S-8

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As filed with the Securities and Exchange Commission on June 13, 2003

Registration No. 333-          

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

CEPHALON, INC.
(Exact name of issuer as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation of organization) 23-2484489
(I.R.S. Employer Identification No.)

145 Brandywine Parkway
West Chester, Pennsylvania 19380
(Address of principal executive offices)

CEPHALON, INC. 2000 EQUITY COMPENSATION PLAN FOR EMPLOYEES AND KEY ADVISORS
(Full title of the plan)

John E. Osborn, Esq.
Senior Vice President, General Counsel & Secretary
Cephalon, Inc.
145 Brandywine Parkway
West Chester, PA 19380
(Name and address of agent for service)

(610) 344-0200
(Telephone number, including area code, of agent for service)

Copy to:
Richard A. Silfen, Esq.
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103
(215) 963-5000

CALCULATION OF REGISTRATION FEE

Title of class of securities to be registered	Amount to be registered(1)	Proposed maximum offering price per share(2)	Proposed maximum Aggregate offering price(2)	Amount of registration fee(3)
Common stock, $0.01 par value(4)	1,500,000 shares	$45.03	$67,545,000	$5,464.39

(1)

Pursuant to Rule 416 under the Securities Act of 1933, this Registration Statement also covers such additional shares as may hereinafter be offered or issued to prevent dilution resulting from stock splits, stock dividends and similar anti-dilution provisions.

(2)

Estimated pursuant to paragraphs (c) and (h) of Rule 457 solely for purposes of calculating the registration fee, based upon the average of the high and low sales price for a share of Common Stock on June 11, 2003, as reported on the Nasdaq National market.

(3)

Calculated pursuant to Section 6(b) as follows: proposed maximum offering price multiplied by .0000809.

(4)

Each share of the registrant's common stock includes one preferred share purchase right pursuant to the Amended and Restated Rights Agreement dated January 1, 1999 between Cephalon, Inc. and StockTrans, Inc., as Rights Agent, as amended on July 31, 2000.

PART II

INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

        This registration statement on Form S-8 relates to the registration of an additional 1,500,000 shares of Common Stock, $.01 par value, of the Registrant. The shares are securities of the same class and relating to the same employee benefit plan, the Cephalon, Inc. 2000 Equity Compensation Plan for Employees and Key Advisors, as those shares registered in the Registrant's registration statement on Forms S-8, previously filed with the Securities and Exchange Commission on December 22, 2000 and May 28, 2002. The earlier registration statements on Form S-8 (Registration Nos. 333-52640 and 333-89228) are hereby incorporated by reference.

Independent Accountants

        The consolidated financial statements of Cephalon, Inc. for the years ended December 31, 2002 and 2001 included in the Annual Report on Form 10-K for the year ended December 31, 2002, incorporated by reference in this Registration Statement, have been audited by PricewaterhouseCoopers LLP, independent public accountants, as stated in their report with respect thereto.

        The consolidated financial statements of Cephalon, Inc. as of December 31, 2000 and for the year then ended, incorporated by reference in this Registration Statement, have been audited by Arthur Andersen LLP. Representatives of Arthur Andersen LLP are not available to provide the consents required for the inclusion of their reports on Cephalon, Inc.'s consolidated financial statements and financial statement schedule for such periods, and we have dispensed with the requirement to file their consent in reliance upon Rule 437a of the Securities Act of 1933. See Exhibit 23.3, "Information Concerning Consent of Arthur Andersen LLP," to this Form S-8 for additional information.

Item 8. Exhibits.

        The following exhibits are filed as part of this registration statement:

Exhibit Number	Exhibit
5.1*	Opinion of Morgan, Lewis & Bockius LLP
23.1*	Consent of Morgan, Lewis & Bockius LLP (included in its opinion filed as Exhibit 5.1 hereto)
23.2*	Consent of PricewaterhouseCoopers LLP
23.3*	Information Concerning Consent of Arthur Andersen LLP
99.1*	Cephalon, Inc. 2000 Equity Compensation Plan for Employees and Key Advisors, as amended and restated, effective as of July 25, 2002

*

Filed herewith.

