8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported) May 21, 2009

Cephalon, Inc.

(Exact Name of Registrant as Specified in Charter)

Delaware	0-19119	23-2484489
(State or Other Jurisdiction	(Commission	(IRS Employer
of Incorporation)	File Number)	Identification No.)
41 Moores Road
Frazer, Pennsylvania		19355
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code (610) 344-0200

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01             Entry into a Material Definitive Agreement.

On May 21, 2009, Cephalon, Inc. (the “Company”) entered into an Underwriting Agreement (the “Notes Underwriting Agreement”) with Deutsche Bank Securities Inc. (the “Representative”), as representative of the several underwriters named therein (the “Underwriters”), relating to its offering of $435 million aggregate principal amount of 2.50% convertible senior subordinated notes due May 1, 2014 (the “Notes”).  The offering of the Notes was made pursuant to an effective shelf registration statement previously filed with the Securities and Exchange Commission.  In accordance with the terms of the Underwriting Agreement, the Company granted the Underwriters of the Notes a 30-day option, solely to cover over-allotments, to purchase up to an additional aggregate $65 million principal amount of the Notes.  The Underwriters exercised the over-allotment option in full on May 22, 2009.   In total, the Company issued $500 million aggregate principal amount of the Notes on May 27, 2009.  A copy of the Underwriting Agreement is attached hereto as Exhibit 1.1 and is incorporated herein by reference.

On May 21, 2009, the Company entered into an Underwriting Agreement (the “Shares Underwriting Agreement”) with the Representative, as representative of the several underwriters named therein (the “Underwriters”), relating to its offering of 5 million shares of the Company’s common stock, par value $0.01 per share (the “Shares”), at $60.00 per share.  The offering of the Shares was made pursuant to an effective shelf registration statement previously filed with the Securities and Exchange Commission.  The Shares were issued on May 27, 2009.  In accordance with the terms of the Shares Underwriting Agreement, the Company granted the Underwriters of the Notes a 30-day option, solely to cover over-allotments, to purchase up to an additional aggregate 750,000 shares of the Company’s common stock.  A copy of the Shares Underwriting Agreement is attached hereto as Exhibit 1.2 and is incorporated herein by reference.

On May 21, 2009, the Company entered into a Convertible Note Hedge Confirmation (as amended and restated, the “Hedge Confirmation”) and a Warrant Confirmation (as amended and restated, the “Warrant Confirmation”) (the Hedge Confirmation together with the Warrant Confirmation, the “Call Spread Agreements”) with Deutsche Bank AG, an affiliate of the Representative.  The Call Spread Agreements are expected to have the impact of increasing the effective conversion price of the Notes (described below) from the Company’s perspective from $69.00 per share of the Company’s common stock to $100.00 per share.  The Call Spread Agreements were subsequently amended and restated on May 22, 2009 to reflect the Underwriters’ exercise of the over-allotment option relating to the Notes.

Under the Hedge Confirmation, if any Notes are converted and the Company timely notifies Deutsche Bank AG of such conversion, Deutsche Bank AG will generally be required to deliver to the Company the number of shares of the Company’s common stock that the Company is obligated to deliver to the holders of the Notes with respect to the conversion, with cash in lieu of any fractional shares, calculated exclusive of any shares deliverable by reason of any election by the Company to unilaterally increase the conversion rate pursuant to the Indenture (as defined below), and subject to certain adjustments if the Company is obligated to deliver any additional (or “make whole”) premium relating to the Notes.  The Hedge Confirmation expires at the close of trading on May 1, 2014, which is the maturity date of the Notes, although Deutsche Bank AG will have ongoing obligations with respect to Notes properly converted on or prior to that date of which Deutsche Bank AG has been timely notified.

See Item 3.02 of this Current Report on Form 8-K for a description of the Warrant Confirmation and the warrants issued pursuant thereto. Holders of our Notes, Deutsche Bank AG or their respective affiliates or transferees may have entered into derivative transactions with respect to the Shares, may enter into additional derivative transactions, may unwind or adjust derivative transactions, and may purchase or sell Shares in secondary market transactions. The effect, if any, of these activities on the trading price of the Shares will depend in part on market conditions and cannot be ascertained in advance, but any of these activities could adversely affect the value of the Shares. Copies of Hedge Confirmation and Warrant Confirmation are attached hereto as Exhibits 10.1 and 10.2, respectively, and are incorporated herein by reference.

On May 27, 2009, the Company entered into an Indenture (the “Indenture”) with U.S. Bank National Association, as trustee, relating to the Notes.  The Notes mature on May 1, 2014 and the interest rate payable on the Notes is 2.50% per annum, payable semi-annually in arrears on May 1 and November 1 of each year, commencing November 1, 2009.  The Notes are subordinate to existing and future senior indebtedness, equal to existing and future senior subordinated indebtedness and senior in right of payment to existing and future subordinated indebtedness of the Company.

The Notes are convertible prior to maturity, subject to certain conditions, into cash and, under certain circumstances, shares, of the Company’s common stock at an initial conversion price of $69.00.

Holders may surrender their Notes for conversion at any time prior to the close of business on November 1, 2013 only if any of the following conditions is satisfied:

·during any calendar quarter commencing after September 30, 2009, if the closing sale price of the Company’s common stock, for at least 20 trading days in the period of 30 consecutive trading days ending on the last trading day of the calendar quarter immediately preceding the calendar quarter in which the conversion occurs, is more than 130% of the conversion price per share of the notes in effect on that last trading day; or

·during the 10 consecutive trading-day period that follows any five consecutive trading-day period in which the trading price for the Notes for each such trading day was less than 98% of the closing sale price of the Company’s common stock  on such date multiplied by the then current conversion rate; or

2

·the Company makes specific significant distributions to holders of the Company’s common stock, the Company enters into specified corporate transactions or the Company’s common stock is not listed on a U.S. national securities exchange.

Holders may surrender their Notes for conversion after November 1, 2013 and on or prior to the close of business on the business day immediately prior to the stated maturity date regardless if any of the foregoing conditions have been satisfied.

Each $1,000 principal amount of Notes is convertible into cash and, under certain circumstances, shares of the Company’s common stock, based on an amount (the “Daily Conversion Value”), calculated for each of the 25 trading days beginning on and including the third trading day after the conversion date (the “Conversion Period”). The Daily Conversion Value for each trading day during the Conversion Period for each $1,000 aggregate principal amount of Notes is equal to one-twenty-fifth (1/25th) of the product of the then applicable conversion rate multiplied by the volume weighted average price of the Company’s common stock on that day.

For each $1,000 aggregate principal amount of Notes surrendered for conversion, the Company will deliver to holders of the Notes, on the third business day following the end of the Conversion Period, the aggregate of the following for each trading day during the related conversion period:

(1)if the Daily Conversion Value for such day exceeds $40.00, (a) a cash payment of $40.00 and (b) the remaining Daily Conversion Value, in shares of the Company’s common stock; or

(2)if the Daily Conversion Value for such day is less than or equal to $40.00, a cash payment equal to the Daily Conversion Value.

For each $1,000 aggregate principal amount of Notes surrendered for conversion after the thirtieth scheduled trading day prior to the maturity date and on or prior to the close of business on the second scheduled trading day immediately prior to the maturity date, (i) the holder will be deemed to have surrendered such Note as of the thirtieth trading day immediately preceding the maturity date, (ii) the Conversion Period for such Notes will commence on the twenty-seventh trading day immediately preceding the maturity date, and (iii) the settlement date for the conversion of such Notes will be the maturity date.

The daily portion of the number of shares of common stock to be delivered under clause (1)(b) above will be determined by dividing the excess Daily Conversion Value over $40.00 by the volume weighted average price of the Company’s common stock for the relevant day. No fractional shares will be issued upon conversion; in lieu thereof, the Company will deliver a number of shares of the Company’s common stock equal to the aggregate of the fractional shares otherwise deliverable for each trading day during the Conversion Period, rounded down to the nearest whole number, and pay cash equal to the remainder multiplied by the volume weighted average price of our common stock on the last trading day of the Conversion Period.

The conversion price for each $1,000 aggregate principal amount of Notes is initially $69.00 per share of our common stock. The “conversion rate” of a Note is equal to $1,000 divided by the then applicable conversion price at the time of determination (initially approximately 14.4928 shares of the Company’s common stock). The conversion price is subject to adjustment as described in the Indenture. Accordingly, an adjustment to the conversion price will result in a corresponding adjustment to the conversion rate.

If the Notes are converted in connection with certain fundamental changes that occur prior to maturity of the Notes, the Company may also be obligated to pay an additional (or “make whole”) premium with respect to the Notes so converted. In addition, if certain fundamental changes occur with respect to the Company, holders of the Notes will have the option to require the Company to purchase for cash all or a portion of the Notes at a purchase price equal to 100% of the principal amount of the Notes plus accrued and unpaid interest.

The foregoing summary is qualified in its entirety by reference to the Indenture, a copy of which is attached hereto as Exhibit 4.1, and is incorporated herein by reference.

Item 3.02             Unregistered Sales of Equity Securities.

Effective as of May 27, 2009, the Company purchased from Deutsche Bank AG, an affiliate of the Representative, a convertible note hedge pursuant to the Hedge Confirmation.  Effective as of May 27, 2009, the Company also sold to Deutsche Bank AG warrants to purchase an aggregate of 7,246,377 shares of our common stock pursuant to the Warrant Confirmation.  The Company paid approximately $121.0 million pursuant to the Hedge Confirmation and received approximately $37.6 million pursuant to the Warrant Confirmation. The Call Spread Agreements are expected to have the impact of increasing the effective conversion price of the Notes from the Company’s perspective from $69.00 per share of the Company’s common stock to $100.00 per share.

The warrants issued under the Warrant Confirmation have a strike price of $100.00 per share (the “Strike Price”), subject to customary adjustments.  The warrants expire in approximately equal tranches over the forty trading days beginning July 30, 2014 and ending September 24, 2014.  The warrants are exercisable only on the applicable expiration date (European style).  If the warrants are exercised, the Company will settle the warrants under net share settlement.  Under net share settlement for the relevant tranche of warrants, the Company will issue a number of shares of its common stock equal to (x) the product of (i) the number of warrants exercised and (ii) the excess, if any, of the volume weighted average price of the Company’s common stock for the expiration date of the relevant tranche of warrants (the “VWAP”) over the Strike Price divided by (y) the VWAP, and cash in lieu of any fractional shares.

3

We issued and sold the warrants to Deutsche Bank AG in transactions which were exempt from the registration requirements of the Securities Act of 1933, as amended, because the offer and sale did not involve a public offering.  There were no underwriting commissions or discounts granted in connection with the sale of the warrants.

Item 8.01             Other Events.

On May 20, 2009, the Company publicly announced a proposed convertible senior subordinated notes offering and the proposed common stock offering.  On May 21, 2009, the Company publicly announced the pricing of the Notes and the Shares.  On May 22, 2009, the Company publicly announced the Underwriters’ exercise of the over-allotment option with respect to the Notes.

The Company hereby incorporates by reference the press releases dated May 20, 2009,  May 21, 2009 and May 22, 2009, attached hereto as Exhibits 99.1, 99.2, and 99.3, respectively, and made a part of this Item 8.01.

Item 9.01             Financial Statements and Exhibits.

Exhibit No.	Description
1.1	Underwriting Agreement for 2.50% Convertible Senior Subordinated Notes due May 1, 2014, dated as of May 21, 2009, between Cephalon, Inc. and Deutsche Bank Securities Inc., as representative of the several underwriters named therein
1.2	Underwriting Agreement for Common Stock, dated as of May 21, 2009, between Cephalon, Inc. and Deutsche Bank Securities Inc., as representative of the several underwriters named therein
4.1	Indenture, dated May 27, 2009, between Cephalon, Inc. and U.S. Bank National Association, as trustee
4.2	Form of 2.50% Convertible Senior Subordinated Notes due May 1, 2014
10.1	Amended and Restated Convertible Noted Hedge Confirmation, dated as of May 22, 2009, between Cephalon, Inc. and Deutsche Bank AG, London Branch
10.2	Amended and Restated Warrant Confirmation, dated as of May 22, 2009, between Cephalon, Inc. and Deutsche Bank AG, London Branch
99.1	Press Release dated May 20, 2009 — Cephalon Announces Proposed Public Offering of Common Stock and Convertible Senior Subordinated Notes
99.2	Press Release dated May 21, 2009 — Cephalon Prices 5 Million Shares of Common Stock and $435 Million in 2.50% Convertible Senior Subordinated Notes in Public Offerings
99.3	Press Release dated May 22, 2009 — Cephalon Announces Exercise of $65 Million Over-allotment Option on 2.50% Convertible Senior Subordinated Notes

4

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	CEPHALON, INC.
Date: May 28, 2009	By:	/s/ J. Kevin Buchi
		J. Kevin Buchi
		Executive Vice President and Chief Financial Officer

5

Exhibit Index

Exhibit No.	Description
1.1	Underwriting Agreement for 2.50% Convertible Senior Subordinated Notes due May 1, 2014, dated as of May 21, 2009, between Cephalon, Inc. and Deutsche Bank Securities Inc., as representative of the several underwriters named therein
1.2	Underwriting Agreement for Common Stock, dated as of May 21, 2009, between Cephalon, Inc. and Deutsche Bank Securities Inc., as representative of the several underwriters named therein
4.1	Indenture, dated May 27, 2009, between Cephalon, Inc. and U.S. Bank National Association, as trustee
4.2	Form of 2.50% Convertible Senior Subordinated Notes due May 1, 2014
10.1	Amended and Restated Convertible Noted Hedge Confirmation, dated as of May 22, 2009, between Cephalon, Inc. and Deutsche Bank AG, London Branch
10.2	Amended and Restated Warrant Confirmation, dated as of May 22, 2009, between Cephalon, Inc. and Deutsche Bank AG, London Branch
99.1	Press Release dated May 20, 2009 — Cephalon Announces Proposed Public Offering of Common Stock and Convertible Senior Subordinated Notes
99.2	Press Release dated May 21, 2009 — Cephalon Prices 5 Million Shares of Common Stock and $435 Million in 2.50% Convertible Senior Subordinated Notes in Public Offerings
99.3	Press Release dated May 22, 2009 — Cephalon Announces Exercise of $65 Million Over-allotment Option on 2.50% Convertible Senior Subordinated Notes

6

EX-1.1

Exhibit 1.1

$435,000,000

CEPHALON, INC.

2.50% Convertible Senior Subordinated Notes due May 1, 2014

UNDERWRITING AGREEMENT

May 21, 2009

Deutsche Bank Securities Inc.
  As Representative of the several Underwriters
  listed in Schedule A hereto
60 Wall Street
New York, New York 10005

Ladies and Gentlemen:

Cephalon, Inc., a Delaware corporation (the “Company”), proposes, subject to the terms and conditions stated herein, to issue and sell to the several underwriters named in Schedule A hereto (the “Underwriters”) for whom you are acting as representative (the “Representative”) $435,000,000] aggregate principal amount of its 2.50% Convertible Senior Subordinated Notes due May 1, 2014 (the “Firm Securities”).  The respective amounts of the Firm Securities to be so purchased by the several Underwriters are set forth opposite their names in Schedule A hereto.  The Company also proposes to issue and sell to the Underwriters, at your election, an aggregate of up to an additional $65,000,000 principal amount of its  2.50% Convertible Senior Subordinated Notes due May 1, 2014 (the “Optional Securities”), solely to cover over-allotments.  The Firm Securities and the Optional Securities (to the extent the aforementioned option is exercised) are herein collectively called the “Offered Securities.”  The Offered Securities will be issued under an indenture to be dated as of May 27, 2009 (the “Indenture”), between the Company and U.S. Bank National Association, as Trustee (the “Trustee”).  Under the terms of the Indenture, the Offered Securities are convertible, in whole or in part, into a combination of cash and shares of common stock, $.01 par value, of the Company (the “Underlying Shares”).

As the Representative, you hereby advise the Company (a) that you are authorized to enter into this Agreement on behalf of the several Underwriters, and (b) that the several Underwriters are willing, acting severally and not jointly, to purchase the numbers of Firm Securities set forth opposite their respective names in Schedule A, plus their pro rata portion of the Optional Securities if you elect to exercise the over-allotment option in whole or in part for the accounts of the several Underwriters.

In connection with the offering of the Offered Securities, the Company is entering into convertible note hedge and warrant transactions with you or your affiliates pursuant to confirmation letters, dated the date hereof, subject to an agreement in the form of the ISDA 2002 Master Agreement (collectively, the “Call Spread Agreements,” and the confirmation letter relating to the warrant transaction, the “Warrant Confirmation”).

In consideration of the mutual agreements contained herein and of the interests of the parties in the transactions contemplated hereby, the parties hereto agree as follows:

1.Representations and Warranties of the Company.  The Company represents and warrants to, and agrees with, each of the Underwriters that:

(a)An “automatic shelf registration statement” as defined in Rule 405 under the Securities Act of 1933, as amended (the “Securities Act”), on Form S-3 (File No. 333-159365) in respect of the Offered Securities, including a form of prospectus (the “Base Prospectus”), has been prepared and filed by the Company not earlier than three years prior to the date hereof.  The Company and the transactions contemplated by this Agreement satisfy all the requirements of the Securities Act for the use of Form S-3 for the offering of the Offered Securities.  Such registration statement, together with any registration statement filed by the Company pursuant to Rules 413(b) and 462(f) under the Securities Act, is herein referred to as the “Registration Statement,” which shall be deemed to include all information omitted therefrom in reliance upon Rules 430A, 430B or 430C under the Securities Act and contained in the Prospectus referred to below, has become effective under the Securities Act and no post-effective amendment to the Registration Statement has been filed as of the date of this Agreement.  “Prospectus” means the form of prospectus relating to the Offered Securities that includes the information set forth in the Final Term Sheet (as defined below) first filed with the Commission pursuant to and within the time limits described in Rule 424(b) under the Securities Act and in accordance with Section 3(a) hereof.  Any information included in the Prospectus that was omitted from the Registration Statement pursuant to Rule 430B under the Securities Act at the time it became effective but that is deemed to be part of and included in the Registration Statement pursuant to Rule 430B is referred to as “Rule 430B Information.”  Each prospectus used in connection with the offering of the Offered Securities that omitted Rule 430B Information is herein called a “Preliminary Prospectus.”  Any reference herein to the Registration Statement, to any Preliminary Prospectus or to the Prospectus or to any amendment or supplement to any of the foregoing documents shall be deemed to refer to and include any documents incorporated by reference therein, and, in the case of any reference herein to the Prospectus, also shall be deemed to include any documents incorporated by reference therein, and any supplements or amendments thereto, filed with the Commission after the date of filing of the Prospectus under Rule 424(b) under the Securities Act, and prior to the termination of the offering of the Offered Securities by the Underwriters.  On the date

2

hereof, the Registration Statement and the Base Prospectus comply in all material respects with the requirements of the Securities Act, the rules and regulations (the “Rules and Regulations”) of the Securities and Exchange Commission (the “Commission”) thereunder and the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”).

(b)As of the Applicable Time (as defined below) and as of the First Closing Date or the Option Closing Date (each as defined below), as the case may be, neither (i) the General Use Free Writing Prospectus(es) (as defined below) issued at or prior to the Applicable Time and the Statutory Prospectus (as defined below), all considered together (collectively, the “General Disclosure Package”), nor (ii) any individual Limited Use Free Writing Prospectus (as defined below), when considered together with the General Disclosure Package, included or will include any untrue statement of a material fact or omitted or will omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Company makes no representations or warranties as to information contained in or omitted from (A) that part of the Registration Statement that constitutes the Statement of Eligibility (Form T-1) under the Trust Indenture Act or (B) any Issuer Free Writing Prospectus, in reliance upon, and in conformity with, written information furnished to the Company by or on behalf of any Underwriter through you, specifically for use therein, it being understood and agreed that the only such information is the third and fourteenth paragraphs, the third sentence of the fifteenth paragraph, the sixteenth paragraph, the fourth sentence of the seventeenth paragraph, and the twentieth paragraph under the caption “Underwriting” in the Preliminary Prospectus included in the General Disclosure Package and in the Prospectus (collectively, the “Underwriter Information”).  All disclosures contained in the Registration Statement, the General Disclosure Package and the Prospectus regarding “non-GAAP financial measures” (as such term is defined by the Rules and Regulations) comply with Regulation G of the Exchange Act and Item 10 of Regulation S-K under the Securities Act, as applicable.  As used in this subsection and elsewhere in this Agreement:

“Applicable Time” means 8:15 a.m. (New York time) on the date of this Agreement or such other time as agreed to by the Company and you.

“Statutory Prospectus” means the Base Prospectus, as amended and supplemented immediately prior to the Applicable Time, including any document incorporated by reference therein and any prospectus supplement deemed to be a part thereof, including the preliminary prospectus supplement dated May 20, 2009 filed by the Company relating to the Offered Securities.

3

“Issuer Free Writing Prospectus” means any “issuer free writing prospectus,” as defined in Rule 433 under the Securities Act, relating to the Offered Securities in the form filed or required to be filed with the Commission or, if not required to be filed, in the form retained in the Company’s records pursuant to Rule 433(g) under the Securities Act.

“General Use Free Writing Prospectus” means the Final Term Sheet and any other Issuer Free Writing Prospectus that is identified on Schedule B to this Agreement.

“Limited Use Free Writing Prospectus” means any Issuer Free Writing Prospectus that is not a General Use Free Writing Prospectus.

(c)The Commission has not issued an order preventing or suspending the effectiveness of the Registration Statement or the use of any Preliminary Prospectus, any Issuer Free Writing Prospectus, the General Disclosure Package or any future use of the Prospectus, and no proceeding for that purpose or pursuant to Section 8A of the Securities Act has been instituted or, to the Company’s knowledge, threatened by the Commission.  The documents incorporated, or to be incorporated, by reference in the Prospectus and the General Disclosure Package, at the time filed with the Commission, conformed or will conform in all material respects with the requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or the Securities Act, as applicable, and the rules and regulations of the Commission thereunder.  The Registration Statement does not contain, and the Registration Statement and any amendment thereto as of the Applicable Time and on each Closing Date (as defined below) will not contain, any untrue statement of a material fact and do not omit, and as of the Applicable Time and on each Closing Date will not omit, to state a material fact required to be stated therein or necessary to make the statements therein not misleading; the Prospectus and the General Disclosure Package, and any amendments and supplements thereto, do not contain, and as of the Applicable Time and on each Closing Date will not contain, any untrue statement of a material fact and do not omit, and as of the Applicable Time and on each Closing Date will not omit, to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Company makes no representations or warranties as to information contained in or omitted from the Registration Statement, the General Disclosure Package or the Prospectus, or any such amendment or supplement, in reliance upon, and in conformity with, written information furnished to the Company by or on behalf of any Underwriter through you, specifically for use therein, it being understood and agreed that the only such information is the Underwriter Information.

(d)Each Issuer Free Writing Prospectus, as of its issue date and at all subsequent times through the completion of the public offer and sale of the Offered Securities or until any earlier date that the Company notifies the Underwriters pursuant to

4

Section 4(c), did not, does not and will not include any information that conflicted, conflicts or will conflict with the information contained in the Registration Statement, the General Disclosure Package or the Prospectus, including any document incorporated by reference and any prospectus supplement deemed to be a part thereof that has not been superseded or modified; provided, however, that the Company makes no representations or warranties as to information contained in or omitted from any Issuer Free Writing Prospectus, or any amendment or supplement thereto, in reliance upon, and in conformity with, written information furnished to the Company by or on behalf of any Underwriter through you, specifically for use therein, it being understood and agreed that the only such information is the Underwriter Information.

(e)The Company has not, directly or indirectly, distributed and will not distribute any offering material in connection with the offering and sale of the Offered Securities other than any Preliminary Prospectus, the Prospectus and other materials, if any, permitted under the Securities Act and consistent with Section 3(b) of this Agreement.  The Company will file with the Commission all Issuer Free Writing Prospectuses in the time and manner required under Rules 163(b)(2) and 433(d) under the Securities Act.

(f)(i) At the time of filing the Registration Statement, (ii) at the time of the most recent amendment thereto for the purposes of complying with Section 10(a)(3) under the Securities Act (whether such amendment was by post-effective amendment, incorporated report filed pursuant to Section 13 or 15(d) of the Exchange Act or form of prospectus), (iii) at the time the Company or any person acting on its behalf (within the meaning, for this clause (iii) only, of Rule 163(c) under the Securities Act) made any offer relating to the Offered Securities in reliance on the exemption of Rule 163 under the Securities Act and (iv) at the date hereof, the Company is a “well-known seasoned issuer” as defined in Rule 405 under the Securities Act.  The Company has not received from the Commission any notice pursuant to Rule 401(g)(2) under the Securities Act objecting to the use of the automatic shelf registration form.

(g)(i)  At the earliest time after the filing the Registration Statement that the Company or another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) under the Securities Act) of the Offered Securities, (ii) as of each relevant eligibility determination date for purposes of Rules 164 and 433 under the Securities Act and (iii) as of the date hereof (with such date being used as the determination date for purposes of this clause (iii)), the Company was not and is not an “ineligible issuer” (as defined in Rule 405 under the Securities Act, without taking into account any determination by the Commission pursuant to Rule 405 under the Securities Act that it is not necessary that the Company be considered an ineligible issuer), including, without

5

limitation, for purposes of Rules 164 and 433 under the Securities Act with respect to the offering of the Offered Securities as contemplated by the Registration Statement.

(h)The Company has been duly incorporated and is an existing corporation in good standing under the laws of the State of Delaware, with corporate power and authority to own its properties and conduct its business as described in the Registration Statement, the General Disclosure Package and the Prospectus; and the Company is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except where the failure to be so qualified would not, individually or in the aggregate, have a material adverse effect on the condition (financial or other), business, properties, results of operations or prospects of the Company and its subsidiaries taken as a whole (a “Material Adverse Effect”).

(i)Each “significant subsidiary” (as defined in Rule 1-02(w) of Regulation S-X under the Exchange Act) of the Company has been duly organized and is an existing corporation or other entity in good standing under the laws of the jurisdiction of its incorporation, with power and authority (corporate and other) to own its properties and conduct its business as described in the Registration Statement, the General Disclosure Package and the Prospectus; each such subsidiary of the Company is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except where the failure to be so qualified would not, individually or in the aggregate, result in a Material Adverse Effect; all of the issued and outstanding capital stock of each such subsidiary of the Company has been duly authorized and validly issued and is fully paid and nonassessable; the capital stock of each such subsidiary owned by the Company, directly or through subsidiaries, is owned free from liens, encumbrances and defects; and no options, warrants or other rights to purchase, agreements or other obligations to issue other rights to convert any obligations into shares of capital stock or ownership interests in each such subsidiary are outstanding.

(j)The Indenture has been duly authorized and, when executed and delivered by the Company and the Trustee, will conform in all material respects to the description thereof contained in the Prospectus; the Offered Securities have been duly authorized; and when the Offered Securities are executed, authenticated, delivered and paid for pursuant to this Agreement on each Closing Date and the Indenture has been duly executed and delivered, such Offered Securities will have been duly executed, authenticated, issued and delivered and will conform in all material respects to the description thereof contained in the Prospectus and to the terms thereof contained in the Indenture, and (assuming due authentication of the Offered Securities by the Trustee) such Offered Securities will constitute valid and legally binding obligations of the

6

Company, enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.

(k)The Company has an authorized capitalization as set forth in the section of the Prospectus entitled “Capitalization”; when the Offered Securities are executed, authenticated, delivered and paid for pursuant to this Agreement on each Closing Date, such Offered Securities will be convertible into cash and/or Underlying Shares in accordance with the terms of the Indenture; the shares of Common Stock initially issuable (i) upon conversion of such Offered Securities and (ii) in respect of the Warrant Confirmation have been duly authorized and reserved for issuance and, when issued, will be validly issued, fully paid and nonassessable; the issued and outstanding shares of Common Stock have been duly authorized and validly issued, are fully paid and nonassessable and conform in all material respects to the description thereof contained in the Registration Statement, the General Disclosure Package and the Prospectus; and the stockholders of the Company have no preemptive rights with respect to the Offered Securities or the Underlying Shares.

(l)Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, there are no contracts, agreements or understandings between the Company and any person that would give rise to a valid claim against the Company or any Underwriter for a brokerage commission, finder’s fee or other like payment with respect to the issuance and sale of the Offered Securities.

(m)No consent, approval, authorization, or order of, or filing with, any governmental agency or body or any court is required for the consummation of the transactions contemplated by this Agreement, except such consents, approvals, authorizations, orders or filings as have already been obtained or may be required under the Securities Act, the Exchange Act, the Trust Indenture Act or the Blue Sky laws of any jurisdiction in connection with the purchase and distribution of the Offered Securities by the Underwriters  in the manner contemplated herein and in the Registration Statement, the General Disclosure Package and the Prospectus.

(n)The execution, delivery and performance by the Company of the Indenture, this Agreement and the Call Spread Agreements, and the issuance and sale of the Offered Securities and the Underlying Shares into which the Offered Securities are convertible and compliance with the terms and provisions of the Offered Securities will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, (i) any statute, rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over the Company or any subsidiary of the Company or any of their properties, (ii) any agreement or instrument to

7

which the Company or any such subsidiary is a party or by which the Company or any such subsidiary is bound or to which any of the properties of the Company or any such subsidiary is subject (subject, with respect to this clause (ii), to satisfaction of the condition set forth in Section 4(l) below), or (iii) the certificate of incorporation or by-laws of the Company or the organizational documents of any such subsidiary; and the Company has full corporate power and authority to authorize, issue and sell the Offered Securities as contemplated by this Agreement.

(o)This Agreement has been duly authorized, executed and delivered by the Company.

(p)Each of the Call Spread Agreements has been duly and validly authorized by the Company, and, upon its execution and delivery by the Company, and assuming due authorization, execution and delivery by each counterparty thereto, will constitute the valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.

(q)Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, the Company and its subsidiaries have good and marketable title to all real properties and all other properties and assets owned by them, in each case free from liens, encumbrances and defects that would materially affect the value thereof or materially interfere with the use made or to be made thereof by them; and except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, the Company and its subsidiaries hold any leased real or personal property under valid and enforceable leases with no exceptions that would materially interfere with the use made or to be made thereof by them.

(r)The Company and its subsidiaries possess adequate certificates, authorities or permits issued by appropriate governmental agencies or bodies necessary to conduct the business now operated by them and have not received any notice of proceedings relating to the revocation or modification of any such certificate, authority or permit that, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate result in a Material Adverse Effect.

(s)No labor dispute with the employees of the Company or any subsidiary exists or, to the knowledge of the Company, is imminent that might have a Material Adverse Effect.

8

(t)Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, neither the Company nor any of its subsidiaries is in violation of any statute, any rule, regulation, decision or order of any governmental agency or body or any court, domestic or foreign, relating to the use, disposal or release of hazardous or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, “Environmental Laws”), owns or operates any real property contaminated with any substance that is subject to any Environmental Laws, is liable for any off-site disposal or contamination pursuant to any Environmental Laws, or is subject to any claim relating to any Environmental Laws, which violation, contamination, liability or claim would individually or in the aggregate have a Material Adverse Effect; and the Company is not aware of any pending investigation which might lead to such a claim.

(u)Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, there are no pending actions, suits, claims, arbitrations, investigations or proceedings against or affecting the Company, any of its subsidiaries or any of their respective properties that, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a Material Adverse Effect, or would materially and adversely affect the ability of the Company to perform its obligations under the Indenture, the Call Spread Agreements or this Agreement; and no such actions, suits, claims, arbitrations, investigations or proceedings are threatened or, to the Company’s knowledge, contemplated.

(v)The financial statements included in the Registration Statement, the General Disclosure Package and the Prospectus present fairly the financial position of the Company and its consolidated subsidiaries as of the dates shown and their results of operations and cash flows for the periods shown, and such financial statements have been prepared in conformity with the generally accepted accounting principles in the United States applied on a consistent basis; and the summary and selected consolidated financial and statistical data included or incorporated by reference in the Registration Statement, the General Disclosure Package and the Prospectus presents fairly the information shown therein and such data has been compiled on a basis consistent with the financial statements presented therein and the books and records of the Company.

(w)PricewaterhouseCoopers LLP, who have certified certain of the financial statements filed with the Commission as part of, or incorporated by reference in, the Registration Statement, the General Disclosure Package and the Prospectus, is an independent registered public accounting firm with respect to the Company and its subsidiaries within the meaning of the Securities Act and the applicable Rules and Regulations and the Public Company Accounting Oversight Board (United States).

9

(x)Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, since the date of the latest audited financial statements included in the Registration Statement, the General Disclosure Package and the Prospectus there has been no material adverse change, nor any development or event that would be reasonably likely to result in a material adverse change, in the condition (financial or other), business, properties or results of operations of the Company and its subsidiaries taken as a whole; and, except as disclosed in or contemplated by the Registration Statement, the General Disclosure Package and the Prospectus, there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock.

(y)The Company is not an open-end investment company, unit investment trust or face-amount certificate company that is or is required to be registered under Section 8 of the Investment Company Act of 1940 (the “Investment Company Act”); and the Company is not and, after giving effect to the offering and sale of the Offered Securities and the application of the proceeds thereof as described in the Registration Statement, the General Disclosure Package and the Prospectus, will not be an “investment company” as defined in the Investment Company Act.

(z)The Company is not a party to and will not enter into any contractual arrangement with respect to the distribution of the Offered Securities except for this Agreement.  Neither the Company, nor to the Company’s knowledge, any of its affiliates, has taken, directly or indirectly, any action designed to cause or result in, or which has constituted or which might reasonably be expected to constitute, the stabilization or manipulation of the price of the shares of Common Stock of the Company to facilitate the sale or resale of the Offered Securities.

(aa)The Company is subject to the reporting requirements of either Section 13 or Section 15(d) of the Exchange Act, and files reports with the Commission on the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system in accordance with the Exchange Act.

(bb)The following terms shall have the following meanings:

“Intellectual Property” means all intellectual property rights, including without limitation, (i) patents and patent applications, (ii) trademarks, service marks, domain names, trade dress, logos, trade names, corporate names, and other identifiers of source or goodwill, including registrations and applications for registration thereof, (iii) mask works and copyrights, including copyrights in computer software, and registrations and applications for registration thereof, and (iv) confidential and proprietary information, including trade secrets, know-how and invention rights.

10

“Owned Intellectual Property” means all Intellectual Property owned by the Company or any of its subsidiaries and material to their business.

“Intellectual Property Licenses” means all licenses, sublicenses or other agreements concerning Intellectual Property to which the Company or any of its subsidiaries are bound or otherwise covered and that are material to their business.

“Licensed Intellectual Property” means all Intellectual Property licensed or sublicensed to the Company or any of its subsidiaries pursuant to the Intellectual Property Licenses.

Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, the Company or its subsidiaries are the exclusive owners of the entire right, title and interest in and to, or have a valid license to use, to the extent so used, all Intellectual Property that is used in the business of the Company and its subsidiaries as currently conducted.  Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, the Company or its subsidiaries are entitled to use all Owned Intellectual Property and Licensed Intellectual Property in the continued operation of the their business without limitation, subject only to the terms of the Intellectual Property Licenses. Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, the Owned Intellectual Property and, to the knowledge of the Company, the Licensed Intellectual Property have not been adjudged invalid or unenforceable in whole or in part, and are valid and enforceable. The expiration of any patents, patent rights, trademarks, service marks, trade names or copyrights owned or used by the Company or its subsidiaries would not result in a Material Adverse Effect that is not otherwise disclosed in the Registration Statement, the General Disclosure Package and the Prospectus.

To the knowledge of the Company, the conduct of the Company’s or its subsidiaries’ business as currently conducted or proposed to be conducted does not infringe or misappropriate the Intellectual Property of any third party, except as would not result in a Material Adverse Effect.  Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, no actions or proceedings alleging any such infringement or misappropriation are pending, and no claim has been threatened or asserted against the Company or any of its subsidiaries alleging any such infringement or misappropriation, except as would not result in a Material Adverse Effect. To the knowledge of the Company, no person is engaging in any activity that infringes the Owned Intellectual Property that would result in a Material Adverse Effect, except as otherwise disclosed in the Registration Statement, the General Disclosure Package and the Prospectus.

11

No Owned Intellectual Property is subject to any outstanding decree, order, injunction, judgment or ruling restricting the Owned Intellectual Property or that would impair the validity or enforceability of the Owned Intellectual Property, except for any such decree, order, injunction or ruling that would not result in a Material Adverse Effect.

(cc)Each of the Company and its subsidiaries are insured by insurers of recognized financial responsibility with policies in such amounts and with such deductibles and covering such risks as the Company and its subsidiaries, as the case may be, deem adequate and customary for their respective businesses, including, but not limited to, policies covering real and personal property owned or leased by the Company and its subsidiaries against theft, damage, destruction and acts of vandalism, general liability and directors and officers liability. The Company has no reason to believe that it or any subsidiary will not be able (i) to renew its existing insurance coverage as and when such policies expire or (ii) to obtain comparable coverage from similar institutions as may be necessary or appropriate to conduct its business as now conducted and at a cost that would not result in a Material Adverse Effect.

(dd)As of and since December 31, 2008, there has been (i) no material weakness in the Company’s internal control over financial reporting (whether or not remediated) and (ii) no change in the Company’s internal control over financial reporting that has materially affected, or is reasonable likely to materially affect, the Company’s internal control over financial reporting.

(ee)There is and has been no failure on the part of the Company or any of the Company’s directors or officers, in their capacities as such, to comply in all material respects with any provision of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith, including Section 402 related to loans and Sections 302 and 906 related to certifications.

(ff)The Company is not, and with the giving of notice or lapse of time or both will not be, (i) in violation of its certificate or articles of incorporation, by-laws or other organizational documents or (ii) in violation of any applicable law or regulation or in violation of or in default under any agreement, lease, contract, indenture or other instrument or obligation to which it is a party or by which it, or any of its properties, is bound, and which violation or default, solely with respect to clause (ii), would have a Material Adverse Effect.

(gg)Each “significant subsidiary” (as defined in Rule 1-02(w) of Regulation S-X under the Exchange Act) of the Company is not, and with the giving of notice or lapse of time or both will not be, (i) in violation of its certificate or articles of incorporation, by-laws, certificate of formation, limited liability agreement, partnership agreement or

12

other organizational documents or (ii) in violation of any applicable law or regulation or in violation of or in default under any agreement, lease, contract, indenture or other instrument or obligation to which it is a party or by which it, or any of its properties, is bound, and which violation or default, in the case of either clause (i) or clause (ii), would have a Material Adverse Effect.

(hh)The Company has established and maintains “disclosure controls and procedures” (as defined in Rules 13a-14(c) and 15d-14(c) under the Exchange Act); the Company’s “disclosure controls and procedures” are reasonably designed to ensure that all information (both financial and non-financial) required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and regulations of the Exchange Act, and that all such information is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure and to make the certifications of the Chief Executive Officer and Chief Financial Officer of the Company required under the Exchange Act with respect to such reports.

2.Purchase, Sale and Delivery of Offered Securities.  On the basis of the representations, warranties and agreements herein contained, but subject to the terms and conditions herein set forth, the Company agrees to sell to the Underwriters, and the Underwriters agree, severally and not jointly, to purchase from the Company, at a purchase price of 97.0% of the principal amount thereof plus accrued interest, if any, from May 27, 2009 to the First Closing Date (as hereinafter defined), the respective principal amounts of Firm Securities set forth opposite the names of the Underwriters in Schedule A hereto.

The Company will deliver the Firm Securities to you, for the accounts of the Underwriters, against payment of the purchase price therefor, in the form of one or more permanent global securities in definitive form (the “Firm Global Securities”) deposited with the Trustee as custodian for The Depository Trust Company (“DTC”) and registered in the name of Cede & Co., as nominee for DTC.  Interests in any permanent global securities will be held only in book-entry form through DTC, except in the limited circumstances described in the Prospectus. Payment for the Firm Securities shall be made by the Underwriters in Federal (same day) funds by wire transfer to an account at a bank acceptable to you, as instructed by the Company, drawn to the order of Cephalon, Inc. at the office of Cleary Gottlieb Steen & Hamilton LLP, One Liberty Plaza, New York, New York 10006 at 9:00 a.m. (New York time), on May 27, 2009, or at such other time not later than five full business days thereafter as you and the Company determine, such time being herein referred to as the “First Closing Date”, against delivery to the Trustee as custodian for DTC of the Firm Global Securities representing all of the Firm Securities. (As used herein, “business day” means a day on which The NASDAQ Global Select Market is open for trading and on which banks in New York are open for business and not permitted by law or executive order to be closed.)  The Firm Global Securities will be made

13

available for checking at the above office of Cleary Gottlieb Steen & Hamilton LLP prior to the First Closing Date.

