives of Goldman Sachs stated that Valeant was sending an additional letter to the Board. Later that day, the Board received a third letter from Valeant in which Valeant declined to extend its March 29th response deadline.

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        Also on March 29, 2011, following the receipt of the Valeant letter, Mr. Buchi sent a letter to Mr. Pearson and the Valeant board of directors confirming that the Board was reviewing Valeant's non-binding proposals for Alternative 1 and Alternative 2 with its legal and financial advisors and that the Board would be in a position to respond to Valeant by the middle of the week of April 4th. After sending this letter, Mr. Buchi called Mr. Pearson to clarify the Board's timeline and process. Later that afternoon, Mr. Pearson called Mr. Buchi and informed him that Valeant intended to publicly announce the Valeant Non-Binding Proposal later that afternoon.

        On March 29, 2011, following the close of trading, Valeant publicly announced in a press release that it had made the Valeant Non-Binding Proposal to acquire the Company for $73.00 per share in cash and that it intended to commence a consent solicitation to replace the Board.

        During the evening of March 29, 2011, the Board conducted a telephonic meeting to discuss the announcement of the Valeant Non-Binding Proposal and Valeant's proposed consent solicitation. During this meeting, the Company's management and legal and financial advisors responded to questions regarding the Valeant Non-Binding Proposal and Valeant's proposed consent solicitation. Also during the evening of March 29, 2011, the Company issued a press release in which the Company confirmed receipt of Valeant's non-binding proposals for Alternative 1 and Alternative 2 and Valeant's announcement of the Valeant Non-Binding Proposal. The press release noted that the Board intended to consider the Valeant Non-Binding Proposal and would respond in due course and that the Board would act in accordance with stockholders' best interests, with the goal of maximizing stockholder value. The press release also advised stockholders to wait for the response of the Board.

        On April 1, 2011, the Board conducted a telephonic meeting during which the Board discussed and approved the retention by the Company of Merrill Lynch Pierce Fenner & Smith Incorporated as an additional financial advisor.

        On April 4, 2011, the Board met to consider and discuss the Valeant Non-Binding Proposal. At this meeting, the Company's management and legal and financial advisors made presentations to the Board relating to the Valeant Non-Binding Proposal. Additionally, the Company's management and legal and financial advisors responded to questions relating to the Valeant Non-Binding Proposal and Valeant's proposed consent solicitation.

        During the afternoon of April 5, 2011, the Board held a telephonic meeting to continue its consideration of the Valeant Non-Binding Proposal and to engage in further discussion. At this meeting, the Company's management and legal and financial advisors responded to questions relating to the Valeant Non-Binding Proposal and Valeant's proposed consent solicitation. At this meeting, the Board unanimously concluded, after an analysis by its financial and legal advisors, that the Valeant Non-Binding Proposal is inadequate and not in the best interests of the Company's stockholders. Also at this meeting, the Board set April 8, 2011 as the Record Date for the Consent Solicitation pursuant to the Company's Bylaws.

        After the conclusion of this meeting, on April 5, 2011, the Company sent a letter to Valeant and issued a press release setting forth the Board's conclusion. The letter also noted that the Company's Board and management will continue to review, develop and adapt the Company's plan to maximize value for the Company's stockholders.

        On April 5, 2011, Valeant filed a preliminary consent solicitation statement with respect to the Valeant Consent Proposals.

        On April 7, 2011, Cephalon filed a preliminary consent revocation statement with respect to the Valeant Consent Proposals.

        On April 11, 2011, Valeant announced that it had set a May 12, 2011 deadline for the delivery of consents in connection with the Valeant Consent Solicitation.

        On April 15, 2011, Cephalon filed an amendment to its preliminary consent revocation statement.

        On April 18, 2011, Valeant filed an amendment to its preliminary consent solicitation statement.

        On or about April 20, 2011, Cephalon filed its definitive consent revocation statement and began mailing the consent revocation statement to shareholders.

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QUESTIONS AND ANSWERS ABOUT THIS CONSENT REVOCATION STATEMENT

         YOUR BOARD URGES YOU NOT TO SIGN ANY GOLD CONSENT CARD SENT TO YOU BY VALEANT BUT INSTEAD TO SIGN AND RETURN THE WHITE CONSENT REVOCATION CARD INCLUDED WITH THESE MATERIALS.

         If you have previously signed and returned Valeant's gold consent card, you have every right to change your vote and revoke your consent. Whether or not you have signed the gold consent card, we urge you to mark the "YES, REVOKE MY CONSENT" boxes on the enclosed WHITE Consent Revocation Card and to sign, date and mail the card in the postage-paid envelope provided. Although submitting a consent revocation will not have any legal effect if you have not previously submitted a consent card, it will help us keep track of the progress of the consent process. Regardless of the number of shares you own, it is important for you to deliver a WHITE Consent Revocation Card. Please act today.

Q:

WHO IS MAKING THIS SOLICITATION?

A:

Your Board of Directors.

Q:

WHAT ARE WE ASKING YOU TO DO?

A:

You are being asked to revoke any consent that you may have delivered in favor of the three proposals described in the Valeant Consent Solicitation Statement and, by doing so, preserve your current Board, which will continue to act in your best interests.

Q:

IF I HAVE ALREADY DELIVERED A CONSENT, IS IT TOO LATE FOR ME TO CHANGE MY MIND?

A:

No. Until the requisite number of duly executed, unrevoked consents are delivered to the Company in accordance with Delaware law and Cephalon's organizational documents, the consents will not be effective. At any time prior to the consents becoming effective, you have the right to revoke your consent by delivering a WHITE Consent Revocation Card, as discussed in the following question.

Q:

WHAT IS THE EFFECT OF DELIVERING A WHITE CONSENT REVOCATION CARD?

A:

By marking the " YES, REVOKE MY CONSENT " boxes on the enclosed WHITE Consent Revocation Card and signing, dating and mailing the card in the postage-paid envelope provided, you will revoke any earlier dated consent that you may have delivered to Valeant. Even if you have not submitted a consent card, we urge you to submit a consent revocation as described above. Although submitting a consent revocation will not have any legal effect if you have not previously submitted a consent card, we urge to you submit a consent revocation card because it will help us keep track of the progress of the consent process.

Q:

IF I DELIVER A CONSENT REVOCATION CARD, DOES THAT MEAN THAT CEPHALON WILL NOT CONSUMMATE A TRANSACTION WITH VALEANT?

A:

No. If you deliver your WHITE Consent Revocation Card, you will only be deciding to preserve the current composition of your Board. In other words, by returning the WHITE Consent Revocation Card, you will help ensure that Cephalon's alternatives and options are evaluated fully and fairly by your existing directors instead of by directors selected by Valeant to facilitate an acquisition of Cephalon by Valeant that your Board has determined is inadequate.

Q:

WHAT SHOULD I DO TO REVOKE MY CONSENT?