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SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of West Chester, Commonwealth of Pennsylvania, on this 12th day of June 2003.

CEPHALON, INC.
By:	/s/  FRANK BALDINO, JR. Frank Baldino, Jr., Ph.D. Chairman and Chief Executive Officer

        Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  FRANK BALDINO, JR. Frank Baldino,Jr., Ph.D.	Chairman and Chief Executive Officer (Principal Executive Officer)	June 12, 2003
/s/  J. KEVIN BUCHI J.Kevin Buchi	Sr. Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)	June 12, 2003
/s/  WILLIAM P. EGAN William P. Egan	Director	June 12, 2003
/s/  ROBERT J. FEENEY Robert J. Feeney, Ph.D.	Director	June 12, 2003
/s/  MARTYN D. GREENACRE Martyn D. Greenacre	Director	June 12, 2003
/s/  CHARLES A. SANDERS Charles A. Sanders	Director	June 12, 2003
/s/  GAIL R. WILENSKY Gail R. Wilensky, Ph.D.	Director	June 12, 2003
/s/  HORST WITZEL Horst Witzel, Dr.-Ing.	Director	June 12, 2003

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Cephalon, Inc.

INDEX

Exhibit Number	Description
5.1	Opinion of Morgan, Lewis & Bockius LLP
23.1	Consent of Morgan, Lewis & Bockius LLP (contained in the opinion of counsel filed as Exhibit 5.1)
23.2	Consent of PricewaterhouseCoopers LLP
23.3	Information Regarding Consent of Arthur Andersen LLP
24.1	Power of Attorney (included on signature page of this Registration Statement)
99.1	Cephalon, Inc. 2000 Equity Compensation Plan For Employees and Key Advisors, as amended and restated, effective as of July 25, 2002

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PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 8. Exhibits.

SIGNATURES
Cephalon, Inc. INDEX

EX-5.1

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EXHIBIT 5.1

[LETTERHEAD OF MORGAN, LEWIS & BOCKIUS LLP]

June 13, 2003

Cephalon, Inc.
145 Brandywine Parkway
West Chester, PA 19380

Re:

Cephalon, Inc.—Registration Statement on Form S-8 Relating to the Cephalon, Inc. 2000 Equity Compensation Plan for Employees and Key Advisors

Ladies and Gentlemen:

        We have acted as counsel Cephalon, Inc., a Delaware corporation (the "Company"), in connection with the preparation of a registration statement on Form S-8 (the "Registration Statement") to be filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "Act"), relating to 1,500,000 shares (the "Shares") of the Company's common stock, par value $.01 per share (the "Common Stock"), issuable under the Cephalon, Inc. 2000 Equity Compensation Plan for Employees and Key Advisors, as amended and restated, effective as of July 25, 2002 (the "Plan"). We have examined such certificates, records, statutes and other documents as we have deemed relevant in rendering this opinion.

        As to matters of fact, we have relied on representations of officers of the Company. In our examination, we have assumed the genuineness of documents submitted to us as originals and the conformity with the original of all documents submitted to us as copies thereof.

        Based upon the foregoing, it is our opinion that the Shares, when issued and delivered in accordance with the terms of the Plan, will be legally issued, fully paid and non-assessable.

        The opinion set forth above is limited to the General Corporation Law of the State of Delaware.

        We hereby consent to the use of this opinion as Exhibit 5.1 to the Registration Statement. In giving such consent, we do not thereby admit that we are acting within the category of persons whose consent is required under Section 7 of the Act or the rules or regulations of the Securities and Exchange Commission thereunder.

Very truly yours,

/s/ Morgan, Lewis & Bockius LLP

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[LETTERHEAD OF MORGAN, LEWIS & BOCKIUS LLP]

EX-23.2

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EXHIBIT 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

        We hereby consent to the incorporation by reference in this Registration Statement on Form S-8 of our report dated March 14, 2003, relating to the financial statements and financial statement schedules, which appears in Cephalon, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2002.