In addition, upon written notice from you given to the Company from time to time not more than 30 days subsequent to the date of this Agreement, the Underwriters may purchase (for the sole purpose of covering over-allotments made in connection with the sale of the Firm Securities on the trade date at the price indicated in the Prospectus) all or less than all of the Optional Securities at the purchase price per principal amount of Offered Securities (including accrued interest, if any, thereon from May 27, 2009 to the related Optional Closing Date) to be paid for the Firm Securities.  The Company agrees to sell to the Underwriters the principal amount of Optional Securities specified in such notice and the Underwriters agree, severally and not jointly, to purchase such Optional Securities.  Such Optional Securities shall be purchased from the Company for the account of each of the Underwriters in the same proportion as the principal amount of Firm Securities set forth opposite such Underwriter’s name in Schedule A hereto bears to the total principal amount of Firm Securities (subject to adjustment by you to eliminate fractions).  No Optional Securities shall be sold or delivered unless the Firm Securities previously have been, or simultaneously are, sold and delivered.  The right to purchase the Optional Securities or any portion thereof may be exercised from time to time and, to the extent not previously exercised, may be surrendered and terminated at any time upon notice by you to the Company.

Each time for the delivery of and payment for the Optional Securities, being herein referred to as the “Optional Closing Date”, which may be the First Closing Date (the First Closing Date and each Optional Closing Date, if any, being sometimes referred to as a “Closing Date”), shall be determined by you on behalf of the several Underwriters but shall not be later than ten full business days after written notice of election to purchase Optional Securities is given.  On each Optional Closing Date, the Company will deliver the Optional Securities being purchased on such Optional Closing Date to you, for the accounts of the Underwriters, against payment of the purchase price therefor, in the form of one or more permanent global securities in definitive form (each, an “Optional Global Security”) deposited with the Trustee as custodian for DTC and registered in the name of Cede & Co., as nominee for DTC. Payment for such Optional Securities shall be made by you on behalf of the several Underwriters in Federal (same day) funds by wire transfer to an account at a bank acceptable to you, as instructed by the Company, drawn to the order of Cephalon, Inc. at the above office of Cleary Gottlieb Steen & Hamilton LLP against delivery to the Trustee as custodian for DTC of the Optional Global Securities representing all of the Optional Securities being purchased on such Optional Closing Date.

3.Certain Agreements of the Company.  The Company agrees with the several Underwriters that:

14

(a)The Company will (A) prepare and timely file with the Commission under Rule 424(b) (without reliance on Rule 424(b)(8)) under the Securities Act a Prospectus in a form approved by you containing information previously omitted at the time of effectiveness of the Registration Statement in reliance on Rules 430A, 430B or 430C under the Securities Act, and (B) file on a timely basis all reports and any definitive proxy or information statements required to be filed by the Company with the Commission subsequent to the date of the Prospectus and prior to the termination of the offering of the Offered Securities by the Underwriters.

(b)The Company will:  (i) not make any offer relating to the Offered Securities that would constitute an Issuer Free Writing Prospectus or that would otherwise constitute a “free writing prospectus” (as defined in Rule 405 under the Securities Act) required to be filed by the Company with the Commission under Rule 433 under the Securities Act unless you approve its use in writing prior to first use (each, a “Permitted Free Writing Prospectus”); provided that the prior written consent of the Underwriters hereto shall be deemed to have been given in respect of the Issuer Free Writing Prospectus(es) included in Schedule B hereto; (ii) treat each Permitted Free Writing Prospectus as an Issuer Free Writing Prospectus; (iii) comply with the requirements of Rules 164 and 433 under the Securities Act applicable to any Issuer Free Writing Prospectus, including the requirements relating to timely filing with the Commission, legending and record keeping; and (iv) not take any action that would result in an Underwriter or the Company being required to file with the Commission pursuant to Rule 433(d) under the Securities Act a free writing prospectus prepared by or on behalf of such Underwriter that such Underwriter otherwise would not have been required to file thereunder.  The Company will satisfy the conditions in Rule 433 under the Securities Act to avoid a requirement to file with the Commission any electronic road show.

(c)The Company will prepare a final term sheet (the “Final Term Sheet”) reflecting the final terms of the Offered Securities, in the form set forth in Annex A hereto, and shall file such Final Term Sheet as an Issuer Free Writing Prospectus pursuant to Rule 433 under the Securities Act prior to the close of business two business days after the date hereof; provided that the Company shall provide the Underwriters with copies of any such Final Term Sheet a reasonable amount of time prior to such proposed filing and will not use or file any such document to which you or your counsel shall reasonably object.

(d)So long as a prospectus relating to the Offered Securities is required to be delivered under the Securities Act (including in circumstances where such requirement may be satisfied pursuant to Rule 172 under the Securities Act) in connection with sales of the Offered Securities by the Underwriters or any dealer, the Company will advise the Underwriters promptly of:  (i) any proposal to amend or supplement the Registration Statement, any Preliminary Prospectus, the General Disclosure Package or the

15

Prospectus, including any document incorporated by reference therein, and will not effect or distribute such amendment or supplement without the Underwriters’ consent, which shall not be unreasonably withheld or delayed; (ii) the effectiveness of any such amendment or supplement; (iii) the receipt of any comments from the Commission relating to the Registration Statement, any Preliminary Prospectus, the General Disclosure Package, the Prospectus, or any such amendment or supplement; (iv) any request of the Commission for amendment of the Registration Statement or the filing of a new registration statement or any amendment or supplement to any Preliminary Prospectus, the General Disclosure Package or the Prospectus or any document incorporated by reference therein or otherwise deemed to be a part thereof or for any additional information; (v) the institution by the Commission of any stop order proceedings in respect of the Registration Statement, or any order preventing the use of any Preliminary Prospectus, the General Disclosure Package or the Prospectus, and will use its reasonable best efforts to prevent the issuance of any such orders and to obtain as soon as possible its lifting, if issued; and (vi) the receipt of any notice with respect to any suspension of qualification of the Offered Securities for offer or sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose and will use its reasonable best efforts to prevent any such suspension of qualification and to obtain as soon as possible its lifting, if issued.  If, at any time when a prospectus (or, in lieu thereof, the notice referred to under Rule 173(a) under the Securities Act) relating to the Offered Securities is required to be delivered under the Securities Act in connection with sales of the Offered Securities by the Underwriters or any dealer, any event occurs as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary at any time to amend the Prospectus to comply with the Securities Act, the Exchange Act, the Trust Indenture Act or the Rules and Regulations, the Company promptly will notify the several Underwriters of such event and promptly will prepare and file with the Commission, at its own expense, an amendment or supplement (which may be an amendment or supplement to the Prospectus or an appropriate filing under the Exchange Act which shall be incorporated into the Prospectus) which will correct such statement or omission or effect such compliance.  Neither the Underwriters’ consent to, nor your delivery to offerees or investors of, any such amendment or supplement shall constitute a waiver of any of the conditions set forth in Section 4.

(e)If the General Disclosure Package is being used to solicit offers to buy the Offered Securities at a time when the Prospectus is not yet available to prospective purchasers and any event shall occur as a result of which it becomes necessary to amend or supplement the General Disclosure Package in order to make the statements therein, in the light of the circumstances, not misleading, or to make the statements therein not conflict with the information contained in the Registration Statement then on file, or if it is necessary

16

at any time to amend or supplement the General Disclosure Package to comply with the Securities Act, the Exchange Act, the Trust Indenture Act or the Rules and Regulations, the Company promptly will either (i) prepare, file with the Commission (if required) and furnish to the Underwriters and any dealers an appropriate amendment or supplement to the General Disclosure Package or (ii) prepare and file with the Commission an appropriate filing under the Exchange Act which shall be incorporated by reference in the General Disclosure Package which will correct such statement or omission or effect such compliance.

(f)The Company agrees to pay the required filing fees to the Commission relating to the Offered Securities within the time required by Rule 456(b)(1) under the Securities Act without regard to the proviso therein and otherwise in accordance with Rules 456(b) and 457(r) under the Securities Act.

(g)The Company will furnish to, or upon order of, the Underwriters and their respective counsel, copies of any Preliminary Prospectus and the Prospectus (including all documents incorporated by reference therein), and all amendments and supplements to any Preliminary Prospectus or the Prospectus that are filed with the Commission during the period in which a prospectus relating to the Offered Securities is required to be delivered under the Securities Act (including all documents filed with the Commission during such period that are deemed to be incorporated by reference therein), in each case as soon as reasonably practicable and in such quantities as the Underwriters may from time to time reasonably request and, at the Underwriters’ request, will also furnish copies of any Preliminary Prospectus, the General Disclosure Package and the Prospectus to each exchange or market on which sales of Offered Securities may be made.  The Company will pay the expenses of printing and distributing all such documents.

(h)The Company will arrange for the qualification of the Offered Securities and the Underlying Shares into which the Offered Securities are convertible for sale and the determination of their eligibility for investment under the laws of such states in the United States as the Underwriters designate and will continue such qualifications in effect so long as required for the distribution of the Offered Securities by the Underwriters as contemplated in the Prospectus; provided that the Company will not be required to qualify as a foreign corporation or to file a general consent to service of process in any such state.

(i)During the period of two years after the later of the First Closing Date and the last Optional Closing Date, the Company will, upon request, furnish to the Underwriters such information concerning the business and financial condition of the Company as the Underwriters may reasonably request.

17

(j)After giving effect to the offering and sale of the Offered Securities and the application of the proceeds thereof as described in the Prospectus, the Company will not be required to be registered as an “investment company” as defined in the Investment Company Act.

(k)The Company will pay all expenses incidental to the performance of its obligations under this Agreement, the Indenture and the Call Spread Agreements including:  (i) the fees and expenses of the Trustee and its professional advisers, including its counsel and its accountants; (ii) all expenses in connection with the execution, issue, authentication, packaging and initial delivery of the Offered Securities, the preparation and printing of this Agreement, the Offered Securities, the Indenture, the Registration Statement, any Preliminary Prospectus, the General Disclosure Package, the Prospectus, and amendments and supplements thereto, and any other document relating to the issuance, offer, sale and delivery of the Offered Securities; (iii) any listing expenses and any other filing fees payable to the Financial Industry Regulatory Authority, The NASDAQ Stock Market, Inc. or the Commission; (iv) the cost of any advertising approved by the Company in connection with the issue of the Offered Securities; (v) the cost of any electronic road show in connection with the offering and sale of the Offered Securities; (vi) any out-of-pocket expenses (including reasonable fees and disbursements of counsel) incurred in connection with qualification of the Offered Securities for sale under the laws of such jurisdictions as the Underwriters designate and the printing of memoranda relating thereto; and (vii) for expenses incurred in distributing any Preliminary Prospectus and the Prospectus (including any amendments and supplements thereto) to the Underwriters.

(l)In connection with the offering, until you shall have notified the Company and the other Underwriters of the completion of the distribution of the Offered Securities as contemplated in the Prospectus, neither the Company nor any of its affiliates has or will, either alone or with one or more other persons, bid for or purchase for any account in which it or any of its affiliates has a beneficial interest in any Offered Securities, or attempt to induce any person to purchase any Offered Securities; and neither it nor any of its affiliates will make bids or purchases for the purpose of creating actual, or apparent, active trading in, or of raising the price of, the Offered Securities.  The Company acknowledges that the Underwriters may engage in passive market making transactions in the Common Stock on The NASDAQ Global Select Market in accordance with Regulation M under the Exchange Act.

(m)As soon as practicable, but not later than 16 months, after the date hereof, the Company will make generally available to its security holders an earnings statement covering a period of at least 12 months beginning after the later of (i) the effective date of the Registration Statement relating to the Offered Securities, (ii) the effective date of the

18

most recent post-effective amendment to the Registration Statement to become effective prior to the date hereof, and (iii) the date of the Company’s most recent Annual Report on Form 10-K filed with the Commission prior to date hereof, which will satisfy the provisions of Section 11(a) of the Securities Act.

(n)For a period of 60 days after the date of this Agreement, the Company will not offer, sell, contract to sell, pledge, or otherwise dispose of, directly or indirectly, or file with the Commission a registration statement under the Securities Act relating to, any debt securities issued or guaranteed by the Company and having a maturity of more than one year from the date of issue, or any shares of Common Stock of the Company or securities convertible into or exchangeable or exercisable for shares of Common Stock of the Company, including the Offered Securities, or warrants or other rights to purchase shares of Common Stock of the Company, or publicly disclose the intention to make any such offer, sale, pledge, disposition or filing, without your prior written consent, except for (i) issuances of shares of Common Stock of the Company pursuant to the conversion or exchange of convertible or exchangeable securities or the exercise of warrants or options, in each case outstanding on the date hereof, (ii) grants of employee stock options pursuant to the terms of a plan in effect on the date hereof, (iii) issuances of shares of Common Stock of the Company pursuant to the Company’s existing stock option plan, stock purchase plan or profit sharing 401(k) plan, (iv) the filing of any registration statement on Form S-8 to register shares of Common Stock reserved for issuance under any stock option plan, stock purchase plan or profit sharing 401(k) plan of the Company, (v) the issuance of up to 5,750,000 shares of Common Stock by the Company in an offering registered under the Securities Act and made concurrently with the offering of the Offered Securities, (vi) the issuance of shares of Common Stock by the Company pursuant to the Call Spread Agreements and (vii) the issuance of up to 2,500,000 shares of Common Stock by the Company.

4.Conditions of the Obligations of the Underwriters.  The several obligations of the Underwriters to purchase and pay for the Firm Securities on the First Closing Date and for the Optional Securities on each Optional Closing Date will be subject to, as of the Applicable Time and such Closing Date, the accuracy of the representations and warranties of the Company contained herein, to the accuracy of the statements of officers of the Company made in certificates or documents issued pursuant to the provisions hereof, to the performance by the Company of its obligations hereunder and to the following additional conditions precedent:

(a)The Underwriters shall have received a letter dated the date hereof and the applicable Closing Date, respectively, in form and substance satisfactory to you, of PricewaterhouseCoopers LLP confirming that they are independent public accountants within the meaning of the Securities Act and the applicable Rules and Regulations and stating that in their opinion the financial statements and schedules examined by them and

19

included in the Registration Statement, any Preliminary Prospectus, the General Disclosure Package and the Prospectus comply in form in all material respects with the applicable accounting requirements of the Securities Act and the related Rules and Regulations; and containing such other statements and information as is ordinarily included in accountants’ “comfort letters” with respect to the financial statements and certain financial and statistical information contained in the Registration Statement, any Preliminary Prospectus, the General Disclosure Package and the Prospectus.

(b)The Registration Statement and all post-effective amendments thereto shall have become effective under the Securities Act and the Rules and Regulations and any Preliminary Prospectus, the Prospectus and each Issuer Free Writing Prospectus required shall have been filed with the Commission as required by Rules 424(b) (without reliance on Rule 424(b)(8)), 430A, 430B, 430C or 433 under the Securities Act, as applicable, within the time period prescribed by, and in compliance with, the Rules and Regulations, and any request of the Commission for additional information (to be included in the Registration Statement or otherwise) shall have been disclosed to you and complied with to its reasonable satisfaction. No stop order suspending the effectiveness of the Registration Statement, as amended from time to time, or of any part thereof shall have been issued and no proceedings for that purpose or pursuant to Section 8A under the Securities Act shall have been taken or, to the knowledge of the Company, shall be contemplated or threatened by the Commission.

(c)Subsequent to the execution and delivery of this Agreement, there shall not have occurred (i) any change, or any development or event involving a prospective change, in the condition (financial or other), business, properties or results of operations of the Company and its subsidiaries taken as one enterprise which, in the judgment of a majority in interest of the Underwriters (including you) is material and adverse and makes it impractical or inadvisable to proceed with completion of the offering or the sale of and payment for the Offered Securities; (ii) any change in U.S. or international financial, political or economic conditions or currency exchange rates or exchange controls as would, in the judgment of a majority in interest of the Underwriters (including you), be likely to prejudice materially the success of the proposed issue, sale or distribution of the Offered Securities, whether in the primary market or in respect of dealings in the secondary market; (iii) any material suspension or material limitation of trading in securities generally on the New York Stock Exchange or The NASDAQ Global Select Market or any setting of minimum prices for trading on such exchange; (iv) any banking moratorium declared by U.S. Federal or New York authorities; (v) any major disruption of settlements of securities or clearance services in the United States; (vi) any attack on, or outbreak or escalation of hostilities or act of terrorism involving, the United States, any declaration of war by Congress or any other national or international calamity or emergency if, in the judgment of a majority in interest of the Underwriters

20

(including you), the effect of any such attack, outbreak, escalation, act, declaration, calamity or emergency makes it impractical or inadvisable to proceed with completion of the offering or sale of and payment for the Offered Securities; or (vii) the suspension of trading of any securities of the Company, including the Common Stock, on The NASDAQ Global Select Market, or by the Commission or any other governmental authority.

(d)The Underwriters shall have received an opinion, dated such Closing Date, of Sidley Austin LLP, counsel for the Company, that:

(i)The Company (A) is validly existing as a corporation and is in good standing under the laws of the State of Delaware and (B) has corporate power and authority to own its properties and conduct its business as described in the General Disclosure Package and the Prospectus;

(ii)Each of Anesta Corp., Cephalon Technology, Inc. and CIMA LABS INC. (A) is validly existing as a corporation and is in good standing under the laws of the State of Delaware and (B) has corporate power and authority to own its properties and conduct its business as described in the General Disclosure Package and the Prospectus;

(iii)This Agreement has been duly authorized, executed and delivered by the Company;

(iv)The Indenture has been duly authorized, executed and delivered by the Company and has been duly qualified under the Trust Indenture Act; the Offered Securities delivered on such Closing Date have been duly authorized, executed and delivered by the Company; and the Indenture constitutes, and the Offered Securities when authenticated by the Trustee in accordance with the provisions of the Indenture and delivered to and paid for by the Underwriters in accordance with the terms of this Agreement will constitute, valid and legally binding obligations of the Company enforceable against the Company in accordance with their respective terms (subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, fraudulent transfer and other laws of general applicability relating to or affecting creditors’ rights generally and to general principles of equity, regardless of whether considered in a proceeding in equity or at law);

(v)The Offered Securities delivered on such Closing Date are convertible into cash and shares of Common Stock in accordance with the terms of the Indenture, and the shares of Common Stock initially issuable upon

21

conversion of the Offered Securities delivered on such Closing Date have been duly authorized by the Company and reserved for issuance by the Company upon conversion of the Offered Securities and, when issued upon such conversion of such Offered Securities in accordance with the terms of the Indenture and such Offered Securities and at conversion prices per share at or in excess of the par value per share of the Common Stock at the time, will be validly issued, fully paid and nonassessable;

(vi)The stockholders of the Company have no preemptive rights with respect to the Offered Securities or the Underlying Shares under the General Corporation Law of the State of Delaware, as currently in effect, or the Company’s certificate of incorporation or by-laws, each as currently in effect;

(vii)The Company is not and, after giving effect to the offering and sale of the Offered Securities and the application of the proceeds thereof as described in the General Disclosure Package and the Prospectus, will not be required to be registered as an “investment company” as defined in the Investment Company Act;

(viii)No consent, approval, authorization or order of, or filing with, any United States or state governmental agency or body or any court having jurisdiction over the Company or any of its subsidiaries or over any of its or their respective properties or operations is required for the consummation of the transactions contemplated by this Agreement in connection with the issuance or sale of the Offered Securities by the Company, except such consents, approvals, authorizations, orders or filings as have already been obtained or may be required under the Securities Act, the Exchange Act or the Trust Indenture Act in connection with the purchase and distribution of the Offered Securities by the Underwriters;

(ix)The execution, delivery and performance by the Company of its obligations under the Indenture, this Agreement and the Call Spread Agreements and the issuance and sale of the Offered Securities and compliance by the Company with the terms and provisions thereof will not (a) violate any provision of any Applicable Law or any order, known to such counsel, of any governmental agency or body or any court having jurisdiction over the Company or any subsidiary of the Company or any of their properties, (b) violate the certificate of incorporation or by-laws of the Company or (c) result in a breach or violation of the terms of provisions of, or constitute a default under, any of (i) the Indenture, dated as of June 11, 2003, between the Company and U.S. Bank, National Association, as trustee; (ii) the Indenture, dated as of December 20,

22

2004, between the Company and U.S. Bank, National Association, as trustee; (iii) the Indenture, dated as of June 7, 2005, between the Company and U.S. Bank, National Association, as trustee; and (iv) the Credit Agreement, dated as of August 15, 2008, among the Company, the lenders named therein, JPMorgan Chase Bank, N.A., as administrative agent, Deutsche Bank Securities Inc. and Bank of America N.A., as co-syndication agents, Wachovia Bank, N.A. and Barclays Bank plc, as co-documentation agents, and J.P. Morgan Securities Inc., Deutsche Bank Securities Inc. and Banc of America Securities LLC, as joint bookrunners and joint lead arrangers, as amended by the First Amendment dated December 3, 2008 and by the Second Amendment dated February 27, 2009 (collectively the agreements identified in clauses (i)-(iv), the “Financing Agreements”); as used in this subsection, “Applicable Laws” means the General Corporation Law of the State of Delaware and those state laws of the State of New York and federal laws of the United States of America which, in the experience of such counsel and without independent investigation, are normally applicable to transactions of the type contemplated by this Agreement; provided, that the term “Applicable Laws” shall not include federal or state securities or blue sky laws, including, without limitation, the Securities Act, the Exchange Act, the Trust Indenture Act or the Investment Company Act, antifraud laws, or in each case any rules or regulations thereunder, or any law, rule or regulation relating to healthcare, food and drug or similar matters;

(x)The authorized capital stock of the Company is as set forth in the General Disclosure Package and the Prospectus under the caption “Capitalization”;

(xi)The statements in the General Disclosure Package and the Prospectus under the caption “Description of the Notes,” insofar as such statements constitute a summary of certain provisions of the Indenture and the Offered Securities, constitute accurate summaries thereof in all material respects;

(xii)The statements in the General Disclosure Package and the Prospectus under the caption “Description of Common Stock,” insofar as such statements constitute a summary of law, legal matters or documents referred to therein, constitute accurate summaries thereof in all material respects;

(xiii)The statements in the General Disclosure Package and the Prospectus under the caption “United States Federal Income Tax Considerations,” insofar as such statements constitute summaries of matters of United States federal income tax law and regulations or legal conclusions with

23

respect thereto, constitute accurate summaries of the matters described therein in all material respects;

(xiv)The Registration Statement became effective under the Securities Act upon filing with the Commission as of the date specified in such opinion, the Prospectus was filed with the Commission pursuant to the subparagraph of Rule 424(b) specified in such opinion on the date specified therein, and, to the knowledge of such counsel based solely upon a statement by the staff of the Commission, (A) no stop order suspending the effectiveness of the Registration Statement or any part thereof has been issued and (B) no proceedings for that purpose have been instituted or are pending or threatened by the Commission; and

(xv)The Registration Statement, as of its effective date, and the Prospectus, as of its date, complied as to form in all material respects with the requirements of the Securities Act and the Rules and Regulations applicable to registration statements on Form S-3 or related prospectuses, as the case may be, except that such counsel need express no opinion with respect to the financial statements and related schedules and other financial or statistical data included or incorporated by reference in the Registration Statement or the Prospectus or omitted therefrom, or the Trustee’s Statement of Eligibility (Form T-1) under the Trust Indenture Act.

Such counsel shall also state that it has no reason to believe that (A) the Registration Statement, or any amendment thereto, as of its effective date, or the Registration Statement (including the information in the Prospectus that was omitted from the Registration Statement at the time it first became effective but that is deemed, pursuant to Rule 430B(f) of the Rules and Regulations, to be part of and included in the Registration Statement) as of the Applicable Time, included an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (B) the Prospectus, as of its date and as of the First Closing Date or the Optional Closing Date, as the case may be, included or includes an untrue statement of a material fact or omitted or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading or (C) the General Disclosure Package, as of the Applicable Time, included an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, it being understood that such counsel need express no belief as to the financial statements and related schedules and

24

other financial or statistical data included or incorporated by reference in or omitted from the Registration Statement, the Prospectus, the General Disclosure Package or the Trustee’s Statement of Eligibility (Form T-1) under the Trust Indenture Act.  In the case the condition set forth in Section 4(l) below is satisfied pursuant to clause (ii) thereof, the opinion in clause (ix) may include an assumption as to the time of effectiveness of such notice.

(e)The Underwriters shall have received an opinion, dated such Closing Date, from Gerald J. Pappert, Executive Vice President, General Counsel and Secretary of the Company, that:

(i)The Company is duly qualified to do business as a foreign corporation in good standing in each jurisdiction in which the Company’s ownership or leasing of property or the conduct of its business requires such qualifications, except where the failure to be so qualified or in good standing would not have a Material Adverse Effect;

(ii)To such counsel’s knowledge, there are no legal or governmental proceedings pending or threatened against the Company or any of the Company’s subsidiaries of a character that would be required to be disclosed in an Annual Report on Form 10-K for the Company (if filed on and as of such Closing Date) other than those described in the Registration Statement, any Preliminary Prospectus, the General Disclosure Package or the Prospectus;

(iii)To such counsel’s knowledge, neither the Company nor any of the Company’s subsidiaries is currently in material breach of (i) any applicable statute, rule or regulation or (ii) any order, writ or decree any United States court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries, or over any of their properties or operations, that could have a Material Adverse Effect, but without expressing any opinion in this paragraph (iii) as to any matter relating to any pending or threatened action, suit, proceeding or investigation disclosed in the Registration Statement, the General Disclosure Package and the Prospectus;

(iv)Except as disclosed in the Registration Statement, any Preliminary Prospectus, the General Disclosure Package or the Prospectus, there are no pending actions, suits or proceedings against or affecting the Company, any of its subsidiaries or any of their respective properties that, if determined adversely to the Company or any of its subsidiaries, could have a Material Adverse Effect or would materially and adversely affect the ability of the Company to perform its obligations under the Indenture, this Agreement or the

25

Call Spread Agreements, and, to such counsel’s knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others;

(v)The statements in the Company’s Annual Report on Form 10-K for the period ended December 31, 2008 (the “10-K”) under the captions “Business—Government Regulation” and “Legal Proceedings,” and Quarterly Report on Form 10-Q for the period ended March 31, 2009 (the “10-Q”) under the caption “Legal Proceedings,” insofar as such statements constitute a summary of law, legal matters, documents or proceedings referred to therein, constitute accurate summaries thereof in all material respects, subject to any such statements in the 10-K that have been superseded by related statements in the 10-Q;

(vi)To such counsel’s knowledge, there are no agreements, contracts, leases or other documents to which the Company is a party of a magnitude and character that would be required to be disclosed in or filed as an exhibit to the Registration Statement that is not described or incorporated by reference in the Registration Statement;

(vii)To such counsel’s knowledge, the stockholders of the Company have no preemptive rights with respect to the Offered Securities or the Underlying Shares under the terms of any agreement or instrument to which the Company is a party or by which the Company is bound; and

(viii)The execution, delivery and performance by the Company of its obligations under the Indenture, this Agreement and the Call Spread Agreements and the issuance and sale of the Offered Securities and compliance by the Company with the terms and provisions thereof will not result in a breach or violation of the terms or provisions of, or constitute a default under, any agreement, instrument or contract to which the Company or any subsidiary of the Company is a party or by which the Company or any such subsidiary is bound or to which any of the properties of the Company or any such subsidiary is subject and which, in each case, has been filed or incorporated by reference as an exhibit to the 10-K or the 10-Q; provided, that such counsel need express no opinion as to any of the Financing Agreements.

Such counsel shall also state that he has no reason to believe that (A) the Registration Statement, or any amendment thereto, as of its effective date or the Applicable Time, included any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the

26

statements therein not misleading, (B) the Prospectus, or any supplement thereto, as of its date and as of the First Closing Date or the Option Closing Date, as the case may be, included or includes any untrue statement of a material fact or omitted or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading or (C) the General Disclosure Package, as of the Applicable Time, included any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, it being understood that such counsel need express no belief as to the financial statements and related schedules and other financial or statistical data included or incorporated by reference in the Registration Statement, the Prospectus, the General Disclosure Package or the Trustee’s Statement of Eligibility (Form T-1) under the Trust Indenture Act.

(f)The Underwriters shall have received an opinion, dated such Closing Date, from Ross Oehler, Vice President, Intellectual Property and Chief Patent Counsel of the Company, that:

(i)The Company or its subsidiaries are the exclusive owners of the entire right, title and interest in and to, or have a valid license to use to the extent so used, all Intellectual Property used in the business of the Company and its subsidiaries as currently conducted. The Company or its subsidiaries are entitled to use all Owned Intellectual Property and Licensed Intellectual Property in the continued operation of their business without limitation, subject only to the terms of the Intellectual Property Licenses. Except as disclosed in the Registration Statement, any Preliminary Prospectus, the General Disclosure Package or the Prospectus, the Owned Intellectual Property and, to such counsel’s knowledge, the Licensed Intellectual Property have not been adjudged invalid or unenforceable in whole or in part, and are valid and enforceable. The expiration of any patents, patent rights, trademarks, service marks, trade names or copyrights owned or used by the Company or its subsidiaries would not result in a Material Adverse Effect that is not otherwise disclosed in the Registration Statement, any Preliminary Prospectus, the General Disclosure Package and the Prospectus;

(ii)To such counsel’s knowledge, the conduct of the Company’s or its subsidiaries’ business as currently conducted or proposed to be conducted does not infringe or misappropriate the Intellectual Property of any third party. No actions or proceedings alleging any of the foregoing are pending, and, to such counsel’s knowledge, no claim has been threatened or asserted against the

27

Company or any of its subsidiaries alleging any of the foregoing. To such counsel’s knowledge, no person is engaging in any activity that infringes the Owned Intellectual Property that would result in a Material Adverse Effect, except as otherwise disclosed in the Registration Statement, any Preliminary Prospectus, the General Disclosure Package and the Prospectus; and

(iii)No Owned Intellectual Property is subject to any outstanding decree, order, injunction, judgment or ruling restricting the Owned Intellectual Property or that would impair the validity or enforceability of the Owned Intellectual Property, except for any such decree, order, injunction, judgment or writing that would not result in a Material Adverse Effect.

(g)The Underwriters shall have received from Cleary Gottlieb Steen & Hamilton LLP, your counsel, such opinion or opinions, dated such Closing Date, with respect to such matters as you may require, and the Company shall have furnished to such counsel such documents as they request for the purpose of enabling them to pass upon such matters.

(h)The Underwriters shall have received a certificate, dated such Closing Date, of the President or any Vice President and a principal financial or accounting officer of the Company in which such officers, to the best of their knowledge after reasonable investigation, shall state that the representations and warranties of the Company in this Agreement are true and correct, that the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to such Closing Date, and that, subsequent to the respective dates of the most recent financial statements in the Registration Statement, any Preliminary Prospectus, the General Disclosure Package or the Prospectus, there has been no material adverse change, nor any development or event that would be reasonably likely to result in a material adverse change, in the condition (financial or other), business, properties or results of operations of the Company and its subsidiaries taken as a whole except as set forth in the Registration Statement, any Preliminary Prospectus, the General Disclosure Package or the Prospectus or as described in such certificate.

(i)The Underwriters shall have received, on or prior to the date of this Agreement, lock-up agreements substantially in the form of Exhibit I attached hereto from each of the executive officers of the Company set forth in Schedule C hereto.

(j)Each of the Call Spread Agreements shall have been entered into by the Company and each counterparty thereto and the premiums or any other amounts due thereunder shall have been paid.

28

(k)The Company shall have obtained approval from The NASDAQ Stock Market, Inc. for listing on The NASDAQ Global Select Market of the Underlying Shares to be issued (i) upon conversion of the Offered Securities and (ii) in respect of the Warrant Confirmation.

(l)Prior to the Closing Date, either (i) the Company shall have received a waiver under, or entered into an amendment of, its Credit Agreement, dated as of August 15, 2008, among the Company, as Borrower, JPMorgan Chase Bank, N.A., as Administrative Agent and the lenders thereunder and other parties thereto, as amended to the date hereof (the “Credit Agreement”), permitting the execution, delivery and performance by the Company of the Indenture, this Agreement and the Call Spread Agreements, the issuance and sale of the Offered Securities and the Underlying Shares into which the Offered Securities are convertible, and compliance with the terms and provisions of the Offered Securities, or (ii) the Company shall have given irrevocable notice of termination of the Credit Agreement pursuant to Section 2.08(b) thereof, such termination to take effect as promptly as practicable after such notice is given.

The Company will furnish the Underwriters with such conformed copies of such opinions, certificates, letters and documents as the Underwriters reasonably request in order to evidence the accuracy of any of the representations and warranties, or the satisfaction of any of the conditions or agreements, contained herein.  You may in your sole discretion waive on behalf of the Underwriters compliance with any conditions to the obligations of the Underwriters hereunder, whether in respect of an Optional Closing Date or otherwise.

5.Indemnification and Contribution. (a)  The Company agrees:

(i)to indemnify and hold harmless each Underwriter and each person, if any, who controls such Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, against any losses, claims, damages or liabilities to which such Underwriter or any such controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of or are based upon (A) any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, any Preliminary Prospectus, the General Disclosure Package, the Prospectus, any Issuer Free Writing Prospectus or any “issuer information” filed or required to be filed pursuant to Rule 433(d) under the Securities Act, or any amendment or supplement to the Registration Statement, any Preliminary Prospectus, the General Disclosure Package or the Prospectus, or (B) the omission or alleged omission to state in the Registration Statement, any Preliminary Prospectus, the General Disclosure Package, the Prospectus, any Issuer Free Writing Prospectus or any “issuer information” filed or required to be filed pursuant to Rule 433(d) under the Securities Act, or any amendment

29

or supplement to the Registration Statement, any Preliminary Prospectus, the General Disclosure Package or the Prospectus, a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and

(ii)to reimburse each Underwriter and each such controlling person upon demand for any legal or other out-of-pocket expenses reasonably incurred by such Underwriter or such controlling person in connection with investigating or defending any such loss, claim, damage or liability, action or proceeding or in responding to a subpoena or governmental inquiry related to the offering or sale of the Offered Securities, whether or not such Underwriter or such controlling person is a party to any action or proceeding;

provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement, or omission or alleged omission made in the Registration Statement, any Preliminary Prospectus, the General Disclosure Package, the Prospectus, any Issuer Free Writing Prospectus or any “issuer information” filed or required to be filed pursuant to Rule 433(d) under the Securities Act, or any amendment or supplement to the Registration Statement, any Preliminary Prospectus, the General Disclosure Package or the Prospectus, in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Underwriter through you specifically for use therein, it being understood and agreed that the only such information is the Underwriter Information.  In the event that it is finally judicially determined that such Underwriter was not entitled to receive payments for legal and other expenses pursuant to subparagraph (ii) above, such Underwriter will promptly return all sums that had been advanced pursuant hereto.

(b)Each Underwriter, severally and not jointly, will:

(i)  indemnify and hold harmless the Company, each of its directors, each of its officers who have signed the Registration Statement, and each person, if any, who controls the Company within the meaning of the Securities Act, against any losses, claims, damages or liabilities to which the Company or any such director, officer, or controlling person may become subject under the Securities Act or the Exchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of or are based upon (A) any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, any Preliminary Prospectus, the General Disclosure Package, the Prospectus, any Issuer Free Writing Prospectus or any “issuer information” filed or required to be filed pursuant to Rule 433(d) under the Securities Act, or any amendment or supplement to the Registration Statement, any Preliminary Prospectus, the General Disclosure Package or

30

the Prospectus, or (B) the omission or the alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and

(ii)reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, or controlling person in connection with investigating or defending any such loss, claim, damage, liability, action or proceeding; provided, however, that each Underwriter will be liable in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission has been made in the Registration Statement, any Preliminary Prospectus, the General Disclosure Package, the Prospectus, any Issuer Free Writing Prospectus or any “issuer information” filed or required to be filed pursuant to Rule 433(d) under the Securities Act, or any amendment or supplement to the Registration Statement, any Preliminary Prospectus, the General Disclosure Package or the Prospectus in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Underwriter through you specifically for use therein, it being understood and agreed that the only such information is the Underwriter Information.  In the event that it is finally judicially determined that the Company was not entitled to receive payments for legal and other expenses provided for above, the Company will promptly return all sums that had been advanced pursuant hereto.

(c)In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to this Section 5, such person (the “indemnified party”) shall promptly notify the person against whom such indemnity may be sought (the “indemnifying party”) in writing.  No indemnification provided for in Section 5(a) or (b) shall be available to any party who shall fail to give notice as provided in this Section 5(c) if the party to whom notice was not given was unaware of the proceeding to which such notice would have related and was materially prejudiced by the failure to give such notice, but the failure to give such notice shall not relieve the indemnifying party or parties from any liability which it or they may have to the indemnified party for contribution or otherwise than on account of the provisions of Section 5(a) or (b).  In case any such proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party and shall pay as incurred the fees and disbursements of such counsel related to such proceeding, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section 5 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than

31

reasonable costs of investigation.  In any such proceeding, any indemnified party shall have the right to retain its own counsel at its own expense.  Notwithstanding the foregoing, the indemnifying party shall pay as incurred (or within 30 days of presentation) the fees and expenses of the counsel retained by the indemnified party in the event (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel, (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them or (iii) the indemnifying party shall have failed to assume the defense and employ counsel acceptable to the indemnified party within a reasonable period of time after notice of commencement of the action.  It is understood that the indemnifying party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate firm for all such indemnified parties.  Such firm shall be designated in writing by you in the case of parties indemnified pursuant to Section 5(b) and by the Company in the case of parties indemnified pursuant to Section 5(a).  The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment.  In addition, the indemnifying party will not, without the prior written consent of the indemnified party, settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding of which indemnification may be sought hereunder (whether or not any indemnified party is an actual or potential party to such claim, action or proceeding) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action or proceeding.

(d)To the extent the indemnification provided for in this Section 5 is unavailable to or insufficient to hold harmless an indemnified party under Section 5(a) or (b) in respect of any losses, claims, damages or liabilities (or actions or proceedings in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters on the other from the sale of the Offered Securities.  If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted

32

in such losses, claims, damages or liabilities (or actions or proceedings in respect thereof), as well as any other relevant equitable considerations.  The relative benefits received by the Company on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company bear to the total compensation received by the Underwriters from the sale of Offered Securities on behalf of the Company.  The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or the Underwriters on the other and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

The Company and the Underwriters agree that it would not be just and equitable if contributions pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 5(d).  The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions or proceedings in respect thereof) referred to above in this Section 5(d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim.  Notwithstanding the provisions of this subsection (d), (i) no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Offered Securities underwritten by it and distributed to the public exceeds the total amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission, and (ii) no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

(e)In any proceeding relating to the Registration Statement, any Preliminary Prospectus, the General Disclosure Package, the Prospectus, any Issuer Free Writing Prospectus or any “issuer information” filed or required to be filed pursuant to Rule 433(d) under the Securities Act, each party against whom contribution may be sought under this Section 5 hereby consents to the jurisdiction of any court having jurisdiction over any other contributing party, agrees that process issuing from such court may be served upon it by any other contributing party and consents to the service of such process and agrees that any other contributing party may join it as an additional defendant in any such proceeding in which such other contributing party is a party.