A:

Mark the " YES, REVOKE MY CONSENT " boxes next to each proposal listed on the WHITE Consent Revocation Card. Then, sign, date and return the enclosed WHITE Consent Revocation Card today in the envelope provided. It is important that you date the WHITE Consent Revocation Card when you sign it.

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Q:

WHAT HAPPENS IF I DO NOTHING?

A:

If you do not send in any consent Valeant may send you and do not return the enclosed WHITE Consent Revocation Card, it will have the effect of not consenting to the Valeant Consent Proposals.

Q:

WHAT HAPPENS IF THE VALEANT CONSENT PROPOSALS PASS?

A:

If unrevoked consents representing a majority of our common stock outstanding as of the Record Date are delivered to us within 60 days of the earliest dated consent, all of the current members of your Board would be replaced with the Valeant Nominees and the Valeant Nominees would then control Cephalon. Although the Valeant Nominees would, if elected, be subject to their fiduciary duties, the Valeant Nominees could facilitate Valeant's acquisition of Cephalon at a price that the current Board has determined is inadequate.

Q:

WHAT IS YOUR BOARD'S POSITION WITH RESPECT TO THE VALEANT CONSENT PROPOSALS?

A:

Your Board has unanimously determined that the Valeant Consent Proposals are not in the best interests of the Company's stockholders and that stockholders should reject the proposals. Your Board's reasons and recommendations are contained in the section entitled "Reasons to Reject the Valeant Consent Proposals."

Q:

WHAT DOES YOUR BOARD OF DIRECTORS RECOMMEND?

A:

On April 5, 2011, the Board unanimously concluded, after an analysis by its financial and legal advisors, that the Valeant Non-Binding Proposal is inadequate and not in the best interests of the Company's stockholders. As a result, your Board strongly believes that the solicitation being undertaken by Valeant is not in the best interests of the Company's stockholders. Your Board unanimously opposes the solicitation by Valeant and urges stockholders to reject the solicitation and revoke any consent previously submitted.

Q:

WHO IS ENTITLED TO CONSENT, WITHHOLD CONSENT OR REVOKE A PREVIOUSLY GIVEN CONSENT WITH RESPECT TO THE VALEANT CONSENT PROPOSALS?

A:

In accordance with Delaware law and Cephalon's Bylaws, the Board set April 8, 2011 as the Record Date for the determination of the Company stockholders who are entitled to execute, withhold or revoke consents relating to the Valeant Consent Proposals. Only stockholders of record as of the close of business on April 8, 2011 may execute, withhold or revoke consents with respect to the Valeant Consent Proposals.

Q:

IF I SUBMIT A WHITE CONSENT REVOCATION CARD REVOKING MY CONSENT, CAN I SUBSEQUENTLY REVOKE SUCH CONSENT REVOCATION?

A:

If you change your mind after submitting a consent revocation on the enclosed WHITE Consent Revocation Card, you can submit a later dated consent to Valeant thereafter so long as such consent is submitted during the solicitation period. Delivery of a later dated consent to Valeant would have the effect of revoking the earlier dated consent revocation delivered to Cephalon.

Q:

HOW DO I CONSENT, WITHHOLD A CONSENT OR REVOKE A PREVIOUSLY GIVEN CONSENT WITH RESPECT TO MY 401(K) SHARES?

A:

If you participate in the Cephalon, Inc. 401(k) Profit Sharing Plan (the "401(k) Plan"), you may give consent instructions as to the number of shares of Cephalon common stock equivalent to the interest in Cephalon common stock credited to your account as of the Record Date. You may provide consent instructions to The Vanguard Group by following the instructions on the enclosed instruction form.

Q:

WHO SHOULD I CALL IF I HAVE QUESTIONS ABOUT THE SOLICITATION?

A:

Please call Innisfree M&A Incorporated, the firm assisting us in soliciting the revocation of consents, toll-free at (877) 800-5186 (banks and brokers call collect at (212) 750-5833).

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THE CONSENT PROCEDURE

Voting Securities and Record Date

        In accordance with the Company's Bylaws, the Board has set April 8, 2011 as the Record Date for the Valeant Consent Solicitation. As of the Record Date, there were 76,151,414 shares of the Company's Common Stock outstanding (excluding treasury shares). Each share of the Company's Common Stock outstanding as of the Record Date will be entitled to one vote per share.

        Only stockholders of record as of the Record Date are eligible to execute, withhold and revoke consents in connection with the Valeant Consent Proposals. Persons beneficially owning shares of the Company's Common Stock (but not holders of record), such as persons whose ownership of the Company's Common Stock is through a broker, bank, financial institution or other nominee holder, may wish to contact such broker, bank, financial institution or other nominee holder and instruct such person to execute the WHITE Consent Revocation Card on their behalf. Any abstention, failure to vote or broker non-vote will have the same effect as withholding consent from the Valeant Consent Proposals. "Broker non-votes" occur when a broker, bank, financial institution or other nominee holder has not received instructions with respect to a particular matter, such as the Valeant Consent Proposals, and therefore does not have discretionary power to vote on that matter.

Effectiveness Of Consents

        Under Delaware law, unless otherwise provided in a corporation's certificate of incorporation, stockholders may act without a meeting, without prior notice and without a vote, if consents in writing setting forth the action to be taken are signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. The Company's certificate of incorporation does not prohibit stockholder action by written consent. Under Section 228 of the Delaware General Corporation Law, the Valeant Consent Proposals will become effective if valid, unrevoked consents signed by the holders of a majority of the shares of the Common Stock of the Company outstanding as of the Record Date are delivered to the Company within 60 days of the earliest dated consent delivered to the Company.

        Because Valeant's proposals could become effective before the expiration of the 60-day period discussed above, we urge you to act promptly to return the WHITE Consent Revocation Card.

Effect of WHITE Consent Revocation Card

        A stockholder may revoke any previously signed consent by signing, dating and returning to the Company a WHITE Consent Revocation Card. A consent may also be revoked by delivery of a written revocation of your consent to Valeant. Stockholders are urged, however, to deliver all consent revocations to Innisfree M&A Incorporated, 501 Madison Avenue, 20th Floor, New York, NY 10022 (Facsimile No. (212) 750-5799). The Company requests that if a consent revocation is instead delivered to Valeant, a copy of the consent revocation also be delivered to the Company, c/o Innisfree M&A Incorporated, at the address or facsimile number set forth above, so that the Company will be aware of all consent revocations. If you return your WHITE Consent Revocation Card by facsimile, please be sure to fax both sides.

        Unless you specify otherwise, by signing and delivering the WHITE Consent Revocation Card, you will be deemed to have revoked any prior consent to all of the Valeant Consent Proposals.

        Any consent revocation may itself be revoked by marking, signing, dating and delivering a written revocation of your Consent Revocation Card to the Company or to Valeant or by delivering to Valeant a subsequently dated gold consent card that Valeant sent to you.