/s/ PricewaterhouseCoopers LLP

Philadelphia, PA
June 13, 2003

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CONSENT OF INDEPENDENT ACCOUNTANTS

EX-23.3

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EXHIBIT 23.3

INFORMATION REGARDING CONSENT OF ARTHUR ANDERSEN LLP

        Section 11(a) of the Securities Act of 1933, as amended (the "Securities Act"), provides that if part of a registration statement at the time it becomes effective contains an untrue statement of a material fact, or omits a material fact required to be stated therein or necessary to make the statements therein not misleading, any person acquiring a security pursuant to such registration statement (unless it is proved that at the time of such acquisition such person knew of such untruth or omission) may assert a claim against, among others, an accountant who has consented to be named as having certified any part of the registration statement or as having prepared any report for use in connection with the registration statement.

        In June of 2002, Arthur Andersen LLP ("Andersen") was convicted of obstructing justice, which is a felony offense. The SEC prohibits firms convicted of a felony from auditing public companies. Andersen is thus unable to consent to the incorporation by reference of its audit reports with respect to Cephalon, Inc.'s consolidated financial statements and financial statement schedule as of December 31, 2000 and for year then ended. Under these circumstances, Rule 437a under the Securities Act permits Cephalon, Inc. to file this Registration Statement without a written consent from Andersen. As a result, with respect to transactions in Cephalon, Inc. securities pursuant to this Registration Statements that occur subsequent to the date hereof, Andersen will not have any liability under Section 11(a) of the Securities Act for any untrue statements of a material fact contained in the financial statements audited by Andersen or any omissions of a material fact required to be stated therein. Accordingly, you would be unable to assert a claim against Andersen under Section 11(a) of the Securities Act.

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INFORMATION REGARDING CONSENT OF ARTHUR ANDERSEN LLP

EX-99.1

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Exhibit 99.1

CEPHALON, INC.
2000 EQUITY COMPENSATION PLAN
FOR EMPLOYEES AND KEY ADVISORS
(As Amended and Restated, Effective as of May 15, 2002; with amendments through July 25, 2002)

        The purpose of the Cephalon, Inc. 2000 Equity Compensation Plan for Employees and Key Advisors (the "Plan") is to provide (i) designated employees of Cephalon, Inc. (the "Company") and its subsidiaries, and (ii) certain consultants and advisors who perform valuable services for the Company or its subsidiaries with the opportunity to receive grants of nonqualified stock options. The Company believes that the Plan will encourage the participants to contribute materially to the growth of the Company, thereby benefiting the Company's shareholders, and will align the economic interests of the participants with those of the shareholders.

1.     Administration

        (a)    Committee.    The Plan shall be administered by a committee (the "Committee") appointed by the Board of Directors of the Company (the "Board"). However, the Board may ratify or approve any grants as it deems appropriate. To the extent that the Board ratifies or approves grants, references in the Plan to the "Committee" shall be deemed to refer to the Board.

        (b)    Committee Authority.    The Committee shall have the sole authority to (i) determine the individuals to whom grants shall be made under the Plan, (ii) determine the type, size and terms of the grants to be made to each such individual, (iii) determine the time when the grants will be made and the duration of any applicable exercise or restriction period, including the criteria for exercisability and the acceleration of exercisability, (iv) amend the terms of any previously issued grant, so long as no previously granted option is repriced, replaced, or regranted through cancellation, or by lowering the option exercise price of a previously granted option, unless the shareholders of the Company provide prior approval, and (v) deal with any other matters arising under the Plan.

        (c)    Committee Determinations.    The Committee shall have full power and authority to administer and interpret the Plan, to make factual determinations and to adopt or amend such rules, regulations, agreements and instruments for implementing the Plan and for the conduct of its business as it deems necessary or advisable, in its sole discretion. The Committee's interpretations of the Plan and all determinations made by the Committee pursuant to the powers vested in it hereunder shall be conclusive and binding on all persons having any interest in the Plan or in any awards granted hereunder. All powers of the Committee shall be executed in its sole discretion, in the best interest of the Company, not as a fiduciary, and in keeping with the objectives of the Plan and need not be uniform as to similarly situated individuals.