(f)Any losses, claims, damages, liabilities or expenses for which an indemnified party is entitled to indemnification or contribution under this Section 5 shall

33

be paid by the indemnifying party to the indemnified party as such losses, claims, damages, liabilities or expenses are incurred.  The indemnity and contribution agreements contained in this Section 5 and the representations and warranties of the Company set forth in this Agreement or in certificates delivered pursuant hereto shall remain operative and in full force and effect, regardless of (i) any investigation made by or on behalf of  any Underwriter or any person controlling such Underwriter or on behalf of the Company, its directors or officers or any persons controlling the Company, (ii) delivery and acceptance of the Offered Securities and payment therefor hereunder and (iii) any termination of this Agreement.  A successor to any Underwriter, or any person controlling  such Underwriter, or to the Company, its directors or officers, or any person controlling the Company, shall be entitled to the benefits of the indemnity, contribution and reimbursement agreements contained in this Section 5.

(g)The obligations of the Company under this Section 5 shall be in addition to any liability which the Company may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any Underwriter within the meaning of the Securities Act or the Exchange Act; and the obligations of the Underwriters under this Section shall be in addition to any liability which the respective Underwriter may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls the Company.

6.Default of Underwriters.  If any Underwriter or Underwriters default in its or their obligations to purchase Offered Securities hereunder on either the First Closing Date or any Optional Closing Date and the aggregate principal amount of the Offered Securities that such defaulting Underwriter or Underwriters agreed but failed to purchase does not exceed 10% of the total principal amount of the Offered Securities that the Underwriters are obligated to purchase on such Closing Date, you may make arrangements satisfactory to the Company for the purchase of such Offered Securities by other persons, including any of the Underwriters, but if no such arrangements are made by such Closing Date, the non-defaulting Underwriters shall be obligated severally, in proportion to their respective commitments hereunder, to purchase the Offered Securities that such defaulting Underwriter or Underwriters agreed but failed to purchase on such Closing Date. If any Underwriter or Underwriters so default and the aggregate principal amount of Offered Securities with respect to which such default or defaults occur exceeds 10% of the total principal amount of the Offered Securities that the Underwriters are obligated to purchase on such Closing Date and arrangements satisfactory to you and the Company for the purchase of such Offered Securities by other persons are not made within 36 hours after such default, this Agreement will terminate without liability on the part of any non-defaulting Underwriter or the Company, except as provided in Section 7 (provided that if such default occurs with respect to Optional Securities after the First Closing Date, this Agreement shall not terminate as to the Firm Securities or any Optional Securities purchased prior to such termination). As used in this

34

Agreement, the term “Underwriter” includes any person substituted for an Underwriter under this Section 6.  Nothing herein will relieve a defaulting Underwriter from liability for its default.

7.Survival of Certain Representations and Obligations. The respective indemnities, agreements, representations, warranties and other statements of the Company, its officers or the Underwriters set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation, or statement as to the results thereof, made by or on behalf of the Underwriters, the Company or any of their respective representatives, officers or directors or any controlling person, and will survive delivery of and payment for the Offered Securities. If for any reason the purchase of the Offered Securities by the Underwriters is not consummated, the Company shall remain responsible for the expenses to be paid or reimbursed by it pursuant to Section 3 and the respective obligations of the Company and the Underwriters pursuant to Section 5 shall remain in effect and if any Offered Securities have been purchased hereunder the representations and warranties in Section 1 and all obligations under Section 3 shall remain in effect.  If the purchase of the Offered Securities by the Underwriters is not consummated for any reason other than as a result of the occurrence of any event specified in clauses (ii), (iii), (iv), (v) or (vi) of Section 4(c) or any event specified in Section 4(g) or Section 6 that leads to termination of this Agreement, the Company will reimburse the Underwriters for all out-of-pocket expenses (including fees and disbursements of counsel) reasonably incurred by them in connection with the offering of the Offered Securities.

8.Notices.  All communications hereunder will be in writing and, if sent to the Underwriters will be mailed, delivered or faxed and confirmed to the Underwriters c/o Deutsche Bank Securities Inc. at 60 Wall Street, New York, New York 10005, Attention: Syndicate (fax: (212) 797-2202) with a copy to Attention: General Counsel (fax: (212) 797-4561) or, if sent to the Company, will be mailed, delivered or faxed and confirmed to it at 41 Moores Road, Frazer, PA 19355, Attention: Gerald J. Pappert, Executive Vice President, General Counsel and Secretary of the Company; provided, however, that any notice to any Underwriter pursuant to Section 5 will be mailed, delivered, or telegraphed and confirmed to such Underwriter.

9.Successors.  This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and the controlling persons referred to in Section 5, and no other person will have any right or obligation hereunder.

10.Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same Agreement.

11.Absence of Fiduciary Duties.  The Company acknowledges and agrees that (a) the purchase and sale of the Offered Securities pursuant to this Agreement, including the determination of the public offering price of the Offered Securities and any related discounts and

35

commissions, is an arm’s-length commercial transaction between the Company, on the one hand, and the several Underwriters, on the other hand, (b) in connection with the offering contemplated hereby and the process leading to such transaction each Underwriter is and has been acting solely as a principal and is not the agent or fiduciary of the Company, or its stockholders, creditors, employees or any other party, (c) each Underwriter is an independent contractor and no Underwriter has assumed or will assume an advisory or fiduciary responsibility in favor of the Company with respect to the offering contemplated hereby or the process leading thereto (irrespective of whether such Underwriter has advised or is currently advising the Company on other matters) and no Underwriter has any obligation to the Company with respect to the offering contemplated hereby except the obligations expressly set forth in this Agreement, (d) the Underwriters and their respective affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Company and (e) the Underwriters have not provided any legal, accounting, regulatory or tax advice with respect to the offering contemplated hereby and the Company has consulted its own legal, accounting, regulatory and tax advisors to the extent it deemed appropriate.

12.Entire Agreement; Amendment; Severability.  This Agreement (including all exhibits attached hereto) constitutes the entire agreement and supersedes all other prior and contemporaneous agreements and undertakings, both written and oral, among the parties hereto with regard to the subject matter hereof.  Neither this Agreement nor any term hereof may be amended except pursuant to a written instrument executed by the Company and the several Underwriters.  In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby.

13.Waiver of Jury Trial.  The Company and the Underwriters hereby irrevocably waive any right either may have to a trial by jury in respect of any claim based upon or arising out of this Agreement or the transactions contemplated hereby.

14.Applicable Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York including, without limitation, Section 5-1401 of the New York General Obligations Law.

The Company hereby submits to the non-exclusive jurisdiction of the Federal and state courts in the Borough of Manhattan in The City of New York in any suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.

[Signature Page Follows]

36

If the foregoing is in accordance with the Underwriters’ understanding of our agreement, kindly sign and return to the Company one of the counterparts hereof, whereupon it will become a binding agreement between the Company and the several Underwriters in accordance with its terms.

Very truly yours,
CEPHALON, INC.
By:	/s/ J. Kevin Buchi
	Name:	J. Kevin Buchi
	Title:	Executive Vice President and Chief Financial Officer

DEUTSCHE BANK SECURITIES INC.
Acting on behalf of itself and as the Representative of the several Underwriters
By:	/s/ Andrew Yaeger
	Name:	Andrew Yaeger
	Title:	Managing Director
By:	/s/ Jeffrey Rosichan
	Name:	Jeffrey Rosichan
	Title:	Managing Director

SCHEDULE A

Underwriter	Principal Amount of Firm Securities
Deutsche Bank Securities Inc.	$	282,750,000
J.P. Morgan Securities Inc.	$	47,850,000
Morgan Stanley & Co. Incorporated	$	28,275,000
Credit Suisse Securities (USA) LLC	$	28,275,000
Barclays Capital Inc.	$	28,275,000
ABN AMRO Incorporated	$	6,525,000
Wachovia Capital Markets, LLC	$	6,525,000
Piper Jaffrary & Co.	$	6,525,000
Total	$	435,000,000

SCHEDULE B

None.

SCHEDULE C

Executive officers of the Company who will deliver executed “lock-up” agreements pursuant to Section 4(j) of this Agreement:

Frank Baldino, Jr., Ph.D. 

J. Kevin Buchi

Peter E. Grebow, Ph.D. 

Robert P. Roche, Jr. 

Carl A. Savini

William P. Egan

Martyn D. Greenacre

Vaughn M. Kailian

Kevin E. Moley

Charles A. Sanders, M.D. 

Gail R. Wilensky, Ph.D. 

Dennis L. Winger

Valli F. Baldassano

Gerald J. Pappert

Lesley Russell, MB.Ch.B., MRCP

Jeffry L. Vaught, Ph.D.

ANNEX A

Filed Pursuant to Rule 433
Registration 333-159365

Issuer Free Writing Prospectus dated May 21, 2009 relating to

Preliminary Prospectus Supplement dated May 20, 2009

Cephalon, Inc.

Final Term Sheet Relating to
$435,000,000 Aggregate Principal Amount of
2.50% Convertible Senior Subordinated Notes due 2014

and

5,000,000 Shares of Common Stock

This term sheet relates to the notes and common stock referenced above (together, the “securities”) and should be read together with the preliminary prospectus supplement dated May 20, 2009 (including the documents incorporated by reference therein) relating to the notes offering or the preliminary prospectus supplement dated May 20, 2009 (including the documents incorporated by reference therein) relating to the common stock offering, respectively, before making a decision in connection with an investment in the corresponding securities. The information in this term sheet supersedes the information in the relevant preliminary prospectus supplement to the extent that it is inconsistent therewith. Terms used but not defined herein have the meanings ascribed to them in the relevant preliminary prospectus supplement.

General
Issuer:	Cephalon, Inc., a Delaware corporation (“Cephalon”).
Ticker/Exchange:	CEPH/The Nasdaq Global Select Market.
Last Reported Sale Price of Common Stock on May 20, 2009:	$63.07 per share.
Notes Offering
Title of Securities:	2.50% Convertible Senior Subordinated Notes due 2014 (the “notes”).
Aggregate Principal Amount Offered:	$435,000,000 aggregate principal amount of notes (excluding the underwriters’ option to purchase up to $65,000,000 of additional aggregate principal amount of notes).
Denomination:	$1,000 x $1,000.
Price to Public:	100% of principal; $435,000,000 total.
Underwriting Discount:	3.0% of principal; $13,050,000 total.
Net Proceeds:	The issuer expects to receive approximately $421,950,000 after deducting fees and before expenses (or approximately $485,000,000 if the

	underwriters exercise in full their option to purchase the additional notes).
Maturity:	The notes will mature on May 1, 2014, subject to earlier conversion or a holder requiring Cephalon to repurchase its notes upon a fundamental change.
Ranking:	The notes will be Cephalon’s unsecured senior subordinated indebtedness and the payment of the principal of and interest on the notes will be subordinated in right of payment to the prior payment in full in cash of Cephalon’s existing and future senior indebtedness, including any borrowings under Cephalon’s existing credit agreement. The notes will also rank equally in express right of payment with Cephalon’s existing and future senior subordinated indebtedness and senior to any of Cephalon’s existing and future subordinated indebtedness. The notes will also rank junior to Cephalon’s secured indebtedness to the extent of the underlying collateral. The notes are effectively subordinated to all existing and future indebtedness and other liabilities including trade payables of Cephalon’s subsidiaries. The notes are not guaranteed by any of Cephalon’s subsidiaries.
Annual Interest Rate:	2.50% per annum, accruing from settlement date.
Interest Payment Dates:	Interest will accrue from May 27, 2009, and will be payable semi-annually in arrears on May 1 and November 1 of each year, beginning on November 1, 2009.
Day Count Convention:	30/360.
Issue Price:	100%, plus accrued interest, if any, from May 27, 2009.
Initial Conversion Price:	$69.00 per share of common stock.
Initial Conversion Rate:	Approximately 14.4928 shares of common stock per $1,000 aggregate principal amount of notes.
CUSIP Number:	156708 AR0.
Listing:	None.
Convertible Note Hedge and Warrant Transactions:	In connection with the offering of the notes, Cephalon has entered into a convertible note hedge transaction (the “convertible note hedge transaction”) with Deutsche Bank AG, an affiliate of the representative of the underwriters (the “hedge counterparty”). The convertible note hedge transaction covers, subject to customary anti-dilution adjustments, 6,304,348 shares of Cephalon’s common stock. Cephalon also has entered into a warrant transaction (the “warrant transaction”) with the hedge counterparty. The warrants issued to the hedge counterparty cover, subject to customary anti-dilution adjustments, 6,304,348 shares of Cephalon’s common stock. The cost to Cephalon of the convertible note hedge transaction, taking into account the proceeds to Cephalon of the warrant transaction, was $72,700,000. If the underwriters exercise their over-allotment option to purchase additional notes, Cephalon expects to increase the number of shares underlying the convertible note hedge transaction and the warrant transaction, in each case on a pro rata basis.

Adjustment to Conversion Rate upon a Make-Whole Fundamental Change: The following table sets forth the numbers of additional shares of Cephalon’s stock to be received per $1,000 principal amount of notes upon conversion in connection with a make-whole fundamental change based upon hypothetical stock prices and effective dates.

	Stock Price
Effective Date	$60.00	$61.00	$62.00	$63.00	$65.00	$70.00	$75.00	$80.00	$90.00	$100.00	$125.00	$150.00	$175.00	$200.00	$250.00
May 27, 2009	2.1700	2.0931	2.0147	1.9404	1.8019	1.5086	1.2749	1.0864	0.8055	0.6108	0.3256	0.1807	0.0991	0.0507	0.0000
May 1, 2010	2.1700	2.1700	2.0835	2.0000	1.8459	1.5215	1.2670	1.0646	0.7695	0.5710	0.2928	0.1582	0.0848	0.0420	0.0000
May 1, 2011	2.1700	2.1700	2.1468	2.0508	1.8738	1.5070	1.2245	1.0051	0.6956	0.4973	0.2385	0.1238	0.0641	0.0300	0.0000
May 1, 2012	2.1700	2.1700	2.1589	2.0460	1.8393	1.4180	1.1035	0.8674	0.5532	0.3684	0.1576	0.0780	0.0389	0.0166	0.0000
May 1, 2013	2.1700	2.0966	1.9527	1.8182	1.5754	1.0985	0.7658	0.5361	0.2714	0.1483	0.0514	0.0263	0.0131	0.0042	0.0000
May 1, 2014	2.1700	1.8974	1.6331	1.3771	0.8888	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000

The exact stock prices and effective dates may not be set forth in the table above, in which case if the stock price is:

·between two stock price amounts in the table or the effective date is between two effective dates in the table, the number of additional shares will be determined by a straight-line interpolation between the number of additional shares set forth for the higher and lower stock prices and the earlier and later effective dates, as applicable, based on a 365-day year;

·in excess of $250.00 per share (subject to adjustment), no additional shares will be issued upon conversion; and

·less than $60.00 per share (subject to adjustment), no additional shares will be issued upon conversion.

Notwithstanding the foregoing, in no event will the total number of shares of Cephalon’s common stock issuable upon conversion of notes exceed 16.66 per $1,000 principal amount of such notes, subject to adjustments in the same manner as the applicable conversion rate as set forth under “Description of the Notes—Adjustment to Shares Delivered upon Conversion upon a Make Whole Adjustment Event” in the preliminary prospectus supplement relating to the notes.

Common Stock Offering

Securities:	5,000,000 shares of common stock of the issuer, par value of $0.01 per share (excluding the underwriters’ option to purchase up to an additional 750,000 shares).
Common Stock Outstanding:	The total number of issued and outstanding shares of common stock as of March 31, 2009 was approximately 68,831,604 and immediately after the completion of this offering, assuming this offering was completed as of March 31, 2009, would have been approximately 73,831,604 shares, or approximately 74,581,604 shares if the underwriters exercise in full their option to purchase additional shares.
Price to Public:	$60.00 per share; $300,000,000 total.
Underwriting Discount:	$2.40 per share; $12,000,000 total.
Net Proceeds:	The issuer expects to receive approximately $288,000,000 after deducting fees and before expenses (or approximately $331,200,000 if the underwriters exercise in full their option to purchase the additional shares).

CUSIP Number: 156708109.

Other Offering Information

Trade Date:	May 21, 2009.
Settlement Date:	May 27, 2009.
Lock-Up:	60 days; applies to Cephalon’s executive officers and directors.
Sole Book-Running Manager:	Deutsche Bank Securities Inc.
Co-Managers:	J.P. Morgan Securities Inc. Barclays Capital Inc. Credit Suisse Securities (USA) LLC Morgan Stanley & Co. Incorporated ABN AMRO Incorporated Piper Jaffray & Co. Wachovia Capital Markets, LLC

Correction to “Summary – The Company”

Our four most significant products are PROVIGIL® (modafinil) Tablets [C-IV], FENTORA® (fentanyl buccal tablet) [C-II], ACTIQ® (oral transmucosal fentanyl citrate) [C-II] (including our generic version of ACTIQ) and TREANDA (bendamustine hydrochloride) which together comprised 77% of our total consolidated net sales for the year ended December 31, 2008 and 78% of our total consolidated net sales for the three months ended March 31, 2009.

The issuer has filed a registration statement, as well as prospectus supplements and the accompanying prospectus, with the SEC for the offerings to which this communication relates. Before you invest, you should read the prospectus supplements and the accompanying prospectus and other documents the issuer has filed with the SEC for more complete information about the issuer and these offerings. You may obtain these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send you the prospectus supplements and accompanying prospectus if you request them by contacting  Deutsche Bank Securities, Attn: Prospectus Department, 100 Plaza One, Jersey City, NJ 07311, Telephone number: +1-800-503-4611, Email: prospectusrequest@list.db.com

Any disclaimers or other notices that may appear below are not applicable to this communication and should be disregarded.  Such disclaimers were automatically generated as a result of this communication being sent via email or another communication system.

EXHIBIT I

FORM OF LOCK-UP AGREEMENT

May 15, 2009

Cephalon, Inc.
41 Moores Road
Frazer, PA 19355

Deutsche Bank Securities Inc.

60 Wall Street
New York, NY 10005

Ladies and Gentlemen:

The undersigned understands that Deutsche Bank Securities Inc. (“DBSI”) proposes to enter into one or more Underwriting Agreements (collectively, the “Underwriting Agreement”) with Cephalon, Inc. and any successor (by merger or otherwise) thereto (the “Company”), providing for the public offering by DBSI and potentially other underwriters for whom DBSI would act as representative, of (i) Convertible Senior Subordinated Notes (the “Securities”) of the Company and (ii) common stock, $.01 par value, of the Company (the “Common Stock”).  Such offerings are referred to below as the “Offering.”  References to the “Underwriters” below shall be deemed to be references to DBSI if there are no other underwriters with respect to the Offering.

As an inducement to the Underwriters to execute the Underwriting Agreement, pursuant to which the Offering will be made that is intended to result in an orderly market for the Securities and the Common Stock of the Company, the undersigned hereby agrees that from the date hereof and until 60 days after the offering date set forth on the final prospectuses used to sell the Securities and/or the Common Stock (the “Offering Date”) pursuant to the Underwriting Agreement, to which you are or expect to become parties, the undersigned will not, directly or indirectly, offer, sell, contract to sell (including any short sale), pledge, grant any option to purchase or otherwise dispose of any shares of Common Stock (including, without limitation, shares of Common Stock of the Company which may be deemed to be beneficially owned by the undersigned on the date hereof in accordance with the rules and regulations of the Securities and Exchange Commission, shares of Common Stock which may be issued upon exercise of a stock option or warrant and any other security convertible into or exchangeable for Common Stock), or securities convertible into or exchangeable or exercisable for any shares of Common Stock, or enter into any transaction which would have the same effect, or enter into any Hedging Transaction (as defined below), whether any of these transactions is to be settled by delivery of Common Stock or such other securities, in cash or otherwise, or publicly disclose the intention to make any such offer, sale, pledge or disposition, or to enter into any such transaction, Hedging Transaction or other arrangement, without, in each case, the prior written consent of DBSI, except pursuant to any written trading plan adopted pursuant to Rule 10b5-1 of the Securities Exchange Act of 1934, as amended.  In addition, the undersigned agrees that, without the prior

written consent of DBSI, it will not, during the period commencing on the date hereof and ending 60 days after the Offering Date, make any demand for or exercise any right with respect to, the registration of any Common Stock or any security convertible into or exercisable or exchangeable for Common Stock.

The foregoing restriction is expressly intended to preclude the undersigned from engaging in any Hedging Transaction or other transaction which is designed to or reasonably expected to lead to or result in a disposition during the 60-day lock-up period, even if the securities would be disposed of by someone other than the undersigned, except as permitted by the proviso above.  “Hedging Transaction” means any short sale (whether or not against the box) or any purchase, sale or grant of any right (including, without limitation, any put or call option) with respect to any security (other than a broad-based market basket or index) that includes, relates to or derives any significant part of its value from the Common Stock.

Any Common Stock or Securities received upon exercise of options granted to the undersigned will also be subject to this Agreement.  Any Common Stock or Securities acquired by the undersigned in the open market after the Offering Date will not be subject to this Agreement.  A transfer of Common Stock or Securities to either (i) an immediate family member or (ii) any trust for the benefit of the undersigned or any immediate family member, may be made, provided the transferee agrees to be bound in writing by the terms of this Agreement prior to such transfer.  For purposes of this Agreement, “immediate family” shall mean any relationship by blood, marriage or adoption, not more remote than first cousin.  In addition, the Company may release up to an aggregate of 200,000 shares of Common Stock subject to this Agreement and all other lock-up agreements signed by executive officers of the Company in connection with the Offering, provided that not more than 50,000 shares of Common Stock may be released with respect to the undersigned.

The undersigned agrees that the Company may, and that the undersigned will, (i) with respect to any shares of Common Stock or other Company securities for which the undersigned is the record holder, cause the transfer agent for the Company to note stop transfer instructions with respect to such securities on the transfer books and records of the Company and (ii) with respect to any shares of Common Stock or other Company securities for which the undersigned is the beneficial holder but not the record holder, cause the record holder of such securities to cause the transfer agent for the Company to note stop transfer instructions with respect to such securities on the transfer books and records of the Company.

The undersigned hereby represents and warrants that the undersigned has full power and authority to enter into this Agreement.  All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned and any obligations of the undersigned shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned.

[Signature Page Follows]

This Agreement shall be binding on the undersigned and the successors, heirs, personal representatives and assigns of the undersigned.  This Agreement shall lapse and become null and void if the Offering Date shall not have occurred on or before June 30, 2009.

Very truly yours,

Name:

Title:

EX-1.2

Exhibit 1.2

5,000,000 Shares

CEPHALON, INC.

Common Stock

($0.01 Par Value)

UNDERWRITING AGREEMENT

May 21, 2009

Deutsche Bank Securities Inc.
  As Representative of the several Underwriters
  listed in Schedule A hereto
60 Wall Street
New York, New York 10005

Ladies and Gentlemen:

Cephalon, Inc., a Delaware corporation (the “Company”), proposes, subject to the terms and conditions stated herein, to issue and sell to the several underwriters named in Schedule A hereto (the “Underwriters”) for whom you are acting as representative (the “Representative”) an aggregate of 5,000,000 shares of common stock, par value $0.01 per share (“Common Stock”) of the Company (the “Firm Securities”).  The respective amounts of the Firm Securities to be so purchased by the several Underwriters are set forth opposite their names in Schedule A hereto.  The Company also proposes to issue and sell to the Underwriters, at your election, an aggregate of up to an additional 750,000 shares of Common Stock  (the “Optional Securities”), solely to cover over-allotments.  The Firm Securities and the Optional Securities (to the extent the aforementioned option is exercised) are herein collectively called the “Offered Securities.”

As the Representative, you hereby advise the Company (a) that you are authorized to enter into this Agreement on behalf of the several Underwriters, and  (b) that the several Underwriters are willing, acting severally and not jointly, to purchase the numbers of Firm Securities set forth opposite their respective names in Schedule A, plus their pro rata portion of the Optional Securities if you elect to exercise the over-allotment option in whole or in part for the accounts of the several Underwriters.

In consideration of the mutual agreements contained herein and of the interests of the parties in the transactions contemplated hereby, the parties hereto agree as follows:

1.Representations and Warranties of the Company.  The Company represents and warrants to, and agrees with, each of the Underwriters that:

(a)An “automatic shelf registration statement” as defined in Rule 405 under the Securities Act of 1933, as amended (the “Securities Act”), on Form S-3 (File No. 333-159365) in respect of the Offered Securities, including a form of prospectus (the “Base Prospectus”), has been prepared and filed by the Company not earlier than three years prior to the date hereof.  The Company and the transactions contemplated by this Agreement satisfy all the requirements of the Securities Act for the use of Form S-3 for the offering of the Offered Securities.  Such registration statement, together with any registration statement filed by the Company pursuant to Rules 413(b) and 462(f) under the Securities Act, is herein referred to as the “Registration Statement,” which shall be deemed to include all information omitted therefrom in reliance upon Rules 430A, 430B or 430C under the Securities Act and contained in the Prospectus referred to below, has become effective under the Securities Act and no post-effective amendment to the Registration Statement has been filed as of the date of this Agreement.  “Prospectus” means the form of prospectus relating to the Offered Securities that includes the information set forth in the Final Term Sheet (as defined below) first filed with the Commission pursuant to and within the time limits described in Rule 424(b) under the Securities Act and in accordance with Section 3(a) hereof.  Any information included in the Prospectus that was omitted from the Registration Statement pursuant to Rule 430B under the Securities Act at the time it became effective but that is deemed to be part of and included in the Registration Statement pursuant to Rule 430B is referred to as “Rule 430B Information.”  Each prospectus used in connection with the offering of the Offered Securities that omitted Rule 430B Information is herein called a “Preliminary Prospectus.”  Any reference herein to the Registration Statement, to any Preliminary Prospectus or to the Prospectus or to any amendment or supplement to any of the foregoing documents shall be deemed to refer to and include any documents incorporated by reference therein, and, in the case of any reference herein to the Prospectus, also shall be deemed to include any documents incorporated by reference therein, and any supplements or amendments thereto, filed with the Commission after the date of filing of the Prospectus under Rule 424(b) under the Securities Act, and prior to the termination of the offering of the Offered Securities by the Underwriters.  On the date hereof, the Registration Statement and the Base Prospectus comply in all material respects with the requirements of the Securities Act and the rules and regulations (the “Rules and Regulations”) of the Securities and Exchange Commission (the “Commission”) thereunder.

(b)As of the Applicable Time (as defined below) and as of the First Closing Date or the Option Closing Date (each as defined below), as the case may be, neither (i) the General Use Free Writing Prospectus(es) (as defined below) issued at or prior to the Applicable Time and the Statutory Prospectus (as defined below), all considered together (collectively, the “General Disclosure Package”), nor (ii) any individual Limited Use Free Writing Prospectus (as defined below), when considered together with the General Disclosure Package, included or will include any untrue statement of a material fact or omitted or will omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;

2

provided, however, that the Company makes no representations or warranties as to information contained in or omitted from any Issuer Free Writing Prospectus, in reliance upon, and in conformity with, written information furnished to the Company by or on behalf of any Underwriter through you, specifically for use therein, it being understood and agreed that the only such information is the third, twelfth, thirteenth and seventeenth paragraphs under the caption “Underwriting” in the Preliminary Prospectus included in the General Disclosure Package and in the Prospectus (collectively, the “Underwriter Information”).  All disclosures contained in the Registration Statement, the General Disclosure Package and the Prospectus regarding “non-GAAP financial measures” (as such term is defined by the Rules and Regulations) comply with Regulation G of the Exchange Act and Item 10 of Regulation S-K under the Securities Act, as applicable.  As used in this subsection and elsewhere in this Agreement:

“Applicable Time” means 8:15 a.m. (New York time) on the date of this Agreement or such other time as agreed to by the Company and you.

“Statutory Prospectus” means the Base Prospectus, as amended and supplemented immediately prior to the Applicable Time, including any document incorporated by reference therein and any prospectus supplement deemed to be a part thereof, including the preliminary prospectus supplement dated May 20, 2009 filed by the Company relating to the Offered Securities.

“Issuer Free Writing Prospectus” means any “issuer free writing prospectus,” as defined in Rule 433 under the Securities Act, relating to the Offered Securities in the form filed or required to be filed with the Commission or, if not required to be filed, in the form retained in the Company’s records pursuant to Rule 433(g) under the Securities Act.

“General Use Free Writing Prospectus” means the Final Term Sheet and any other Issuer Free Writing Prospectus that is identified on Schedule B to this Agreement.

“Limited Use Free Writing Prospectus” means any Issuer Free Writing Prospectus that is not a General Use Free Writing Prospectus.

(c)The Commission has not issued an order preventing or suspending the effectiveness of the Registration Statement or the use of any Preliminary Prospectus, any Issuer Free Writing Prospectus, the General Disclosure Package or any future use of the Prospectus, and no proceeding for that purpose or pursuant to Section 8A of the Securities Act has been instituted or, to the Company’s knowledge, threatened by the Commission.  The documents incorporated, or to be incorporated, by reference in the Prospectus and the General Disclosure Package, at the time filed with the Commission, conformed or will conform in all material respects with the requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or the Securities Act, as applicable, and the rules

3

and regulations of the Commission thereunder.  The Registration Statement does not contain, and the Registration Statement and any amendment thereto as of the Applicable Time and on each Closing Date (as defined below) will not contain, any untrue statement of a material fact and do not omit, and as of the Applicable Time and on each Closing Date will not omit, to state a material fact required to be stated therein or necessary to make the statements therein not misleading; the Prospectus and the General Disclosure Package, and any amendments and supplements thereto, do not contain, and as of the Applicable Time and on each Closing Date will not contain, any untrue statement of a material fact and do not omit, and as of the Applicable Time and on each Closing Date will not omit, to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Company makes no representations or warranties as to information contained in or omitted from the Registration Statement, the General Disclosure Package or the Prospectus, or any such amendment or supplement, in reliance upon, and in conformity with, written information furnished to the Company by or on behalf of any Underwriter through you, specifically for use therein, it being understood and agreed that the only such information is the Underwriter Information.

(d)Each Issuer Free Writing Prospectus, as of its issue date and at all subsequent times through the completion of the public offer and sale of the Offered Securities or until any earlier date that the Company notifies the Underwriters  pursuant to Section 4(c), did not, does not and will not include any information that conflicted, conflicts or will conflict with the information contained in the Registration Statement, the General Disclosure Package or the Prospectus, including any document incorporated by reference and any prospectus supplement deemed to be a part thereof that has not been superseded or modified; provided, however, that the Company makes no representations or warranties as to information contained in or omitted from any Issuer Free Writing Prospectus, or any amendment or supplement thereto, in reliance upon, and in conformity with, written information furnished to the Company by or on behalf of any Underwriter through you, specifically for use therein, it being understood and agreed that the only such information is the Underwriter Information.

(e)The Company has not, directly or indirectly, distributed and will not distribute any offering material in connection with the offering and sale of the Offered Securities other than any Preliminary Prospectus, the Prospectus and other materials, if any, permitted under the Securities Act and consistent with Section 3(b) of this Agreement.  The Company will file with the Commission all Issuer Free Writing Prospectuses in the time and manner required under Rules 163(b)(2) and 433(d) under the Securities Act.

(f)(i)  At the time of filing the Registration Statement, (ii) at the time of the most recent amendment thereto for the purposes of complying with Section 10(a)(3)

4

under the Securities Act (whether such amendment was by post-effective amendment, incorporated report filed pursuant to Section 13 or 15(d) of the Exchange Act or form of prospectus), (iii) at the time the Company or any person acting on its behalf (within the meaning, for this clause (iii) only, of Rule 163(c) under the Securities Act) made any offer relating to the Offered Securities in reliance on the exemption of Rule 163 under the Securities Act and (iv) at the date hereof, the Company is a “well-known seasoned issuer” as defined in Rule 405 under the Securities Act.  The Company has not received from the Commission any notice pursuant to Rule 401(g)(2) under the Securities Act objecting to the use of the automatic shelf registration form.

(g)(i)  At the earliest time after the filing the Registration Statement that the Company or another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) under the Securities Act) of the Offered Securities, (ii) as of each relevant eligibility determination date for purposes of Rules 164 and 433 under the Securities Act and (iii) as of the date hereof (with such date being used as the determination date for purposes of this clause (iii)), the Company was not and is not an “ineligible issuer” (as defined in Rule 405 under the Securities Act, without taking into account any determination by the Commission pursuant to Rule 405 under the Securities Act that it is not necessary that the Company be considered an ineligible issuer), including, without limitation, for purposes of Rules 164 and 433 under the Securities Act with respect to the offering of the Offered Securities as contemplated by the Registration Statement.

(h)The Company has been duly incorporated and is an existing corporation in good standing under the laws of the State of Delaware, with corporate power and authority to own its properties and conduct its business as described in the Registration Statement, the General Disclosure Package and the Prospectus; and the Company is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except where the failure to be so qualified would not, individually or in the aggregate, have a material adverse effect on the condition (financial or other), business, properties, results of operations or prospects of the Company and its subsidiaries taken as a whole (a “Material Adverse Effect”).

(i)Each “significant subsidiary” (as defined in Rule 1-02(w) of Regulation S-X under the Exchange Act) of the Company has been duly organized and is an existing corporation or other entity in good standing under the laws of the jurisdiction of its incorporation, with power and authority (corporate and other) to own its properties and conduct its business as described in the Registration Statement, the General Disclosure Package and the Prospectus; each such subsidiary of the Company is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except where the failure to be so qualified would not, individually or in the aggregate,

5

result in a Material Adverse Effect; all of the issued and outstanding capital stock of each such subsidiary of the Company has been duly authorized and validly issued and is fully paid and nonassessable; the capital stock of each such subsidiary owned by the Company, directly or through subsidiaries, is owned free from liens, encumbrances and defects; and no options, warrants or other rights to purchase, agreements or other obligations to issue other rights to convert any obligations into shares of capital stock or ownership interests in each such subsidiary are outstanding.

(j)The Company has an authorized capitalization as set forth in the section of the Prospectus entitled “Capitalization.”  The outstanding shares of capital stock of the Company, including all Offered Securities sold by the Company pursuant to this Agreement, have been duly authorized and validly issued and are fully paid and nonassessable; the Offered Securities conform in all material respects to the description thereof contained in the Registration Statement, the General Disclosure Package and the Prospectus; and the stockholders of the Company have no preemptive rights with respect to the Offered Securities.

(k)Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, there are no contracts, agreements or understandings between the Company and any person that would give rise to a valid claim against the Company or any Underwriter for a brokerage commission, finder’s fee or other like payment with respect to the issuance and sale of the Offered Securities.

(l)No consent, approval, authorization, or order of, or filing with, any governmental agency or body or any court is required for the consummation of the transactions contemplated by this Agreement, except such consents, approvals, authorizations, orders or filings as have already been obtained or may be required under the Securities Act, the Exchange Act or the Blue Sky laws of any jurisdiction in connection with the purchase and distribution of the Offered Securities by the Underwriters in the manner contemplated herein and in the Registration Statement, the General Disclosure Package, and the Prospectus.

(m)The execution, delivery and performance by the Company of this Agreement and the issuance and sale of the Offered Securities will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, any statute, rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over the Company or any subsidiary of the Company or any of their properties, or any agreement or instrument to which the Company or any such subsidiary is a party or by which the Company or any such subsidiary is bound or to which any of the properties of the Company or any such subsidiary is subject, or the certificate of incorporation or by-laws of the Company or the organizational documents of any such subsidiary, and the Company has full corporate

6

power and authority to authorize, issue and sell the Offered Securities as contemplated by this Agreement.

(n)This Agreement has been duly authorized, executed and delivered by the Company.

(o)Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, the Company and its subsidiaries have good and marketable title to all real properties and all other properties and assets owned by them, in each case free from liens, encumbrances and defects that would materially affect the value thereof or materially interfere with the use made or to be made thereof by them; and except as disclosed in the Registration Statement, the General Disclosure Package, and the Prospectus, the Company and its subsidiaries hold any leased real or personal property under valid and enforceable leases with no exceptions that would materially interfere with the use made or to be made thereof by them.

(p)The Company and its subsidiaries possess adequate certificates, authorities or permits issued by appropriate governmental agencies or bodies necessary to conduct the business now operated by them and have not received any notice of proceedings relating to the revocation or modification of any such certificate, authority or permit that, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate result in a Material Adverse Effect.

(q)No labor dispute with the employees of the Company or any subsidiary exists or, to the knowledge of the Company, is imminent that might have a Material Adverse Effect.

(r)Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, neither the Company nor any of its subsidiaries is in violation of any statute, any rule, regulation, decision or order of any governmental agency or body or any court, domestic or foreign, relating to the use, disposal or release of hazardous or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, “Environmental Laws”), owns or operates any real property contaminated with any substance that is subject to any Environmental Laws, is liable for any off-site disposal or contamination pursuant to any Environmental Laws, or is subject to any claim relating to any Environmental Laws, which violation, contamination, liability or claim would individually or in the aggregate have a Material Adverse Effect; and the Company is not aware of any pending investigation which might lead to such a claim.

(s)Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, there are no pending actions, suits, claims, arbitrations, investigations or proceedings against or affecting the Company, any of its subsidiaries or

7

any of their respective properties that, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a Material Adverse Effect, or would materially and adversely affect the ability of the Company to perform its obligations under this Agreement; and no such actions, suits, claims, arbitrations, investigations or proceedings are threatened or, to the Company’s knowledge, contemplated.

(t)The financial statements included in the Registration Statement, the General Disclosure Package and the Prospectus present fairly the financial position of the Company and its consolidated subsidiaries as of the dates shown and their results of operations and cash flows for the periods shown, and such financial statements have been prepared in conformity with the generally accepted accounting principles in the United States applied on a consistent basis; and the summary and selected consolidated financial and statistical data included or incorporated by reference in the Registration Statement, the General Disclosure Package and the Prospectus presents fairly the information shown therein and such data has been compiled on a basis consistent with the financial statements presented therein and the books and records of the Company.

(u)PricewaterhouseCoopers LLP, who have certified certain of the financial statements filed with the Commission as part of, or incorporated by reference in, the Registration Statement, the General Disclosure Package and the Prospectus, is an independent registered public accounting firm with respect to the Company and its subsidiaries within the meaning of the Securities Act and the applicable Rules and Regulations and the Public Company Accounting Oversight Board (United States).

(v)Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, since the date of the latest audited financial statements included in the Registration Statement, the General Disclosure Package, and the Prospectus there has been no material adverse change, nor any development or event that would be reasonably likely to result in a material adverse change, in the condition (financial or other), business, properties or results of operations of the Company and its subsidiaries taken as a whole; and, except as disclosed in or contemplated by the Registration Statement, the General Disclosure Package and the Prospectus, there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock.

(w)The Company is not an open-end investment company, unit investment trust or face-amount certificate company that is or is required to be registered under Section 8 of the Investment Company Act of 1940 (the “Investment Company Act”); and the Company is not and, after giving effect to the offering and sale of the Offered Securities and the application of the proceeds thereof as described in the Registration

8

Statement, the General Disclosure Package and the Prospectus, will not be an “investment company” as defined in the Investment Company Act.

(x)The Company is not a party to and will not enter into any contractual arrangement with respect to the distribution of the Offered Securities except for this Agreement.  Neither the Company, nor to the Company’s knowledge, any of its affiliates, has taken, directly or indirectly, any action designed to cause or result in, or which has constituted or which might reasonably be expected to constitute, the stabilization or manipulation of the price of the shares of Common Stock of the Company to facilitate the sale or resale of the Offered Securities.

(y)The Company is subject to the reporting requirements of either Section 13 or Section 15(d) of the Exchange Act, and files reports with the Commission on the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system in accordance with the Exchange Act.

(z)The following terms shall have the following meanings:

“Intellectual Property” means all intellectual property rights, including without limitation, (i) patents and patent applications, (ii) trademarks, service marks, domain names, trade dress, logos, trade names, corporate names, and other identifiers of source or goodwill, including registrations and applications for registration thereof, (iii) mask works and copyrights, including copyrights in computer software, and registrations and applications for registration thereof, and (iv) confidential and proprietary information, including trade secrets, know-how and invention rights.

“Owned Intellectual Property” means all Intellectual Property owned by the Company or any of its subsidiaries and material to their business.

“Intellectual Property Licenses” means all licenses, sublicenses or other agreements concerning Intellectual Property to which the Company or any of its subsidiaries are bound or otherwise covered and that are material to their business.

“Licensed Intellectual Property” means all Intellectual Property licensed or sublicensed to the Company or any of its subsidiaries pursuant to the Intellectual Property Licenses.

Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, the Company or its subsidiaries are the exclusive owners of the entire right, title and interest in and to, or have a valid license to use, to the extent so used, all Intellectual Property that is used in the business of the Company and its subsidiaries as currently conducted.  Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, the Company or its subsidiaries are entitled to

9

use all Owned Intellectual Property and Licensed Intellectual Property in the continued operation of the their business without limitation, subject only to the terms of the Intellectual Property Licenses.  Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, the Owned Intellectual Property and, to the knowledge of the Company, the Licensed Intellectual Property have not been adjudged invalid or unenforceable in whole or in part, and are valid and enforceable. The expiration of any patents, patent rights, trademarks, service marks, trade names or copyrights owned or used by the Company or its subsidiaries would not result in a Material Adverse Effect that is not otherwise disclosed in the Registration Statement, the General Disclosure Package and the Prospectus.

To the knowledge of the Company, the conduct of the Company’s or its subsidiaries’ business as currently conducted or proposed to be conducted does not infringe or misappropriate the Intellectual Property of any third party, except as would not result in a Material Adverse Effect.  Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, no actions or proceedings alleging any such infringement or misappropriation are pending, and no claim has been threatened or asserted against the Company or any of its subsidiaries alleging any such infringement or misappropriation, except as would not result in a Material Adverse Effect. To the knowledge of the Company, no person is engaging in any activity that infringes the Owned Intellectual Property that would result in a Material Adverse Effect, except as otherwise disclosed in the Registration Statement, the General Disclosure Package, and the Prospectus.

No Owned Intellectual Property is subject to any outstanding decree, order, injunction, judgment or ruling restricting the Owned Intellectual Property or that would impair the validity or enforceability of the Owned Intellectual Property, except for any such decree, order, injunction or ruling that would not result in a Material Adverse Effect.

(aa)Each of the Company and its subsidiaries are insured by insurers of recognized financial responsibility with policies in such amounts and with such deductibles and covering such risks as the Company and its subsidiaries, as the case may be, deem adequate and customary for their respective businesses, including, but not limited to, policies covering real and personal property owned or leased by the Company and its subsidiaries against theft, damage, destruction and acts of vandalism, general liability and directors and officers liability. The Company has no reason to believe that it or any subsidiary will not be able (i) to renew its existing insurance coverage as and when such policies expire or (ii) to obtain comparable coverage from similar institutions as may be necessary or appropriate to conduct its business as now conducted and at a cost that would not result in a Material Adverse Effect.

10

(bb)As of and since December 31, 2008, there has been (i) no material weakness in the Company’s internal control over financial reporting (whether or not remediated) and (ii) no change in the Company’s internal control over financial reporting that has materially affected, or is reasonable likely to materially affect, the Company’s internal control over financial reporting.

(cc)There is and has been no failure on the part of the Company or any of the Company’s directors or officers, in their capacities as such, to comply in all material respects with any provision of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith, including Section 402 related to loans and Sections 302 and 906 related to certifications.

(dd)The Company is not, and with the giving of notice or lapse of time or both will not be, (i) in violation of its certificate or articles of incorporation, by-laws or other organizational documents or (ii) in violation of any applicable law or regulation or in violation of or in default under any agreement, lease, contract, indenture or other instrument or obligation to which it is a party or by which it, or any of its properties, is bound, and which violation or default, solely with respect to clause (ii), would have a Material Adverse Effect.

(ee)Each “significant subsidiary” (as defined in Rule 1-02(w) of Regulation S-X under Exchange Act) of the Company is not, and with the giving of notice or lapse of time or both will not be, (i) in violation of its certificate or articles of incorporation, by-laws, certificate of formation, limited liability agreement, partnership agreement or other organizational documents or (ii) in violation of any applicable law or regulation or in violation of or in default under any agreement, lease, contract, indenture or other instrument or obligation to which it is a party or by which it, or any of its properties, is bound, and which violation or default, in the case of either clause (i) or clause (ii), would have a Material Adverse Effect.

(ff)The Company has established and maintains “disclosure controls and procedures” (as defined in Rules 13a-14(c) and 15d-14(c) under the Exchange Act); the Company’s “disclosure controls and procedures” are reasonably designed to ensure that all information (both financial and non-financial) required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and regulations of the Exchange Act, and that all such information is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure and to make the certifications of the Chief Executive Officer and Chief Financial Officer of the Company required under the Exchange Act with respect to such reports.

2.Purchase, Sale and Delivery of Offered Securities.  On the basis of the representations, warranties and agreements herein contained, but subject to the terms and

11

conditions herein set forth, the Company agrees to sell to the Underwriters, and the Underwriters agree, severally and not jointly, to purchase from the Company at a purchase price per share of $57.60, the respective numbers of Firm Securities set forth opposite the names of the Underwriters in Schedule A hereto.

The Company will deliver the Firm Securities to you, for the accounts of the Underwriters, against payment of the purchase price therefor, through the facilities of The Depository Trust Company (“DTC”).  Payment for the Firm Securities shall be made by the Underwriters in Federal (same day) funds by wire transfer to an account at a bank acceptable to you, as instructed by the Company, drawn to the order of Cephalon, Inc. at the office of Cleary Gottlieb Steen & Hamilton LLP, One Liberty Plaza, New York, New York 10006 at 9:00 a.m. (New York time), on May 27, 2009, or at such other time not later than five full business days thereafter as you and the Company determine, such time being herein referred to as the “First Closing Date.” (As used herein, “business day” means a day on which The NASDAQ Global Select Market is open for trading and on which banks in New York are open for business and not permitted by law or executive order to be closed.)  The Firm Global Securities will be made available for checking at the above office of Cleary Gottlieb Steen & Hamilton LLP prior to the First Closing Date.

In addition, upon written notice from you given to the Company from time to time not more than 30 days subsequent to the date of this Agreement, the Underwriters may purchase (for the sole purpose of covering over-allotments made in connection with the sale of the Firm Securities) all or less than all of the Optional Securities at the purchase price per share to be paid for the Firm Securities; provided, that the purchase price per Optional Security shall be reduced by an amount per share equal to any dividends or distributions declared by the Company and payable on the Firm Securities but not payable on the Optional Securities.  The Company agrees to sell to the Underwriters the number of Optional Securities specified in such notice and the Underwriters agree, severally and not jointly, to purchase such Optional Securities.  Such Optional Securities shall be purchased from the Company for the account of each of the Underwriters in the same proportion as the principal amount of Firm Securities set forth opposite such Underwriter’s name in Schedule A hereto bears to the total principal amount of Firm Securities (subject to adjustment by you to eliminate fractions).  No Optional Securities shall be sold or delivered unless the Firm Securities previously have been, or simultaneously are, sold and delivered.  The right to purchase the Optional Securities or any portion thereof may be exercised from time to time and, to the extent not previously exercised, may be surrendered and terminated at any time upon notice by you to the Company.

Each time for the delivery of and payment for the Optional Securities, being herein referred to as the “Optional Closing Date,” which may be the First Closing Date (the First Closing Date and each Optional Closing Date, if any, being sometimes referred to as a “Closing Date”), shall be determined by you on behalf of the several Underwriters but shall not be later than ten full business days after written notice of election to purchase Optional Securities is

12

given.  On each Optional Closing Date, the Company will deliver the Optional Securities being purchased on such Optional Closing Date to you, for the accounts of the Underwriters, against payment of the purchase price therefor, through the facilities of DTC.  Payment for such Optional Securities shall be made by you on behalf of the several Underwriters in Federal (same day) funds by wire transfer to an account at a bank acceptable to you, as instructed by the Company, drawn to the order of Cephalon, Inc. at the above office of Cleary Gottlieb Steen & Hamilton LLP.

3.Certain Agreements of the Company.  The Company agrees with the several Underwriters that:

(a)The Company will (A) prepare and timely file with the Commission under Rule 424(b) (without reliance on Rule 424(b)(8)) under the Securities Act a Prospectus in a form approved by you containing information previously omitted at the time of effectiveness of the Registration Statement in reliance on Rules 430A, 430B or 430C under the Securities Act, and (B) file on a timely basis all reports and any definitive proxy or information statements required to be filed by the Company with the Commission subsequent to the date of the Prospectus and prior to the termination of the offering of the Offered Securities by the Underwriters.

(b)The Company will:  (i) not make any offer relating to the Offered Securities that would constitute an Issuer Free Writing Prospectus or that would otherwise constitute a “free writing prospectus” (as defined in Rule 405 under the Securities Act) required to be filed by the Company with the Commission under Rule 433 under the Securities Act unless you approve its use in writing prior to first use (each, a “Permitted Free Writing Prospectus”); provided that the prior written consent of the Underwriters hereto shall be deemed to have been given in respect of the Issuer Free Writing Prospectus(es) included in Schedule B hereto; (ii) treat each Permitted Free Writing Prospectus as an Issuer Free Writing Prospectus; (iii) comply with the requirements of Rules 164 and 433 under the Securities Act applicable to any Issuer Free Writing Prospectus, including the requirements relating to timely filing with the Commission, legending and record keeping; and (iv) not take any action that would result in an Underwriter or the Company being required to file with the Commission pursuant to Rule 433(d) under the Securities Act a free writing prospectus prepared by or on behalf of such Underwriter that such Underwriter otherwise would not have been required to file thereunder.  The Company will satisfy the conditions in Rule 433 under the Securities Act to avoid a requirement to file with the Commission any electronic road show.

(c)The Company will prepare a final term sheet (the “Final Term Sheet”) reflecting the final terms of the Offered Securities, in the form set forth in Annex A hereto, and shall file such Final Term Sheet as an Issuer Free Writing Prospectus pursuant to Rule 433 under the Securities Act prior to the close of business two business days after the date

13

hereof; provided that the Company shall provide the Underwriters with copies of any such Final Term Sheet a reasonable amount of time prior to such proposed filing and will not use or file any such document to which you or your counsel shall reasonably object.

(d)So long as a prospectus relating to the Offered Securities is required to be delivered under the Securities Act (including in circumstances where such requirement may be satisfied pursuant to Rule 172 under the Securities Act) in connection with sales of the Offered Securities by the Underwriters or any dealer, the Company will advise the Underwriters promptly of:  (i) any proposal to amend or supplement the Registration Statement, any Preliminary Prospectus, the General Disclosure Package or the Prospectus, including any document incorporated by reference therein, and will not effect or distribute such amendment or supplement without the Underwriters’ consent, which shall not be unreasonably withheld or delayed; (ii) the effectiveness of any such amendment or supplement; (iii) the receipt of any comments from the Commission relating to the Registration Statement, any Preliminary Prospectus, the General Disclosure Package, the Prospectus, or any such amendment or supplement; (iv) any request of the Commission for amendment of the Registration Statement or the filing of a new registration statement or any amendment or supplement to any Preliminary Prospectus, the General Disclosure Package or the Prospectus or any document incorporated by reference therein or otherwise deemed to be a part thereof or for any additional information; (v) the institution by the Commission of any stop order proceedings in respect of the Registration Statement, or any order preventing the use of any Preliminary Prospectus, the General Disclosure Package or the Prospectus, and will use its reasonable best efforts to prevent the issuance of any such orders and to obtain as soon as possible its lifting, if issued; and (vi) the receipt of any notice with respect to any suspension of qualification of the Offered Securities for offer or sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose and will use its reasonable best efforts to prevent any such suspension of qualification and to obtain as soon as possible its lifting, if issued.  If, at any time when a prospectus (or, in lieu thereof, the notice referred to under Rule 173(a) under the Securities Act) relating to the Offered Securities is required to be delivered under the Securities Act in connection with sales of the Offered Securities by the Underwriters or any dealer, any event occurs as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary at any time to amend the Prospectus to comply with the Securities Act, the Exchange Act or the Rules and Regulations, the Company promptly will notify the several Underwriters of such event and promptly will prepare and file with the Commission, at its own expense, an amendment or supplement (which may be an amendment or supplement to the Prospectus or an appropriate filing under the Exchange Act which shall be incorporated into the Prospectus) which will correct such statement or omission or effect such compliance.  Neither the Underwriters’ consent to, nor your delivery to offerees or

14

investors of, any such amendment or supplement shall constitute a waiver of any of the conditions set forth in Section 4.

(e)If the General Disclosure Package is being used to solicit offers to buy the Offered Securities at a time when the Prospectus is not yet available to prospective purchasers and any event shall occur as a result of which it becomes necessary to amend or supplement the General Disclosure Package in order to make the statements therein, in the light of the circumstances, not misleading, or to make the statements therein not conflict with the information contained in the Registration Statement then on file, or if it is necessary at any time to amend or supplement the General Disclosure Package to comply with the Securities Act, the Exchange Act or the Rules and Regulations, the Company promptly will either (i) prepare, file with the Commission (if required) and furnish to the Underwriters and any dealers an appropriate amendment or supplement to the General Disclosure Package or (ii) prepare and file with the Commission an appropriate filing under the Exchange Act which shall be incorporated by reference in the General Disclosure Package which will correct such statement or omission or effect such compliance.

(f)The Company agrees to pay the required filing fees to the Commission relating to the Offered Securities within the time required by Rule 456(b)(1) under the Securities Act without regard to the proviso therein and otherwise in accordance with Rules 456(b) and 457(r) under the Securities Act.

(g)The Company will furnish to, or upon order of, the Underwriters and their respective counsel, copies of any Preliminary Prospectus and the Prospectus (including all documents incorporated by reference therein) and all amendments and supplements to any Preliminary Prospectus or the Prospectus that are filed with the Commission during the period in which a prospectus relating to the Offered Securities is required to be delivered under the Securities Act (including all documents filed with the Commission during such period that are deemed to be incorporated by reference therein), in each case as soon as reasonably practicable and in such quantities as the Underwriters may from time to time reasonably request and, at the Underwriters’ request, will also furnish copies of any Preliminary Prospectus, the General Disclosure Package and the Prospectus to each exchange or market on which sales of Offered Securities may be made.  The Company will pay the expenses of printing and distributing to the Underwriters all such documents.

(h)The Company will arrange for the qualification of the Offered Securities for sale and the determination of their eligibility for investment under the laws of such states in the United States as the Underwriters designate and will continue such qualifications in effect so long as required for the distribution of the Offered Securities by the Underwriters as contemplated in the Prospectus; provided that the Company will not

15

be required to qualify as a foreign corporation or to file a general consent to service of process in any such state.

(i)During the period of two years after the later of the First Closing Date and the last Optional Closing Date, the Company will, upon request, furnish to the Underwriters such information concerning the business and financial condition of the Company as the Underwriters may reasonably request.

(j)After giving effect to the offering and sale of the Offered Securities and the application of the proceeds thereof as described in the Prospectus, the Company will not be required to be registered as an “investment company” as defined in the Investment Company Act.

(k)The Company will pay all expenses incidental to the performance of its obligations under this Agreement:  (i) the fees and expenses of the Company’s transfer agent and its professional advisers, including its counsel and accountants; (ii) all expenses in connection with the execution, issue, authentication, packaging and initial delivery of the Offered Securities, the preparation and printing of this Agreement, the Offered Securities, the Registration Statement, any Preliminary Prospectus, the General Disclosure Package, the Prospectus, and amendments and supplements thereto, and any other document relating to the issuance, offer, sale and delivery of the Offered Securities; (iii) any listing expenses and any other filing fees payable to the Financial Industry Regulatory Authority, The NASDAQ Stock Market, Inc. or the Commission; (iv) the cost of any advertising approved by the Company in connection with the issue of the Offered Securities, (v) the cost of any electronic road show in connection with the offering and sale of the Offered Securities; (vi) any out-of-pocket expenses (including reasonable fees and disbursements of counsel) incurred in connection with qualification of the Offered Securities for sale under the laws of such jurisdictions as the Underwriters designate and the printing of memoranda relating thereto; and (vii) for expenses incurred in distributing any Preliminary Prospectus and the Prospectus (including any amendments and supplements thereto) to the Underwriters.

(l)In connection with the offering, until you shall have notified the Company and the other Underwriters of the completion of the distribution of the Offered Securities as contemplated in the Prospectus, neither the Company nor any of its affiliates has or will, either alone or with one or more other persons, bid for or purchase for any account in which it or any of its affiliates has a beneficial interest in any Offered Securities, or attempt to induce any person to purchase any Offered Securities; and neither it nor any of its affiliates will make bids or purchases for the purpose of creating actual, or apparent, active trading in, or of raising the price of, the Offered Securities.  The Company acknowledges that the Underwriters may engage in passive market making transactions in

16

the Common Stock on The NASDAQ Global Select Market in accordance with Regulation M under the Exchange Act.

(m)As soon as practicable, but not later than 16 months, after the date hereof, the Company will make generally available to its security holders an earnings statement covering a period of at least 12 months beginning after the later of (i) the effective date of the Registration Statement relating to the Offered Securities, (ii) the effective date of the most recent post-effective amendment to the Registration Statement to become effective prior to the date hereof, and (iii) the date of the Company’s most recent Annual Report on Form 10-K filed with the Commission prior to date hereof, which will satisfy the provisions of Section 11(a) of the Securities Act.

(n)For a period of 60 days after the date of this Agreement, the Company will not offer, sell, contract to sell, pledge, or otherwise dispose of, directly or indirectly, or file with the Commission a registration statement under the Securities Act relating to, any debt securities issued or guaranteed by the Company and having a maturity of more than one year from the date of issue, or any shares of Common Stock of the Company or securities convertible into or exchangeable or exercisable for shares of Common Stock of the Company, including the Offered Securities, or warrants or other rights to purchase shares of Common Stock of the Company, or publicly disclose the intention to make any such offer, sale, pledge, disposition or filing, without your prior written consent, except for (i) issuances of shares of Common Stock of the Company pursuant to the conversion or exchange of convertible or exchangeable securities or the exercise of warrants or options, in each case outstanding on the date hereof or issued by the Company in connection with an offering of convertible notes registered under the Securities Act and made concurrently with the offering of the Offered Securities, (ii) grants of employee stock options pursuant to the terms of a plan in effect on the date hereof, (iii) issuances of shares of Common Stock of the Company pursuant to the Company’s existing stock option plan, stock purchase plan or profit sharing 401(k) plan, (iv) the filing of any registration statement on Form S-8 to register shares of Common Stock reserved for issuance under any stock option plan, stock purchase plan or profit sharing 401(k) plan of the Company, (v) the issuance of up to $500,000,000 of convertible senior subordinated notes issued by the Company in an offering registered under the Securities Act and made concurrently with the offering of the Offered Securities, and the issuance of the shares of Common Stock underlying such notes, (vi) the issuance of shares of Common Stock by the Company pursuant to call spread agreements to be entered into in connection with the offering of such notes; and (vii) the issuance of up to 2,500,000 shares of Common Stock by the Company.

4.Conditions of the Obligations of the Underwriters.  The several obligations of the Underwriters to purchase and pay for the Firm Securities on the First Closing Date and for the Optional Securities on each Optional Closing Date will be subject to, as of the Applicable Time

17

and such Closing Date, the accuracy of the representations and warranties of the Company contained herein, to the accuracy of the statements of officers of the Company made in certificates or documents issued pursuant to the provisions hereof, to the performance by the Company of its obligations hereunder and to the following additional conditions precedent:

(a)The Underwriters shall have received a letter dated the date hereof and the applicable Closing Date, respectively, in form and substance satisfactory to you, of PricewaterhouseCoopers LLP confirming that they are independent public accountants within the meaning of the Securities Act and the applicable Rules and Regulations and stating that in their opinion the financial statements and schedules examined by them and included in the Registration Statement, any Preliminary Prospectus, the General Disclosure Package and the Prospectus comply in form in all material respects with the applicable accounting requirements of the Securities Act and the related Rules and Regulations; and containing such other statements and information as is ordinarily included in accountants’ “comfort letters” with respect to the financial statements and certain financial and statistical information contained in the Registration Statement, any Preliminary Prospectus, the General Disclosure Package and the Prospectus.

(b)The Registration Statement and all post-effective amendments thereto shall have become effective under the Securities Act and the Rules and Regulations and any Preliminary Prospectus, the Prospectus and each Issuer Free Writing Prospectus required shall have been filed with the Commission as required by Rules 424(b) (without reliance on Rule 424(b)(8)), 430A, 430B, 430C or 433 under the Securities Act, as applicable, within the time period prescribed by, and in compliance with, the Rules and Regulations, and any request of the Commission for additional information (to be included in the Registration Statement or otherwise) shall have been disclosed to you and complied with to its reasonable satisfaction. No stop order suspending the effectiveness of the Registration Statement, as amended from time to time, or of any part thereof shall have been issued and no proceedings for that purpose or pursuant to Section 8A under the Securities Act shall have been taken or, to the knowledge of the Company, shall be contemplated or threatened by the Commission.

(c)Subsequent to the execution and delivery of this Agreement, there shall not have occurred (i) any change, or any development or event involving a prospective change, in the condition (financial or other), business, properties or results of operations of the Company and its subsidiaries taken as one enterprise which, in the judgment of a majority in interest of the Underwriters (including you) is material and adverse and makes it impractical or inadvisable to proceed with completion of the offering or the sale of and payment for the Offered Securities; (ii) any change in U.S. or international financial, political or economic conditions or currency exchange rates or exchange controls as would, in the judgment of a majority in interest of the Underwriters (including you), be likely to prejudice materially the success of the proposed issue, sale or

18

distribution of the Offered Securities, whether in the primary market or in respect of dealings in the secondary market; (iii) any material suspension or material limitation of trading in securities generally on the New York Stock Exchange or The NASDAQ Global Select Market or any setting of minimum prices for trading on such exchange; (iv) any banking moratorium declared by U.S. Federal or New York authorities; (v) any major disruption of settlements of securities or clearance services in the United States; (vi) any attack on, or outbreak or escalation of hostilities or act of terrorism involving, the United States, any declaration of war by Congress or any other national or international calamity or emergency if, in the judgment of a majority in interest of the Underwriters (including you), the effect of any such attack, outbreak, escalation, act, declaration, calamity or emergency makes it impractical or inadvisable to proceed with completion of the offering or sale of and payment for the Offered Securities; or (vii) the suspension of trading of any securities of the Company, including the Common Stock, on The NASDAQ Global Select Market, or by the Commission or any other governmental authority.

(d)The Underwriters shall have received an opinion, dated such Closing Date, of Sidley Austin LLP, counsel for the Company, that:

(i)The Company (A) is validly existing as a corporation and is in good standing under the laws of the State of Delaware and (B) has corporate power and authority to own its properties and conduct its business as described in the General Disclosure Package and the Prospectus;

(ii)Each of Anesta Corp., Cephalon Technology, Inc. and CIMA LABS INC. (A) is validly existing as a corporation and is in good standing under the laws of the State of Delaware and (B) has corporate power and authority to own its properties and conduct its business as described in the General Disclosure Package and the Prospectus;

(iii)The Offered Securities delivered on such Closing Date have been duly authorized for issuance and sale to the Underwriters pursuant to this Agreement and, when issued and delivered by the Company pursuant to this Agreement against payment of the consideration set forth in this Agreement, will be validly issued and fully paid and non-assessable.;

(iv)This Agreement has been duly authorized, executed and delivered by the Company;

(v)The stockholders of the Company have no preemptive rights with respect to the Offered Securities under the General Corporation Law of the State of Delaware, as currently in effect, or the Company’s certificate of incorporation or by-laws, each as currently in effect;

19

(vi)The Company is not and, after giving effect to the offering and sale of the Offered Securities and the application of the proceeds thereof as described in the General Disclosure Package and the Prospectus, will not be required to be registered as an “investment company” as defined in the Investment Company Act;

(vii)No consent, approval, authorization or order of, or filing with, any United States or state governmental agency or body or any court having jurisdiction over the Company or any of its subsidiaries or over any of its or their respective properties or operations is required for the consummation of the transactions contemplated by this Agreement in connection with the issuance or sale of the Offered Securities by the Company, except such consents, approvals, authorizations, orders or filings as have already been obtained or may be required under the Securities Act or the Exchange Act in connection with the purchase and distribution of the Offered Securities by the Underwriters;

(viii)The execution, delivery and performance by the Company of its obligations under this Agreement and the issuance and sale of the Offered Securities will not (a) violate any provision of any Applicable Law or any order, known to such counsel, of any governmental agency or body or any court having jurisdiction over the Company or any subsidiary of the Company or any of their properties, (b) violate the certificate of incorporation or by-laws of the Company or (c) result in a breach or violation of the terms of provisions of, or constitute a default under, any of (i) the Indenture, dated as of June 11, 2003, between the Company and U.S. Bank, National Association, as trustee; (ii) the Indenture, dated as of December 20, 2004, between the Company and U.S. Bank, National Association, as trustee; (iii) the Indenture, dated as of June 7, 2005, between the Company and U.S. Bank, National Association, as trustee; and (iv) the Credit Agreement, dated as of August 15, 2008, among the Company, the lenders named therein, JPMorgan Chase Bank, N.A., as administrative agent, Deutsche Bank Securities Inc. and Bank of America N.A., as co-syndication agents, Wachovia Bank, N.A. and Barclays Bank plc, as co-documentation agents, and J.P. Morgan Securities Inc., Deutsche Bank Securities Inc. and Banc of America Securities LLC, as joint bookrunners and joint lead arrangers, as amended by the First Amendment dated December 3, 2008 and by the Second Amendment dated February 27, 2009 (collectively the agreements identified in clauses (i)-(iv), the “Financing Agreements”); as used in this subsection, “Applicable Laws” means the General Corporation Law of the State of Delaware and those state laws of the State of New York and federal laws of the United States of America which, in the experience of such counsel and without independent investigation, are normally applicable to transactions of the type contemplated by this Agreement; provided, that the term “Applicable Laws” shall not include federal

20

or state securities or blue sky laws, including, without limitation, the Securities Act, the Exchange Act, the Trust Indenture Act or the Investment Company Act, antifraud laws, or in each case any rules or regulations thereunder, or any law, rule or regulation relating to healthcare, food and drug or similar matters;

(ix)The authorized capital stock of the Company is as set forth in the General Disclosure Package and the Prospectus under the caption “Capitalization”;

(x)The statements in the General Disclosure Package and the Prospectus under the caption “Description of Common Stock,” insofar as such statements constitute a summary of law, legal matters or documents referred to therein, constitute accurate summaries thereof in all material respects;

(xi)The statements in the General Disclosure Package and the Prospectus under the caption “United States Federal Income Tax Considerations,” insofar as such statements constitute summaries of matters of United States federal income tax law and regulations or legal conclusions with respect thereto, constitute accurate summaries of the matters described therein in all material respects;

(xii)The Registration Statement became effective under the Securities Act upon filing with the Commission as of the date specified in such opinion, the Prospectus was filed with the Commission pursuant to the subparagraph of Rule 424(b) specified in such opinion on the date specified therein, and, to the knowledge of such counsel based solely upon a statement by the staff of the Commission, (A) no stop order suspending the effectiveness of the Registration Statement or any part thereof has been issued and (B) no proceedings for that purpose have been instituted or are pending or threatened by the Commission; and

(xiii)The Registration Statement, as of its effective date, and the Prospectus, as of its date, complied as to form in all material respects with the requirements of the Securities Act and the Rules and Regulations applicable to registration statements on Form S-3 or related prospectuses, as the case may be, except that such counsel need express no opinion with respect to the financial statements and related schedules and other financial or statistical data included or incorporated by reference in the Registration Statement or the Prospectus or omitted therefrom, or any trustee’s Statement of Eligibility (Form T-1).

Such counsel shall also state that it has no reason to believe that (A) the Registration Statement, or any amendment thereto, as of its effective date, or the Registration Statement (including the information in the Prospectus that was

21

omitted from the Registration Statement at the time it first became effective but that is deemed, pursuant to Rule 430B(f) of the Rules and Regulations, to be part of and included in the Registration Statement) as of the Applicable Time, included an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (B) the Prospectus, as of its date and as of the First Closing Date or the Optional Closing Date, as the case may be, included or includes an untrue statement of a material fact or omitted or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading or (C) the General Disclosure Package, as of the Applicable Time, included an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, it being understood that such counsel need express no belief as to the financial statements and related schedules and other financial or statistical data included or incorporated by reference in or omitted from the Registration Statement, the Prospectus or the General Disclosure Package or any trustee’s Statement of Eligibility (Form T-1).

(e)The Underwriters shall have received an opinion, dated such Closing Date, from Gerald J. Pappert, Executive Vice President, General Counsel and Secretary of the Company, that:

(i)The Company is duly qualified to do business as a foreign corporation in good standing in each jurisdiction in which the Company’s ownership or leasing of property or the conduct of its business requires such qualifications, except where the failure to be so qualified or in good standing would not have a Material Adverse Effect;

(ii)To such counsel’s knowledge, there are no legal or governmental proceedings pending or threatened against the Company or any of the Company’s subsidiaries of a character that would be required to be disclosed in an Annual Report on Form 10-K for the Company (if filed on and as of such Closing Date) other than those described in the Registration Statement, any Preliminary Prospectus, the General Disclosure Package or the Prospectus;

(iii)To such counsel’s knowledge, neither the Company nor any of the Company’s subsidiaries is currently in material breach of (i) any applicable statute, rule or regulation or (ii) any order, writ or decree any United States court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries, or over any of their properties or operations, that could have a Material Adverse Effect, but without expressing any opinion in this paragraph

22

(iii) as to any matter relating to any pending or threatened action, suit, proceeding or investigation disclosed in the Registration Statement, the General Disclosure Package and the Prospectus;

(iv)Except as disclosed in the Registration Statement, any Preliminary Prospectus, the General Disclosure Package or the Prospectus, there are no pending actions, suits or proceedings against or affecting the Company, any of its subsidiaries or any of their respective properties that, if determined adversely to the Company or any of its subsidiaries, could have a Material Adverse Effect or would materially and adversely affect the ability of the Company to perform its obligations under this Agreement and, to such counsel’s knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others;

(v)The statements in the Company’s Annual Report on Form 10-K for the period ended December 31, 2008 (the “10-K”) under the captions “Business—Government Regulation” and “Legal Proceedings,” and Quarterly Report on Form 10-Q for the period ended March 31, 2009 (the “10-Q”) under the caption “Legal Proceedings,” insofar as such statements constitute a summary of law, legal matters, documents or proceedings referred to therein, constitute accurate summaries thereof in all material respects, subject to any such statements in the 10-K that have been superseded by related statements in the 10-Q;

(vi)To such counsel’s knowledge, there are no agreements, contracts, leases or other documents to which the Company is a party of a magnitude and character that would be required to be disclosed in or filed as an exhibit to the Registration Statement that is not described or incorporated by reference in the Registration Statement;

(vii)To such counsel’s knowledge, the stockholders of the Company have no preemptive rights with respect to the Offered Securities under the terms of any agreement or instrument to which the Company is a party or by which the Company is bound; and

(viii)The execution, delivery and performance by the Company of its obligations under this Agreement and the issuance and sale of the Offered Securities will not result in a breach or violation of the terms or provisions of, or constitute a default under, any agreement, instrument or contract to which the Company or any subsidiary of the Company is a party or by which the Company or any such subsidiary is bound or to which any of the properties of the Company or any such subsidiary is subject and which, in each case, has been filed or

23

incorporated by reference as an exhibit to the 10-K or the 10-Q; provided, that such counsel need express no opinion as to any of the Financing Agreements.

Such counsel shall also state that he has no reason to believe that (A) the Registration Statement, or any amendment thereto, as of its effective date or the Applicable Time, included any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (B) the Prospectus, or any supplement thereto, as of its date and as of the First Closing Date or the Option Closing Date, as the case may be, included or includes any untrue statement of a material fact or omitted or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading or (C) the General Disclosure Package, as of the Applicable Time, included any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, it being understood that such counsel need express no belief as to the financial statements and related schedules and other financial or statistical data included or incorporated by reference in the Registration Statement, the Prospectus or the General Disclosure Package.

(f)The Underwriters shall have received an opinion, dated such Closing Date, from Ross Oehler, Vice President, Intellectual Property and Chief Patent Counsel of the Company, that:

(i)The Company or its subsidiaries are the exclusive owners of the entire right, title and interest in and to, or have a valid license to use to the extent so used, all Intellectual Property used in the business of the Company and its subsidiaries as currently conducted. The Company or its subsidiaries are entitled to use all Owned Intellectual Property and Licensed Intellectual Property in the continued operation of their business without limitation, subject only to the terms of the Intellectual Property Licenses. Except as disclosed in the Registration Statement, any Preliminary Prospectus, the General Disclosure Package or the Prospectus, the Owned Intellectual Property and, to such counsel’s knowledge, the Licensed Intellectual Property have not been adjudged invalid or unenforceable in whole or in part, and are valid and enforceable. The expiration of any patents, patent rights, trademarks, service marks, trade names or copyrights owned or used by the Company or its subsidiaries would not result in a Material Adverse Effect that is not otherwise disclosed in the Registration Statement, any Preliminary Prospectus, the General Disclosure Package and the Prospectus;

24

(ii)To such counsel’s knowledge, the conduct of the Company’s or its subsidiaries’ business as currently conducted or proposed to be conducted does not infringe or misappropriate the Intellectual Property of any third party. No actions or proceedings alleging any of the foregoing are pending, and, to such counsel’s knowledge, no claim has been threatened or asserted against the Company or any of its subsidiaries alleging any of the foregoing. To such counsel’s knowledge, no person is engaging in any activity that infringes the Owned Intellectual Property that would result in a Material Adverse Effect, except as otherwise disclosed in the Registration Statement, any Preliminary Prospectus, the General Disclosure Package and the Prospectus; and

(iii)No Owned Intellectual Property is subject to any outstanding decree, order, injunction, judgment or ruling restricting the Owned Intellectual Property or that would impair the validity or enforceability of the Owned Intellectual Property, except for any such decree, order, injunction, judgment or writing that would not result in a Material Adverse Effect.

(g)The Underwriters shall have received from Cleary Gottlieb Steen & Hamilton LLP, your counsel, such opinion or opinions, dated such Closing Date, with respect to such matters as you may require, and the Company shall have furnished to such counsel such documents as they request for the purpose of enabling them to pass upon such matters.

(h)The Underwriters shall have received a certificate, dated such Closing Date, of the President or any Vice President and a principal financial or accounting officer of the Company in which such officers, to the best of their knowledge after reasonable investigation, shall state that the representations and warranties of the Company in this Agreement are true and correct, that the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to such Closing Date, and that, subsequent to the respective dates of the most recent financial statements in the Registration Statement, any Preliminary Prospectus, the General Disclosure Package or the Prospectus, there has been no material adverse change, nor any development or event that would be reasonably likely to result in a material adverse change, in the condition (financial or other), business, properties or results of operations of the Company and its subsidiaries taken as a whole except as set forth in the Registration Statement, any Preliminary Prospectus, the General Disclosure Package or the Prospectus or as described in such certificate.

(i)The Underwriters shall have received, on or prior to the date of this Agreement, lock-up agreements substantially in the form of Exhibit I attached hereto from each of the executive officers of the Company set forth in Schedule C hereto.

25

(j)The Company shall have obtained approval from The NASDAQ Stock Market, Inc. for listing on The NASDAQ Global Select Market of the Offered Securities.

The Company will furnish the Underwriters with such conformed copies of such opinions, certificates, letters and documents as the Underwriters reasonably request in order to evidence the accuracy of any of the representations and warranties, or the satisfaction of any of the conditions or agreements, contained herein.  You may in your sole discretion waive on behalf of the Underwriters compliance with any conditions to the obligations of the Underwriters hereunder, whether in respect of an Optional Closing Date or otherwise.

5.Indemnification and Contribution. (a)  The Company agrees:

(i)to indemnify and hold harmless each Underwriter and each person, if any, who controls such Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, against any losses, claims, damages or liabilities to which such Underwriter or any such controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of or are based upon (A) any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, any Preliminary Prospectus, the General Disclosure Package, the Prospectus, any Issuer Free Writing Prospectus or any “issuer information” filed or required to be filed pursuant to Rule 433(d) under the Securities Act, or any amendment or supplement to the Registration Statement, any Preliminary Prospectus, the General Disclosure Package or the Prospectus, or (B) the omission or alleged omission to state in the Registration Statement, any Preliminary Prospectus, the General Disclosure Package, the Prospectus, any Issuer Free Writing Prospectus or any “issuer information” filed or required to be filed pursuant to Rule 433(d) under the Securities Act, or any amendment or supplement to the Registration Statement, any Preliminary Prospectus, the General Disclosure Package or the Prospectus, a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and

(ii)to reimburse each Underwriter and each such controlling person upon demand for any legal or other out-of-pocket expenses reasonably incurred by such Underwriter or such controlling person in connection with investigating or defending any such loss, claim, damage or liability, action or proceeding or in responding to a subpoena or governmental inquiry related to the offering or sale of the Offered Securities, whether or not such Underwriter or such controlling person is a party to any action or proceeding;

provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement, or omission or alleged omission made in the Registration Statement, any Preliminary Prospectus, the General Disclosure Package, the

26

Prospectus, any Issuer Free Writing Prospectus or any “issuer information” filed or required to be filed pursuant to Rule 433(d) under the Securities Act, or any amendment or supplement to the Registration Statement, any Preliminary Prospectus, the General Disclosure Package or the Prospectus, in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Underwriter through you specifically for use therein, it being understood and agreed that the only such information is the Underwriter Information.  In the event that it is finally judicially determined that such Underwriter was not entitled to receive payments for legal and other expenses pursuant to subparagraph (ii) above, such Underwriter will promptly return all sums that had been advanced pursuant hereto.

(b)Each Underwriter, severally and not jointly, will:

(i)  indemnify and hold harmless the Company, each of its directors, each of its officers who have signed the Registration Statement, and each person, if any, who controls the Company within the meaning of the Securities Act, against any losses, claims, damages or liabilities to which the Company or any such director, officer, or controlling person may become subject under the Securities Act or the Exchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of or are based upon (A) any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, any Preliminary Prospectus, the General Disclosure Package, the Prospectus, any Issuer Free Writing Prospectus or any “issuer information” filed or required to be filed pursuant to Rule 433(d) under the Securities Act, or any amendment or supplement to the Registration Statement, any Preliminary Prospectus, the General Disclosure Package or the Prospectus, or (B) the omission or the alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and

(ii)reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, or controlling person in connection with investigating or defending any such loss, claim, damage, liability, action or proceeding;

provided, however, that each Underwriter will be liable in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission has been made in the Registration Statement, any Preliminary Prospectus, the General Disclosure Package, the Prospectus, any Issuer Free Writing Prospectus or any “issuer information” filed or required to be filed pursuant to Rule 433(d) under the Securities Act, or any amendment or supplement to the Registration Statement, any Preliminary Prospectus, the General Disclosure Package or the Prospectus in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Underwriter through you specifically for use therein, it being

27

understood and agreed that the only such information is the Underwriter Information.  In the event that it is finally judicially determined that the Company was not entitled to receive payments for legal and other expenses provided for above, the Company will promptly return all sums that had been advanced pursuant hereto.

(c)In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to this Section 5, such person (the “indemnified party”) shall promptly notify the person against whom such indemnity may be sought (the “indemnifying party”) in writing.  No indemnification provided for in Section 5(a) or (b) shall be available to any party who shall fail to give notice as provided in this Section 5(c) if the party to whom notice was not given was unaware of the proceeding to which such notice would have related and was materially prejudiced by the failure to give such notice, but the failure to give such notice shall not relieve the indemnifying party or parties from any liability which it or they may have to the indemnified party for contribution or otherwise than on account of the provisions of Section 5(a) or (b).  In case any such proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party and shall pay as incurred the fees and disbursements of such counsel related to such proceeding, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section 5 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation.  In any such proceeding, any indemnified party shall have the right to retain its own counsel at its own expense.  Notwithstanding the foregoing, the indemnifying party shall pay as incurred (or within 30 days of presentation) the fees and expenses of the counsel retained by the indemnified party in the event (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel, (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them or (iii) the indemnifying party shall have failed to assume the defense and employ counsel acceptable to the indemnified party within a reasonable period of time after notice of commencement of the action.  It is understood that the indemnifying party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate firm for all such indemnified parties.  Such firm shall be designated in writing by you in the case of parties indemnified pursuant to Section 5(b) and by the Company in the case of parties indemnified pursuant to Section 5(a).  The indemnifying party shall not be liable for any settlement of any proceeding effected

28

without its written consent but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment.  In addition, the indemnifying party will not, without the prior written consent of the indemnified party, settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding of which indemnification may be sought hereunder (whether or not any indemnified party is an actual or potential party to such claim, action or proceeding) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action or proceeding.