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        If any shares of Common Stock that you owned on the Record Date were held for you in an account with a stock brokerage firm, bank nominee or other similar "street name" holder, you are not entitled to vote such shares directly, but rather must give instructions to the stock brokerage firm, bank nominee or other "street name" holder to grant or revoke consent for the shares of Common Stock held in your name. Accordingly, you should either sign, date and mail the enclosed WHITE Consent Revocation Card or contact the person responsible for your account and direct him or her to execute the enclosed WHITE Consent Revocation Card on your behalf. If your bank, broker firm, dealer, trust company or other nominee provides for consent instructions to be delivered to them by telephone or internet, instructions will be included on the WHITE Consent Revocation Card.

        YOU HAVE THE RIGHT TO REVOKE ANY CONSENT YOU MAY HAVE PREVIOUSLY GIVEN TO VALEANT. TO DO SO, YOU NEED ONLY SIGN, DATE AND RETURN IN THE ENCLOSED POSTAGE PREPAID ENVELOPE THE WHITE CONSENT REVOCATION CARD WHICH ACCOMPANIES THIS CONSENT REVOCATION STATEMENT. IF YOU DO NOT INDICATE A SPECIFIC VOTE ON THE WHITE CONSENT REVOCATION CARD WITH RESPECT TO ONE OR MORE OF THE VALEANT CONSENT PROPOSALS, THE CONSENT REVOCATION CARD WILL BE USED IN ACCORDANCE WITH THE BOARD'S RECOMMENDATION TO REVOKE ANY CONSENT WITH RESPECT TO SUCH PROPOSALS.

        The Company has retained Innisfree M&A Incorporated to assist in communicating with stockholders in connection with the Valeant Consent Solicitation and to assist in our efforts to obtain consent revocations. If you have any questions about how to complete or submit your WHITE Consent Revocation Card or any other questions, Innisfree M&A Incorporated will be pleased to assist you. You may call Innisfree M&A Incorporated toll-free at (877) 800-5186 (banks and brokers call collect at (212) 750-5833).

         You should carefully review this Consent Revocation Statement. YOUR TIMELY RESPONSE IS IMPORTANT. You are urged not to sign any gold consent cards. Instead, you can reject the solicitation efforts of Valeant and revoke your consent by promptly completing, signing, dating and mailing the enclosed WHITE Consent Revocation Card to Innisfree M&A Incorporated, 501 Madison Avenue, 20th Floor, New York, NY 10022 (Facsimile No. (212) 750-5799).

        If you return your WHITE Consent Revocation Card by facsimile, please be sure to fax both sides. Please be aware that if you sign a gold card but do not check any of the boxes on the card, you will be deemed to have consented to the Valeant Consent Proposals.

Results Of This Consent Revocation Solicitation

        The Company will retain an independent inspector of elections in connection with the Valeant Consent Solicitation. The Company intends to notify stockholders of the results of the Valeant Consent Solicitation by issuing a press release, which it will also file with the SEC as an exhibit to a Current Report on Form 8-K.

SOLICITATION OF CONSENT REVOCATIONS

Cost and Method

        The cost of the solicitation of revocations of consent will be borne by the Company. The Company estimates that the total expenditures relating to the Company's consent revocation solicitation (other than salaries and wages of officers and employees), but excluding costs of (if any) litigation related to the solicitation, will be approximately $1.25 million, of which approximately $300,000 has been incurred as of the date hereof. The Company may, from time to time, request that certain of its employees perform certain tasks in connection with the solicitation as part of his or her duties in the normal course of his or her employment without any additional compensation for the solicitation. In addition

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to solicitation by mail, directors and other participants may, without additional compensation, solicit revocations by mail, e-mail, facsimile, in person or by telephone. The Company will also include copies of all written soliciting material provided to stockholders at http://www.cephaloninvestors.com.

        The Company has retained Innisfree M&A Incorporated as its proxy solicitor, at a fee not to exceed $850,000, plus reasonable out-of-pocket expenses incurred on our behalf, to assist in the solicitation of consent revocations. The Company will reimburse brokerage houses, banks, custodians and other nominees and fiduciaries for out-of-pocket expenses incurred in forwarding the Company's consent revocation materials to, and obtaining instructions relating to such materials from, beneficial owners of the Company's Common Stock. Innisfree M&A Incorporated has advised the Company that approximately 75 of its employees will be involved in the solicitation of consent revocations by Innisfree M&A Incorporated on behalf of the Company. In addition, Innisfree M&A Incorporated and certain related persons will be indemnified against certain liabilities arising out of or in connection with the engagement.

Participants in the Solicitation

        Under applicable regulations of the SEC, each of our directors and certain of our executive officers and other employees may be deemed to be "participants" in this consent revocation solicitation. Please refer to the section entitled "Information About the Company and its Directors and Officers" and to Annex I, "Certain Information Regarding Participants in this Consent Revocation Solicitation" and Annex II, "Recent Trading History of Participants in this Consent Revocation Solicitation" for information about our directors and certain of our executive officers and other employees who may be deemed to be participants in the solicitation. Except as described in this Consent Revocation Statement, there are no agreements or understandings between the Company and any such participants relating to employment with the Company or any future transactions.

        Other than the persons described above, no general class of employee of the Company will be employed to solicit stockholders in connection with the solicitation. However, in the course of their regular duties, employees may be asked to perform clerical or ministerial tasks in furtherance of this solicitation.

CERTAIN LITIGATION

        On March 31, 2011, two separate plaintiffs filed putative class action lawsuits, related to the Valeant Non-Binding Proposal, in the Delaware Court of Chancery. The first-filed suit, brought by plaintiff Kaczak, named as defendants all members of the Board. The second-filed suit, brought by plaintiff County of Dauphin Retirement Plan, named as defendants all members of the Board and the Company itself. Both suits contain substantially similar allegations and seek substantially similar relief. Plaintiffs in both suits allege that members of the Board violated their fiduciary duties to the Company's stockholders by failing to properly consider the Valeant Non-Binding Proposal. They further allege that, by breaching their fiduciary duties, the directors thereby failed to maximize value for the Company's stockholders. Both suits seek injunctions requiring Board members to fulfill their fiduciary duties by properly considering the Valeant Non-Binding Proposal and by acting in ways that will maximize shareholder value. County of Dauphin additionally asks the court to enjoin the board members from "taking any further action designed to frustrate any potential transaction that would maximize shareholder value." Both suits seek fees and expenses.

        On April 4, 2011, a third plaintiff filed a putative class action in the Delaware Court of Chancery against the Company and all Board members. The allegations contained in this third complaint are substantially similar to those contained in the previously-filed complaints—namely, that members of the Board breached their fiduciary duties to the Company's stockholders by failing to adequately consider

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the Valeant Non-Binding Proposal. Plaintiff seeks an injunction requiring Board members to adequately consider the Valeant Non-Binding Proposal. Plaintiff also seeks fees and expenses.