2.     Grants

        Awards under the Plan shall consist of grants of nonqualified stock options as described in Section 5 ("Nonqualified Stock Options" or "Options"). All Options shall be subject to the terms and conditions set forth herein and to such other terms and conditions consistent with this Plan as the Committee deems appropriate and as are specified in writing by the Committee to the individual in a grant instrument or an amendment to the grant instrument (the "Grant Instrument"). The Committee shall approve the form and provisions of each Grant Instrument. Options granted under the Plan need not be uniform as among the grantees.

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3.     Shares Subject to the Plan

        (a)    Shares Authorized.    Subject to adjustment as described below, the aggregate number of shares of common stock of the Company ("Company Stock") that may be issued or transferred under the Plan is 4,300,000 shares, subject to adjustment as described below. The shares may be authorized but unissued shares of Company Stock or reacquired shares of Company Stock, including shares purchased by the Company on the open market for purposes of the Plan. If and to the extent Options granted under the Plan terminate, expire, or are canceled, forfeited, exchanged or surrendered without having been exercised, the shares subject to such Options shall again be available for purposes of the Plan. If shares of Company Stock are used to pay the exercise price of an Option, only the net number of shares received by the grantee pursuant to such exercise shall be considered to have been issued or transferred under the Plan with respect to such Option, and the remaining number of shares subject to the Option shall again be available for purposes of the Plan.

        (b)    Adjustments.    If there is any change in the number or kind of shares of Company Stock outstanding (i) by reason of a stock dividend, spin-off, recapitalization, stock split, or combination or exchange of shares, (ii) by reason of a merger, reorganization or consolidation in which the Company is the surviving corporation, (iii) by reason of a reclassification or change in par value, or (iv) by reason of any other extraordinary or unusual event affecting the outstanding Company Stock as a class without the Company's receipt of consideration, or if the value of outstanding shares of Company Stock is substantially reduced as a result of a spin-off or the Company's payment of an extraordinary dividend or distribution, the maximum number of shares of Company Stock available for Options, the number of shares covered by outstanding Options, the kind of shares issued under the Plan, and the price per share or the applicable market value of such Options may be appropriately adjusted by the Committee to reflect any increase or decrease in the number of, or change in the kind or value of, issued shares of Company Stock to preclude, to the extent practicable, the enlargement or dilution of rights and benefits under such Options; provided, however, that any fractional shares resulting from such adjustment shall be eliminated. Any adjustments determined by the Committee shall be final, binding, and conclusive.

4.     Eligibility for Participation

        (a)    Eligible Persons.    All employees of the Company and its subsidiaries, including persons who have accepted employment with the Company or a subsidiary, ("Employees"), other than (except as provided below) employees who are officers or directors of the Company shall be eligible to participate in the Plan. Employees who are officers or directors of the Company shall not be eligible to receive Options except to the extent that such Options are issued to a person not previously employed by the Company or a subsidiary as an inducement essential to the person's entering into an employment contract with the Company. Consultants and advisors who perform services for the Company or any of its subsidiaries ("Key Advisors") shall be eligible to participate in the Plan if the Key Advisors render bona fide services and such services are not in connection with the offer and sale of securities in a capital-raising transaction, and the Key Advisors do not directly or indirectly promote or maintain a market for the Company's securities.

        (b)    Selection of Grantees.    The Committee shall select the Employees and Key Advisors to receive Grants and shall determine the number of shares of Company Stock subject to a particular Option in such manner as the Committee determines. Employees and Key Advisors who receive Options under this Plan shall hereinafter be referred to as "Grantees."

        (c)    Prospective Employees and Key Advisors.    Options may be granted to a prospective Employee or Key Advisor conditioned upon, and the date of grant shall be no earlier than, the date such person becomes an Employee or Key Advisor.

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5.     Granting of Options

        (a)    Number of Shares.    The Committee shall determine the number of shares of Company Stock that will be subject to each grant of Options to Employees and Key Advisors.

        (b)    Type of Option and Price.

          (i)  All Options shall be Nonqualified Stock Options, which are not intended to qualify as "incentive stock options" within the meaning of section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). The Committee may grant Options in accordance with the terms and conditions herein set forth.