(d)To the extent the indemnification provided for in this Section 5 is unavailable to or insufficient to hold harmless an indemnified party under Section 5(a) or (b) in respect of any losses, claims, damages or liabilities (or actions or proceedings in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters on the other from the sale of the Offered Securities.  If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions or proceedings in respect thereof), as well as any other relevant equitable considerations.  The relative benefits received by the Company on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company bear to the total compensation received by the Underwriters from the sale of Offered Securities on behalf of the Company.  The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or the Underwriters on the other and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

The Company and the Underwriters agree that it would not be just and equitable if contributions pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 5(d).  The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions or proceedings in respect thereof) referred to above in this Section 5(d) shall be deemed to

29

include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim.  Notwithstanding the provisions of this subsection (d), (i) no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Offered Securities underwritten by it and distributed to the public exceeds the total amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission, and (ii) no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

(e)In any proceeding relating to the Registration Statement, any Preliminary Prospectus, the General Disclosure Package, the Prospectus, any Issuer Free Writing Prospectus or any “issuer information” filed or required to be filed pursuant to Rule 433(d) under the Securities Act, each party against whom contribution may be sought under this Section 5 hereby consents to the jurisdiction of any court having jurisdiction over any other contributing party, agrees that process issuing from such court may be served upon it by any other contributing party and consents to the service of such process and agrees that any other contributing party may join it as an additional defendant in any such proceeding in which such other contributing party is a party.

(f)Any losses, claims, damages, liabilities or expenses for which an indemnified party is entitled to indemnification or contribution under this Section 5 shall be paid by the indemnifying party to the indemnified party as such losses, claims, damages, liabilities or expenses are incurred.  The indemnity and contribution agreements contained in this Section 5 and the representations and warranties of the Company set forth in this Agreement or in certificates delivered pursuant hereto shall remain operative and in full force and effect, regardless of (i) any investigation made by or on behalf of  any Underwriter or any person controlling such Underwriter or on behalf of the Company, its directors or officers or any persons controlling the Company, (ii) delivery and acceptance of the Offered Securities and payment therefor hereunder and (iii) any termination of this Agreement.  A successor to any Underwriter, or any person controlling  such Underwriter, or to the Company, its directors or officers, or any person controlling the Company, shall be entitled to the benefits of the indemnity, contribution and reimbursement agreements contained in this Section 5.

(g)The obligations of the Company under this Section 5 shall be in addition to any liability which the Company may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any Underwriter within the meaning of the Securities Act or the Exchange Act; and the obligations of the Underwriters under this Section shall be in addition to any liability which the respective

30

Underwriter may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls the Company.

6.Default of Underwriters.  If any Underwriter or Underwriters default in their obligations to purchase Offered Securities hereunder on either the First Closing Date or any Optional Closing Date and the aggregate principal amount of the Offered Securities that such defaulting Underwriter or Underwriters agreed but failed to purchase does not exceed 10% of the total principal amount of the Offered Securities that the Underwriters are obligated to purchase on such Closing Date, you may make arrangements satisfactory to the Company for the purchase of such Offered Securities by other persons, including any of the Underwriters, but if no such arrangements are made by such Closing Date, the non-defaulting Underwriters shall be obligated severally, in proportion to their respective commitments hereunder, to purchase the Offered Securities that such defaulting Underwriter or Underwriters agreed but failed to purchase on such Closing Date. If any Underwriter or Underwriters so default and the aggregate principal amount of Offered Securities with respect to which such default or defaults occur exceeds 10% of the total principal amount of the Offered Securities that the Underwriters are obligated to purchase on such Closing Date and arrangements satisfactory to you and the Company for the purchase of such Offered Securities by other persons are not made within 36 hours after such default, this Agreement will terminate without liability on the part of any non-defaulting Underwriter or the Company, except as provided in Section 7 (provided that if such default occurs with respect to Optional Securities after the First Closing Date, this Agreement shall not terminate as to the Firm Securities or any Optional Securities purchased prior to such termination). As used in this Agreement, the term “Underwriter” includes any person substituted for an Underwriter under this Section 6.  Nothing herein will relieve a defaulting Underwriter from liability for its default.

7.Survival of Certain Representations and Obligations. The respective indemnities, agreements, representations, warranties and other statements of the Company, its officers or the Underwriters set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation, or statement as to the results thereof, made by or on behalf of the Underwriters, the Company or any of their respective representatives, officers or directors or any controlling person, and will survive delivery of and payment for the Offered Securities. If for any reason the purchase of the Offered Securities by the Underwriters is not consummated, the Company shall remain responsible for the expenses to be paid or reimbursed by it pursuant to Section 3 and the respective obligations of the Company and the Underwriters pursuant to Section 5 shall remain in effect and if any Offered Securities have been purchased hereunder the representations and warranties in Section 1 and all obligations under Section 3 shall remain in effect.  If the purchase of the Offered Securities by the Underwriters is not consummated for any reason other than as a result of the occurrence of any event specified in clauses (ii), (iii), (iv), (v) or (vi) of Section 4(c) or any event specified in Section 4(g) or Section 6 that leads to termination of this Agreement, the Company will reimburse the Underwriters for all out-of-pocket expenses (including fees and disbursements of counsel) reasonably incurred by them in connection with the offering of the Offered Securities.

31

8.          Notices.  All communications hereunder will be in writing and, if sent to the Underwriters will be mailed, delivered or faxed and confirmed to the Underwriters c/o Deutsche Bank Securities Inc. at 60 Wall Street, New York, New York 10005, Attention: Syndicate (fax: (212) 797-2202), with a copy to Attention: General Counsel (fax: (212) 797-4561) or, if sent to the Company, will be mailed, delivered or faxed and confirmed to it at 41 Moores Road, Frazer, PA 19355, Attention: Gerald J. Pappert, Executive Vice President, General Counsel and Secretary of the Company; provided, however, that any notice to any Underwriter pursuant to Section 5 will be mailed, delivered, or telegraphed and confirmed to such Underwriter.

9.          Successors.  This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and the controlling persons referred to in Section 5, and no other person will have any right or obligation hereunder.

10.        Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same Agreement.

11.        Absence of Fiduciary Duties.  The Company acknowledges and agrees that (a) the purchase and sale of the Offered Securities pursuant to this Agreement, including the determination of the public offering price of the Offered Securities and any related discounts and commissions, is an arm’s-length commercial transaction between the Company, on the one hand, and the several Underwriters, on the other hand, (b) in connection with the offering contemplated hereby and the process leading to such transaction each Underwriter is and has been acting solely as a principal and is not the agent or fiduciary of the Company, or its stockholders, creditors, employees or any other party, (c) each Underwriter is an independent contractor and no Underwriter has assumed or will assume an advisory or fiduciary responsibility in favor of the Company with respect to the offering contemplated hereby or the process leading thereto (irrespective of whether such Underwriter has advised or is currently advising the Company on other matters) and no Underwriter has any obligation to the Company with respect to the offering contemplated hereby except the obligations expressly set forth in this Agreement, (d) the Underwriters and their respective affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Company and (e) the Underwriters have not provided any legal, accounting, regulatory or tax advice with respect to the offering contemplated hereby and the Company has consulted its own legal, accounting, regulatory and tax advisors to the extent it deemed appropriate.

12.        Entire Agreement; Amendment; Severability.  This Agreement (including all exhibits attached hereto) constitutes the entire agreement and supersedes all other prior and contemporaneous agreements and undertakings, both written and oral, among the parties hereto with regard to the subject matter hereof.  Neither this Agreement nor any term hereof may be amended except pursuant to a written instrument executed by the Company and the several Underwriters.  In the event that any one or more of the provisions contained herein, or the

32

application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby.

13.       Waiver of Jury Trial.  The Company and the Underwriters hereby irrevocably waive any right either may have to a trial by jury in respect of any claim based upon or arising out of this Agreement or the transactions contemplated hereby.

14.        Applicable Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York including, without limitation, Section 5-1401 of the New York General Obligations Law.

The Company hereby submits to the non-exclusive jurisdiction of the Federal and state courts in the Borough of Manhattan in The City of New York in any suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.

[Signature Page Follows]

33

If the foregoing is in accordance with the Underwriters’ understanding of our agreement, kindly sign and return to the Company one of the counterparts hereof, whereupon it will become a binding agreement between the Company and the several Underwriters in accordance with its terms.

Very truly yours,
CEPHALON, INC.
By:	/s/ J. Kevin Buchi
	Name:	J. Kevin Buchi
	Title:	Executive Vice President and Chief Financial Officer

DEUTSCHE BANK SECURITIES INC.
Acting on behalf of itself and as the Representative of the several Underwriters
By:	/s/ Andrew Yaeger
	Name:	Andrew Yaeger
	Title:	Managing Director
By:	/s/ Jeffrey Rosichan
	Name:	Jeffrey Rosichan
	Title:	Managing Director

SCHEDULE A

Underwriter	Number of Firm Securities
Deutsche Bank Securities Inc.	$	3,250,000
J.P. Morgan Securities Inc.	$	550,000
Morgan Stanley & Co. Incorporated	$	325,000
Credit Suisse Securities (USA) LLC	$	325,000
Barclays Capital Inc.	$	325,000
ABN AMRO Incorporated	$	75,000
Wachovia Capital Markets, LLC	$	75,000
Piper Jaffrary & Co.	$	75,000
Total	$	5,000,000

SCHEDULE B

None.

SCHEDULE C

Executive officers of the Company who will deliver executed “lock-up” agreements pursuant to Section 4(j) of this Agreement:

Frank Baldino, Jr., Ph.D. 
J. Kevin Buchi
Peter E. Grebow, Ph.D. 
Robert P. Roche, Jr. 
Carl A. Savini
William P. Egan
Martyn D. Greenacre
Vaughn M. Kailian
Kevin E. Moley
Charles A. Sanders, M.D. 
Gail R. Wilensky, Ph.D. 
Dennis L. Winger
Valli F. Baldassano
Gerald J. Pappert
Lesley Russell, MB.Ch.B., MRCP
Jeffry L. Vaught, Ph.D.

ANNEX A

Filed Pursuant to Rule 433
Registration 333-159365

Issuer Free Writing Prospectus dated May 21, 2009 relating to

Preliminary Prospectus Supplement dated May 20, 2009

Cephalon, Inc.

Final Term Sheet Relating to
$435,000,000 Aggregate Principal Amount of
2.50% Convertible Senior Subordinated Notes due 2014

and

5,000,000 Shares of Common Stock

This term sheet relates to the notes and common stock referenced above (together, the “securities”) and should be read together with the preliminary prospectus supplement dated May 20, 2009 (including the documents incorporated by reference therein) relating to the notes offering or the preliminary prospectus supplement dated May 20, 2009 (including the documents incorporated by reference therein) relating to the common stock offering, respectively, before making a decision in connection with an investment in the corresponding securities. The information in this term sheet supersedes the information in the relevant preliminary prospectus supplement to the extent that it is inconsistent therewith. Terms used but not defined herein have the meanings ascribed to them in the relevant preliminary prospectus supplement.

General

Issuer:	Cephalon, Inc., a Delaware corporation (“Cephalon”).
Ticker/Exchange:	CEPH/The Nasdaq Global Select Market.
Last Reported Sale Price of Common Stock on May 20, 2009:	$63.07 per share.
Notes Offering
Title of Securities:	2.50% Convertible Senior Subordinated Notes due 2014 (the “notes”).
Aggregate Principal Amount Offered:	$435,000,000 aggregate principal amount of notes (excluding the underwriters’ option to purchase up to $65,000,000 of additional aggregate principal amount of notes).
Denomination:	$1,000 x $1,000.
Price to Public:	100% of principal; $435,000,000 total.
Underwriting Discount:	3.0% of principal; $13,050,000 total.
Net Proceeds:	The issuer expects to receive approximately $421,950,000 after deducting fees and before expenses (or approximately $485,000,000 if the

	underwriters exercise in full their option to purchase the additional notes).
Maturity:	The notes will mature on May 1, 2014, subject to earlier conversion or a holder requiring Cephalon to repurchase its notes upon a fundamental change.
Ranking:	The notes will be Cephalon’s unsecured senior subordinated indebtedness and the payment of the principal of and interest on the notes will be subordinated in right of payment to the prior payment in full in cash of Cephalon’s existing and future senior indebtedness, including any borrowings under Cephalon’s existing credit agreement. The notes will also rank equally in express right of payment with Cephalon’s existing and future senior subordinated indebtedness and senior to any of Cephalon’s existing and future subordinated indebtedness. The notes will also rank junior to Cephalon’s secured indebtedness to the extent of the underlying collateral. The notes are effectively subordinated to all existing and future indebtedness and other liabilities including trade payables of Cephalon’s subsidiaries. The notes are not guaranteed by any of Cephalon’s subsidiaries.
Annual Interest Rate:	2.50% per annum, accruing from settlement date.
Interest Payment Dates:	Interest will accrue from May 27, 2009, and will be payable semi-annually in arrears on May 1 and November 1 of each year, beginning on November 1, 2009.
Day Count Convention:	30/360.
Issue Price:	100%, plus accrued interest, if any, from May 27, 2009.
Initial Conversion Price:	$69.00 per share of common stock.
Initial Conversion Rate:	Approximately 14.4928 shares of common stock per $1,000 aggregate principal amount of notes.
CUSIP Number:	156708 AR0.
Listing:	None.
Convertible Note Hedge and Warrant Transactions:	In connection with the offering of the notes, Cephalon has entered into a convertible note hedge transaction (the “convertible note hedge transaction”) with Deutsche Bank AG, an affiliate of the representative of the underwriters (the “hedge counterparty”). The convertible note hedge transaction covers, subject to customary anti-dilution adjustments, 6,304,348 shares of Cephalon’s common stock. Cephalon also has entered into a warrant transaction (the “warrant transaction”) with the hedge counterparty. The warrants issued to the hedge counterparty cover, subject to customary anti-dilution adjustments, 6,304,348 shares of Cephalon’s common stock. The cost to Cephalon of the convertible note hedge transaction, taking into account the proceeds to Cephalon of the warrant transaction, was $72,700,000. If the underwriters exercise their over-allotment option to purchase additional notes, Cephalon expects to increase the number of shares underlying the convertible note hedge transaction and the warrant transaction, in each case on a pro rata basis.

Adjustment to Conversion Rate upon a Make-Whole Fundamental Change: The following table sets forth the numbers of additional shares of Cephalon’s stock to be received per $1,000 principal amount of notes upon conversion in connection with a make-whole fundamental change based upon hypothetical stock prices and effective dates.

	Stock Price
Effective Date	$60.00	$61.00	$62.00	$63.00	$65.00	$70.00	$75.00	$80.00	$90.00	$100.00	$125.00	$150.00	$175.00	$200.00	$250.00
May 27, 2009	2.1700	2.0931	2.0147	1.9404	1.8019	1.5086	1.2749	1.0864	0.8055	0.6108	0.3256	0.1807	0.0991	0.0507	0.0000
May 1, 2010	2.1700	2.1700	2.0835	2.0000	1.8459	1.5215	1.2670	1.0646	0.7695	0.5710	0.2928	0.1582	0.0848	0.0420	0.0000
May 1, 2011	2.1700	2.1700	2.1468	2.0508	1.8738	1.5070	1.2245	1.0051	0.6956	0.4973	0.2385	0.1238	0.0641	0.0300	0.0000
May 1, 2012	2.1700	2.1700	2.1589	2.0460	1.8393	1.4180	1.1035	0.8674	0.5532	0.3684	0.1576	0.0780	0.0389	0.0166	0.0000
May 1, 2013	2.1700	2.0966	1.9527	1.8182	1.5754	1.0985	0.7658	0.5361	0.2714	0.1483	0.0514	0.0263	0.0131	0.0042	0.0000
May 1, 2014	2.1700	1.8974	1.6331	1.3771	0.8888	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000

The exact stock prices and effective dates may not be set forth in the table above, in which case if the stock price is:

·between two stock price amounts in the table or the effective date is between two effective dates in the table, the number of additional shares will be determined by a straight-line interpolation between the number of additional shares set forth for the higher and lower stock prices and the earlier and later effective dates, as applicable, based on a 365-day year;

·in excess of $250.00 per share (subject to adjustment), no additional shares will be issued upon conversion; and

·less than $60.00 per share (subject to adjustment), no additional shares will be issued upon conversion.

Notwithstanding the foregoing, in no event will the total number of shares of Cephalon’s common stock issuable upon conversion of notes exceed 16.66 per $1,000 principal amount of such notes, subject to adjustments in the same manner as the applicable conversion rate as set forth under “Description of the Notes—Adjustment to Shares Delivered upon Conversion upon a Make Whole Adjustment Event” in the preliminary prospectus supplement relating to the notes.

Common Stock Offering

Securities:	5,000,000 shares of common stock of the issuer, par value of $0.01 per share (excluding the underwriters’ option to purchase up to an additional 750,000 shares).
Common Stock Outstanding:	The total number of issued and outstanding shares of common stock as of March 31, 2009 was approximately 68,831,604 and immediately after the completion of this offering, assuming this offering was completed as of March 31, 2009, would have been approximately 73,831,604 shares, or approximately 74,581,604 shares if the underwriters exercise in full their option to purchase additional shares.
Price to Public:	$60.00 per share; $300,000,000 total.
Underwriting Discount:	$2.40 per share; $12,000,000 total.
Net Proceeds:	The issuer expects to receive approximately $288,000,000 after deducting fees and before expenses (or approximately $331,200,000 if the underwriters exercise in full their option to purchase the additional shares).

CUSIP Number: 156708109.

Other Offering Information

Trade Date:	May 21, 2009.
Settlement Date:	May 27, 2009.
Lock-Up:	60 days; applies to Cephalon’s executive officers and directors.
Sole Book-Running Manager:	Deutsche Bank Securities Inc.
Co-Managers:	J.P. Morgan Securities Inc. Barclays Capital Inc. Credit Suisse Securities (USA) LLC Morgan Stanley & Co. Incorporated ABN AMRO Incorporated Piper Jaffray & Co. Wachovia Capital Markets, LLC

Correction to “Summary — The Company”

Our four most significant products are PROVIGIL® (modafinil) Tablets [C-IV], FENTORA® (fentanyl buccal tablet) [C-II], ACTIQ® (oral transmucosal fentanyl citrate) [C-II] (including our generic version of ACTIQ) and TREANDA (bendamustine hydrochloride) which together comprised 77% of our total consolidated net sales for the year ended December 31, 2008 and 78% of our total consolidated net sales for the three months ended March 31, 2009.

The issuer has filed a registration statement, as well as prospectus supplements and the accompanying prospectus, with the SEC for the offerings to which this communication relates. Before you invest, you should read the prospectus supplements and the accompanying prospectus and other documents the issuer has filed with the SEC for more complete information about the issuer and these offerings. You may obtain these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send you the prospectus supplements and accompanying prospectus if you request them by contacting Deutsche Bank Securities, Attn: Prospectus Department, 100 Plaza One, Jersey City, NJ 07311, Telephone number: +1-800-503-4611, Email: prospectusrequest@list.db.com

Any disclaimers or other notices that may appear below are not applicable to this communication and should be disregarded.  Such disclaimers were automatically generated as a result of this communication being sent via email or another communication system.

EXHIBIT I

FORM OF LOCK-UP AGREEMENT

May 15, 2009

Cephalon, Inc.
41 Moores Road
Frazer, PA 19355

Deutsche Bank Securities Inc.

60 Wall Street
New York, NY 10005

Ladies and Gentlemen:

The undersigned understands that Deutsche Bank Securities Inc. (“DBSI”) proposes to enter into one or more Underwriting Agreements (collectively, the “Underwriting Agreement”) with Cephalon, Inc. and any successor (by merger or otherwise) thereto (the “Company”), providing for the public offering by DBSI and potentially other underwriters for whom DBSI would act as representative, of (i) Convertible Senior Subordinated Notes (the “Securities”) of the Company and (ii) common stock, $.01 par value, of the Company (the “Common Stock”).  Such offerings are referred to below as the “Offering.”  References to the “Underwriters” below shall be deemed to be references to DBSI if there are no other underwriters with respect to the Offering.

As an inducement to the Underwriters to execute the Underwriting Agreement, pursuant to which the Offering will be made that is intended to result in an orderly market for the Securities and the Common Stock of the Company, the undersigned hereby agrees that from the date hereof and until 60 days after the offering date set forth on the final prospectuses used to sell the Securities and/or the Common Stock (the “Offering Date”) pursuant to the Underwriting Agreement, to which you are or expect to become parties, the undersigned will not, directly or indirectly, offer, sell, contract to sell (including any short sale), pledge, grant any option to purchase or otherwise dispose of any shares of Common Stock (including, without limitation, shares of Common Stock of the Company which may be deemed to be beneficially owned by the undersigned on the date hereof in accordance with the rules and regulations of the Securities and Exchange Commission, shares of Common Stock which may be issued upon exercise of a stock option or warrant and any other security convertible into or exchangeable for Common Stock), or securities convertible into or exchangeable or exercisable for any shares of Common Stock, or enter into any transaction which would have the same effect, or enter into any Hedging Transaction (as defined below), whether any of these transactions is to be settled by delivery of Common Stock or such other securities, in cash or otherwise, or publicly disclose the intention to make any such offer, sale, pledge or disposition, or to enter into any such transaction, Hedging Transaction or other arrangement, without, in each case, the prior written consent of DBSI, except pursuant to any written trading plan adopted pursuant to Rule 10b5-1 of the Securities Exchange Act of 1934, as amended.  In addition, the undersigned agrees that, without the prior

written consent of DBSI, it will not, during the period commencing on the date hereof and ending 60 days after the Offering Date, make any demand for or exercise any right with respect to, the registration of any Common Stock or any security convertible into or exercisable or exchangeable for Common Stock.

The foregoing restriction is expressly intended to preclude the undersigned from engaging in any Hedging Transaction or other transaction which is designed to or reasonably expected to lead to or result in a disposition during the 60-day lock-up period, even if the securities would be disposed of by someone other than the undersigned, except as permitted by the proviso above.  “Hedging Transaction” means any short sale (whether or not against the box) or any purchase, sale or grant of any right (including, without limitation, any put or call option) with respect to any security (other than a broad-based market basket or index) that includes, relates to or derives any significant part of its value from the Common Stock.

Any Common Stock or Securities received upon exercise of options granted to the undersigned will also be subject to this Agreement.  Any Common Stock or Securities acquired by the undersigned in the open market after the Offering Date will not be subject to this Agreement.  A transfer of Common Stock or Securities to either (i) an immediate family member or (ii) any trust for the benefit of the undersigned or any immediate family member, may be made, provided the transferee agrees to be bound in writing by the terms of this Agreement prior to such transfer.  For purposes of this Agreement, “immediate family” shall mean any relationship by blood, marriage or adoption, not more remote than first cousin.  In addition, the Company may release up to an aggregate of 200,000 shares of Common Stock subject to this Agreement and all other lock-up agreements signed by executive officers of the Company in connection with the Offering, provided that not more than 50,000 shares of Common Stock may be released with respect to the undersigned.

The undersigned agrees that the Company may, and that the undersigned will, (i) with respect to any shares of Common Stock or other Company securities for which the undersigned is the record holder, cause the transfer agent for the Company to note stop transfer instructions with respect to such securities on the transfer books and records of the Company and (ii) with respect to any shares of Common Stock or other Company securities for which the undersigned is the beneficial holder but not the record holder, cause the record holder of such securities to cause the transfer agent for the Company to note stop transfer instructions with respect to such securities on the transfer books and records of the Company.

The undersigned hereby represents and warrants that the undersigned has full power and authority to enter into this Agreement.  All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned and any obligations of the undersigned shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned.

[Signature Page Follows]

This Agreement shall be binding on the undersigned and the successors, heirs, personal representatives and assigns of the undersigned.  This Agreement shall lapse and become null and void if the Offering Date shall not have occurred on or before June 30, 2009.

Very truly yours,

Name:

Title:

EX-4.1

Exhibit 4.1

CEPHALON, INC.

2.50% CONVERTIBLE SENIOR SUBORDINATED NOTES DUE MAY 1, 2014

INDENTURE

DATED AS OF MAY 27, 2009

U.S. BANK NATIONAL ASSOCIATION,

AS TRUSTEE

TABLE OF CONTENTS

	PAGE
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01 . Definitions	1
Section 1.02 . Other Definitions	7
Section 1.03 . Trust Indenture Act Provisions	8
Section 1.04 . Rules of Construction	9
ARTICLE 2
THE SECURITIES
Section 2.01 . Form and Dating	9
Section 2.02 . Execution and Authentication	11
Section 2.03 . Registrar, Paying Agent and Conversion Agent	12
Section 2.04 . Paying Agent to Hold Money in Trust	13
Section 2.05 . Holder Lists	13
Section 2.06 . Transfer and Exchange	13
Section 2.07 . Replacement Securities	14
Section 2.08 . Outstanding Securities	15
Section 2.09 . Treasury Securities	16
Section 2.10 . Temporary Securities	16
Section 2.11 . Cancellation	16
Section 2.12 . Additional Transfer Requirements	16
Section 2.13 . CUSIP Numbers	18
ARTICLE 3
PURCHASES OF SECURITIES UPON FUNDAMENTAL CHANGE
Section 3.01 . Purchase of Securities at Option of the Holder Upon Fundamental Change	18
Section 3.02 . Effect of Fundamental Change Purchase Notice	22
Section 3.03 . Deposit of Fundamental Change Purchase Price	23
Section 3.04 . Securities Purchased in Part	23
Section 3.05 . Compliance with Securities Laws Upon Purchase of Securities	24
ARTICLE 4
PAYMENT OF INTEREST AND MAKE WHOLE ADJUSTMENT EVENTS
Section 4.01 . Interest Payments	24
Section 4.02 . Increased Conversion Rate Applicable to Certain Securities Surrendered in Connection with Make Whole Adjustment Events	25
Section 4.03 . Adjustments Relating to Make Whole Adjustment Event	27

ii

ARTICLE 5
CONVERSION
Section 5.01 . Conversion Privilege	27
Section 5.02 . Conversion Procedure	29
Section 5.03 . Fractional Shares	31
Section 5.04 . Taxes on Conversion	31
Section 5.05 . Settlement Upon Conversion	31
Section 5.06 . Adjustment of Conversion Price	33
Section 5.07 . No Adjustment	40
Section 5.08 . Adjustment for Tax Purposes	41
Section 5.09 . Notice of Adjustment	41
Section 5.10 . Notice of Certain Transactions	42
Section 5.11 . Stockholder Rights Plans	42
Section 5.12 . Effect of Reclassification, Consolidation, Merger or Sale on Conversion Privilege	42
Section 5.13 . Trustee’s Disclaimer	44
Section 5.14 . Voluntary Reduction	45
Section 5.15 . Exchange in Lieu of Conversion	45
Section 5.16 . Compliance with NASDAQ Market Rule 4350	45
ARTICLE 6
SUBORDINATION
Section 6.01 . Agreement of Subordination	46
Section 6.02 . Payments to Holders	46
Section 6.03 . Subrogation of Securities	49
Section 6.04 . Authorization to Effect Subordination	50
Section 6.05 . Notice to Trustee	50
Section 6.06 . Trustee’s Relation to Senior Indebtedness	51
Section 6.07 . No Impairment of Subordination	51
Section 6.08 . Certain Conversions Deemed Payment	52
Section 6.09 . Article Applicable to Paying Agents	52
Section 6.10 . Senior Indebtedness Entitled to Rely	52
ARTICLE 7
COVENANTS
Section 7.01 . Payment of Securities	53
Section 7.02 . Reports	53
Section 7.03 . Compliance Certificates	53
Section 7.04 . Further Instruments and Acts	54
Section 7.05 . Maintenance of Corporate Existence	54
Section 7.06 . Stay, Extension and Usury Laws	54
Section 7.07 . Additional Interest Notice	54

iii

ARTICLE 8
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 8.01 . Company May Consolidate, etc., only on Certain Terms	55
Section 8.02 . Successor Substituted	55
ARTICLE 9
DEFAULT AND REMEDIES
Section 9.01 . Events of Default	56
Section 9.02 . Acceleration	58
Section 9.03 . Other Remedies	59
Section 9.04 . Waiver of Defaults and Events of Default	59
Section 9.05 . Control by Majority	60
Section 9.06 . Limitations on Suits	60
Section 9.07 . Rights of Holders to Receive Payment and to Convert	60
Section 9.08 . Collection Suit by Trustee	61
Section 9.09 . Trustee May File Proofs of Claim	61
Section 9.10 . Priorities	61
Section 9.11 . Undertaking for Costs	62
ARTICLE 10
TRUSTEE
Section 10.01 . Duties of Trustee	62
Section 10.02 . Rights of Trustee	63
Section 10.03 . Individual Rights of Trustee	64
Section 10.04 . Trustee’s Disclaimer	64
Section 10.05 . Notice of Default or Events of Default	65
Section 10.06 . Reports by Trustee to Holders	65
Section 10.07 . Compensation and Indemnity	65
Section 10.08 . Replacement of Trustee	66
Section 10.09 . Successor Trustee by Merger, etc.	67
Section 10.10 . Eligibility; Disqualification	67
Section 10.11 . Preferential Collection of Claims Against Company	67
ARTICLE 11
SATISFACTION AND DISCHARGE
Section 11.01 . Satisfaction and Discharge	67
Section 11.02 . Application of Trust Money	68
Section 11.03 . Repayment to Company	68
Section 11.04 . Reinstatement	69

iv

ARTICLE 12
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 12.01 . Without Consent of Holders	69
Section 12.02 . With Consent of Holders	70
Section 12.03 . Compliance with Trust Indenture Act	71
Section 12.04 . Revocation and Effect of Consents	71
Section 12.05 . Notation on or Exchange of Securities	71
Section 12.06 . Trustee to Sign Amendments, etc.	71
Section 12.07 . Effect of Supplemental Indentures	72
ARTICLE 13
MISCELLANEOUS
Section 13.01 . Trust Indenture Act Controls	72
Section 13.02 . Notices	72
Section 13.03 . Communications by Holders with Other Holders	73
Section 13.04 . Certificate and Opinion as to Conditions Precedent	73
Section 13.05 . Record Date for Vote or Consent of Holders	74
Section 13.06 . Rules by Trustee, Paying Agent, Registrar and Conversion Agent	74
Section 13.07 . Payment Day or Record Date Not A Business Day	74
Section 13.08 . Governing Law	74
Section 13.09 . No Adverse Interpretation of Other Agreements	74
Section 13.10 . No Recourse against Others	75
Section 13.11 . Successors	75
Section 13.12 . Multiple Counterparts	75
Section 13.13 . Separability	75
Section 13.14 . Table of Contents, Headings, etc.	75
Section 13.15 . Submission to Jurisdiction	75
Exhibit A	A-1

v

CROSS-REFERENCE TABLE

TIA SECTION		INDENTURE SECTION
Section	310(a)(1)	10.10
	(a)(2)	10.10
	(a)(3)	N.A.**
	(a)(4)	N.A.
	(a)(5)	10.10
	(b)	10.08; 10.10
	(c)	N.A.
Section	311(a)	10.11
	(b)	10.11
	(c)	N.A.
Section	312(a)	2.05
	(b)	13.03
	(c)	13.03
Section	313(a)	10.06
	(b)(1)	N.A.
	(b)(2)	10.06
	(c)	10.06; 13.02
	(d)	10.06
Section	314(a)	7.02; 7.04; 13.02
	(b)	N.A.
	(c)(1)	13.04(a)
	(c)(2)	13.04(a)
	(c)(3)	N.A.
	(d)	N.A.
	(e)	13.04(b)
	(f)	N.A.
Section	315(a)	10.01(b)
	(b)	10.05; 13.02
	(c)	10.01(a)
	(d)	10.01(c)
	(e)	9.11
Section	316(a)(last sentence)	2.09
	(a)(1)(A)	9.05
	(a)(1)(B)	9.04
	(a)(2)	N.A.
	(b)	9.07
	(c)	13.05
Section	317(a)(1)	9.08
	(a)(2)	9.09
	(b)	2.04

*This Cross-Reference Table shall not, for any purpose, be deemed a part of this Indenture.

**N.A. means Not Applicable.

vi

THIS INDENTURE dated as of May 27, 2009 is between Cephalon, Inc., a corporation duly organized under the laws of the State of Delaware (the “Company”), and U.S. Bank National Association, a national banking association organized and existing under the laws of the United States, as Trustee (the “Trustee”).

In consideration of the premises and the acquisition of the Securities by the Holders thereof, both parties agree as follows for the benefit of the other and for the equal and ratable benefit of the registered Holders of the Securities.

ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE

Section 1.01.  Definitions.

“Affiliate” means, with respect to any specified person, any other person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified person.  For the purposes of this definition, “control” when used with respect to any person means the power to direct the management and policies of such person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Agent” means any Registrar, Paying Agent or Conversion Agent.

“Applicable Procedures” means, with respect to any transfer or exchange of beneficial ownership interests in a Global Security, the rules and procedures of the Depositary, in each case to the extent applicable to such transfer or exchange.

“Board of Directors” means either the board of directors of the Company or any committee of the Board of Directors specifically authorized to act for it with respect to this Indenture.

“Business Day” means any day other than a (x) Saturday, (y) Sunday or (z) day on which state or federally chartered banking institutions in New York, New York are not required to be open.

“Capital Stock” of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, but excluding any debt securities convertible into such equity.

“Cash” or “cash” means such coin or currency of the United States as at any time of payment is legal tender for the payment of public and private debts.

1

“Certificated Security” means a Security that is in substantially the form attached hereto as Exhibit A and that does not include the information or the schedule called for by footnotes 1 and 2 thereof.

“Closing Sale Price” of the Common Stock means, as of any date of determination, the closing per share sale price (or, if no such closing sale price is reported on such day, the average of the bid and asked prices or, if more than one in either case, the average of the average bid and the average asked prices) at 4:00 p.m., New York time, on such date as reported in composite transactions for the principal U.S. securities exchange on which the Common Stock is traded or, if the Common Stock is not listed on a U.S. national or regional securities exchange, as reported by Pink OTC Markets Inc.

“Common Stock” means the common stock of the Company, $0.01 par value, as it exists on the date of this Indenture and any shares of any class or classes of capital stock of the Company resulting from any reclassification or reclassifications thereof and which have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Company and which are not subject to redemption by the Company; provided, however, that, if at any time there shall be more than one such resulting class, the shares of each such class then so issuable on conversion of Securities shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications.

“Company” means the party named as such in the first paragraph of this Indenture until a successor replaces it pursuant to the applicable provisions of this Indenture, and thereafter “Company” shall mean such successor Company.

“Conversion Rate” means, as of any date, an amount equal to $1,000 divided by the then applicable Conversion Price on such date.  As of the date hereof and subject to adjustment pursuant to Section 5.06, the Conversion Rate with respect to the Securities is 14.4928 shares of Common Stock for each $1,000 principal amount of Securities.

“Conversion Value” of a Security means, as of any date of determination, the product of the last reported bid price of the Common Stock on that date multiplied by the Conversion Rate of that Security on that date.

“Corporate Trust Office” means the office of the Trustee at which at any time the trust created by this Indenture shall be administered, which office at the date of the execution of this Indenture is located at 225 Asylum Street, 23rd Floor, Hartford, CT  06103, Attention:  Corporate Trust Services (Cephalon, Inc. 2.50% Convertible Senior Subordinated Notes due May 1, 2014), or at any other time at such other address as the Trustee may designate from time to time by notice to the Company.

“Default” or “default” means any event which is or, after notice or passage of time or both, would be an Event of Default.

2

“Designated Senior Indebtedness” means any particular Senior Indebtedness of the Company in which the instrument creating or evidencing the same or the assumption or guarantee thereof (or any related agreements or documents to which the Company is a party) expressly provides that such Senior Indebtedness shall be “Designated Senior Indebtedness” for purposes of this Indenture (provided that such instrument, agreement or other document may place limitations and conditions on the right of such Senior Indebtedness to exercise the rights of Designated Senior Indebtedness).  If any payment made to any holder of any Designated Senior Indebtedness or its Representative with respect to such Designated Senior Indebtedness is rescinded or must otherwise be returned by such holder or Representative upon the insolvency, bankruptcy or reorganization of the Company or otherwise, the reinstated Indebtedness of the Company arising as a result of such rescission or return shall constitute Designated Senior Indebtedness effective as of the date of such rescission or return.

“Exchange Act” means the Securities and Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, as in effect from time to time.

“Ex-Dividend Date” means with respect to any issuance, dividend or distribution, the first date on which the shares of Common Stock trade, regular way, on the relevant exchange or in the relevant market for which the sale price was obtained without the right to receive the issuance, dividend or distribution in question.

“Final Maturity Date” means May 1, 2014.

“GAAP” means generally accepted accounting principles in the United States of America as in effect as of the date of this Indenture, including those set forth in (1) the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants, (2) the statements and pronouncements of the Financial Accounting Standards Board, (3) such other statements by such other entity as approved by a significant segment of the accounting profession and (4) the rules and regulations of the SEC governing the inclusion of financial statements (including pro forma financial statements) in registration statements filed under the Securities Act and periodic reports required to be filed pursuant to Section 13 of the Exchange Act, including opinions and pronouncements in staff accounting bulletins and other official written statements from the accounting staff of the SEC expressing the views of the SEC therein.

“Global Security” means a permanent Global Security that is in substantially the form attached hereto as Exhibit A and that includes the information and schedule called for by footnotes 1, 2 and 3 thereof and which is deposited with the Depositary or its custodian and registered in the name of the Depositary or its nominee.

“Holder” means the person in whose name a Security is registered on the Primary Registrar’s books.

“Indebtedness” means, with respect to any Person, without duplication, (a) all indebtedness, obligations and other liabilities (contingent or otherwise) of such Person (i) for borrowed money (including obligations of such Person in respect of overdrafts, foreign exchange

3

contracts, currency exchange agreements, interest rate protection agreements and any loans or advances from banks, whether or not evidenced by notes or similar instruments) or (ii) evidenced by credit or loan agreements, bonds, debentures, notes or similar instruments (whether or not the recourse of the lender is to the whole of the assets of such Person or to only a portion thereof) (other than any account payable or other accrued current liability or obligation incurred in the ordinary course of business in connection with the obtaining of materials or services), (b) all reimbursement obligations and other liabilities (contingent or otherwise) of such Person with respect to letters of credit, bank guarantees or bankers’ acceptances, (c) all obligations and liabilities (contingent or otherwise) of such Person (i) in respect of leases of such Person required, in conformity with GAAP, to be accounted for as capitalized lease obligations on the balance sheet of such Person (as determined by such Person, or the Company in the case of any Subsidiary of the Company), or (ii) under any lease or related document (including a purchase agreement, conditional sale or other title retention agreement) in connection with the lease of real property or improvements thereon (or any personal property included as part of any such lease) which provides that such Person is contractually obligated to purchase or cause a third party to purchase the leased property or pay an agreed upon residual value of the leased property to the lessor (whether or not such lease transaction is characterized as an operating lease or a capitalized lease in accordance with GAAP), (d) all obligations (contingent or otherwise) of such Person with respect to any interest rate or other swap, cap, floor or collar agreement, hedge agreement, forward contract or other similar instrument or agreement or foreign currency hedge, exchange, purchase or similar instrument or agreement; (e) all direct or indirect guaranties, agreements to be jointly liable or similar agreements by such Person in respect of, and obligations or liabilities of such Person to purchase or otherwise acquire or otherwise assure a creditor against loss in respect of, indebtedness, obligations or liabilities of another Person of the kind described in clauses (a) through (d), and (f) any and all deferrals, renewals, extensions, refinancings and refundings of, or amendments, modifications or supplements to, any indebtedness, obligation or liability of the kind described in clauses (a) through (e).

“Indenture” means this Indenture as amended or supplemented from time to time pursuant to the terms of this Indenture.

“interest,” in respect of the Securities, unless the context otherwise requires, refers to interest payable on the Securities, including any additional interest that may become payable pursuant to Section 9.02(b).