        Cephalon and all Board members intend to vigorously defend themselves against the asserted claims.

CERTAIN AGREEMENTS

        The removal of the Board and its replacement with the Valeant Nominees will constitute a change in control that will trigger an event of default under the Company's $200 million, three-year revolving credit facility (the "Credit Agreement"). Although the Company currently does not have any amounts drawn under the Credit Agreement, the administrative agent under the Credit Agreement may terminate outstanding commitments under the Credit Agreement following an event of default, which could significantly reduce the Company's available sources of liquidity and the Company's prospects in the event that the Valeant Non-Binding Proposal is not consummated for any reason.

        The removal and replacement of the Board may also trigger a change in control under certain of the Company's equity plans and agreements with the Company's executive officers that are disclosed in this Consent Revocation Statement.

APPRAISAL RIGHTS

        Our stockholders are not entitled to appraisal rights in connection with the Valeant Consent Proposals or this Consent Revocation Statement.

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INFORMATION ABOUT THE COMPANY AND ITS DIRECTORS AND
OFFICERS CURRENT DIRECTORS OF CEPHALON

        The following sets forth information about the current members of the Board as of the date of this Consent Revocation Statement, including the experience, qualifications, attributes or skills that led to the conclusion that each such person should serve as a director. On April 8, 2011, Charles A. Sanders, M.D. retired from the Board effective immediately due to his ongoing health issues.

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EXECUTIVE OFFICERS OF THE COMPANY

        J. KEVIN BUCHI (age 55) is presently the Chief Executive Officer and a Director of the Company. Mr. Buchi joined Cephalon in March 1991 and, since December 2010, he has served as Chief Executive Officer. From January 2010 through December 2010, Mr. Buchi was Chief Operating Officer. From February 2006 through January 2010, Mr. Buchi served as Chief Financial Officer and, from 2004, head of business development for the Company. Mr. Buchi joined Cephalon in 1991 as controller.

        ALAIN ARAGUES (age 60) is presently Executive Vice President and President of Cephalon Europe. Mr. Aragues was appointed as Executive Vice President and President of Cephalon Europe in January 2010. Mr. Aragues joined Cephalon in 2002 to lead the company's expansion in France following its 2001 acquisition of Group Lafon and was appointed President of Cephalon Europe in February 2005.

        VALLI F. BALDASSANO (age 50) is presently Executive Vice President and Chief Compliance Officer, and has served in such capacity since she joined Cephalon in October 2007.

        WILCO GROENHUYSEN (age 53) is presently Executive Vice President and Chief Financial Officer. Mr. Groenhuysen joined Cephalon in August 2007 as Senior Vice President of Finance. Since January 2010, he has held the position of Executive Vice President & CFO with responsibility for Worldwide Finance, Commercial Operations and Risk Management.

        GERALD J. PAPPERT (age 47) is presently Executive Vice President, General Counsel and Secretary. Mr. Pappert joined Cephalon in May 2008 as Executive Vice President and General Counsel. In October 2008, Mr. Pappert assumed the responsibilities of the Company Secretary.

        LESLEY RUSSELL COOPER, MB.CH.B., MRCP (age 50) is presently Executive Vice President and Chief Medical Officer. Dr. Russell joined Cephalon in January 2000 and, since August 2008, she has served as Executive Vice President and Chief Medical Officer. From November 2006 to August 2008, Dr. Russell served as Executive Vice President, Worldwide Medical and Regulatory Operations. From January 2000 to August 2006, Dr. Russell was Senior Vice President of Worldwide Clinical Research with the Company.

        CARL A. SAVINI (age 61) is presently Executive Vice President and Chief Administrative Officer. Mr. Savini joined Cephalon in June 1993 and, since February 2006, he has served as Executive Vice President and Chief Administrative Officer. Mr. Savini has served in various capacities with the Company, including Senior Vice President, Administration and Senior Vice President, Human Resources.

        JEFFRY L. VAUGHT, PH.D. (age 60) is presently Executive Vice President and Chief Scientific Officer. Dr. Vaught joined Cephalon in August 1991 and, since August 2008, he has served as Executive Vice President and Chief Scientific Officer responsible for directing Cephalon's research operations.

        None of the directors or executive officers of the Company have been involved in any legal proceedings in the preceding ten years described in Item 401(f) of Regulation S-K promulgated under the Securities Act of 1933 ("Regulation S-K"), which must be disclosed as material for purposes of an evaluation of the integrity or ability of any person to serve as a director or executive officer of the Company under the federal securities laws.

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GOVERNANCE OF THE COMPANY

Stock Ownership by Directors and Executive Officers

        The following table shows the number of shares of the Company's Common Stock that are beneficially owned by the directors, by each of the executives named in the summary compensation table, and by all directors and executive officers as a group as of April 6, 2011. As of the Record Date of April 8, 2011, there were 76,151,414 shares of Common Stock outstanding (excluding treasury shares). The number of shares shown for each individual does not exceed 1% of the Common Stock outstanding. The number of shares shown for all directors and executive officers as a group represents 2.42% of the Common Stock outstanding. Individuals have sole voting and investment power over the stock unless otherwise indicated in the footnotes. Except as otherwise noted, the business address of each person shown below is 41 Moores Road, Frazer, PA 19355.

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Principal Holders of Stock

        The following table sets forth information regarding beneficial owners of more than 5 percent of the outstanding shares of the Company's Common Stock as of the dates indicated in the footnotes below.

(1)

Beneficial ownership is determined in accordance with the rules of the SEC and means voting or investment power with respect to securities. Except as indicated below, the individuals or groups named in this table have sole voting and investment power with respect to all shares of common stock indicated above.

(2)

Shares of common stock issuable upon the exercise of stock options that are exercisable within 60 days of February 28, 2011 and shares of common stock issuable upon the conversion of the Company's convertible subordinated notes are deemed to be outstanding and beneficially owned by the person or group holding such option or notes, as the case may be, for purposes of computing such person's percentage ownership as of February 28, 2011 but are not deemed outstanding for the purpose of computing the percentage ownership of any other person or group as of February 28, 2011.

(3)

Information is as of December 31, 2010 and is based upon a Schedule 13G, as amended and filed by Wellington Management Company, LLP ("WMC") with the SEC on February 14, 2011. WMC is an investment adviser with respect to 9,170,782 shares that are held of record by clients of WMC. Vanguard Specialized Fund—Vanguard Health Care Fund is a client of WMC holding more than five percent of the Company's securities. WMC has shared voting power with respect to 2,902,802 shares and shared dispositive power with respect to 9,170,782 shares.