         (ii)  The purchase price (the "Exercise Price") of Company Stock subject to an Option shall be determined by the Committee and may be equal to or greater than the Fair Market Value (as defined below) of a share of Company Stock on the date the Option is granted.

        (iii)  If the Company Stock is publicly traded, then the Fair Market Value per share shall be determined as follows: (x) if the principal trading market for the Company Stock is a national securities exchange or the Nasdaq National Market, the last reported sale price thereof on the relevant date or (if there were no trades on that date) the latest preceding date upon which a sale was reported, or (y) if the Company Stock is not principally traded on such exchange or market, the mean between the last reported "bid" and "asked" prices of Company Stock on the relevant date, as reported on Nasdaq or, if not so reported, as reported by the National Daily Quotation Bureau, Inc. or as reported in a customary financial reporting service, as applicable and as the Committee determines. If the Company Stock is not publicly traded or, if publicly traded, is not subject to reported transactions or "bid" or "asked" quotations as set forth above, the Fair Market Value per share shall be as determined by the Committee.

        (c)    Option Term.    The Committee shall determine the term of each Option. The term of any Option shall not exceed ten years from the date of grant.

        (d)    Exercisability of Options.    Options shall become exercisable in accordance with such terms and conditions, consistent with the Plan, as may be determined by the Committee and specified in the Grant Instrument. The Committee may impose such additional restrictions or conditions on the exercisability of Options or on the shares of Company Stock issuable upon exercise of the Options as it shall determine and specify in the Grant Instrument. The Committee may accelerate the exercisability of any or all outstanding Options at any time for any reason.

        (e)    Grants to Non-Exempt Employees.    Notwithstanding the foregoing, Options granted to persons who are non-exempt employees under the Fair Labor Standards Act of 1938, as amended, may not be exercisable for at least six months after the date of grant (except that such Options may become exercisable, as determined by the Board, upon the Grantee's death, Disability (as defined below) or retirement, or upon a Change of Control (as defined below) or other circumstances permitted by applicable regulations).

        (f)    Exercise of Options.    A Grantee may exercise an Option that has become exercisable, in whole or in part, by delivering a notice of exercise to the Company with payment of the Exercise Price. The Grantee shall pay the Exercise Price for an Option as specified by the Committee (x) in cash, (y) with the approval of the Committee, by delivering shares of Company Stock owned by the Grantee and having a Fair Market Value on the date of exercise equal to the Exercise Price or by attestation (on a form prescribed by the Committee) to ownership of shares of Company Stock having a Fair Market Value on the date of exercise equal to the Exercise Price, or (z) by such other method as the Committee may approve. Shares of Company Stock used to exercise an Option shall have been held by the Grantee for the requisite period of time to avoid adverse accounting consequences to the Company

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with respect to the Option. The Grantee shall pay the Exercise Price and the amount of any withholding tax due (pursuant to Section 6) at the time of exercise.

6.     Withholding of Taxes

        (a)    Required Withholding.    All Options granted under the Plan shall be subject to applicable federal (including FICA), state and local tax withholding requirements. The Company may require that the Grantee or other person receiving or exercising Options pay to the Company the amount of any federal, state or local taxes that the Company is required to withhold with respect to such Options, or the Company may deduct from other wages paid by the Company the amount of any withholding taxes due with respect to such Options.

        (b)    Election to Withhold Shares.    If the Committee so permits, a Grantee may elect to satisfy the Company's income tax withholding obligation with respect to an Option by having shares withheld up to an amount that does not exceed the Grantee's minimum applicable withholding tax rate for federal (including FICA), state and local tax liabilities. The election must be in a form and manner prescribed by the Committee and may be subject to the prior approval of the Committee.

7.     Transferability of Options

        (a)    Nontransferability of Options.    Except as provided below, only the Grantee may exercise rights under an Option during the Grantee's lifetime. A Grantee may not transfer those rights except by will or by the laws of descent and distribution or, if permitted in any specific case by the Committee, pursuant to a domestic relations order (as defined under the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended or the regulations thereunder). When a Grantee dies, the personal representative or other person entitled to succeed to the rights of the Grantee ("Successor Grantee") may exercise such rights. A Successor Grantee must furnish proof satisfactory to the Company of his or her right to receive the Option under the Grantee's will or under the applicable laws of descent and distribution.