“Issue Date” means May 27, 2009.

“Market Disruption Event” means (1) a failure by the primary exchange or quotation system on which the Common Stock trades or is quoted to open for trading during its regular trading session or (2) the occurrence or existence for more than one half hour period in the aggregate on any Scheduled Trading Day for the Common Stock of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by The NASDAQ Global Select Market or otherwise) in the Common Stock or in any options, contracts or future contracts relating to the Common Stock, and such suspension or limitation occurs or exists at any time before 1:00 p.m., New York City time, on such day.

4

“Officer” means the Chairman or any Co-Chairman of the Board, any Vice Chairman of the Board, the Chief Executive Officer, the President, any Vice President, the Chief Financial Officer, the Controller, the Secretary or any Assistant Controller or Assistant Secretary of the Company.

“Officers’ Certificate” means a certificate signed by two Officers; provided, however, that, for purposes of Section 5.11 and 7.03, “Officers’ Certificate” means a certificate signed by the principal executive officer, principal financial officer or principal accounting officer of the Company and by one other Officer.

“Opinion of Counsel” means a written opinion from legal counsel.  The counsel may be an employee of or counsel to the Company or the Trustee.

“Person” or “person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.

“Principal” or “principal” of a debt security, including the Securities, means the principal of the security plus, when appropriate, the premium, if any, on the security.

 “Representative” means the (a) indenture trustee or other trustee, agent or representative for any Senior Indebtedness or (b) with respect to any Senior Indebtedness that does not have any such trustee, agent or other representative, (i) in the case of such Senior Indebtedness issued pursuant to an agreement providing for voting arrangements as among the holders or owners of such Senior Indebtedness, any holder or owner of such Senior Indebtedness acting with the consent of the required persons necessary to bind such holders or owners of such Senior Indebtedness and (ii) in the case of all other such Senior Indebtedness, the holder or owner of such Senior Indebtedness.

“Scheduled Trading Day” means any day that is scheduled to be a Trading Day.

“SEC” means the Securities and Exchange Commission.

“Securities” means the 2.50% Convertible Senior Subordinated Notes due May 1, 2014, or any of them (each, a “Security”).

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, as in effect from time to time.

“Securities Custodian” means the Trustee, as custodian with respect to the Securities in global form, or any successor thereto.

“Senior Indebtedness” means the principal of, and premium, if any, interest (including any interest accruing after the commencement of any bankruptcy or similar proceeding, whether or not a claim for post-petition interest is allowed as a claim in any such proceeding) and rent payable on or in connection with, and all fees, costs, expenses and other amounts accrued or due

5

on or in connection with, Indebtedness of the Company, whether secured or unsecured, absolute or contingent, due or to become due, outstanding on the date of this Indenture or thereafter created, incurred, assumed, guaranteed or in effect guaranteed by the Company (including all deferrals, renewals, extensions or refundings of, or amendments, modifications or supplements to, the foregoing), unless in the case of any particular Indebtedness the instrument creating or evidencing the same or the assumption or guarantee thereof expressly provides that such Indebtedness shall not be senior in right of payment to the Securities or expressly provides that such Indebtedness is “pari passu” or “junior” to the Securities.  Notwithstanding the foregoing, the term Senior Indebtedness shall not include (i) any Indebtedness of the Company to any Subsidiary of the Company (other than Indebtedness of the Company to such Subsidiary arising by reason of guarantees by the Company of Indebtedness of such Subsidiary to a Person that is not a Subsidiary of the Company) or (ii) Indebtedness for trade payables or the deferred purchase price of assets or services incurred in the ordinary course of business.  If any payment made to any holder of any Senior Indebtedness or its Representative with respect to such Senior Indebtedness is rescinded or must otherwise be returned by such holder or Representative upon the insolvency, bankruptcy or reorganization of the Company or otherwise, the reinstated Indebtedness of the Company arising as a result of such rescission or return shall constitute Senior Indebtedness effective as of the date of such rescission or return.

“Significant Subsidiary” means, in respect of any Person, a Subsidiary of such Person that would constitute a “significant subsidiary” as such term is defined under Rule 1-02 of Regulation S-X under the Securities Act and the Exchange Act.

“Subsidiary” means, in respect of any Person, any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of Capital Stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, general partners or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) such Person; (ii) such Person and one or more Subsidiaries of such Person; or (iii) one or more Subsidiaries of such Person.

“TIA” means the Trust Indenture Act of 1939, as amended, and the rules and regulations thereunder as in effect on the date of this Indenture, except to the extent any amendment to the Trust Indenture Act expressly provides for application of the Trust Indenture Act as in effect on another date.

“Trading Day” means any day during which (i) there is no Market Disruption Event and (ii) The NASDAQ Global Select Market, or if the Common Stock is not listed on The NASDAQ Global Select Market, the principal other U.S. national or regional securities exchange on which the Common Stock is then listed is open for trading or, if the Common Stock is not so listed, any Business Day.  A “Trading Day” only includes those days that have a scheduled closing time of 4:00 p.m., New York City time, or the then standard closing time for regular trading on the relevant exchange or trading system.

6

“Trading Price” means, on any date of determination with respect to any Security, the average of the secondary bid quotations per Security obtained by the Conversion Agent for $5,000,000 principal amount of Securities at approximately 3:30 p.m., New York City time, on such determination date from three independent nationally recognized securities dealers selected by the Company; provided that, if at least three such bids cannot reasonably be obtained, but two such bids can reasonably be obtained, then the average of these two bids shall be used; provided, further, that, if at least two such bids cannot reasonably be obtained, but one such bid can reasonably be obtained, this one bid shall be used.  If the Conversion Agent cannot reasonably obtain at least one bid for $5,000,000 principal amount of the Securities from an independent nationally recognized securities dealer, then the Trading Price of such Securities on such determination date will be deemed to be less than 98% of the Closing Sale Price of the Common Stock on such Date multiplied by the then current Conversion Rate.

“Trustee” means the party named as such in the first paragraph of this Indenture until a successor replaces it in accordance with the provisions of this Indenture and, thereafter, means the successor.

“Trust Officer” means, with respect to the Trustee, any officer assigned to the Corporate Trust Office and also, with respect to a particular matter, any other officer to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject.

“Vice President”, when used with respect to the Company or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title “vice president.”

“Voting Stock” of a Person means any class or classes of Capital Stock or other interests (including partnership interests) of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof.

Section 1.02.  Other Definitions.

Term	Defined in Section
“Additional Shares”	4.02(a)
“Agent Members”	2.01(b)
“Bankruptcy Law”	9.01
“Change in Control”	3.01(a)
“Closing Sale Price Condition”	5.01(a)
“Company Order”	2.02
“Conversion Agent”	2.03
“Conversion Date”	5.02
“Conversion Notice”	5.02
“Conversion Obligation”	5.02
“Conversion Period”	5.05(a)
“Conversion Price”	5.06

7

“Custodian”	9.01
“Daily Conversion Value”	5.05(a)
“Daily Settlement Amount”	5.05(a)
“Daily VWAP”	5.05(a)
“DTC”	2.01(a)
“Depositary”	2.01(a)
“Designated Institution”	5.15
“Effective Date”	4.02(a)
“Event of Default”	9.01
“Expiration Date”	5.06(e)
“Expiration Time”	5.06(e)
“Fundamental Change”	3.01(a)
“Fundamental Change Purchase Date”	3.01(a)
“Fundamental Change Purchase Notice”	3.01(c)
“Fundamental Change Purchase Price”	3.01(a)
“Legal Holiday”	13.07
“Instrument”	9.01(g)
“Interest Payment Date”	4.01(a)
“Make Whole Adjustment Event”	4.02(a)
“Make Whole Adjustment Event Period”	4.02(a)
“Merger Event”	5.12
“Paying Agent”	2.03
“Payment Blockage Notice”	6.02
“Primary Registrar”	2.03
“Principal Portion”	5.05(a)
“Reference Property”	5.12(a)
“Registrar”	2.03
“Record Date”	4.01(a)
“Senior Subordinated Indebtedness”	6.01
“Spin-Off”	5.06(c)
“Stock Price”	4.02(a)
“Subordinated Indebtedness”	6.01
“Termination of Trading”	3.01(a)
“Unissued Shares”	3.01(a)
“Valuation Period”	5.06(c)
“Weighted Average Consideration”	5.12(c)

Section 1.03.  Trust Indenture Act Provisions.

Whenever this Indenture refers to a provision of the TIA, that provision is incorporated by reference in and made a part of this Indenture.  This Indenture shall also include those provisions of the TIA required to be included herein by the provisions of the Trust Indenture Reform Act of 1990.  The following TIA terms used in this Indenture have the following meanings:

8

“indenture securities” means the Securities;

“indenture security holder” means a Holder;

“indenture to be qualified” means this Indenture;

“indenture trustee” or “institutional trustee” means the Trustee; and “obligor” on the indenture securities means the Company or any other obligor on the Securities.

All other terms used in this Indenture that are defined in the TIA, defined by TIA reference to another statute or defined by any SEC rule and not otherwise defined herein have the meanings assigned to them therein.

Section 1.04.  Rules of Construction.

Unless the context otherwise requires:

(A)          a term has the meaning assigned to it herein;

(B)           an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

(C)           words in the singular include the plural, and words in the plural include the singular;

(D)          provisions apply to successive events and transactions;

(E)           the term “merger” includes a statutory share exchange, and the term “merged” has a correlative meaning;

(F)           the masculine gender includes the feminine and the neuter;

(G)           references to agreements and other instruments include subsequent amendments thereto; and

(H)          “herein,” “hereof” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision.

ARTICLE 2
THE SECURITIES

Section 2.01.  Form and Dating.

The Securities and the corresponding Trustee’s certificate of authentication shall be substantially in the respective forms set forth in Exhibit A, which Exhibit is incorporated in and made part of this Indenture.  The Securities may have notations, legends or endorsements

9

required by law, stock exchange rule or usage.  The Company shall provide any such notations, legends or endorsements to the Trustee in writing.  The Securities shall be dated the date of their authentication.

(a)   Global Securities.  Each Security shall be issued initially in the form of one or more Global Securities, which shall be deposited on behalf of the acquirers of the Securities represented thereby with the Trustee, at its Corporate Trust Office, as custodian for the depositary, The Depository Trust Company (“DTC”) (such depositary, or any successor thereto, being hereinafter referred to as the “Depositary”), and registered in the name of its nominee, Cede & Co., duly executed by the Company and authenticated by the Trustee as hereinafter provided.  The aggregate principal amount of the Global Securities may from time to time be increased or decreased by adjustments made on the records of the Securities Custodian as hereinafter provided, subject in each case to compliance with the Applicable Procedures.

(b)   Global Securities In General.  Each Global Security shall represent such of the outstanding Securities as shall be specified therein, and each shall provide that it shall represent the aggregate amount of outstanding Securities from time to time endorsed thereon and that the aggregate amount of outstanding Securities represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges, purchases or conversions of such Securities.  Any adjustment of the aggregate principal amount of a Global Security to reflect the amount of any increase or decrease in the amount of outstanding Securities represented thereby shall be made by the Trustee in accordance with instructions given by the Holder thereof as required by Section 2.12 hereof and shall be made on the records of the Trustee and the Depositary.

Members of, or participants in, the Depositary (“Agent Members”) shall have no rights under this Indenture with respect to any Global Security held on their behalf by the Depositary or under the Global Security, and the Depositary (including, for this purpose, its nominee) may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner and Holder of such Global Security for all purposes whatsoever.  Notwithstanding the foregoing, nothing herein shall (A) prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or (B) impair, as between the Depositary and its Agent Members, the operation of customary practices governing the exercise of the rights of a Holder of any Security.

(c)   Book-Entry Provisions.  The Company shall execute and the Trustee shall, in accordance with this Section 2.01(c) and Section 2.02, authenticate and deliver initially one or more Global Securities that (i) shall be registered in the name of Cede & Co. or as otherwise instructed by the Depositary, (ii) shall be delivered by the Trustee to the Depositary or pursuant to the Depositary’s instructions and (iii) shall bear legends substantially to the following effect:

“THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF.

10

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO CEPHALON, INC. (THE “COMPANY”) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.  TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS TO NOMINEES OF THE DEPOSITORY TRUST COMPANY OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE, AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN ARTICLE TWO OF THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.  THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.”

Section 2.02.  Execution and Authentication.

An Officer shall sign the Securities for the Company by manual or facsimile signature.  Typographic and other minor errors or defects in any such facsimile signature shall not affect the validity or enforceability of any Security that has been authenticated and delivered by the Trustee.

If an Officer whose signature is on a Security no longer holds that office at the time the Trustee authenticates the Security, the Security shall be valid nevertheless.

A Security shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Security.  The signature shall be conclusive evidence that the Security has been authenticated under this Indenture.

The Trustee shall authenticate and make available for delivery Securities for original issue in the aggregate principal amount of up to $500,000,000 upon receipt of a written order or orders of the Company signed by two Officers of the Company (a “Company Order”); provided that additional Securities may be issued in an unlimited aggregate principal amount so long as such Securities are part of the same issue, within the meaning of Treasury Regulations Sections 1.1275-1(f) and 1.1275-2(k)(2), as the Securities initially issued hereunder, and would be fungible with the Securities issued on the Issue Date for purposes of the Securities Act, the Exchange Act and other applicable U.S. securities laws.  If any additional Securities are issued, the Securities issued on the Issue Date and such additional Securities shall be treated as a single class for all purposes under this Indenture and shall vote together as one class on all matters with

11

respect to the Securities.  Each Company Order shall specify the amount of Securities to be authenticated and the date on which each original issue of Securities is to be authenticated.

The Trustee shall authenticate the Securities issued on the Issue Date.  Thereafter, the Trustee may appoint an authenticating agent acceptable to the Company to authenticate Securities.  An authenticating agent may authenticate Securities whenever the Trustee may do so.  Each reference in this Indenture to authentication by the Trustee includes authentication by such agent.  An authenticating agent shall have the same rights as the Trustee to deal with the Company or an Affiliate of the Company.

The Securities shall be issuable only in registered form without coupons and only in denominations of $1,000 principal amount and any integral multiple thereof.

If any successor that has replaced the Company in accordance with Article 8 has executed an indenture supplemental hereto with the Trustee pursuant to Section 5.12, any of the Securities authenticated or delivered prior to such transaction may, from time to time, at the request of such successor, be exchanged for other Securities executed in the name of the such successor with such changes in phraseology and form as may be appropriate, but otherwise identical to the Securities surrendered for such exchange and of like principal amount; and the Trustee, upon receipt of a Company Order of such successor, shall authenticate and deliver Securities as specified in such order for the purpose of such exchange.  If Securities shall at any time be authenticated and delivered in any new name of such successor pursuant to this provision of Section 2.02 in exchange or substitution for or upon registration of transfer of any Securities, such successor, at the option of the Holders but without expense to them, shall provide for the exchange of all Securities then outstanding for Securities authenticated and delivered in such new name.

Section 2.03.  Registrar, Paying Agent and Conversion Agent.

The Company shall maintain one or more offices or agencies where Securities may be presented for registration of transfer or for exchange (each, a “Registrar”), one or more offices or agencies where Securities may be presented for payment (each, a “Paying Agent”), one or more offices or agencies where Securities may be presented for conversion (each, a “Conversion Agent”) and one or more offices or agencies where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served.  The Company will at all times maintain a Paying Agent, Conversion Agent, Registrar and an office or agency where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served in the Borough of Manhattan, The City of New York.  One of the Registrars (the “Primary Registrar”) shall keep a register of the Securities and of their transfer and exchange.

The Company shall enter into an appropriate agency agreement with any Agent not a party to this Indenture.  The agreement shall implement the provisions of this Indenture that relate to such Agent (including any applicable terms of the TIA).  The Company shall notify the Trustee of the name and address of any Agent not a party to this Indenture.  If the Company fails to maintain a Registrar, Paying Agent, Conversion Agent or agent for service of notices and demands in any place required by this Indenture, or fails to give the foregoing notice, the Trustee

12

shall act as such.  The Company or any Affiliate of the Company may act as Paying Agent (except for the purposes of Section 7.01 and Article 11); provided, that upon any proceeding under any Bankruptcy Law with respect to the Company or any such Affiliate, if the Company or such Affiliate is then acting as Paying Agent, the Trustee shall replace the Company or such Affiliate, as applicable, as Paying Agent.

The Company hereby initially designates the Trustee as Paying Agent, Registrar, Custodian and Conversion Agent, and each of the Corporate Trust Office of the Trustee and the office or agency of the Trustee in the Borough of Manhattan, The City of New York (which shall initially be U.S. Bank Trust National Association, an Affiliate of the Trustee), to be such office or agency of the Company for each of the aforesaid purposes.

Section 2.04.  Paying Agent to Hold Money in Trust.

Prior to 11:00 a.m., New York City time, on each due date of the principal of or interest, if any, on, any Securities, the Company shall deposit with a Paying Agent a sum sufficient to pay such principal or interest, if any, so becoming due.  Subject to Section 6.02, a Paying Agent shall hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal of, and interest, if any, on, the Securities and shall notify the Trustee of any default by the Company (or any other obligor on the Securities) in making any such payment.  If the Company or an Affiliate of the Company acts as Paying Agent, it shall, before 11:00 a.m., New York City time, on each due date of the principal of, or interest, if any, on, any Securities, segregate the money and hold it as a separate trust fund.  The Company at any time may require a Paying Agent to pay all money held by it to the Trustee, and the Trustee may at any time during the continuance of any default, upon written request to a Paying Agent, require such Paying Agent to pay forthwith to the Trustee all sums so held in trust by such Paying Agent.  Upon doing so, the Paying Agent (other than the Company) shall have no further liability for the money.

Section 2.05.  Holder Lists.

The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders.  If the Trustee is not the Primary Registrar, the Company shall furnish to the Trustee on or before each semiannual interest payment date, and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Holders.

Section 2.06.  Transfer and Exchange.

(a)Subject to compliance with any applicable additional requirements contained in Section 2.12 when a Security is presented to a Registrar with a request to register a transfer thereof or to exchange such Security for an equal principal amount of Securities of other authorized denominations, the Registrar shall register the transfer or make the exchange as requested if the requirements for such transactions specified in this Indenture and in the related certificate are met; provided, however, that every Security presented or surrendered for registration of transfer or exchange shall be duly endorsed or accompanied by an assignment

13

form and, if applicable, a transfer certificate, each in the form included in Exhibit A, and in form satisfactory to the Registrar duly executed by the Holder thereof or its attorney duly authorized in writing.  To permit registration of transfers and exchanges, upon surrender of any Security for transfer or exchange at an office or agency maintained pursuant to Section 2.03, the Company shall execute and the Trustee shall authenticate Securities of a like aggregate principal amount at the Registrar’s request.  Any exchange or transfer shall be without charge, except that the Company or the Registrar may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto; provided that this sentence shall not apply to any exchange pursuant to Section 2.10, 3.04, 5.02 (third paragraph) or 12.05.

None of the Company, any Registrar or the Trustee shall be required to exchange or register a transfer of any Securities or portions thereof in respect of which a Fundamental Change Purchase Notice has been delivered and not withdrawn by the Holder thereof (except, in the case of the purchase of a Security in part, the portion thereof not to be purchased).

All Securities issued upon any transfer or exchange of Securities shall be valid obligations of the Company, evidencing the same debt and entitled to the same benefits under this Indenture, as the Securities surrendered upon such transfer or exchange.

(b)Any Registrar appointed pursuant to Section 2.03 hereof shall provide to the Trustee such information as the Trustee may reasonably require in connection with the delivery by such Registrar of Securities upon transfer or exchange of Securities.

(c)Each Holder of a Security agrees to indemnify the Company and the Trustee against any liability that may result from the transfer, exchange or assignment of such Holder’s Security in violation of any provision of this Indenture and/or applicable U.S. federal or state securities law.

The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Security (including any transfers between or among Agent Members or other beneficial owners of interests in any Global Security) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of, this Indenture and to examine the same to determine substantial compliance as to form with the express requirements hereof.

Section 2.07.  Replacement Securities.

If any mutilated Security is surrendered to the Company, a Registrar or the Trustee, or the Company, a Registrar and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Security, and there is delivered to the Company, the applicable Registrar and the Trustee such security or indemnity as will be required by them to save each of them harmless, then, in the absence of notice to the Company, such Registrar or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute, and upon its written request the Trustee shall authenticate and deliver, in exchange for any such mutilated

14

Security or in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and principal amount, bearing a number not contemporaneously outstanding.

In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, or is about to be purchased by the Company pursuant to Article 3, the Company in its discretion may, instead of issuing a new Security, pay or purchase such Security, as the case may be.

Upon the issuance of any new Securities under this Section 2.07, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other reasonable expenses (including the reasonable fees and expenses of the Trustee or the Registrar) in connection therewith.

Every new Security issued pursuant to this Section 2.07 in lieu of any mutilated, destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the mutilated, destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder.

The provisions of this Section 2.07 are (to the extent lawful) exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.

Section 2.08.  Outstanding Securities.

Securities outstanding at any time are all Securities authenticated by the Trustee, except for those canceled by it, those converted pursuant to Article 5, those delivered to it for cancellation or surrendered for transfer or exchange and those described in this Section 2.08 as not outstanding.

If a Security is replaced pursuant to Section 2.07, it ceases to be outstanding unless the Company receives, subsequent to the new Security’s authentication, proof satisfactory to the Company that the replaced Security is held by a bona fide purchaser.

If a Paying Agent (other than the Company or an Affiliate of the Company) holds in respect of Securities on a Fundamental Change Purchase Date or the Final Maturity Date money sufficient to pay the principal of, and any accrued interest on, Securities (or portions thereof) payable on that date, then on and after such Fundamental Change Purchase Date or the Final Maturity Date, as the case may be, such Securities (or portions thereof, as the case may be) shall cease to be outstanding and any interest on them shall cease to accrue.

Subject to the restrictions contained in Section 2.09, a Security does not cease to be outstanding because the Company or an Affiliate of the Company holds the Security.

15

Section 2.09.  Treasury Securities.

In determining whether the Holders of the required principal amount of Securities have concurred in any notice, direction, waiver or consent, Securities owned by the Company or any other obligor on the Securities or by any Affiliate of the Company or of such other obligor shall be disregarded, except that, for purposes of determining whether the Trustee shall be protected in relying on any such notice, direction, waiver or consent, only Securities which a Trust Officer of the Trustee actually knows are so owned shall be so disregarded.  Securities so owned which have been pledged in good faith shall not be disregarded if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to the Securities and that the pledgee is not the Company or any other obligor on the Securities or any Affiliate of the Company or of such other obligor.

Section 2.10.  Temporary Securities.

Until definitive Securities are ready for delivery, the Company may prepare and execute, and, upon receipt of a Company Order, the Trustee shall authenticate and deliver, temporary Securities.  Temporary Securities shall be substantially in the form of definitive Securities but may have variations that the Company with the consent of the Trustee considers appropriate for temporary Securities.  Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate and deliver definitive Securities in exchange for temporary Securities.

Section 2.11.  Cancellation.

The Company at any time may deliver Securities to the Trustee for cancellation.  The Registrar, the Paying Agent and the Conversion Agent shall forward to the Trustee or its agent any Securities surrendered to them for transfer, exchange, payment or conversion.  The Trustee and no one else shall cancel, in accordance with its standard procedures, all Securities surrendered for transfer, exchange, payment, conversion or cancellation and shall deliver the canceled Securities to the Company.  No Security shall be authenticated in exchange for any Security cancelled pursuant to this Section 2.11.

The Company may, to the extent permitted by law, purchase Securities in the open market or by tender offer at any price or by private agreement.  Any Securities purchased or otherwise acquired by the Company or any of its Subsidiaries prior to the Final Maturity Date may, to the extent permitted by law, be reissued or resold or may, at the option of the Company, be surrendered to the Trustee for cancellation.  Any Securities surrendered for cancellation may not be reissued or resold and shall be promptly cancelled by the Trustee, and the Company may not hold or resell such Securities or issue any new Securities to replace any such Securities or any Securities that any Holder has converted pursuant to Article 5.

Section 2.12.  Additional Transfer Requirements.

(a)A Global Security may not be transferred, in whole or in part, to any Person other than the Depositary or a nominee or any successor thereof, and no such transfer to any such other Person may be registered; provided that the foregoing shall not prohibit any transfer of a Security that is issued in exchange for a Global Security but is not itself a Global Security.  No transfer of a Security to any Person shall be effective under this Indenture or the Securities unless and until

16

such Security has been registered in the name of such Person.  Notwithstanding any other provisions of this Indenture or the Securities, transfers of a Global Security, in whole or in part, shall be made only in accordance with this Section 2.12.

(b)The provisions of clauses (i) through (v) below shall apply only to Global Securities:

(i)Notwithstanding any other provisions of this Indenture or the Securities, a Global Security shall not be exchanged in whole or in part for a Security registered in the name of any Person other than the Depositary or one or more nominees thereof; provided that a Global Security may be exchanged for Securities registered in the names of any person designated by the Depositary in the event that (A) the Depositary has notified the Company that it is unwilling or unable to continue as Depositary for such Global Security or such Depositary has ceased to be a “clearing agency” registered under the Exchange Act, and a successor Depositary is not appointed by the Company within 90 days, (B) the Company has provided the Depositary with written notice that it has decided to discontinue use of the system of book-entry transfer through the Depositary or any successor Depositary or (C) an Event of Default has occurred and is continuing with respect to the Securities.  Any Global Security exchanged pursuant to clause (A) or (B) above shall be so exchanged in whole and not in part, and any Global Security exchanged pursuant to clause (C) above may be exchanged in whole or from time to time in part as directed by the Depositary.  Any Security issued in exchange for a Global Security or any portion thereof shall be a Global Security; provided that any such Security so issued that is registered in the name of a Person other than the Depositary or a nominee thereof shall not be a Global Security.

(ii)Securities issued in exchange for a Global Security or any portion thereof shall be issued in definitive, fully registered form, without interest coupons, shall have an aggregate principal amount equal to that of such Global Security or portion thereof to be so exchanged, shall be registered in such names and be in such authorized denominations as the Depositary shall designate and shall bear the applicable legends provided for herein.  Any Global Security to be exchanged in whole shall be surrendered by the Depositary to the Trustee, as Registrar.  With regard to any Global Security to be exchanged in part, either such Global Security shall be so surrendered for exchange or, if the Trustee is acting as custodian for the Depositary or its nominee with respect to such Global Security, the principal amount thereof shall be reduced by an amount equal to the portion thereof to be so exchanged, by means of an appropriate adjustment made on the records of the Trustee.  Upon any such surrender or adjustment, the Trustee shall authenticate and deliver the Security issuable on such exchange to or upon the order of the Depositary or an authorized representative thereof.

(iii)The registered Holder may grant proxies and otherwise authorize any Person, including Agent Members and persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Securities.

17

(iv)In the event of the occurrence of any of the events specified in clause (i) above, the Company will promptly make available to the Trustee a reasonable supply of Certificated Securities in definitive, fully registered form, without interest coupons.  If (A) an event described in Section 2.12(b)(i)(A) or (B) occurs and definitive Certificated Securities are not issued promptly to all beneficial owners or (B) the Registrar receives from a beneficial owner instructions to obtain definitive Certificated Securities due to an event described in Section 2.12(b)(i)(C) and definitive Certificated Securities are not issued promptly to any such beneficial owner, the Company expressly acknowledges, with respect to the right of any Holder to pursue a remedy pursuant to Section 9.06 hereof, the right of any beneficial owner of Securities to pursue such remedy with respect to the portion of the Global Security that represents such beneficial owner’s Securities as if such definitive certificated Securities had been issued.

(v)Notwithstanding any provision to the contrary in this Indenture, so long as a Global Security remains outstanding and is held by or on behalf of the Depositary, transfers of a Global Security, in whole or in part, or of any beneficial interest therein, shall only be made in accordance with Section 2.06, this Section 2.12 and the rules and procedures of the Depositary for such Global Security to the extent applicable to such transaction and as in effect from time to time.

Section 2.13.  CUSIP Numbers.

The Company in issuing the Securities may use one or more “CUSIP” numbers (if then generally in use), and, if so, the Trustee shall use “CUSIP” numbers in notices of purchase as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a purchase and that reliance may be placed only on the other identification numbers printed on the Securities, and any such purchase shall not be affected by any defect in or omission of such numbers.  The Company will promptly notify the Trustee of any change in the “CUSIP” numbers.

ARTICLE 3
PURCHASES OF SECURITIES UPON FUNDAMENTAL CHANGE

Section 3.01.  Purchase of Securities at Option of the Holder Upon Fundamental Change.

(a)If at any time that Securities remain outstanding there shall occur a Fundamental Change, Securities shall be purchased by the Company at the option of the Holders, as of a date, determined by the Company in its sole discretion, that is not less than 20 Business Days and not more than 30 Business Days after the occurrence of the Fundamental Change (the “Fundamental Change Purchase Date”) at a purchase price equal to 100% of the principal amount of the Securities to be purchased, together with any accrued and unpaid interest to, but excluding, the Fundamental Change Purchase Date (the “Fundamental Change Purchase

18

Price”), unless the Fundamental Change Purchase Date is after a Record Date and on or prior to the related Interest Payment Date, in which case interest accrued to the Interest Payment Date will be paid to Holders of the Securities as of the preceding Record Date and the Fundamental Change Purchase Price payable to any Holder surrendering such Holder’s Security for purchase pursuant to this Article 3 shall be equal to the principal amount of Securities subject to purchase and will not include any accrued and unpaid interest.  The Fundamental Change Purchase Price shall be payable in cash, subject to satisfaction by or on behalf of any Holder of the requirements set forth in subsection (c) of this Section 3.01.  Notwithstanding the foregoing, the Company may not repurchase the Securities upon the occurrence of a Fundamental Change if the principal amount of the Securities has been accelerated and such acceleration has not been rescinded on or prior to the Fundamental Change Purchase Date.

A “Fundamental Change” shall mean the occurrence of a Change in Control or a Termination of Trading.

A “Change in Control” shall be deemed to have occurred if any of the following occurs after the date hereof:

(i)any “person” or “group” (as such terms are defined below) is or becomes the “beneficial owner” (as defined below), directly or indirectly, of shares of Voting Stock of the Company representing 50% or more of the total voting power of all outstanding classes of Voting Stock of the Company or has the power, directly or indirectly, to elect a majority of the members of the Board of Directors;

(ii)the Company consolidates with, enters into a binding share exchange with, or merges with or into, another Person or the Company sells, assigns, conveys, transfers, leases or otherwise disposes of all or substantially all of the assets of the Company, or any Person consolidates with, or merges with or into, the Company, in any such event other than pursuant to a transaction (A) in which the Persons that “beneficially owned” (as defined below), directly or indirectly, shares of Voting Stock of the Company immediately prior to such transaction “beneficially own” (as defined below), directly or indirectly, shares of Voting Stock of the Company representing at least a majority of the total voting power of all outstanding classes of Voting Stock of the surviving or transferee Person, with such Holders’ proportional voting power immediately after such transaction vis-à-vis each other with respect to the securities they receive in such transaction being in substantially the same proportions as their respective voting power vis-à-vis each other immediately prior to such transaction, or (B) which is effected solely to change the jurisdiction of incorporation of the Company and results in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of common stock of the surviving Person; or

(iii)the holders of capital stock of the Company approve any plan or proposal for the liquidation or dissolution of the Company (whether or not otherwise in compliance with the terms of this Indenture).

19

For the purpose of the definition of “Change in Control”, (i) “person” and “group” have the meanings given such terms under Section 13(d) and 14(d) of the Exchange Act or any successor provision to either of the foregoing, and the term “group” includes any group acting for the purpose of acquiring, holding, voting or disposing of securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act (or any successor provision thereto), (ii) a “beneficial owner” shall be determined in accordance with Rule 13d-3 under the Exchange Act, as in effect on the date of this Indenture, except that the number of shares of Voting Stock of the Company shall be deemed to include, in addition to all outstanding shares of Voting Stock of the Company and Unissued Shares deemed to be held by the “person” or “group” (as such terms are defined above) or other Person with respect to which the Change in Control determination is being made, all Unissued Shares deemed to be held by all other Persons, and (iii) the terms “beneficially owned” and “beneficially own” shall have meanings correlative to that of “beneficial owner.”  The term “Unissued Shares” means shares of Voting Stock not outstanding that are subject to options, warrants, rights to purchase or conversion privileges exercisable within 60 days of the date of determination of a Change in Control.

Notwithstanding anything to the contrary set forth in this Section 3.01, Holders shall not have the right to require the Company to purchase any Securities under clauses (i) and (ii) above, and the Company shall not be required to deliver a written notice of a Fundamental Change incidental thereto as a result of any acquisition, consolidation, merger or binding share exchange or a sale, assignment, conveyance, transfer, lease or other disposition if at least 90% of the consideration (excluding cash payments for fractional shares and cash payments pursuant to dissenters’ appraisal rights) paid for the Common Stock in such transaction or transactions consists of shares of common stock traded on the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or any of their respective successors) (or which will be so traded immediately following the transaction or transactions) and as a result of such transaction or transactions the Securities become convertible into such shares of such common stock.

A “Termination of Trading” means that the Common Stock or other securities into which the Securities are convertible are not approved for listing the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or any of their respective successors).

If any transaction in which the Common Stock is replaced by the securities of another entity occurs, following completion of any related Make Whole Adjustment Event Period and any related Fundamental Change Purchase Date, references to the Company in the definitions of “Fundamental Change,” “Change of Control” and “Termination of Trading” above shall apply to such other entity instead.

(b)Within 10 Business Days after the occurrence of a Fundamental Change, the Company shall mail a written notice of the Fundamental Change to the Trustee and to each Holder (and to beneficial owners as required by applicable law).  The Company shall also issue a press release announcing the occurrence of such Fundamental Change (and make such press

20

release available on the Company’s website).  The notice shall include the form of a Fundamental Change Purchase Notice to be completed by the Holder and shall state:

   (i)briefly, the events causing such Fundamental Change;

  (ii)the effective date of such Fundamental Change;

 (iii)whether the Fundamental Change constitutes a Make Whole Adjustment Event and, if so, the Effective Date of such Make Whole Adjustment Event;

  (iv)briefly, the conversion rights of the Securities, the Conversion Price and any adjustments thereto;

   (v)the Holder’s right to require the Company to purchase the Securities;

  (vi)the Fundamental Change Purchase Date;

 (vii)the Fundamental Change Purchase Price;

(viii)the date by which the Fundamental Change Purchase Notice pursuant to this Section 3.01 must be given;

  (ix)that Securities as to which a Fundamental Change Purchase Notice has been given may be converted into Cash and Common Stock (if any) pursuant to Article 5 of this Indenture only to the extent that the Fundamental Change Purchase Notice has been withdrawn in accordance with the terms of this Indenture;

   (x)the procedures that the Holder must follow to exercise rights under this Section 3.01;

  (xi)the procedures for withdrawing a Fundamental Change Purchase Notice, including a form of notice of withdrawal;

 (xii)that the Holder must satisfy the requirements set forth in the Securities in order to convert the Securities; and

(xiii)the name and address of each Paying Agent and Conversion Agent.

If any of the Securities is in the form of a Global Security, then the Company shall modify such notice to the extent necessary to accord with the procedures of the Depositary applicable to the repurchase of Global Securities.

(c)A Holder may exercise its rights specified in subsection (a) of this Section 3.01 upon delivery of a written notice (which shall be in substantially the form included in Exhibit A hereto and which may be delivered by letter, overnight courier, hand delivery, facsimile transmission or in any other written form and, in the case of Global Securities, may (or, if definitive Certificated Securities have not been issued, shall) be delivered electronically or by

21

other means in accordance with the Depositary’s customary procedures) of the exercise of such rights (a “Fundamental Change Purchase Notice”) to any Paying Agent at any time during the period between the date on which notice is given of the Fundamental Change and the close of business on the second Scheduled Trading Day immediately preceding the Fundamental Change Purchase Date.  The Fundamental Change Purchase Notice must specify the Securities for which the purchase right is being exercised.

The delivery of such Security to any Paying Agent (together with all necessary endorsements) at the office of such Paying Agent shall be a condition to the receipt by the Holder of the Fundamental Change Purchase Price therefor.

The Company shall purchase from the Holder thereof, pursuant to this Section 3.01, a portion of a Security if the principal amount of such portion is $1,000 or an integral multiple of $1,000.  Provisions of this Indenture that apply to the purchase of all of a Security pursuant to Section 3.01 through Section 3.04 also apply to the purchase of such portion of such Security.

Notwithstanding anything herein to the contrary, any Holder delivering to a Paying Agent the Fundamental Change Purchase Notice contemplated by this subsection (c) shall have the right to withdraw such Fundamental Change Purchase Notice in whole or in a portion thereof that is a principal amount of $1,000 or in an integral multiple thereof at any time prior to 5:00 p.m., New York City time, on the second Scheduled Trading Day immediately preceding the Fundamental Change Purchase Date by delivery of a written notice of withdrawal to the Paying Agent in accordance with Section 3.02.

A Paying Agent shall promptly notify the Company of the receipt by it of any Fundamental Change Purchase Notice or written withdrawal thereof.

Anything herein to the contrary notwithstanding, in the case of Global Securities, any Fundamental Change Purchase Notice may be delivered or withdrawn and such Securities may be surrendered or delivered for purchase in accordance with the Applicable Procedures as in effect from time to time.

Section 3.02.  Effect of Fundamental Change Purchase Notice.

Upon receipt by any Paying Agent of the Fundamental Change Purchase Notice specified in Section 3.01(c), the Holder of the Security in respect of which such Fundamental Change Purchase Notice was given shall (unless such Fundamental Change Purchase Notice is withdrawn as specified below) thereafter be entitled to receive the Fundamental Change Purchase Price with respect to such Security.  Such Fundamental Change Purchase Price shall be paid to such Holder promptly following the later of (a) the Fundamental Change Purchase Date with respect to such Security (provided the conditions in Section 3.01(c) have been satisfied) and (b) the time of delivery of such Security to a Paying Agent by the Holder thereof in the manner required by Section 3.01(c).  Securities in respect of which a Fundamental Change Purchase Notice has been given by the Holder thereof may not be converted into shares of Common Stock pursuant to Article 5 on or after the date of the delivery of such Fundamental Change Purchase Notice unless such Fundamental Change Purchase Notice has first been validly withdrawn.

22

A Fundamental Change Purchase Notice may be withdrawn by means of a written notice (which may be delivered by mail, overnight courier, hand delivery, facsimile transmission or in any other written form and, in the case of Global Securities, may be delivered electronically or by other means in accordance with the Depositary’s customary procedures) of withdrawal delivered by the Holder to a Paying Agent at any time prior to 5:00 p.m., New York City time, on the second Scheduled Trading Day immediately preceding the Fundamental Change Purchase Date, specifying the principal amount of the Security or portion thereof (which must be a principal amount of $1,000 or an integral multiple of $1,000 in excess thereof) with respect to which such notice of withdrawal is being submitted.

Section 3.03.  Deposit of Fundamental Change Purchase Price.

On or before 11:00 a.m., New York City time, on the Fundamental Change Purchase Date, the Company shall deposit with the Trustee or with a Paying Agent (other than the Company or an Affiliate of the Company) an amount of money (in immediately available funds if deposited on such Fundamental Change Purchase Date) sufficient to pay the aggregate Fundamental Change Purchase Price of all the Securities or portions thereof that are to be purchased as of such Fundamental Change Purchase Date.  The manner in which the deposit required by this Section 3.03 is made by the Company shall be at the option of the Company; provided that such deposit shall be made in a manner such that the Trustee or a Paying Agent shall have immediately available funds on the Fundamental Change Purchase Date.

If a Paying Agent holds, in accordance with the terms hereof, money sufficient to pay the Fundamental Change Purchase Price of any Security for which a Fundamental Change Purchase Notice has been tendered and not withdrawn in accordance with this Indenture, then, on the Fundamental Change Purchase Date, (i) such Security will cease to be outstanding and interest will cease to accrue (whether or not book-entry transfer of such Security is made or whether or not such Security is delivered to the Paying Agent) and (ii) all other rights of the Holder in respect thereof shall terminate (other than the right to receive the Fundamental Change Purchase Price and previously accrued and unpaid interest as aforesaid).  The Company shall publicly announce the principal amount of Securities purchased as a result of such Fundamental Change on or as soon as practicable after the Fundamental Change Purchase Date.