(4)

Information is as of January 31, 2011 and is based upon a Schedule 13G, as amended and filed by BlackRock, Inc. ("BlackRock") with the SEC on February 10, 2011. BlackRock is a Delaware corporation and a parent holding company or control person in accordance with

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Rule 13d-1(b)(1)(ii)(G) of the Securities Exchange Act of 1934. BlackRock has sole voting power and sole dispositive power with respect to 8,729,500 shares.

(5)

Information is as of March 31, 2010 and is based upon a Schedule 13G, as amended and filed with the SEC by T. Rowe Price Associates, Inc. ("T. Rowe Price") on April 8, 2011. These securities are owned by various individual and institutional investors, for which T. Rowe Price Associates, Inc. serves as investment adviser, registered under Section 203 of the Investment Advisers Act of 1940, with power to direct investments and/or sole power to vote the securities. For purposes of the reporting requirements of the Securities Exchange Act of 1934, T. Rowe Price is deemed to be a beneficial owner of such securities; however, T. Rowe Price expressly disclaims that it is, in fact, the beneficial owner of such securities. T. Rowe Price has sole voting power to vote 1,601,409 shares and sole dispositive power over 6,442,142 shares.

(6)

Information is as of December 31, 2010 and is based upon a Schedule 13G, as amended and filed with the SEC by Vanguard Specialized Funds—Vanguard Healthcare Fund ("Vanguard SF-VHF"), on February 10, 2011. Vanguard SF-VHF is an Investment Company registered under Section 8 of the Investment Company Act of 1940, and is the beneficial owner and has sole voting power with respect to 5,811,230 shares.

(7)

Information is as of December 31, 2010 and is based upon a Schedule 13G, as amended and filed by FMR LLC ("FMR") and others with the SEC on February 14, 2011 that states the following:

•

Fidelity Management & Research Company ("Fidelity"), a wholly owned subsidiary of FMR and an investment adviser, is the beneficial owner of 6,553,799 shares of the Common Stock outstanding of the Company as a result of acting as investment adviser to various investment companies. The number of shares of common stock of Cephalon, Inc. owned by the investment companies at December 31, 2010 included 24,625 shares of common stock resulting from the assumed conversion of $1,150,000 principal amount of the Company's 2% convertible notes due June 1, 2015 (21.4133 shares of common stock for each $1,000 principal amount of debenture).

•

Edward C. Johnson, 3d, Chairman of FMR, and FMR, through its control of Fidelity and its funds (the "Funds") each has sole dispositive power of the 6,553,799 shares of the Common Stock outstanding of the Company owned by the Funds. Neither FMR nor Edward C. Johnson, 3d, has the sole power to vote or direct the voting of the shares owned directly by the Funds, which power resides with the Funds' Boards of Trustees. Fidelity carries out the voting of the shares under written guidelines established by the Funds' Boards of Trustees.

•

Members of the family of Edward C. Johnson 3d, Chairman of FMR LLC, are the predominant owners, directly or through trusts, of Series B voting common shares of FMR LLC, representing 49% of the voting power of FMR LLC. The Johnson family group and all other Series B shareholders have entered into a shareholders' voting agreement under which all Series B voting common shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly, through their ownership of voting common shares and the execution of the shareholders' voting agreement, members of the Johnson family may be deemed, under the Investment Company Act of 1940, to form a controlling group with respect to FMR LLC.

•

Strategic Advisers, Inc., a wholly-owned subsidiary of FMR and an investment adviser registered under Section 203 of the Investment Advisers Act of 1940, provides investment advisory services to individuals. As such, FMR's beneficial ownership includes 3,913 shares of the Common Stock outstanding of the Company, beneficially owned through Strategic Advisers, Inc.

•

Pyramis Global Advisors, LLC ("PGA LLC"), an indirect wholly-owned subsidiary of FMR and an investment adviser registered under Section 203 of the Investment Advisors Act of 1940, is the beneficial owner of 220,174 shares of the Common Stock outstanding of the Company, as a result of its serving as investment advisor to institutional accounts, non-U.S. mutual funds, or investment companies registered under Section 8 of the Investment Company Act of 1940 owning such shares. The number of shares of common stock of the Company owned by institutional account(s) at December 31, 2010 included 177,794 shares of the Common Stock outstanding of the Company resulting from the assumed conversion of $8,303,000 principal

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amount of the Company's 2% convertible notes due June 1, 2015 (21.4133 shares of Common Stock for each $1,000 principal amount of debenture).

•

Edward C. Johnson, 3d and FMR, through its control of PGA LLC, each has sole dispositive power over 220,174 shares and sole power to vote or to direct the voting of 220,174 shares of the Common Stock owned by the institutional accounts or funds advised by PGA LLC as reported above.



•

Pyramis Global Advisors Trust Company ("PGATC"), an indirect wholly-owned subsidiary of FMR LLC and a bank as defined in Section 3(a)(6) of the Securities Exchange Act of 1934, is the beneficial owner of 170,681 of the Common Stock outstanding of the Company, as a result of its serving as investment manager of institutional accounts owning such shares. The number of shares of common stock of the Company owned by institutional account(s) at December 31, 2010 included 20,129 shares of common stock resulting from the assumed conversion of $940,000 principal amount of the Company's 2% convertible notes due June 01, 2015 (21.4133 shares of Common Stock for each $1,000 principal amount of debenture).



•

Edward C. Johnson, 3d and FMR, through its control of PGATC, each has sole dispositive power over 170,681 shares and sole power to vote or to direct the voting of 170,681 shares of the Common Stock outstanding of the Company owned by the institutional accounts managed by PGATC as reported above.



•

FIL Limited ("FIL") and various foreign-based subsidiaries provide investment advisory and management services to a number of non-U.S. investment companies and certain institutional investors. FIL, which is a qualified institution under section 240.13d-1(b)(1)(ii), is the beneficial owner of 84,890 shares of the Common Stock outstanding of the Company. Partnerships controlled predominantly by members of the family of Edward C. Johnson 3d, Chairman of FMR LLC and FIL, or trusts for their benefit, own shares of FIL voting stock with the right to cast approximately 39% of the total votes which may be cast by all holders of FIL voting stock. FMR LLC and FIL are separate and independent corporate entities, and their Boards of Directors are generally composed of different individuals.



•

FMR LLC and FIL are of the view that they are not acting as a "group" for purposes of Section 13(d) under the Securities Exchange Act of 1934 and that they are not otherwise required to attribute to each other the "beneficial ownership" of securities "beneficially owned" by the other corporation within the meaning of Rule 13d-3 promulgated under the 1934 Act. Therefore, they are of the view that the shares held by the other corporation need not be aggregated for purposes of Section 13(d). However, FMR LLC is making this filing on a voluntary basis as if all of the shares are beneficially owned by FMR LLC and FIL on a joint basis.