        (b)    Transfer of Nonqualified Stock Options.    Notwithstanding the foregoing, the Committee may provide, in a Grant Instrument, that a Grantee may transfer Nonqualified Stock Options to family members, or one or more trusts or other entities for the benefit of or owned by family members, consistent with applicable securities laws, according to such terms as the Committee may determine; provided that the Grantee receives no consideration for the transfer of an Option and the transferred Option shall continue to be subject to the same terms and conditions as were applicable to the Option immediately before the transfer.

8.     Certain Corporate Transactions and Changes of Control

        (a)    Change of Control.    As used in Section 8(d) below, a "Change of Control" shall be deemed to have occurred if there is a change in ownership or control of the Company effected through either of the following transactions:

          (i)  the direct or indirect acquisition by any person or related group of persons (other than the Company or a person that directly or indirectly controls, is controlled by, or is under common control with, the Company) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than thirty percent (30%) of the combined voting power of the Company's outstanding securities pursuant to a tender or exchange offer made directly to the Company's shareholders which the Board does not recommend such shareholders to accept; or

         (ii)  a change in the composition of the Board over a period of twenty-four (24) months or less such that a majority of the Board members ceases, by reason of one or more contested

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elections for Board membership, to be comprised of individuals who either (x) have been Board members continuously since the beginning of such period, or (y) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (x) who were still in office at the time such election or nomination was approved by the Board.

        (b)    Corporate Transaction.    As used in Section 8(d) below, "Corporate Transaction" shall mean either of the following shareholder-approved transactions to which the Company is a party:

          (i)  a merger or consolidation in which securities possessing more than fifty percent (50%) of the combined voting power of the Company's outstanding securities are transferred to a person or persons different from the persons holding those securities immediately prior to such transaction, or

         (ii)  the sale, transfer or other disposition of more than 75% of the Company's assets in a single or related series of transactions.

        (c)    Involuntary Termination.    As used in Section 8(d) below, "Involuntary Termination" shall mean the termination of the service of any Grantee of the Company or any successor thereto which occurs by reason of:

          (i)  such individual's involuntary dismissal or discharge by the Company or the successor thereto for reasons other than Misconduct (as defined below), or

         (ii)  such individual's voluntary resignation, in either case following:

        (A)  a change in his or her position with the Company or the successor thereto which materially reduces his or her level of responsibility;

        (B)  a reduction in his or her level of compensation (including base salary, significant fringe benefits or any non-discretionary and objective-standard incentive payment or bonus award) by more than ten percent (10%) in the aggregate; or

        (C)  a relocation of such individual's place of employment by more than fifty (50) miles, only if such change, reduction or relocation is effected by the Company or the successor thereto without the individual's consent.

        For purposes of this definition, the term "Misconduct" means the commission of any act of fraud, embezzlement or dishonesty by the Grantee, any unauthorized use or disclosure by such individual of confidential information or trade secrets of the Company or its successor, or any other intentional misconduct by such individual adversely affecting the business or affairs of the Company or its successor in a material manner. The foregoing definition shall not be deemed to be inclusive of all the acts or omissions which the Company or its successor may consider as grounds for the dismissal or discharge of any Grantee or its successor.

        (d)Consequences of Certain Corporate Transactions and Changes of Control:    

          (i)  In the event of any Corporate Transaction, each Option which is at the time outstanding under this Plan shall automatically accelerate so that each such Option shall, immediately prior to the specified effective date for such Corporate Transaction, become fully exercisable with respect to the total number of shares of Company Stock at the time subject to such Option and may be exercised for all or any portion of such shares as fully-vested shares. However, the vesting of an outstanding Option under this Plan shall not so accelerate, if:

        (A)  such Option is, in connection with such Corporate Transaction, either to be assumed by the successor corporation or parent thereof or to be replaced with an option

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for shares of the capital stock of the successor corporation or parent thereof having comparable value and terms;

        (B)  such Option is to be replaced with a cash incentive option or award of the successor corporation which preserves the Option spread existing at the time of such Corporate Transaction and provides for subsequent payout in accordance with the same terms and conditions, including without limitation, the same vesting schedule applicable to such Option;

        (C)  such Option is to be replaced by a grant under another incentive program which the Committee determines is reasonably equivalent in value; or

        (D)  the acceleration of the vesting period under such Option is subject to other limitations imposed by the Committee at the time of the grant of the Option. The determination of comparability under clauses 8(d)(i)(A), (B) or (C) above shall be made by the Committee, and its determination shall be final, binding and conclusive.