To the extent that the aggregate amount of cash deposited by the Company pursuant to this Section 3.03 exceeds the aggregate Fundamental Change Purchase Price of the Securities or portions thereof that the Company is obligated to purchase, then promptly after the Fundamental Change Purchase Date the Trustee or a Paying Agent, as the case may be, shall return any such excess cash to the Company.

Section 3.04.  Securities Purchased in Part.

Any Security that is to be purchased only in part shall be surrendered at the office of a Paying Agent, and promptly after the Fundamental Change Purchase Date the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Security, without service charge, a new Security or Securities, of such authorized denomination or denominations

23

as may be requested by such Holder, in aggregate principal amount equal to, and in exchange for, the portion of the principal amount of the Security so surrendered that is not purchased.

Section 3.05.  Compliance with Securities Laws Upon Purchase of Securities.

In connection with any offer to purchase or repurchase Securities under Section 3.01, the Company shall (a) comply with Rule 13e-4, Rule 14e-1 and any other tender offer rules under the Exchange Act, to the extent any such rules are applicable, (b) file a Schedule TO (or any successor or similar schedule, form or report), if required, under the Exchange Act and (c) otherwise comply with all federal and state securities laws in connection with such offer to purchase or repurchase Securities, all so as to permit the rights of the Holders and obligations of the Company under Section 3.01 through Section 3.04 to be exercised in the time and in the manner specified therein.

ARTICLE 4
PAYMENT OF INTEREST AND MAKE WHOLE ADJUSTMENT EVENTS

Section 4.01. Interest Payments

(a)The Company shall pay interest on the Securities at a rate of 2.50% per annum, payable semi-annually in arrears on May 1 and November 1 of each year (each, an “Interest Payment Date”), or if any such day is not a Business Day, the immediately following Business Day, commencing November 1, 2009.  Interest on a Security shall be paid to the Holder of such Security at the close of business on April 15 or October 15 (each, a “Record Date”), as the case may be, next preceding the related Interest Payment Date, and shall be computed on the basis of a 360-day year comprised of twelve 30-day months.  In the event of the maturity, conversion, or purchase of a Security by the Company at the option of the Holder, interest shall cease to accrue on such Security.  The Company shall pay interest on the Final Maturity Date to Holders of record of a Security on the Record Date immediately preceding the Final Maturity Date regardless of whether such Holders convert their Securities.

(b)Upon conversion of a Security, (i) a Holder shall not receive any cash payment of interest (unless such conversion occurs between a Record Date and the Interest Payment Date to which it relates, in which case a Holder that was the Holder on the Record Date will receive on the Interest Payment Date accrued and unpaid interest) and the Conversion Rate shall not be adjusted to account for accrued and unpaid interest and (ii) except as set forth in clause (c) below, the Company’s delivery to a Holder of cash and shares, if any, of Common Stock into which the Security is convertible shall be deemed to satisfy its obligation to pay the principal amount of such Security and accrued and unpaid interest, if any, to but not including the Conversion Date with respect to such Security.  Any accrued but unpaid interest shall be deemed to be paid in full upon conversion, rather than cancelled, extinguished or forfeited.

(c)Securities surrendered for conversion by a Holder after the close of business on any Record Date but prior to the next Interest Payment Date must be accompanied by payment of an

24

amount equal to the interest that will be payable on the Securities so converted on such Record Date; provided, however, that no such payment need be made (1) if the Company has specified a Fundamental Change Purchase Date that is after a Record Date and on or prior to the corresponding Interest Payment Date, (2) with respect to any Securities surrendered for conversion following the Record Date for the payment of interest immediately preceding the Final Maturity Date or (3) only to the extent of overdue interest, if any overdue interest exists at the time of conversion with respect to such Securities.

Section 4.02.  Increased Conversion Rate Applicable to Certain Securities Surrendered in Connection with Make Whole Adjustment Events.

(a)Notwithstanding anything herein to the contrary, in the event a Holder elects to surrender its Securities for conversion in accordance with Article 5, at any time from, and including, the Effective Date of a Make Whole Adjustment Event to, and including, the close of business on the second Scheduled Trading Day immediately preceding the related purchase date, or (in the case of a Make Whole Adjustment Event that does not also constitute a Fundamental Change) the 35th Scheduled Trading Day immediately following the Effective Date of such Make Whole Adjustment Event (such period, the “Make Whole Adjustment Event Period”), the Company will increase the Conversion Rate for the Securities surrendered for conversion by a number of additional shares of Common Stock (the “Additional Shares”), as described in this Section 4.02.

As used herein, a “Make Whole Adjustment Event” means (i) any Change in Control and (ii) any Termination of Trading; provided, however, that an acquisition, consolidation, merger or binding share exchange or a sale, assignment, conveyance, transfer, lease or other disposition otherwise constituting a Change in Control will not constitute a Make Whole Adjustment Event if at least 90% of the consideration (excluding cash payments for fractional shares and cash payments pursuant to dissenters’ appraisal rights) paid for the Common Stock in such transaction or transactions consists of shares of common stock traded on the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or any of their respective successors) (or which will be so traded immediately following the transaction or transactions) and as a result of such transaction or transactions the Securities become convertible into such shares of such common stock.

The number of Additional Shares by which the Conversion Rate shall be increased for conversions in connection with a Make Whole Adjustment Event shall be determined by reference to the table below and is based on the date on which the Make Whole Adjustment Event occurs or becomes effective (the “Effective Date”) and  (1) the price paid or deemed paid per share of Common Stock in the Change in Control in the case of a Make Whole Adjustment Event described in clause (ii) of the definition of Change in Control in Section 3.01, in the event that the Common Stock is acquired for cash, or (2) the average of the Closing Sale Prices of the Common Stock over the five consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the Effective Date of such other Make Whole Adjustment Event, in the case of any other Make Whole Adjustment Event (such amount determined under the first and second clause of this sentence, as applicable, the “Stock Price”).

25

Effective	Stock Price
Date	$60.00	$61.00	$62.00	$63.00	$65.00	$70.00	$75.00	$80.00	$90.00	$100.00	$125.00	$150.00	$175.00	$200.00	$250.00
May 27, 2009	2.1700	2.0931	2.0147	1.9404	1.8019	1.5086	1.2749	1.0864	0.8055	0.6108	0.3256	0.1807	0.0991	0.0507	0.0000
May 1, 2010	2.1700	2.1700	2.0835	2.0000	1.8459	1.5215	1.2670	1.0646	0.7695	0.5710	0.2928	0.1582	0.0848	0.0420	0.0000
May 1, 2011	2.1700	2.1700	2.1468	2.0508	1.8738	1.5070	1.2245	1.0051	0.6956	0.4973	0.2385	0.1238	0.0641	0.0300	0.0000
May 1, 2012	2.1700	2.1700	2.1589	2.0460	1.8393	1.4180	1.1035	0.8674	0.5532	0.3684	0.1576	0.0780	0.0389	0.0166	0.0000
May 1, 2013	2.1700	2.0966	1.9527	1.8182	1.5754	1.0985	0.7658	0.5361	0.2714	0.1483	0.0514	0.0263	0.0131	0.0042	0.0000
May 1, 2014	2.1700	1.8974	1.6331	1.3771	0.8888	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000

If the exact Stock Prices and Effective Dates are not set forth in the table, then:  (i) if the Stock Price is between two Stock Price amounts in the table or the Effective Date is between two Effective Dates in the table, the Additional Shares to be issued upon conversion of the Securities shall be determined by a straight-line interpolation between the number of Additional Shares set forth for the higher and lower Stock Price amounts and the two Effective Dates in the table, based on a 365-day year; (ii) if the Stock Price exceeds $250.00 per share, subject to adjustment as set forth herein, no Additional Shares shall be issued upon conversion of the Securities; and (iii) if the Stock Price is less than $60.00 per share, subject to adjustment as set forth herein, no Additional Shares shall be issued upon conversion of the Securities.

Notwithstanding the foregoing, in no event will the total number of shares of Common Stock issuable upon conversion exceed 16.66 shares per $1,000 principal amount of Securities, subject to adjustments for the same events for which the Conversion Rate is adjusted and pursuant to the same adjustment factor applied in such Conversion Rate adjustment pursuant to Section 5.06.

The Company shall deliver the additional conversion consideration payable pursuant to this Section 4.02 after the Effective Date of the applicable Make Whole Adjustment Event, notwithstanding that the Settlement Date in respect of other conversion consideration payable by the Company may occur earlier.  The Company shall deliver the portion of the conversion consideration payable on account of the increase in the Conversion Rate as soon as practicable, but in no event later than the third Business Day after the later of:  (i) the date a Holder surrenders its Security for conversion; (ii) the last Trading Day in the applicable Conversion Period; and (iii) the Effective Date of the Make Whole Adjustment Event.

As soon as practicable after the Company determines the anticipated Effective Date of any proposed Make Whole Adjustment Event, the Company shall mail to each Holder, the Trustee and the Conversion Agent written notice of, and shall use commercially reasonable efforts to give such notice not more than 70 Scheduled Trading Days nor less than 35 Scheduled Trading Days in advance of such anticipated Effective Date.  The Company shall also issue a press release announcing the anticipated Effective Date (and make such press release available on the Company’s website).  Each such notice and press release shall also state that in

26

connection with such Make Whole Adjustment Event, the Company shall increase, in accordance herewith, the Conversion Rate applicable to Securities entitled to such increase as provided herein (along with a description of how such increase shall be calculated and the time periods during which Securities must be surrendered in order to be entitled to such increase).

Section 4.03.  Adjustments Relating to Make Whole Adjustment Event.

Whenever the Conversion Price shall be adjusted from time to time by the Company pursuant to Section 5.06, each Stock Price set forth in the table under the row titled “Stock Price” in the table in Section 4.02(a) shall be adjusted in the same manner in which, at the same time and for the same events for which, the Conversion Price is to be so adjusted.  The Stock Prices in the table in Section 4.02(a) will be adjusted by the same adjustment factor applied to the Conversion Price pursuant to Section 5.06 and the number of additional shares by which the Conversion Rate will be increased will be adjusted by the inverse of that adjustment factor.

ARTICLE 5
CONVERSION

Section 5.01.  Conversion Privilege.

(a)Subject to the further provisions of this Article 5 and paragraph 6 of the Securities, a Holder of a Security may convert the principal amount of such Security (or any portion thereof equal to $1,000 or any integral multiple of $1,000 in excess thereof) into cash and shares of Common Stock any time until the close of business on November 1, 2013, at the Conversion Price then in effect, if, during any calendar quarter commencing after September 30, 2009, the Closing Sale Price of the Common Stock, for at least 20 Trading Days in the period of 30 consecutive Trading Days ending on the last Trading Day of the calendar quarter immediately preceding the calendar quarter in which the conversion occurs, is more than 130% of the Conversion Price per share of Common Stock in effect on such last Trading Day (the “Closing Sale Price Condition”), subject to the additional exceptions provided in Section 5.01(b).

Provisions of this Indenture that apply to conversion of all of a Security also apply to conversion of a portion of a Security.

A Security in respect of which a Holder has delivered a Fundamental Change Purchase Notice pursuant to Section 3.01(c) exercising the option of such Holder to require the Company to purchase such Security may be converted only if such Fundamental Change Purchase Notice is withdrawn by a written notice of withdrawal delivered to a Paying Agent prior to 5:00 p.m., New York City time, on the second Scheduled Trading Day immediately preceding the Fundamental Change Purchase Date in accordance with Section 3.02.

A Holder of Securities is not entitled to any rights of a holder of Common Stock until such Holder has converted its Securities and only to the extent such Securities are deemed to have been converted into Common Stock pursuant to this Article 5.

(b)Even if the Closing Sale Price Condition is not satisfied,

27

(i)if, after any five consecutive Trading Day period in which the Trading Price for the Securities for each such Trading Day was less than 98% of the Closing Sale Price of the Common Stock on such date multiplied by the then current Conversion Rate, a Holder may surrender Securities for conversion at any time during the following 10 Trading Days.  Upon request by the Trustee or any Holder or beneficial owner of the Securities, the Conversion Agent shall, on behalf of the Company, determine if the Securities are convertible pursuant to this Section 5.01(b)(i) and will notify the Company and the Trustee accordingly.  The Conversion Agent shall have no obligation to determine the Trading Price of the Securities unless the Company requests such determination in writing, the Company has no obligation to make such request unless the Trustee provides the Company with reasonable evidence that the Trading Price of the Securities on any Trading Day would be less than 98% of the product of the then-current Conversion Rate times the Closing Sale Price of the Common Stock on such date, and the Trustee has no obligation to provide such evidence unless directed by the Company or a Holder.  At such time, the Company shall instruct the Conversion Agent to determine the Trading Price of the Securities beginning on such Trading Day and on each of the next four Trading Days;

(ii)in the event that the Company declares a dividend or distribution to all or substantially all holders of Common Stock of:

(A)any rights, options or warrants entitling them to subscribe for or purchase, for a period expiring within 60 days, shares of Common Stock at a price per share less than the Closing Sale Price on the record date for such dividend or distribution, or

(B)cash, debt securities (or other evidences of indebtedness) or other assets (excluding dividends or distributions for which Conversion Price adjustment is required to be made under Section 5.06(a) or Section 5.06(b) of this Indenture), where the fair market value of such dividend or distribution per share of Common Stock, as determined in this Indenture, together with all other such dividends or distributions within the preceding twelve months, has a per share value exceeding 10% of the Closing Sale Price of the Common Stock as of the Trading Day immediately preceding the date of declaration for such dividend or distribution,

then the Securities may be surrendered for conversion beginning on the date the Company gives notice to the Holders of such right, which notice shall be given not less than 35 Scheduled Trading Days prior to the Ex-Dividend Date for such dividend or distribution, until the earlier of the close of business on the Business Day prior to the Ex-Dividend Date or until the Company announces that such distribution will not take place;

(iii)upon the occurrence of a Fundamental Change with respect to the Company, the Securities may be surrendered for conversion at any time from or after the

28

effective time of the Fundamental Change until the close of business on the second Scheduled Trading Day immediately preceding the related Fundamental Change Purchase Date, or, if there is no such Fundamental Change Purchase Date, the 35th Scheduled Trading Day immediately following the effective date of the Fundamental Change;

(iv)if the Company is a party to a consolidation, merger or binding share exchange or a sale, assignment, conveyance, transfer, lease or other disposition of all or substantially all of its property and assets that does not also constitute a Fundamental Change (including any event that would be a Fundamental Change but for the existence of an exception specified in the paragraph immediately preceding the definition of “Termination of Trading” in Section 3.01 hereof), in each case pursuant to which the Common Stock would be converted into cash, securities or other property, the Securities may be surrendered conversion at any time from or after the effective date of such transaction as announced by the Company (with the Company using commercially reasonable efforts to give such announcement at least 35 Scheduled Trading Days prior to such anticipated effective date), until the close of business on the 35th Scheduled Trading Day following the effective date of such transaction; and

(v)at any time after November 1, 2013 and until the close of business on the second Scheduled Trading Day immediately prior to the Final Maturity Date, the Securities may be surrendered for conversion regardless of whether any of the foregoing conditions has been satisfied.

Section 5.02.  Conversion Procedure.

The right to convert any Security may be exercised, (a) if such Security is represented by a Global Security, by book-entry transfer to the Conversion Agent (which initially shall be the Trustee) through the facilities of the Depositary in accordance with the Applicable Procedures, and, if required, by payment of any tax or duty, in accordance with Section 5.04, that may be payable in respect of any transfer involving the issue or delivery of the Common Stock in the name of Person other than the Holder of the Security, or (b) if such Security is represented by a Certificated Security, by delivery of such Security at the specified office of the Conversion Agent, accompanied by:  (i) a completed and duly signed conversion notice, in the form as set forth on the reverse of Security attached hereto as Exhibit A (a “Conversion Notice”); (ii) if such Certificated Security has been lost, stolen, destroyed or mutilated, a notice to the Conversion Agent in accordance with Section 2.07 regarding the loss, theft, destruction or mutilation of the Security; (iii) appropriate endorsements and transfer documents if required by the Conversion Agent; and (iv) payment of any tax or duty, in accordance with Section 5.04, which may be payable in respect of any transfer involving the issue or delivery of the Common Stock in the name of a Person other than the Holder of the Security.  The “Conversion Date” shall be the Business Day on which the Holder satisfies all of the requirements set forth in the immediately preceding sentence; provided, however, if a Holder surrenders for conversion a Security at any time after the 30th Scheduled Trading Day prior to the Final Maturity Date, the Conversion Date shall be deemed to be the 30th Trading Day immediately preceding such

29

Security’s Final Maturity Date.  On the third Business Day following the last day of the related Conversion Period, subject to Section 5.05, the Company shall deliver to the Holder through a Conversion Agent a certificate for the number of whole shares of Common Stock issuable upon the conversion and cash in an amount payable upon conversion (including cash in lieu of any fractional shares pursuant to Section 5.03).

The person in whose name the Common Stock certificate is registered shall be deemed to be a stockholder of record as of the last Trading Day of the related Conversion Period; provided, however, that if the related Conversion Date or such last Trading Day of the Conversion Period occurs on any date when the stock transfer books of the Company shall be closed, such occurrence shall not be effective to constitute the person or persons entitled to receive any such shares of Common Stock due upon conversion as the record holder or holders of such shares of Common Stock on such date, but such occurrence shall be effective to constitute the person or persons entitled to receive such shares of Common Stock as the record holder or holders thereof for all purposes at the close of business on the next succeeding day on which such stock transfer books are open.  Upon conversion of Securities, such person shall no longer be a Holder.

Upon surrender of a Security that is converted in part, the Company shall execute, and the Trustee shall authenticate and deliver to the Holder, a new Security equal in principal amount to the unconverted portion of the Security surrendered.

No Conversion Notice with respect to any Securities may be given by a Holder thereof if such Holder has also delivered a Fundamental Change Purchase Notice to the Company in respect of such Securities and not validly withdrawn such Fundamental Change Purchase Notice in accordance with Section 3.01, unless the Company defaults in the payment of the Fundamental Change Purchase Price.

Except as provided below, the Company shall pay or deliver the cash and shares of Common Stock, if any, payable or deliverable, as the case may be, upon conversion of a Security (the “Conversion Obligation”), through the Conversion Agent on the third Business Day immediately following the last Trading Day of the Conversion Period; provided, that if prior to the relevant Conversion Date, the Common Stock has been replaced by Reference Property consisting solely of cash, pursuant to Section 5.12, the Company shall pay such cash on the third Trading Day immediately following the relevant Conversion Date.  Notwithstanding the foregoing, if any information required to calculate the Conversion Obligation is not available as of the applicable Settlement Date, the Company will deliver the Conversion Obligation on the third Trading Day after the earliest Trading Day on which such calculation can be made (but in no event later than October 31, 2014).  If application of the provisions described above would result in settlement of a conversion during the 10 Trading Days immediately following the effective date of a Fundamental Change, settlement will instead take place on the 10th Trading Day following the relevant effective date. If any shares of Common Stock are due to a converting Holder, the Company shall issue or cause to be issued, and deliver to the Conversion Agent or to such Holder, or such Holder’s nominee or nominees, certificates or a book-entry transfer through the Depositary for the number of full shares of Common Stock to which such Holder shall be entitled in satisfaction of such Conversion Obligation.

30

Section 5.03.  Fractional Shares.

The Company will not issue fractional shares of Common Stock upon conversion of a Security.  Instead, the Company will pay cash in lieu of fractional shares by multiplying the Daily VWAP of a full share of Common Stock on the last Trading Day of such Conversion Period by the fractional amount and rounding the product to the nearest whole cent.  Whether fractional shares are issuable upon a conversion will be determined on the basis of the aggregate principal amount of Securities that the Holder is then converting into cash and shares of Common Stock, if any, and the aggregate number of shares, if any, of Common Stock issuable upon such conversion.

Section 5.04.  Taxes on Conversion.

If a Holder converts a Security, the Company shall pay any documentary, stamp or similar issue or transfer tax due on the issue of shares of Common Stock upon such conversion; provided, however, that the Holder shall pay any such tax which is due because the Holder requests the shares to be issued in a name other than the Holder’s name.  The Conversion Agent may refuse to deliver the certificate representing the Common Stock being issued in a name other than the Holder’s name until the Conversion Agent receives a sum sufficient to pay any tax which will be due because the shares are to be issued in a name other than the Holder’s name.  Nothing herein shall preclude any tax withholding required by law or regulation.

Section 5.05.  Settlement Upon Conversion.

(a)Subject to Section 5.01, a Holder upon conversion will receive, in respect of each $1,000 aggregate principal amount of such Holder’s Securities being converted, cash in an amount equal to the sum of the Principal Portions for each Trading Day during the relevant Conversion Period.  In addition, if the Daily Conversion Value exceeds $40.00 on any Trading Day during the relevant Conversion Period, the Company will also deliver shares of Common Stock in an amount equal to (i) the excess of the Daily Conversion Value over $40.00 divided by (ii) the Daily VWAP of the Common Stock on such Trading Day.

“Conversion Period”, with respect to any Security, means the 25 consecutive Trading Day period beginning on and including the third Trading Day immediately following the related Conversion Date, except that if a Holder surrenders a Security for conversion at any time after the 30th Scheduled Trading Day prior to the Final Maturity Date and until the close of business on the second Scheduled Trading Day immediately preceding the Final Maturity Date, then (i) the Holder will be deemed to have surrendered such Security as of the 30th Trading Day immediately preceding the Final Maturity Date, (ii) the Conversion Period for such Security will commence on the 27th Trading Day immediately preceding the Final Maturity Date, and (iii) the Settlement Date for the conversion of such Security will be the Final Maturity Date (assuming no delay in settlement due to Market Disruption Events).

“Daily Conversion Value” means, for each of the 25 consecutive Trading Days during the Conversion Period, for each $1,000 aggregate principal amount of Securities, one-twenty-

31

fifth (1/25th) of the product of (i) the applicable Conversion Rate and (ii) the Daily VWAP of the Common Stock (or other Reference Property, if applicable) on such Trading Day.

“Daily Settlement Amount,” for each of the 25 consecutive Trading Days during the relevant Conversion Period, for each $1,000 aggregate principal amount of Securities will consist of:

(i)cash equal to the lesser of (a) $40.00 and (b) the Daily Conversion Value for such Trading Day (the amount determined pursuant to this clause (i) being the “Principal Portion”); and

(ii)to the extent the Daily Conversion Value exceeds $40.00, a number of shares of Common Stock equal to (a) the difference between the Daily Conversion Value and $40.00, divided by (b) the Daily VWAP of the Common Stock for such Trading Day.

“Daily VWAP” for the Common Stock (or any security that is part of the Reference Property into which the Common Stock has been converted, if applicable), in respect of any Trading Day, means the per share volume-weighted average price of the Common Stock (or other security) on The NASDAQ Global Select Market (or other principal exchange on which such security is then listed) as displayed under the heading “Bloomberg VWAP” on Bloomberg page “CEPH<equity>AQR” (or its equivalent successor if such page is not available, or the Bloomberg page for any security that is part of the Reference Property into which the Common Stock has been converted, if applicable) in respect of the period from the scheduled opening of trading until the scheduled close of trading of the primary trading session on such Trading Day (or if such volume-weighted average price is unavailable, the market value of one share of the Common Stock on such Trading Day as determined by the Board of Directors in a commercially reasonable manner, using a volume-weighted average price method, provided that in making such determination the Board of Directors may rely conclusively on the determination of Daily VWAP for such Trading Day made by an independent nationally recognized securities dealer selected by the Board of Directors) and will be determined without regard to after hours trading or any other trading outside of the regular trading session.

(b)The Daily Settlement Amounts (if applicable) and the Daily Conversion Values (if applicable) shall be determined by the Company promptly following the last day of the Conversion Period.  Promptly after such determination of the Daily Settlement Amounts or the Daily Conversion Values, as the case may be, and the amount of cash deliverable in lieu of fractional shares (if any), the Company shall notify the Trustee and the Conversion Agent of the Daily Settlement Amounts or the Daily Conversion Values, as the case may be, and the amount of cash deliverable in lieu of fractional shares of Common Stock.  The Trustee and the Conversion Agent shall have no responsibility for any such determination.

(c)The Company shall, prior to the issuance of any Securities hereunder, and from time to time as may be necessary, reserve at all times and keep available, free from preemptive rights, out of its authorized but unissued Common Stock, a sufficient number of shares of Common Stock deliverable upon conversion of all of the Securities.

32

(d)All shares of Common Stock that may be issued upon conversion of the Securities shall be newly issued shares, shall be duly authorized, validly issued, fully paid and nonassessable and shall be free of any preemptive rights and free of any lien or adverse claim.

(e)The Company shall endeavor to comply with all applicable securities laws regulating the offer and delivery of any Common Stock upon conversion of Securities and shall list or cause to have quoted such shares of Common Stock on each national securities exchange, including The NASDAQ Global Select Market, or over-the-counter market or such other market on which the Common Stock is then listed or quoted; provided, however, that if the rules of such automated quotation system or exchange permit the Company to defer the listing of such Common Stock until the first conversion of the Securities into Common Stock in accordance with the provisions of this Indenture, the Company covenants to list such Common Stock issuable upon conversion of the Securities in accordance with the requirements of such automated quotation system or exchange at such time. Any Common Stock issued upon conversion of a Security hereunder which at the time of conversion was a “restricted security” (as defined in Rule 144 under the Securities Act) shall also be a restricted security.

(f)Notwithstanding anything herein to the contrary, nothing herein shall give to any Holder any rights as a creditor in respect of its right to conversion.

Section 5.06.  Adjustment of Conversion Price.

The conversion price as stated in paragraph 6 of the Securities (the “Conversion Price”) shall be adjusted from time to time by the Company as follows:

(a)If the Company issues solely shares of Common Stock as a dividend or distribution on all or substantially all of the shares of Common Stock, or if the Company subdivides or combines the outstanding shares of Common Stock, the applicable Conversion Price will be adjusted based on the following formula:

CP = CP0 ×	OS0
	OS

where

CP0	=	the Conversion Price in effect immediately prior to the open of business on the Ex-Dividend Date for such dividend or distribution, or immediately prior to the open of business on the effective date of such subdivision or combination of Common Stock, as the case may be;
CP	=	the Conversion Price in effect immediately after the open of business on the Ex-Dividend Date for such dividend or distribution, or immediately after the open of business on the effective date of such subdivision or combination of Common Stock, as the case may be;
OS0	=	the number of shares of Common Stock outstanding immediately prior to the open of business on the Ex-Dividend Date for such dividend or

33

		distribution, or immediately prior to the open of business on the effective date of such subdivision or combination of Common Stock, as the case may be; and
OS	=	the number of shares of Common Stock outstanding immediately after such dividend or distribution, or immediately after the effective date of such subdivision or combination of Common Stock, as the case may be.

Such adjustment shall become effective immediately after the opening of business on the Ex-Dividend Date for such dividend or distribution, or the effective date for such subdivision or combination of Common Stock.  If any dividend or distribution of the type described in this Section 5.06(a) is declared but not so paid or made, or the outstanding shares of Common Stock are not split or combined, as the case may be, the Conversion Price shall be immediately readjusted, effective as of the date the Board of Directors determines not to pay such dividend or distribution, or subdivide or combine the outstanding shares of Common Stock, as the case may be, to the Conversion Price that would then be in effect if such dividend, distribution, subdivision or combination of Common Stock had not been declared or announced.

(b)If the Company distributes to all or substantially all holders of its Common Stock any rights, options or warrants entitling them for a period of not more than 60 calendar days from the record date for such distribution to subscribe for or purchase shares of the Common Stock (or securities convertible into Common Stock), at a price per share (or a conversion price per share) less than the average of the Closing Sale Prices of the Common Stock for the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the Ex-Dividend Date for such distribution, the Conversion Price shall be decreased based on the following formula:

CP = CP0 ×	OS0 + Y
	OS0 + X

where

CP0	=	the Conversion Price in effect immediately prior to the open of business on the Ex-Dividend Date for such distribution;
CP	=	the Conversion Price in effect immediately after the open of business on the Ex-Dividend Date for such distribution;
OS0	=	the number of shares of the Common Stock that are outstanding immediately prior to the open of business on the Ex-Dividend Date for such distribution;
X	=	the total number of shares of the Common Stock issuable pursuant to such rights, options or warrants; and

34

Y = the number of shares of the Common Stock equal to the aggregate price payable to exercise such rights, options or warrants, divided by the average of the Closing Sale Prices of Common Stock over the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the Ex-Dividend Date relating to such distribution.

Such adjustment shall be successively made whenever any such rights, options or warrants are distributed and shall become effective immediately after the opening of business on the Ex-Dividend Date for such distribution.  To the extent that shares of the Common Stock are not delivered after the expiration of such rights, options or warrants, the Conversion Price shall be readjusted to the Conversion Price that would then be in effect had the adjustments made upon the issuance of such rights, options or warrants been made on the basis of delivery of only the number of shares of Common Stock actually delivered.  If such rights, options or warrants are not so issued, the Conversion Price shall again be adjusted to be the Conversion Price that would then be in effect if such Ex-Dividend Date for such distribution had not been fixed.

For purposes of this Section 5.06(b), in determining whether any rights, options or warrants entitle the holders to subscribe for or purchase shares of the Common Stock at less than the average of the Closing Sale Prices of the Common Stock for each Trading Day in the applicable 10-consecutive Trading Day period, there shall be taken into account any consideration received by the Company for such rights, options or warrants and any amount payable on exercise or conversion thereof, the value of such consideration, if other than cash, to be determined by the Board of Directors.  In no event shall the Conversion Price be increased pursuant to this Section 5.06(b).

(c)If the Company shall distribute shares of its Capital Stock, evidences of its indebtedness or other of its assets or property to all or substantially all holders of its Common Stock other than (i) dividends or distributions (including subdivision of Common Stock) covered by Section 5.06(a) or Section 5.06(b), (ii) dividends or distributions paid exclusively in cash covered by Section 5.06(d), (iii) Spin-Offs to which the provisions set forth below in this Section 5.06(c) shall apply, and (iv) distributions of rights to all or substantially all holders of Common Stock pursuant to the adoption of a shareholder rights plan, then, in each such case the Conversion Price shall be decreased based on the following formula:

CP = CP0 ×	SP0 - FMV
	SP0

where

CP0	=	the Conversion Price in effect immediately prior to the open of business on the Ex-Dividend Date for such distribution;
CP	=	the Conversion Price in effect immediately after the open of business on the Ex-Dividend Date for such distribution.
SP0	=	the average of the Closing Sale Prices of the Common Stock over the 10 consecutive Trading Day period ending on, and including, the Trading

35

		Day immediately preceding the Ex-Dividend Date for such distribution; and
FMV	=	the fair market value (as determined by the Board of Directors) of the shares of Capital Stock, evidences of indebtedness, assets or property distributed with respect to each outstanding share of the Common Stock as of the open of business on the Ex-Dividend Date for such distribution.

If the then-fair market value of the portion of the shares of Capital Stock, evidences of indebtedness or other assets or property so distributed applicable to one share of Common Stock is equal to or greater than the average of the Closing Sale Prices of the Common Stock over the 10 consecutive Trading Day period ending on the Trading Day immediately preceding the Ex-Dividend Date for such distribution, in lieu of the foregoing adjustment, adequate provisions shall be made so that each Holder of a Security shall have the right to receive on conversion in respect of each Security held by such Holder, in addition to the number of shares of Common Stock to which such Holder is entitled to receive, the amount and kind of securities and assets such Holder would have received had such Holder already owned a number of shares of Common Stock equal to the Conversion Rate immediately prior to the record date for the distribution of the securities or assets.

With respect to an adjustment pursuant to this Section 5.06(c) where there has been a dividend or other distribution on the Common Stock of shares of Capital Stock of any class or series, or similar equity interest, of or relating to a Subsidiary or other business unit of the Company (a “Spin-Off”), the Conversion Price will be decreased based on the following formula:

CP = CP0 ×	MP0
	FMV + MP0

where

CP0	=	the Conversion Price in effect immediately prior to the open of business on the Ex-Dividend Date for the Spin-Off;
CP	=	the Conversion Price in effect immediately after the open of business on the Ex-Dividend Date for the Spin-Off;
FMV	=	the average of the Closing Sale Prices of the Capital Stock or similar equity interests distributed to holders of the Common Stock applicable to one share of the Common Stock over the first 10 consecutive Trading Day period immediately following, and including, the Ex-Dividend Date for the Spin-Off (such period, the “Valuation Period”), and
MP0	=	the average of the Closing Sale Prices of the Common Stock over the Valuation Period.

36

The adjustment to the Conversion Price under the preceding paragraph of this Section 5.06(c) shall be made immediately after the open of business on the day after the last day of the Valuation Period, but shall become effective as of the open of business on the Ex-Dividend Date for the Spin-Off.  If the Ex-Dividend Date for the Spin-Off is less than 10 Trading Days prior to, and including, the end of the Conversion Period in respect of any conversion, references within this Section 5.06(c) to 10 Trading Days shall be deemed replaced, for purposes of calculating the affected daily Conversion Prices in respect of that conversion, with such lesser number of Trading Days as have elapsed from, and including, the Ex-Dividend Date for the Spin-Off to, and including, the last Trading Day of such Conversion Period.  For purposes of determining the Conversion Price, in respect of any conversion during the 10 Trading Days commencing on the Ex-Dividend Date of any Spin-Off, references in the portion of this Section 5.06(c) related to Spin-Offs to 10 Trading Days shall be deemed replaced with such lesser number of Trading Days as have elapsed from, and including, the Ex-Dividend Date for such Spin-Off to, but excluding, the Conversion Date for such conversion.

For purposes of this Section 5.06(c), Section 5.06(a) and Section 5.06(b), any dividend or distribution to which this Section 5.06(c) is applicable that also includes shares of Common Stock, or rights, options or warrants to subscribe for or purchase shares of Common Stock to which Section 5.06(a) or Section 5.06(b) applies (or both), shall be deemed instead to be (1) a dividend or distribution of the evidences of indebtedness, assets or shares of Capital Stock other than such shares of Common Stock or rights, options or warrants to which this Section 5.06(c) applies (and any Conversion Price adjustment required by this Section 5.06(c) with respect to such dividend or distribution shall then be made) immediately followed by (2) a dividend or distribution of such shares of Common Stock or such rights, options or warrants (and any further Conversion Price adjustment required by Section 5.06(a) and Section 5.06(b) with respect to such dividend or distribution shall then be made), except (A) the Ex-Dividend Date of such dividend or distribution shall be substituted as “the Ex-Dividend Date,” “the Ex-Dividend Date relating to such distribution of such rights, options or warrants” and “the Ex-Dividend Date for such distribution” within the meaning of Section 5.06(a) and Section 5.06(b) and (B) any shares of Common Stock included in such dividend or distribution shall not be deemed “outstanding immediately prior to the Ex-Dividend Date for such dividend or distribution, or the effective date of such share split or share combination, as the case may be” within the meaning of Section 5.06(a) or “outstanding immediately prior to the Ex-Dividend Date for such dividend or distribution” within the meaning of Section 5.06(b).

In no event shall the Conversion Price be increased pursuant to this Section 5.06(c).

(d)If the Company makes or pays any cash dividend or distribution to all or substantially all holders of its outstanding Common Stock (other than distributions pursuant to Section 5.06(e) and any dividend or distribution in connection with the liquidation, dissolution or winding up on the Company), the applicable Conversion Price shall be decreased based on the following formula:

37

CP = CP0 ×	SP0 - C
	SP0

where

CP0	=	the Conversion Price in effect immediately prior to the open of business on the Ex-Dividend Date for such dividend or distribution;
CP	=	the Conversion Rate in effect immediately after the open of business on the Ex-Dividend Date for such dividend or distribution;
SP0	=	the average of the Closing Sale Prices of the Common Stock over the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the Ex-Dividend Date for such dividend or distribution; and
C	=	the amount in cash per share the Company pays or distributes to holders of its Common Stock.

If any dividend or distribution described in this Section 5.06(d) is declared but not so paid or made, the Conversion Price shall again be adjusted to be the Conversion Price that would then be in effect if such dividend or distribution had not been declared.

For the avoidance of doubt, for purposes of this Section 5.06(d), in the event of any reclassification of the Common Stock, as a result of which the Securities become convertible into more than one class of Common Stock, if an adjustment to the Conversion Price is required pursuant to this Section 5.06(d), references in this Section to one share of Common Stock or Closing Sale Prices of one share of Common Stock shall be deemed to refer to a unit or to the price of a unit consisting of the number of shares of each class of Common Stock into which the Securities are then convertible equal to the number of shares of such class issued in respect of one share of Common Stock in such reclassification.  The above provisions of this paragraph shall similarly apply to successive reclassifications.

In no event shall the Conversion Price be increased pursuant to this Section 5.06(d).

(e)If the Company or any of its Subsidiaries makes a payment in respect of a tender offer or exchange offer for the Common Stock and if the cash and value of any other consideration included in the payment per share of the Common Stock exceeds the average of the Closing Sale Prices of the Common Stock over the 10 consecutive Trading-Day period commencing on, and including, the Trading Day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer (the “Expiration Date”), the Conversion Price shall be decreased based on the following formula:

CP = CP0 ×	OS0 x SP
	AC + (OS x SP)

where

38

CP0	=	the Conversion Price in effect immediately prior to the open of business on the Trading Day next succeeding the Expiration Date;
CP	=	the Conversion Price in effect immediately after the open of business on the Trading Day next succeeding the Expiration Date;
AC	=	the aggregate value of all cash and any other consideration (as determined by the Board of Directors) paid or payable for shares of Common Stock purchased in such tender or exchange offer;
OS0	=	the number of shares of Common Stock outstanding immediately prior to the time (the “Expiration Time”) such tender or exchange offer expires (prior to giving effect to such tender offer or exchange offer);
OS	=	the number of shares of Common Stock outstanding immediately after the Expiration Time (after giving effect to such tender offer or exchange offer); and
SP	=	the average of the Closing Sale Prices of Common Stock over the 10 consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the Expiration Date.

Such adjustment under this Section 5.06(e) shall become effective at the opening of business on the Trading Day next succeeding the Expiration Date.  If the Trading Day next succeeding the Expiration Date is less than 10 Trading Days prior to, and including, the end of the Conversion Period in respect of any conversion, references within this Section 5.06(e) to 10 Trading Days shall be deemed replaced, for purposes of calculating the affected daily Conversion Prices in respect of that conversion, with such lesser number of Trading Days as have elapsed from, and including, the Trading Day next succeeding the Expiration Date to, and including, the last Trading Day of such Conversion Period.  For purposes of determining the Conversion Price, in respect of any conversion during the 10 Trading Days commencing on the Trading Day next succeeding the Expiration Date, references within this Section 5.06(e) to 10 Trading Days shall be deemed replaced with such lesser number of Trading Days as have elapsed from, and including, the Trading Day next succeeding the Expiration Date to, but excluding, the Conversion Date for such conversion.  If the Company is obligated to purchase shares pursuant to any such tender or exchange offer, but the Company is permanently prevented by applicable law from effecting any or all or any portion of such purchases or all such purchases are rescinded, the Conversion Rate shall again be adjusted to be the Conversion Rate that would then be in effect if such tender or exchange offer had not been made or had been made only in respect of the purchases that had been effected.  In no event shall the Conversion Price be increased pursuant to this Section 5.06(e).

(f)Notwithstanding this Section 5.06 or any other provision of this Indenture or the Securities, if any Conversion Price adjustment becomes effective, or any Ex-Dividend Date for any issuance, dividend or distribution (relating to a required Conversion Price adjustment) occurs, during the period beginning on, and including, the open of business on a Conversion

39

Date and ending on, and including, the close of business on the last Trading Day of a related Conversion Period, the Board of Directors shall make adjustments to the Conversion Price and the amount of cash or number of shares of Common Stock issuable upon conversion of the Securities, as the case may be, as are necessary or appropriate to effect the intent of this Section 5.06 and the other provisions of this Article 5 and to avoid unjust or inequitable results, as determined in good faith by the Board of Directors.  Any adjustment made pursuant to this Section 5.06(f) shall apply in lieu of the adjustment or other term that would otherwise be applicable.