•

FIL has sole dispositive power over 84,890 shares owned by the International Funds. FIL has sole power to vote or direct the voting of 82,440 shares and no power to vote or direct the voting of 2,450 shares of Common Stock held by the International Funds as reported above.

(8)

Information is as of December 31, 2010 and is based upon a Schedule 13G, as amended and filed with the SEC by The Vanguard Group, Inc. ("Vanguard") on February 10, 2011. Vanguard has sole voting power over 94,053 shares and sole dispositive power over 4,226,915 shares and, through its wholly-owned subsidiary, Vanguard Fiduciary Trust Company ("VFTC"), is the beneficial owner of 94,053 shares as a result of its serving as investment manager of collective trust accounts. VFTC directs the voting of these shares. The aggregate amount of beneficially owned shares by Vanguard is 4,320,968 shares of the Common Stock outstanding of the Company.

(9)

Information is as of April 15, 2011 and is based upon a Schedule 13D jointly filed by Taconic Capital Advisors L.P. ("Taconic Advisors"), Taconic Advisors U.K. L.L.P. ("Taconic Advisors UK"), Taconic Associates LLC ("Taconic Associates"), Taconic Capital Partners LLC ("Taconic Capital Partners"), Mr. Kenneth D. Brody ("Mr. Brody"), and Mr. Frank P. Brosens ("Mr. Brosens") with the SEC on April 15, 2011. The 5,650,000 shares are held for the accounts of Taconic Capital Partners L.P ("TCP"), a Delaware limited partnership, Taconic Capital Partners 1.5 L.P.

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("TCP 1.5"), a Delaware limited partnership, Taconic Master Fund 1.5 L.P. ("TMF 1.5"), a Cayman Islands exempted limited partnership, Taconic Opportunity Fund L.P. ("TOP"), a Delaware limited partnership, Taconic Opportunity Fund II L.P. ("TOP II"), a Delaware limited partnership, and Taconic Opportunity Master Fund L.P. ("TOMF"), a Cayman Islands exempted limited partnership. Taconic Advisors and Taconic Advisors UK serve as the investment managers to TCP, TCP 1.5, TMF 1.5, TOP, TOP II and TOMF (collectively, the "Taconic Funds"). Taconic Capital Performance Partners LLC ("Taconic Partners") serves as the general partner to Taconic Advisors. Taconic Capital Services UK Limited ("Taconic Capital Services") serves as the managing member of Taconic Advisors UK. Taconic Associates serves as the general partner to TOP, TOP II and TOMF. Taconic Capital Partners serves as the general partner to TCP, TCP 1.5 and TMF 1.5. Mr. Brody is a principal of Taconic Advisors, a director of Taconic Capital Services, and a manager of Taconic Partners, Taconic Associates and Taconic Capital Partners. Mr. Brosens is a principal of Taconic Advisors, a director of Taconic Capital Services, and a manager of Taconic Partners, Taconic Associates and Taconic Capital Partners.

Each of Taconic Advisors, Taconic Advisors UK, Taconic Associates, Taconic Capital Partners, Mr. Brody and Mr. Brosens has shared voting and shared dispositive power with respect to 5,650,000 shares. This amount consists of 5,650,000 shares held for the account of the Taconic Funds: (i) approximately 18,310 Shares held for the account of TCP, (ii) approximately 418,780 Shares held for the account of TCP 1.5, (iii) approximately 692,910 Shares held for the account of TMF 1.5, (iv) approximately 1,356,000 Shares held for the account of TOP, (v) approximately 309,620 Shares held for the account of TOP II, and (vi) approximately 2,854,380 Shares held for the account of TOMF.

Additional Information Concerning Board of Directors of the Company

        The Board of Directors of the Company met 12 times during the year ended December 31, 2010. The Board's standing Audit, Corporate Governance and Nominating and Stock Option and Compensation Committees met ten, five and six times, respectively, during this same period. Each independent director attended at least 75% of the total number of meetings of the Board and the Board committee(s) on which he or she served, with the exception of one director, Dr. Sanders, who was on temporary medical leave. Under the Company's Corporate Governance Guidelines (the "Guidelines"), each director is expected to regularly attend meetings of the Board and his or her respective committees, with the understanding that on occasion a director may be unable to attend a meeting.

        Under a policy adopted by the Corporate Governance and Nominating Committee in 2004, all directors are expected to make every reasonable effort to attend the Annual Meeting of Stockholders. All of the directors of the Company attended the 2010 Annual Meeting of Stockholders and Cephalon expects that all of the nominees for election will be present for the 2011 Annual Meeting on May 10, 2011.

        Mr. Buchi serves as Chief Executive Officer of the Company. Mr. Egan, an independent director, serves as Chairman of the Board. The Chairman of the Board's primary responsibility is to preside over all sessions of the Board, including executive sessions in which the management directors and other members of management do not participate. The Board meets in executive session at all regularly scheduled meetings. The Chairman of the Board also reviews and approves meeting schedules, Board agendas and related information prior to distribution to the Board, and performs such other duties that the Board may from time to time delegate to assist the Board in the fulfillment of its responsibilities. The independent directors of the Board have designated Mr. Egan to serve as Chairman of the Board until Cephalon's 2011 Annual Meeting of Stockholders. The Board believes that this structure is appropriate for the Company because it allows the Chief Executive Officer to speak for and lead the Company with effective oversight provided by an independent Chairman leading an independent Board.

        Pursuant to the Company's Guidelines, the Nominating Committee is charged with undertaking an annual review of director independence. Under the Guidelines, at least a majority of the directors must

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satisfy the "independence" requirements of the Securities Exchange Act of 1934 and NASDAQ, and all members of the Audit Committee must meet the specific independence requirements for audit committee members under the Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley") and NASDAQ listing standards. A copy of these independence standards is available on the Investors section of the Company's website (www.cephalon.com) by selecting "Corporate Governance" and then "Director Independence Standards."

        In December 2010, the Nominating Committee undertook its review of director independence. During this review, the Nominating Committee considered whether any transactions and relationships existed between each director or any member of his or her immediate family and the Company and its subsidiaries and affiliates. The Nominating Committee also examined whether any transactions or relationships were present between directors and members of the Company's senior management. The purpose of this review was to determine whether any such transactions or relationships exist and, if so, whether any such transactions or relationships were inconsistent with a determination that the director is independent. As a result of the review conducted by the Nominating Committee, the Board affirmatively determined that all of the directors nominated for election at the Annual Meeting are independent, with the exception of Mr. Buchi. Mr. Buchi is considered an inside director because of his employment as an executive officer of the Company.

        The Nominating Committee considers candidates for Board membership suggested by its members and other Board members, as well as management and stockholders. The Nominating Committee also retains third-party executive search firms to identify candidates from time to time. A stockholder who wishes to recommend a prospective nominee for the Board should notify the Company's Secretary or any member of the Nominating Committee in writing and provide the information set forth in Section 2.10 of the Company's bylaws. The Nominating Committee also will consider whether to nominate any person nominated by a stockholder pursuant to the provisions of the Company's bylaws relating to stockholder nominations as described in "Additional Information—Advance Notice Provisions," on page 66 of this Proxy Statement. The Nominating Committee will apply the same standards in considering a person nominated by a stockholder as it applies to other candidates.