         (ii)  Upon a Grantee's cessation of service by reason of an Involuntary Termination within thirty-six (36) months after a Corporate Transaction in which his or her outstanding options are assumed or replaced pursuant to clause 8(d)(i)(A), (B) or (C) above, each such option under clause 8(d)(i)(A) shall automatically accelerate and become fully exercisable and all restrictions applicable to such options shall lapse, with respect to the total number of shares of stock at the time subject to such option and the cash incentive program under clause 8(d)(i)(B) or other incentive program under clause 8(d)(i)(C) shall become fully vested. In addition, upon a Grantee's cessation of service by reason of an Involuntary Termination within 36 months after a Change of Control, each Option shall automatically accelerate and become fully exercisable, with respect to the total number of shares of Company Stock at the time subject to such Option. The Option as so accelerated shall remain exercisable until the earlier of the expiration of the Option term or the expiration of the one (1)-year period measured from the date of such Involuntary Termination.

        (iii)  Immediately following the consummation of a Corporate Transaction, all outstanding Options under this Plan shall terminate and cease to remain outstanding, except to the extent assumed by the successor corporation or its parent company.

        (iv)  Each outstanding Option under this Plan that is assumed in connection with a Corporate Transaction shall be appropriately adjusted, immediately after such Corporate Transaction, to apply and pertain to the number and class of securities which would have been issued to the Grantee, upon consummation of such Corporate Transaction, had (in the case of an Option) such person exercised the Option immediately prior to such Corporate Transaction. In the case of an Option, appropriate adjustments shall also be made to the exercise price payable per share, provided the aggregate exercise price payable for such securities shall remain the same. In addition, the class and number of shares available for issuance under the Plan on both an aggregate and participant basis following the consummation of such Corporate Transaction shall be appropriately adjusted.

         (v)  The provisions of Section 8(d)(i) shall not operate as a limitation on the Committee's discretionary authority, exercisable either at the time of the grant of the Option or at any time while the Option remains outstanding, to provide for the automatic acceleration of one or more outstanding Options upon the occurrence of any change in the Company's organization, ownership or structure not otherwise within the definition of a Corporate Transaction or a Change of Control. The Committee also shall have full power and authority to condition any such option acceleration upon the Grantee's cessation of service by reason of an Involuntary Termination within a specified period following any such event. Any Options accelerated in

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connection with any such event shall remain fully exercisable until the expiration or sooner termination of the Option term or the surrender of such Option.

        (vi)  The acceleration or substitution of Options under this Section 8 shall in no way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

9.     Limitations on Issuance or Transfer of Shares

        No Company Stock shall be issued or transferred in connection with any Option hereunder unless and until all legal requirements applicable to the issuance or transfer of such Company Stock have been complied with to the satisfaction of the Committee. The Committee shall have the right to condition any Option made to any Grantee hereunder on such Grantee's undertaking in writing to comply with such restrictions on his or her subsequent disposition of such shares of Company Stock as the Committee shall deem necessary or advisable as a result of any applicable law, regulation or official interpretation thereof, and certificates representing such shares may be legended to reflect any such restrictions. Certificates representing shares of Company Stock issued or transferred under the Plan will be subject to such stop-transfer orders and other restrictions as may be required by applicable laws, regulations, and interpretations, including any requirement that a legend be placed thereon.

10.   Amendment and Termination of the Plan

        (a)    Amendment.    The Board may amend or terminate the Plan at any time.

        (b)    Termination of Plan.    The Plan shall terminate on the day immediately preceding the tenth anniversary of its effective date, unless the Plan is terminated earlier by the Board or is extended by the Board.

        (c)    Termination and Amendment of Outstanding Options.    A termination or amendment of the Plan that occurs after a grant of an Option is made shall not materially impair the rights of a Grantee unless the Grantee consents or unless the Committee acts under Section 16(b). The termination of the Plan shall not impair the power and authority of the Committee with respect to an outstanding Option. Whether or not the Plan has terminated, an outstanding Option may be terminated or amended under Section 16(b) or may be amended by agreement of the Company and the Grantee consistent with the Plan, so long as no previously granted Option is repriced, replaced, or regranted through cancellation, or by lowering the Exercise Price of a previously granted Option, unless the shareholders of the Company provide prior approval.

        (d)    Governing Document.    The Plan shall be the controlling document. No other statements, representations, explanatory materials or examples, oral or written, may amend the Plan in any manner. The Plan shall be binding upon and enforceable against the Company and its successors and assigns.

11.   Funding of the Plan

        This Plan shall be unfunded. The Company shall not be required to establish any special or separate fund or to make any other segregation of assets to assure the payment of any Option under this Plan. In no event shall interest be paid or accrued on any Option, including unpaid installments of Options.

12.   Rights of Participants

        Nothing in this Plan shall entitle any Employee, Key Advisor, or other person to any claim or right to be granted an Option under this Plan. Neither this Plan nor any action taken hereunder shall be

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construed as giving any individual any rights to be retained by or in the employ of the Company or any other employment rights.

13.   No Fractional Shares

        No fractional shares of Company Stock shall be issued or delivered pursuant to the Plan or any Option. The Committee shall determine whether cash, other awards, or other property shall be issued or paid in lieu of such fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.

14.   Headings

        Section headings are for reference only. In the event of a conflict between a title and the content of a Section, the content of the Section shall control.

15.   Effective Date of the Plan.

        The Plan was originally effective as of December 13, 2000. This amendment and restatement of the Plan is effective as of May 15, 2002, and includes amendments to the Plan through July 25, 2002.

16.   Miscellaneous

        (a)    Options Granted in Connection with Corporate Transactions, Changes of Control and Otherwise.    Nothing contained in this Plan shall be construed to (i) limit the right of the Committee to grant Options under this Plan in connection with the acquisition, by purchase, lease, merger, consolidation or otherwise, of the business or assets of any corporation, firm or association, including grants of Options to employees thereof who become Employees of the Company, or for other proper corporate purposes, or (ii) limit the right of the Company to grant stock options or make other awards outside of this Plan. Without limiting the foregoing, the Committee may make a grant of an Option to an employee of another corporation who becomes an Employee by reason of a corporate merger, consolidation, acquisition of stock or property, reorganization or liquidation involving the Company or any of its subsidiaries in substitution for a stock option grant made by such corporation. The terms and conditions of the substitute grants may vary from the terms and conditions required by the Plan and from those of the substituted stock incentives. The Committee shall prescribe the provisions of the substitute grants.

        (b)    Compliance with Law.    The Plan, the exercise of Options and the obligations of the Company to issue or transfer shares of Company Stock under Options shall be subject to all applicable laws and to approvals by any governmental or regulatory agency as may be required. The Committee may revoke any Option if it is contrary to law or modify a Option to bring it into compliance with any valid and mandatory government regulation, so long as no previously granted Option is repriced, replaced, or regranted through cancellation, or by lowering the Exercise Price of a previously granted Option, unless the shareholders of the Company provide prior approval. The Committee may also adopt rules regarding the withholding of taxes on payments to Grantees. The Committee may, in its sole discretion, agree to limit its authority under this Section.

        (c)    Governing Law.    The validity, construction, interpretation and effect of the Plan and Grant Instruments issued under the Plan shall be governed and construed by and determined in accordance with the laws of the Commonwealth of Pennsylvania, without giving effect to the conflict of laws provisions thereof.

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CEPHALON, INC. 2000 EQUITY COMPENSATION PLAN FOR EMPLOYEES AND KEY ADVISORS (As Amended and Restated, Effective as of May 15, 2002; with amendments through July 25, 2002)