        Once the Nominating Committee has identified a prospective nominee, the Nominating Committee makes an initial determination as to whether to conduct a full evaluation of the candidate. This initial determination is based on whatever information is provided to the Nominating Committee with the recommendation of the prospective candidate, as well as the Nominating Committee's own knowledge of the prospective candidate, which may be supplemented by inquiries to the person making the recommendation or others. The preliminary determination is based primarily on the need for additional Board members to fill vacancies or expand the size of the Board and the likelihood that the prospective nominee can satisfy the evaluation factors described below. If the Nominating Committee determines, in consultation with the Chairman of the Board and other Board members as appropriate, that additional consideration is warranted, it may request that a third-party search firm gather additional information about the prospective nominee's background and experience and report its findings to the Nominating Committee. The Nominating Committee then evaluates the prospective nominee against the standards and qualifications set out in the Company's Guidelines, including:

•

the ability of the prospective nominee to represent the best interests of all of the stockholders of the Company;



•

the prospective nominee's standards of integrity, ethics, commitment and independence of thought and judgment;



•

the prospective nominee's record of professional accomplishment in his or her chosen field;



•

the prospective nominee's independence from a material personal, financial or professional interest in any present or potential competitor of the Company;

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•

the prospective nominee's ability to dedicate sufficient time, energy and attention to the diligent performance of his or her duties on the Board and its Committees, including the prospective nominee's service on other public company boards; and



•

the extent to which the prospective nominee contributes to the diverse range of talent, skill and expertise currently present on the Board.

        The Nominating Committee also considers such other relevant factors as it deems appropriate, including the current composition of the Board, the balance of management and independent directors, the need for Audit Committee expertise and the evaluations of other prospective nominees. In connection with this evaluation, the Nominating Committee determines whether to interview the prospective nominee, and, if warranted, one or more members of the Nominating Committee, and others as appropriate, conduct an interview of the prospective nominees, either in person or by telephone. After completing this evaluation and interview, the Nominating Committee makes a recommendation to the full Board as to the persons who should be nominated by the Board, and the Board determines the nominees after considering the recommendation and report of the Nominating Committee.

        As noted above, the Company's Guidelines explicitly consider diversity of personal and professional experience and educational background when evaluating a nominee's potential contribution to the Board. The Nominating Committee and the Board implement the Guidelines (and consideration of diversity set forth therein) as part of the annual evaluation of director nominees.

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DIRECTOR COMPENSATION

        The following table sets forth information regarding the compensation earned by or awarded to each non-employee director who served on the Company's Board of Directors for the fiscal year ended December 31, 2010.

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Compensation for Service as a Non-Employee Director

        The Company compensates its non-employee directors through a mix of cash compensation and stock option grants. The components of the non-employee directors' compensation are as follows:

        Under the Company's 2004 Equity Compensation Plan, the initial grant of 15,000 stock options to a non-employee director is made at the time of the earlier to occur of such director's appointment as a director by the Board or first election to the Board by stockholders. This initial award generally vests over a four-year period, with 25% becoming exercisable on each anniversary of the grant date. Upon the date of re-election to the Board at the Annual Meeting, a non-employee director will receive an annual grant of 15,000 stock options that are fully exercisable on the date of grant. The Board of Directors also may grant options to non-employee directors in addition to the automatic grants described above. Stock options granted to non-employee directors have a ten-year term and are granted with an exercise price equal to the fair market value of the Company's Common Stock on the date of grant.

        In May 2010, all non-employee directors each received an annual grant of stock options to purchase 15,000 shares of common stock at an exercise price of $59.18 per share, which were immediately exercisable.

        Mr. Buchi does not receives any additional remuneration for service as a director. The Company also reimburses directors for travel expenses incurred in connection with attending Board, committee and stockholder meetings and for other Company business-related expenses. The Company does not provide retirement benefits or other perquisites to non-employee directors under any current program.

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COMMITTEES OF THE BOARD

        The members of the Board of Directors on the date of this Consent Revocation Statement, and the standing committees of the Board on which they serve, are identified below. Dr. Homcy was appointed to the Board on March 10, 2011 and currently has not been appointed to serve as a member on any of the Board's standing committees.

        Each of the above directors, with the exception of Mr. Buchi, is considered independent.

Audit Committee.

        The functions of the Audit Committee are described in detail below under the heading "Report of the Audit Committee." The charter of the Audit Committee is available on the Investors section of the Company's website (www.cephalon.com) by selecting "Corporate Governance" and then "Board Committees/Charters." The Audit Committee met ten times during 2010.

        Mr. Winger has chaired the Audit Committee since June 2003. Mr. Winger is qualified as an audit committee financial expert within the meaning of SEC regulations. In addition, the Board has determined, in accordance with the listing standards of the NASDAQ Global Select Market ("NASDAQ"), that Mr. Winger meets the standards of financial sophistication set forth therein and that each other member of the Audit Committee is able to read and understand fundamental financial statements.

        All of the members of the Audit Committee are independent within the meaning of SEC regulations, Rule 4200(a)(15) of the NASDAQ listing standards and the Company's Guidelines.

Corporate Governance and Nominating Committee.

        The Corporate Governance and Nominating Committee (the "Nominating Committee") is responsible for developing and implementing policies and practices relating to corporate governance, including reviewing and monitoring implementation of the Company's Guidelines. In addition, the Nominating Committee develops and reviews background information on candidates for the Board and makes recommendations to the Board regarding such candidates. The Nominating Committee also prepares and supervises the Board's review of director independence and the Board and its committees' performance evaluations. The charter of the Nominating Committee is available on the Investors section of the Company's website (www.cephalon.com) by selecting "Corporate Governance" and then

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"Board Committees/Charters." The Nominating Committee met five times during 2010. All of the members of the Nominating Committee are independent within the meaning of the Securities Exchange Act of 1934, the NASDAQ listing standards and the Company's Guidelines.

Stock Option and Compensation Committee.

        The Stock Option and Compensation Committee (the "Compensation Committee") annually reviews the performance and total compensation package for the Company's executive officers, including the Chief Executive Officer; considers the modification of existing compensation and employee benefit programs, and the adoption of new plans; administers the terms and provisions of the Company's equity compensation plans; and reviews the compensation and benefits of non-employee directors. The charter of the Compensation Committee is available on the Investors section of the Company's website (www.cephalon.com) by selecting "Corporate Governance" and then "Board Committees/Charters." The Compensation Committee met six times during 2010. All of the members of the Compensation Committee are independent within the meaning of SEC regulations, the NASDAQ listing standards and the Company's Guidelines.

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        NOTWITHSTANDING ANYTHING TO THE CONTRARY, THE FOLLOWING REPORTS OF THE AUDIT COMMITTEE AND THE COMPENSATION COMMITTEE SHALL NOT BE DEEMED INCORPORATED BY REFERENCE BY ANY GENERAL STATEMENT INCORPORATING BY REFERENCE THIS CONSENT REVOCATION STATEMENT INTO ANY FILING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, EXCEPT TO THE EXTENT THAT THE COMPANY SPECIFICALLY INCORPORATES THIS INFORMATION BY REFERENCE, AND SHALL NOT OTHERWISE BE DEEMED FILED UNDER SUCH ACTS.

REPORT OF THE AUDIT COMMITTEE

        The Audit Committee of the Company's Board of Directors is composed of three independent directors and operates under a written charter adopted by the Board that is designed to comply with rules adopted by NASDAQ and the SEC. A copy of the written charter is available on the Investors section of the Company's website (www.cephalon.com) by selecting "Corporate Governance" and then "Board Committees/Charters." The current members of the Audit Committee are Mr. Egan, Ambassador Moley and Mr. Winger (chair).

        Management is responsible for the preparation, presentation and integrity of the Company's financial statements, accounting and financial reporting principles, internal controls and procedures designed to ensure compliance with accounting standards, applicable laws and regulations. The Company's independent registered public accountants are responsible for performing an independent audit of the Company's consolidated financial statements in accordance with the generally accepted auditing standards and issuing a report thereon. The Audit Committee's responsibility is to monitor and oversee these processes, including the selection of the Company's independent auditors.

        The Audit Committee members are not professional accountants or auditors, and their functions are not intended to duplicate or to certify the activities of management and the independent registered public accountant, nor can the Audit Committee certify that the independent accountant is "independent" under applicable rules. The Audit Committee serves in a Board-level oversight role, in which it provides advice, counsel and direction to management and the auditors on the basis of the information it receives, discussions with management and the auditors and the experience of the Audit Committee's members in business, financial and accounting matters.

        In this context, the Audit Committee has met and held discussions with management and the independent auditors, including meetings with the independent accountants during which management was not present. Management represented to the Audit Committee that the Company's consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America, and the Audit Committee has reviewed and discussed the consolidated financial statements with management and the independent registered public accountants. The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by the statement on Auditing Standards No. 61, as amended, (AICPA, Professional Standards, Vol. 1, AU Section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T.

        The Company's independent registered public accountants also provided to the Audit Committee the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accountants' communications with the Audit Committee concerning independence, and the Audit Committee discussed with the independent accountants that firm's independence.

        Based upon the Audit Committee's discussion with management and the independent registered public accountants and the Audit Committee's review of the representation of management and the report of the independent registered public accountants to the Audit Committee, the Audit Committee

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recommended that the Board of Directors include the audited consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2010, as filed with the SEC.

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EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS

        Set forth below is the Compensation Discussion & Analysis ("CD&A"), which provides information regarding the executive officer compensation program in place for 2010 for the Company's Chief Executive Officer ("CEO"), former CEO, Chief Financial Officer ("CFO") and the three most highly-compensated executive officers other than the CEO and CFO (together with the CEO and CFO, the "Named Executive Officers" or "NEOs"). For 2010, the Company's NEOs were:

•

J. Kevin Buchi, current CEO and former Chief Operating Officer ("COO");



•

Wilco Groenhuysen, Executive Vice President and Chief Financial Officer;



•

Alain Aragues, Executive Vice President and President, Cephalon Europe;



•

Lesley Russell Cooper, MB.Ch.B, MRCP, Executive Vice President and Chief Medical Officer;



•

Gerald J. Pappert, Executive Vice President, General Counsel and Secretary; and



•

Frank Baldino, Jr., Ph.D., former Chairman and CEO.

Philosophy

        The Stock Option and Compensation Committee (the "Compensation Committee") annually reviews the performance and total compensation package for the Company's executive officers, including the Chief Executive Officer; considers the modification of existing compensation and employee benefit programs, and the adoption of new plans; administers the terms and provisions of the Company's equity compensation plans; and reviews the compensation and benefits of non-employee directors. The compensation program for the Company's executive officers is designed to attract, retain and reward talented executives who can contribute to the Company's long-term success and thereby build value for the Company's stockholders. The Compensation Committee has retained Mercer (US) Inc. ("Mercer") to assist in fulfilling the duties noted above. Mercer provides information, analyses, and advice regarding executive and director compensation. The Company also retains Mercer and its related entities to perform other services. To ensure that Mercer's executive compensation advice to the Compensation Committee remains objective and is not influenced by the Company's management, the Compensation Committee has established procedures including: a direct reporting relationship of the individual Mercer consultant providing executive compensation consulting services to the Compensation Committee; a provision in the Compensation Committee's engagement letter with Mercer specifying the information, data, and recommendations that can and cannot be shared with management; an annual update to the Compensation Committee on Mercer's financial relationship with the Company, including a summary of the work performed for the Company during the preceding 12 months; and written assurances from Mercer that, within the Mercer organization, the Mercer consultant who performs executive compensation services for the Company has a reporting relationship and compensation determined separately from Mercer's other lines of business and from its other work for the Company. Notwithstanding the above, with the consent of the chairman of the Compensation Committee, Mercer may, from time to time, contact the Company's executive officers for information necessary to fulfill its executive compensation-related duties and may make reports and presentations to and on behalf of the Compensation Committee that the executive officers also receive.

        In general terms, the Compensation Committee believes that by placing greater weight on variable pay incentives and long-term compensation rather than base salary compensation, it will more effectively align the interests of executives with the Company's stockholders. Furthermore, this emphasis enables the Company to attract executives who are willing to sacrifice current earnings and the retirement benefits generally offered by larger biotechnology and pharmaceutical companies for potential long-term gains in a less stable and riskier environment. The Compensation Committee believes that the Company's stockholders share a similar risk profile.

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        The fundamental principle of the Company's compensation program is "Pay-for-Performance" and, as such, the Company strives to closely align the compensation paid to its executive officers with the performance of the Company on both a short-term and long-term basis. The total compensation program for executive officers consists of a base salary, annual cash incentive, long-term incentives and other benefits, including perquisites.

        The Compensation Committee consists of three independent members of the Board of Directors and has responsibility for reviewing and approving all compensation decisions for the NEOs. The Compensation Committee submits its decisions to the independent members of the Board for ratification. The Compensation Committee acts pursuant to a charter that has been approved by the Board. Our Human Resources Department supports the Compensation Committee in its work. In addition, the Compensation Committee retains Mercer to advise the Committee on all matters related to the compensation of the NEOs. The following table summarizes the roles of each of the key participants in the executive compensation decision-making process.

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