(g)If, in respect of any Trading Day within the Conversion Period for a converted Security:

(i)any event that requires an adjustment to the Conversion Price under any of clauses (a), (b), (c), (d) and (e) of this Section 5.06 has not resulted in an adjustment to the Conversion Price as of such Trading Day; and

(ii)the shares of Common Stock the Holder of such Security shall receive in respect of such Trading Day are not entitled to participate in the distribution or transaction giving rise to such adjustment event because, pursuant to the terms of the second paragraph of Section 5.02, such shares were not held by such Holder on the record date corresponding to such distribution or transaction,

then the Company will adjust the number of shares of Common Stock deliverable with respect to the Daily Settlement Amount for such Trading Day to reflect the relevant distribution or transaction.

Section 5.07.  No Adjustment.

All calculations and other determinations under this Article 5 shall be made by the Company and shall be made to the nearest one-ten thousandth (1/10,000) of a share.  No adjustment in the Conversion Price shall be required unless the adjustment would require an increase or decrease of at least 1% in the Conversion Price as last adjusted; provided, however, the Company shall carry forward any adjustments that are less than 1% of the Conversion Rate and make such carried forward adjustment, regardless of whether the aggregate adjustment is less than 1%, (i) upon any conversion of Securities, (ii) upon any required repurchase of Securities in connection with a Fundamental Change, and (iii) on each of the 27 Scheduled Trading Days immediately preceding the Final Maturity Date.

Except as otherwise provided herein, no adjustment need be made:

(a)upon the issuance of any shares of the Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on the Company’s securities and the investment of additional optional amounts in shares of the Common Stock under any plan;

40

(b)upon the issuance of any shares of the Common Stock or options or rights to purchase those shares pursuant to any present or future employee, director or consultant benefit plan or program of, or assumed by, the Company or any of the Company’s Subsidiaries;

(c)upon the issuance of any shares of the Common Stock pursuant to any option, warrant, right or exercisable, exchangeable or convertible security not described in clause (b) of this subsection and outstanding as of the date the Securities were first issued; or

(d)for accrued and unpaid interest, if any.

Except as set forth in this Article 5, the Company shall not adjust the Conversion Price.  The Company shall not be obligated to adjust the Conversion Price in transactions in which Holders participate without conversion of the Securities.

To the extent that the Securities become convertible into the right to receive cash, no adjustment need be made thereafter as to the cash.  Interest will not accrue on the cash.

Section 5.08.  Adjustment for Tax Purposes.

The Company shall be entitled to (but is not required to) make such reductions in the Conversion Price, in addition to those required by Section 5.06, as it in its discretion shall determine to be advisable in order to avoid or diminish any tax to holders of Common Stock (or holders of rights to purchase Common Stock) in connection with any stock dividends, subdivisions of shares, distributions of rights to purchase stock or securities or distributions of securities convertible into or exchangeable for stock (or rights to acquire such securities) hereafter made by the Company to its stockholders; provided the Company shall not take any action that would result in an adjustment to the Conversion Price in such a manner as to result in the reduction of the Conversion Price to less than the par value per share of the Common Stock.

Section 5.09.  Notice of Adjustment.

Whenever the Conversion Price or conversion privilege is adjusted, the Company shall promptly mail to Holders a notice of the adjustment and file with the Trustee and the Conversion Agent an Officers’ Certificate setting forth the Conversion Price, detailing the calculation of the Conversion Price and briefly stating the facts upon which the adjustment is based.  In addition, the Company will issue a press release containing such information and make such press release available on its website.

Unless and until the Trustee shall receive an Officers’ Certificate setting forth an adjustment of the Conversion Price, the Trustee may assume without inquiry that the Conversion Price has not been adjusted and that the last Conversion Price of which it has knowledge remains in effect.

41

Section 5.10.  Notice of Certain Transactions.

In the event that:

(1)the Company takes any action which would require an adjustment in the Conversion Price;

(2)the Company consolidates or merges with, or transfers all or substantially all of its property and assets to, another corporation and shareholders of the Company must approve the transaction; or

(3)there is a dissolution or liquidation of the Company;

the Company shall mail to Holders and file with the Trustee and the Conversion Agent a notice stating the proposed record or effective date, as the case may be.  The Company shall use commercially reasonable efforts to mail the notice at least 30 Business Days before such date and, in any event, as promptly as practicable thereafter and in no event less than 10 days prior to such event.  Failure to mail such notice or any defect therein shall not affect the validity of any transaction referred to in clause (1), (2) or (3) of this Section 5.10.

Section 5.11. Stockholder Rights Plans.

To the extent that the Company has a stockholder rights plan or other “poison pill” in effect upon conversion of the Securities, each share of Common Stock, if any, issued upon such conversion shall be entitled to receive the appropriate number of rights, if any, and the certificates representing the Common Stock issued upon such conversion shall bear such legends, if any, in each case as may be provided by the terms of any such stockholder rights plan or poison pill, as the same may be amended from time to time.  If, however, prior to the time of conversion, the rights provided by such stockholder rights plan or poison pill have separated from the shares of Common Stock in accordance with the provisions of the applicable stockholder rights agreement so that the holders of the Securities would not be entitled to receive any rights in respect of Common Stock, if any, issuable upon conversion of the Securities, the Conversion Rate will be adjusted at the time of separation as if the Company has distributed to all holders of Common Stock, shares of Capital Stock of the Company, evidences of indebtedness or assets as provided in Section 5.04(c), subject to readjustment in the event of the expiration, termination or redemption of such rights.

Section 5.12. Effect of Reclassification, Consolidation, Merger or Sale on Conversion Privilege.

If any of the following shall occur, namely:  (i) any reclassification or change of shares of Common Stock issuable upon conversion of the Securities (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination, or any other change for which an adjustment is provided in Section 5.06); (ii) any consolidation, merger or binding share exchange involving the Company; or (iii) any sale, assignment, conveyance, transfer, lease or other disposition to another person of the Company’s property and assets as an entirety or substantially as an entirety, in each case as a result of which

42

holders of Common Stock shall be entitled to receive cash, securities or other property with respect to or in exchange for such Common Stock (any such event a “Merger Event”), then:

(a)the Company, or such successor purchasing Person, as the case may be, shall, as a condition precedent to such Merger Event, execute and deliver to the Trustee a supplemental indenture (which shall comply with the TIA as in force at the date of execution of such supplemental indenture if such supplemental indenture is then required to so comply) providing that Holders shall be entitled thereafter to convert their Securities into the type and amount of shares of stock, other securities or other property or assets (including cash or any combination thereof) that a holder of a number of shares of the Common Stock equal to the Conversion Rate immediately prior to such Merger Event would have owned or been entitled to receive (the “Reference Property”) upon such Merger Event; provided that, at and after the effective time of any such Merger Event, any amount otherwise payable in cash upon conversion of the Securities shall continue to be payable as provided in Section 5.05.

(b)In the event the Company shall execute a supplemental indenture pursuant to this Section 5.12, the Company shall promptly file with the Trustee (x) an Officers’ Certificate briefly describing the Merger Event, the kind or amount of shares of stock or other securities or property (including cash) that will comprise the Reference Property after any such Merger Event, any adjustment to be made with respect thereto and stating that all conditions precedent have been complied with and (y) an Opinion of Counsel that all conditions precedent have been complied with.  Any failure to deliver such Officers’ Certificate shall not affect the legality or validity of such supplemental indenture.

(c)With respect to each $1,000 principal amount of Securities surrendered for conversion after the effective date of any such Merger Event in lieu of cash and shares of Common Stock, if any, otherwise provided for hereunder, the Company shall deliver to the converting Holder a number of units of Reference Property (each such unit comprised of the kind and amount of shares of stock, securities or other property or assets (including cash or any combination thereof) that a holder of one share of Common Stock immediately prior to such Merger Event would have owned or been entitled to receive based on the Weighted Average Consideration) equal to (1) the aggregate principal amount of Securities to be converted, divided by $1,000, multiplied by (2) the then-applicable Conversion Rate.

(i)The Company will deliver the cash in lieu of fractional units of Reference Property as set forth pursuant to Section 5.03 (provided that the amount of such cash shall be determined as if references in such Section to “the Closing Sale Price” were instead a reference to “the Closing Sale Price of a unit of Reference Property” composed of the type and amount of shares of stock, securities or other property or assets (including cash or any combination thereof) that a holder of one share of Common Stock immediately prior to such Merger Event would have owned or been entitled to receive based on the Weighted Average Consideration).

43

(ii)The Daily Settlement Amounts (if applicable) and Daily Conversion Values (if applicable) shall be determined by the Company promptly following the last day of the applicable Conversion Period.

(iii)For purposes of this Section 5.12, the “Weighted Average Consideration” means the weighted average of the types and amounts of consideration received by the holders of the Common Stock entitled to receive cash, securities or other property or assets with respect to or in exchange for such Common Stock in any Merger Event who affirmatively make such an election; provided that, if the types and amounts of consideration that holders of the Common Stock would be entitled to receive with respect to or in exchange for such Common Stock is based in part upon any form of stockholder election, the “Weighted Average Consideration” will be deemed to be (A) if holders of the majority of the shares of Common Stock affirmatively make such an election, the weighted average of the types and amounts of consideration received by the holders of the Common Stock that affirmatively make such an election or (B) if the holders of a majority of the shares of Common Stock do not affirmatively make such an election, the types and amount of consideration actually received by such holders.

(iv)The Company shall notify the holders and the Trustee of the Weighted Average Consideration as soon as practicable after the Weighted Average Consideration is determined.

(v)The above provisions of this Section shall similarly apply to successive Merger Events.

Promptly following the effective time of any such Merger Event, the Company shall notify the Trustee and the Conversion Agent and issue a press release describing the type or amount of cash, securities, property or other assets that will comprise the Reference Property after any such Merger Event (and shall make the press release available on its website).

Section 5.13.  Trustee’s Disclaimer.

The Trustee and the Conversion Agent shall have no duty to determine when an adjustment under this Article 5 should be made, how it should be made or what such adjustment should be, but may accept as conclusive evidence of that fact or the correctness of any such adjustment, and shall be protected in relying upon, an Officers’ Certificate, including the Officers’ Certificate with respect thereto which the Company is obligated to file with the Trustee pursuant to Section 5.09.  Neither the Trustee nor the Conversion Agent makes any representation as to the validity or value of any securities or assets issued upon conversion of Securities, and the Trustee and the Conversion Agent shall not be responsible for the Company’s failure to comply with any provisions of this Article 5.

The Trustee shall not be under any responsibility to determine the correctness of any provisions contained in any supplemental indenture executed pursuant to Section 5.12, but may

44

accept as conclusive evidence of the correctness thereof, and shall be fully protected in relying upon, the Officers’ Certificate with respect thereto which the Company is obligated to file with the Trustee pursuant to Section 5.12.

Section 5.14.  Voluntary Reduction.

The Company from time to time may reduce the Conversion Price by any amount for any period of time if the period is at least 20 Business Days and if the reduction is irrevocable during the period if the Board of Directors determines that such reduction would be in the best interest of the Company or to avoid or diminish income tax to holders of shares of Common Stock or rights to purchase shares of Common Stock in connection with a dividend or distribution of shares (or rights to acquire shares) or similar event, and the Company provides at least 15 days’ prior notice of any reduction in the Conversion Price; provided, however, that in no event may the Company reduce the Conversion Price to be less than the par value of a share of Common Stock.

Section 5.15.  Exchange in Lieu of Conversion.

When a Holder surrenders its Securities for conversion, the Company may, at its election, direct the Conversion Agent to surrender, on or prior to the second Business Day following the relevant Conversion Date, such Securities to a financial institution designated by the Company (the “Designated Institution”) for exchange in lieu of conversion.  In order to accept any Securities surrendered for conversion for exchange in lieu of conversion, the Designated Institution must agree to timely deliver, in exchange for such Securities, the cash and shares of Common Stock, if any, that would otherwise be due upon conversion pursuant to Section 5.01 and in respect of which the Company has notified converting Holders.  If the Company makes the election provided for in this Section 5.15, the Company shall, by the close of business on the second Business Day following the relevant Conversion Date as part of its Settlement Notice, notify the Holder surrendering its Securities for conversion that it has made such election.  Any Securities exchanged by the Designated Institution will remain outstanding.

If the Designated Institution agrees to accept any Securities for exchange but does not timely deliver the related consideration due upon conversion to the Conversion Agent, or if the Designated Institution does not accept such Securities for exchange, the Company shall, within the time period specified in Section 5.02, pay or deliver the cash and shares of Common Stock, if any, due upon such conversion in accordance with the provisions of Section 5.02.

For the avoidance of doubt, in no event will the Company’s designation of a Designated Institution pursuant to this Section 5.15 require the Designated Institution to accept any Securities for exchange.

Section 5.16.  Compliance with NASDAQ Market Rule 4350.

The Company shall not take any action that would result in an adjustment pursuant to the provisions described in this Article 5 without complying with NASDAQ Market Rule 4350,

45

requiring stockholder approval of certain issuances of stock, or any similar rule of any other stock exchange on which the Common Stock may be listed, if applicable.

ARTICLE 6

SUBORDINATION

Section 6.01.  Agreement of Subordination.

The Company covenants and agrees, and each Holder of Securities issued hereunder by its acceptance thereof likewise covenants and agrees, that all Securities shall be issued subject to the provisions of this Article 6; and each Person holding any Security, whether upon original issue or upon transfer, assignment or exchange thereof, accepts and agrees to be bound by such provisions.

The payment of the principal of, any cash portion of the Conversion Obligation in respect of, and interest on, all Securities (including, but not limited to, the Fundamental Change Purchase Price with respect to the Securities subject to purchase in accordance with Article 3 as provided in this Indenture) issued hereunder shall, to the extent and in the manner hereinafter set forth, be subordinated and subject in right of payment to the prior payment in full, in cash or other payment satisfactory to the holders of Senior Indebtedness, of all Senior Indebtedness, whether outstanding at the date of this Indenture or thereafter incurred. The Securities shall rank senior to all Subordinated Indebtedness and equal in right of payment to all Senior Subordinated Indebtedness.  “Senior Subordinated Indebtedness” means, with respect to the Company, the Securities and any other Indebtedness that specifically provides that such Indebtedness is to have the same rank as the Securities in right of payment and is not subordinated by its terms in right of payment to any Indebtedness of other obligations of the Company that is not Senior Indebtedness, including, but not limited to, the Company’s 2.00% Convertible Senior Subordinated Notes due June 1, 2015.  “Subordinated Indebtedness” means, with respect to the Company, any Indebtedness that provides pursuant to the terms of the instruments creating such Indebtedness that such Indebtedness is subordinated to the Securities, including, but not limited to, the Company’s Zero Coupon Convertible Subordinated Notes due 2033, first putable 2010.

No provision of this Article 6 shall prevent the occurrence of any default or Event of Default hereunder.

Section 6.02.  Payments to Holders.

No payment shall be made with respect to the principal of the cash portion of the Conversion Obligation, if any, or interest on, the Securities (including, but not limited to, the Fundamental Change Purchase Price with respect to the Securities subject to purchase in accordance with Article 3 as provided in this Indenture), except payments and distributions made by the Trustee as permitted by the first or second paragraph of Section 6.05, if:

(i)a default in the payment of principal, interest, rent or other obligations due on any Senior Indebtedness occurs and is continuing (or, in the case of Senior

46

Indebtedness for which there is a period of grace, in the event of such a default that continues beyond the period of grace, if any, specified in the agreement, indenture, instrument, lease or other document evidencing such Senior Indebtedness), unless and until such default shall have been cured or waived or shall have ceased to exist; or

(ii)a default, other than a payment default, on any Designated Senior Indebtedness occurs and is continuing that permits holders of such Designated Senior Indebtedness to accelerate its maturity and the Trustee receives a notice of the default (a “Payment Blockage Notice”) from the Company or a Representative or holder of such Designated Senior Indebtedness or the Company.

Subject to the provisions of Section 6.05, if the Trustee receives any Payment Blockage Notice pursuant to clause (ii) above, no subsequent Payment Blockage Notice shall be effective for purposes of this Section unless and until at least 365 days shall have elapsed since the initial effectiveness of the immediately prior Payment Blockage Notice and all scheduled payments on the Securities that have come due have been paid in full in cash.  No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee (unless such default was waived, cured or otherwise ceased to exist and thereafter subsequently reoccurred) shall be, or be made, the basis for a subsequent Payment Blockage Notice, unless such default shall have been cured or waived for a period of not less than 180 days.

The Company may and shall resume payments on and distributions in respect of the Securities upon the earlier of:

(a)in the case of a default referred to in clause (i) above, the date upon which the default is cured or waived or ceases to exist, or

(b)in the case of a default referred to in clause (ii) above, the earlier of the date on which such default is cured or waived or ceases to exist or 179 days pass after the date on which the applicable Payment Blockage Notice is received, if the maturity of such Designated Senior Indebtedness has not been accelerated, unless this Article 6 otherwise prohibits the payment or distribution at the time of such payment or distribution.

Upon any payment by the Company, or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to creditors upon any dissolution or winding-up or liquidation or reorganization of the Company (whether voluntary or involuntary) or in bankruptcy, insolvency, receivership or similar proceedings, all amounts due or to become due upon all Senior Indebtedness shall first be paid in full, in cash or other payment satisfactory to the holders of Senior Indebtedness, before any payment is made on account of the principal of, the cash portion of the Conversion Obligation, if any, or interest on, the Securities (except payments made pursuant to Article 11 from monies deposited with the Trustee pursuant thereto prior to commencement of proceedings for such dissolution, winding-up, liquidation or reorganization); and upon any such dissolution or winding-up or liquidation or reorganization of the Company or bankruptcy, insolvency, receivership or other proceeding, any payment by the Company, or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to which the Holders of the Securities or the Trustee would be entitled,

47

except for the provision of this Article 6, shall (except as aforesaid) be paid by the Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other Person making such payment or distribution, or by the Holders of the Securities or by the Trustee under this Indenture, if received by them or it, directly to the holders of Senior Indebtedness (pro rata to such holders on the basis of the respective amounts of Senior Indebtedness held by such holders, or as otherwise required by law or a court order) or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing any Senior Indebtedness may have been issued, as their respective interests may appear, to the extent necessary to pay all Senior Indebtedness in full, in cash or other payment satisfactory to the holders of Senior Indebtedness, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness, before any payment or distribution is made to the Holders of the Securities or to the Trustee.

For purposes of this Article 6, the words, “cash, property or securities” shall not be deemed to include shares of stock of the Company, as reorganized or readjusted, or securities of the Company or any other corporation provided for by a plan of reorganization or readjustment, the payment of which is subordinated at least to the extent provided in this Article 6 with respect to the Securities to the payment of all Senior Indebtedness which may at the time be outstanding; provided that (i) the Senior Indebtedness is assumed by the new corporation, if any, resulting from any reorganization or readjustment and (ii) the rights of the holders of Senior Indebtedness (other than leases which are not assumed by the Company or the new corporation, as the case may be) are not, without the consent of such holders, altered by such reorganization or readjustment.  The consolidation of the Company with, or the merger of the Company into, another corporation or the liquidation or dissolution of the Company following the conveyance, transfer or lease of its property as an entirety, or substantially as an entirety, to another corporation upon the terms and conditions provided for in Article 8 shall not be deemed a dissolution, winding-up, liquidation or reorganization for the purposes of this Section 6.02 if such other corporation shall, as a part of such consolidation, merger, conveyance, transfer or lease, comply with the conditions stated in Article 8.

In the event of the acceleration of the Securities because of an Event of Default, no payment or distribution shall be made to the Trustee or any Holder of Securities in respect of the principal of, the cash portion of the Conversion Obligation, if any, or interest on, the Securities by the Company (including, but not limited to, the Fundamental Change Purchase Price with respect to the Securities subject to purchase in accordance with Article 3 as provided in this Indenture), except payments and distributions made by the Trustee as permitted by Section 6.05, until all Senior Indebtedness has been paid in full in cash or other payment satisfactory to the holders of Senior Indebtedness or such acceleration is rescinded in accordance with the terms of this Indenture.  If payment of Securities is accelerated because of an Event of Default, the Company shall promptly notify holders of Senior Indebtedness of such acceleration.

In the event that, notwithstanding the foregoing provisions, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities (including, without limitation, by way of setoff or otherwise), prohibited by the foregoing, shall be received by the Trustee or the Holders of the Securities before all Senior Indebtedness is paid

48

in full, in cash or other payment satisfactory to the holders of Senior Indebtedness, or provision is made for such payment thereof in accordance with its terms in cash or other payment satisfactory to the holders of Senior Indebtedness, such payment or distribution shall be held in trust for the benefit of and shall be paid over or delivered to the holders of Senior Indebtedness or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing any Senior Indebtedness may have been issued, as their respective interests may appear, as calculated by the Company, for application to the payment of all Senior Indebtedness remaining unpaid to the extent necessary to pay all Senior Indebtedness in full, in cash or other payment satisfactory to the holders of Senior Indebtedness, after giving effect to any concurrent payment or distribution to or for the holders of such Senior Indebtedness.

Nothing in this Section 6.02 shall apply to claims of, or payments to, the Trustee under or pursuant to Section 10.07.  This Section 6.02 shall be subject to the further provisions of Section 6.05.

Section 6.03.  Subrogation of Securities.

Subject to the payment in full, in cash or other payment satisfactory to the holders of Senior Indebtedness, of all Senior Indebtedness, the rights of the Holders of the Securities shall be subrogated to the extent of the payments or distributions made to the holders of such Senior Indebtedness pursuant to the provisions of this Article 6 (equally and ratably with the holders of all indebtedness of the Company which by its express terms is subordinated to other indebtedness of the Company to substantially the same extent as the Securities are subordinated and is entitled to like rights of subrogation) to the rights of the holders of Senior Indebtedness to receive payments or distributions of cash, property or securities of the Company applicable to the Senior Indebtedness until the principal of, the cash portion of the Conversion Obligation, if any, and interest on, the Securities shall be paid in full, in cash or other payment satisfactory to the holders of Senior Indebtedness; and, for the purposes of such subrogation, no payments or distributions to the holders of the Senior Indebtedness of any cash, property or securities to which the Holders of the Securities or the Trustee would be entitled except for the provisions of this Article 6, and no payment over, pursuant to the provisions of this Article 6, to or for the benefit of the holders of Senior Indebtedness by Holders of the Securities or the Trustee shall, as between the Company, its creditors other than holders of Senior Indebtedness and the Holders of the Securities, be deemed to be a payment by the Company to or on account of the Senior Indebtedness; and no payments or distributions of cash, property or securities to or for the benefit of the Holders of the Securities pursuant to the subrogation provisions of this Article 6, which would otherwise have been paid to the holders of Senior Indebtedness, shall be deemed to be a payment by the Company to or for the account of the Securities.  It is understood that the provisions of this Article 6 are and are intended solely for the purposes of defining the relative rights of the Holders of the Securities, on the one hand, and the holders of the Senior Indebtedness, on the other hand.

Nothing contained in this Article 6 or elsewhere in this Indenture or in the Securities is intended to or shall impair, as among the Company, its creditors other than the holders of Senior

49

Indebtedness and the Holders of the Securities, the obligation of the Company, which is absolute and unconditional, to pay to the Holders of the Securities the principal of, the cash portion of the Conversion Obligation, if any, and any interest on the Securities as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders of the Securities and creditors of the Company other than the holders of the Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article 6 of the holders of Senior Indebtedness in respect of cash, property or securities of the Company received upon the exercise of any such remedy.

Upon any payment or distribution of assets of the Company referred to in this Article 6, the Trustee, subject to the provisions of Section 10.01, and the Holders of the Securities shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which such bankruptcy, dissolution, winding-up, liquidation or reorganization proceedings are pending, or a certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent or other person making such payment or distribution, delivered to the Trustee or to the Holders of the Securities, for the purpose of ascertaining the persons entitled to participate in such distribution, the holders of the Senior Indebtedness and other indebtedness of the Company, the amount thereof or payable thereon and all other facts pertinent thereto or to this Article 6.

Section 6.04.  Authorization to Effect Subordination.

Each Holder of a Security by the Holder’s acceptance thereof authorizes and directs the Trustee on the Holder’s behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in this Article 6 and appoints the Trustee to act as the Holder’s attorney-in-fact for any and all such purposes.  If the Trustee does not file a proper proof of claim or proof of debt in the form required in any proceeding referred to in Section 6.03 hereof at least 30 days before the expiration of the time to file such claim, the holders of any Senior Indebtedness or their representatives are hereby authorized to file an appropriate claim for and on behalf of the Holders of the Securities.

Section 6.05.  Notice to Trustee.

The Company shall give prompt written notice in the form of an Officers’ Certificate to a Trust Officer of the Trustee and to any Paying Agent of any fact known to the Company which would prohibit the making of any payment of monies to or by the Trustee or any Paying Agent in respect of the Securities pursuant to the provisions of this Article 6.  Notwithstanding the provisions of this Article 6 or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment of monies to or by the Trustee in respect of the Securities pursuant to the provisions of this Article 6, unless and until a Trust Officer of the Trustee shall have received written notice thereof at the Corporate Trust Office from the Company (in the form of an Officers’ Certificate) or a Representative or a holder or holders of Senior Indebtedness or from any trustee thereof; and before the receipt of any such written notice, the Trustee, subject to the provisions of Section 10.01,

50

shall be entitled in all respects to assume that no such facts exist; provided that, if on a date not less than one Business Day prior to the date upon which by the terms hereof any such monies may become payable for any purpose (including, without limitation, the payment of the principal of, or interest on, any Security) the Trustee shall not have received, with respect to such monies, the notice provided for in this Section 6.05, then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such monies and to apply the same to the purpose for which they were received and shall not be affected by any notice to the contrary which may be received by it on or after such prior date.  Notwithstanding anything in this Article 6 to the contrary, nothing shall prevent any payment by the Trustee to the Holders of monies deposited with it pursuant to Article 11, and any such payment shall not be subject to the provisions of Article 6.

The Trustee, subject to the provisions of Section 10.01, shall be entitled to rely on the delivery to it of a written notice by a Representative or a person representing himself to be a holder of Senior Indebtedness (or a trustee on behalf of such holder) to establish that such notice has been given by a Representative or a holder of Senior Indebtedness or a trustee on behalf of any such holder or holders.  In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any person as a holder of Senior Indebtedness to participate in any payment or distribution pursuant to this Article 6, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article 6, and if such evidence is not furnished the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.

Section 6.06.  Trustee’s Relation to Senior Indebtedness.

The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article 6 in respect of any Senior Indebtedness at any time held by it, to the same extent as any other holder of Senior Indebtedness, and nothing in Section 10.11 or elsewhere in this Indenture shall deprive the Trustee of any of its rights as such holder.

With respect to the holders of Senior Indebtedness, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this Article 6, and no implied covenants or obligations with respect to the holders of Senior Indebtedness shall be read into this Indenture against the Trustee.  The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness, and, subject to the provisions of Section 10.01, the Trustee shall not be liable to any holder of Senior Indebtedness if it shall pay over or deliver to Holders of Securities, the Company or any other person money or assets to which any holder of Senior Indebtedness shall be entitled by virtue of this Article 6 or otherwise.

Section 6.07.  No Impairment of Subordination.

No right of any present or future holder of any Senior Indebtedness to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any

51

act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof which any such holder may have or otherwise be charged with.

Section 6.08.  Certain Conversions Deemed Payment.

For the purposes of this Article 6 only, (1) the issuance and delivery of junior securities upon conversion of Securities in accordance with Article 5 shall not be deemed to constitute a payment or distribution on account of the principal of, the cash portion of the Conversion Obligation, if any, or interest on, Securities or on account of the purchase or other acquisition of Securities, and (2) the payment, issuance or delivery of cash (except in satisfaction of fractional shares pursuant to Section 5.03), property or securities (other than junior securities) upon conversion of a Security shall be deemed to constitute payment on account of the principal of such Security.  For the purposes of this Section 6.08, the term “junior securities” means (a) shares of any stock of any class of the Company or (b) securities of the Company which are subordinated in right of payment to all Senior Indebtedness which may be outstanding at the time of issuance or delivery of such securities to substantially the same extent as, or to a greater extent than, the Securities are so subordinated as provided in this Article.  Nothing contained in this Article 6 or elsewhere in this Indenture or in the Securities is intended to or shall impair, as among the Company, its creditors other than holders of Senior Indebtedness and the Holders, the right, which is absolute and unconditional, of the Holder of any Security to convert such Security in accordance with Article 5.

Section 6.09.  Article Applicable to Paying Agents.

If at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term “Trustee” as used in this Article shall (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article in addition to or in place of the Trustee; provided, however, that the first paragraph of Section 6.05 shall not apply to the Company or any Affiliate of the Company if it or such Affiliate acts as Paying Agent.

Section 6.10.  Senior Indebtedness Entitled to Rely.

The holders of Senior Indebtedness (including, without limitation, Designated Senior Indebtedness) shall have the right to rely upon this Article 6, and no amendment or modification of the provisions contained herein shall diminish the rights of such holders unless such holders shall have agreed in writing thereto.

52

ARTICLE 7
COVENANTS

Section 7.01.  Payment of Securities.

The Company shall promptly make all payments in respect of the Securities on the dates and in the manner provided in the Securities and this Indenture.  The installment of principal or interest shall be considered paid on the date it is due if the Paying Agent (other than the Company) holds by 11:00 a.m., New York City time, on that date money, deposited by the Company or an Affiliate thereof, sufficient to pay such installment.  The Company shall (in immediately available funds), to the fullest extent permitted by law, pay interest on overdue principal and overdue installments of interest at the rate borne by the Securities per annum.

Payment of the principal of and interest on the Securities shall be made at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, The City of New York (which shall initially be U.S. Bank Trust National Association, an Affiliate of the Trustee), or at the Corporate Trust Office of the Trustee in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Company payment of interest may be made by check mailed to the address of the Person entitled thereto as such address appears in the Register; provided, further, that a Holder with an aggregate principal amount in excess of $1,000,000 will be paid by wire transfer in immediately available funds at the election of such Holder if such Holder has provided wire transfer instructions to the Company at least 10 Business Days prior to the payment date.

Section 7.02.  Reports.

So long as any Securities are outstanding, the Company shall (i) file with the SEC within the time periods prescribed by its rules and regulations and (ii) furnish to the Trustee and the Holders of the Securities within 15 days after the date on which the Company would be required to file the same with the SEC pursuant to its rules and regulations (giving effect to any grace period provided by Rule 12b-25 under the Exchange Act), all quarterly and annual financial information required to be contained in Forms 10-Q and 10-K and, with respect to the annual consolidated financial statements only, a report thereon by the Company’s independent auditors.

Delivery of such reports, information and documents to the Trustee is for informational purposes only, and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates).  The Company shall not be required to file any report or other information with the SEC if the SEC does not permit such filing, although such reports shall be furnished to the Trustee.  Documents filed by the Company with the SEC via the SEC’s EDGAR system (or any successor thereto) will be deemed furnished to the Trustee and the Holders of the Securities as of the time such documents are filed via EDGAR (or such successor).

Section 7.03.  Compliance Certificates.

The Company shall deliver to the Trustee, within 120 days after the end of each fiscal year of the Company (beginning with the fiscal year ending December 31, 2009), an Officers’

53

Certificate as to the signer’s knowledge of the Company’s compliance with all conditions and covenants on its part contained in this Indenture and stating whether or not the signer knows of any default or Event of Default.  If such signer knows of such a default or Event of Default, the Officers’ Certificate shall describe the default or Event of Default and the efforts to remedy the same.  For the purposes of this Section 7.03, compliance shall be determined without regard to any grace period or requirement of notice provided pursuant to the terms of this Indenture.

Section 7.04.  Further Instruments and Acts.

Upon request of the Trustee, the Company will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purposes of this Indenture.

Section 7.05.  Maintenance of Corporate Existence.

Subject to Article 8, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence.

Section 7.06.  Stay, Extension and Usury Laws.

The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the principal of, or interest on, the Securities as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

Section 7.07.  Additional Interest Notice.

In the event that the Company is required to pay additional interest to Holders of Securities pursuant to Section 9.02(b) hereof, the Company shall provide a direction or order in the form of a written notice to the Trustee (and if the Trustee is not the Paying Agent, the Paying Agent) of the Company’s obligation to pay such additional interest no later than three Business Days prior to date on which any such additional interest is scheduled to be paid.  Such notice shall set forth the amount of additional interest to be paid by the Company on such payment date and direct the Trustee (or, if the Trustee is not the Paying Agent, the Paying Agent) to make payment to the extent it receives funds from the Company to do so.  The Trustee shall not at any time be under any duty or responsibility to any Holder to determine whether additional interest is payable, or with respect to the nature, extent, or calculation of the amount of additional interest owed, or with respect to the method employed in such calculation of additional interest.

54

ARTICLE 8
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

Section 8.01.  Company May Consolidate, etc., only on Certain Terms.

The Company shall not consolidate with, enter into a binding share exchange with, or merge into any other Person (in a transaction in which the Company is not the surviving corporation) or sell, assign, convey, transfer, lease or otherwise dispose of its properties and assets substantially as an entirety to any Person, unless:

(1)           in case the Company shall consolidate with, enter into a binding share exchange with, or merge into another Person (in a transaction in which the Company is not the surviving corporation) or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the Person formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Company substantially as an entirety shall be a corporation organized and validly existing under the laws of the United States of America, any State thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of, and any interest on, all the Securities and the performance or observance of every covenant of this Indenture on the part of the Company to be performed or observed, and the conversion rights shall be provided for in accordance with Article 5, by supplemental indenture satisfactory in form to the Trustee, executed and delivered to the Trustee, by the Person (if other than the Company) formed by such consolidation or into which the Company shall have been merged or by the Person which shall have acquired the Company’s assets;

(2)           immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing; and

(3)           the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with.

Section 8.02.  Successor Substituted.

Upon any consolidation of the Company with, or merger of the Company into, any other Person or any conveyance, transfer or lease of the properties and assets of the Company substantially as an entirety in accordance with Section 8.01, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been

55

named as the Company herein, and thereafter, except in the case of a lease, the predecessor Person shall be relieved of all obligations and covenants under this Indenture and the Securities.

ARTICLE 9
DEFAULT AND REMEDIES

Section 9.01.  Events of Default.

An “Event of Default” with respect to Securities shall occur if:

(a)        the Company defaults in the payment of any principal of any Security when the same becomes due and payable (whether at maturity, upon required repurchase, following a Fundamental Change or otherwise), whether or not such payment shall be prohibited by the provisions of Article 6 hereof;

(b)        the Company fails to pay the cash and deliver the shares of Common Stock, if any, representing the Conversion Obligation upon conversion of any Security (including any Additional Shares) within the time period required by the provisions of this Indenture, whether or not such payment shall be prohibited by the provisions of Article 6 hereof;

(c)        the Company defaults in the payment of interest when the same becomes due and payable and the default continues for a period of 30 days, whether or not such payment shall be prohibited by the provisions of Article 6 hereof;

(d)        the Company fails to perform or comply with any of its other covenants or agreements contained in the Securities or in this Indenture (other than a covenant or agreement a default in whose performance or whose breach is specifically dealt with in clauses (a), (b) or (c) of this Section 9.01) and the default continues for 60 days after notice is given as specified below;

(e)        the Company defaults in the payment of the purchase price of any Security when the same becomes due and payable, whether or not such payment shall be prohibited by the provisions of Article 6 hereof;

(f)         the Company fails to provide a Fundamental Change Purchase Notice when required by Section 3.01;

(g)        any indebtedness under any bond, debenture, note or other evidence of indebtedness for money borrowed by the Company or any Significant Subsidiary (or group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary) or under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by, or any other payment obligation of, the Company or any Significant Subsidiary (or group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary) (an “Instrument”) with a principal amount then, individually or in the aggregate, outstanding in excess of $10,000,000, whether such

56

indebtedness now exists or shall hereafter be created, is not paid at final maturity of the Instrument (either at its stated maturity or upon acceleration thereof) or when otherwise due or is accelerated, and such indebtedness is not discharged, or such default in payment or acceleration is not cured or rescinded, within a period of 30 days after there shall have been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in aggregate principal amount of the outstanding Securities a written notice specifying such default and requiring the Company to cause such indebtedness to be discharged or cause such default to be cured or waived or such acceleration to be rescinded or annulled and stating that such notice is a “Notice of Default” hereunder;

(h)        the Company or any Significant Subsidiary (or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary) fails to pay one or more final and non-appealable judgments entered by a court or courts of competent jurisdiction, the aggregate uninsured or unbonded portion of which is in excess of $10,000,000, if the judgments are not paid, discharged, waived or stayed within 30 days;

(i)         the Company or any Significant Subsidiary (or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary) of the Company, pursuant to or within the meaning of any Bankruptcy Law:

(i)            commences a voluntary case or proceeding;

(ii)           consents to the entry of an order for relief against it in an involuntary case or proceeding;

(iii)          consents to the appointment of a Custodian of it or for all or substantially all of its property; or

(iv)          makes a general assignment for the benefit of its creditors; or

(j)         a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

(i)            is for relief against the Company or any Significant Subsidiary (or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary) of the Company in an involuntary case or proceeding;

(ii)           appoints a Custodian of the Company or any Significant Subsidiary (or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary) of the Company for all or substantially all of the property of the Company or any such Significant Subsidiary (or such group of Subsidiaries); or

(iii)          orders the liquidation of the Company or any Significant Subsidiary (or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary) of the Company;

57

and the case of each of clause (i), (ii) and (iii), the order or decree remains unstayed and in effect for 60 consecutive days.

The term “Bankruptcy Law” means Title 11 of the United States Code (or any successor thereto) or any similar federal or state law for the relief of debtors.  The term “Custodian” means any receiver, trustee, assignee, liquidator, sequestrator or similar official under any Bankruptcy Law.

A default under clause (d) above is not an Event of Default until the Trustee notifies the Company, or the Holders of at least 25% in aggregate principal amount of the Securities then outstanding notify the Company and the Trustee, in writing of the default, and the Company does not cure the default within 60 days after receipt of such notice.  The notice given pursuant to this Section 9.01 must specify the default, demand that it be remedied and state that the notice is a “Notice of Default.”  When any default under this Section 9.01 is cured, it ceases.

The Trustee shall not be charged with knowledge of any Event of Default unless written notice thereof shall have been given to a Trust Officer at the Corporate Trust Office of the Trustee by the Company, a Paying Agent, any Holder or any agent of any Holder.  The Company shall deliver to the Trustee, within 30 days after the occurrence thereof, written notice in the form of an Officers’ Certificate of any Event of Default described in clause (g), (h), (i) or (j) above and any event of which it becomes aware that with the giving of notice or the lapse of time would become such an Event of Default, its status and what action the Company is taking or proposes to take with respect thereto.

Section 9.02.  Acceleration.

(a)           If an Event of Default (other than an Event of Default specified in clause (i) or (j) of Section 9.01) occurs and is continuing with respect to any Securities, the Trustee may, by notice to the Company, or the Holders of at least 25% in aggregate principal amount of the Securities then outstanding may, by notice to the Company and the Trustee, declare all unpaid principal to the date of acceleration on the Securities then outstanding (if not then due and payable) to be due and payable upon any such declaration, and the same shall become and be immediately due and payable.  If an Event of Default specified in clause (i) or (j) of Section 9.01 occurs, all unpaid principal of the Securities then outstanding shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder.  The Holders of a majority in aggregate principal amount of the Securities then outstanding by notice to the Trustee may rescind an acceleration of Securities and its consequences if (a) all existing Events of Default, other than the nonpayment of the principal of the Securities which has become due solely by such declaration of acceleration, have been cured or waived; (b) to the extent the payment of such interest is lawful, interest (calculated at the rate of 2½% per annum) on overdue installments of interest and overdue principal, which has become due otherwise than by such declaration of acceleration, has been paid; (c) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction; and (d) all payments due to the Trustee and any predecessor Trustee under Section 10.07 have been made.  No such rescission shall affect any subsequent default or impair any right consequent thereto.

58

(b)           Notwithstanding any of provision of this Article 9, at the election of the Company in its sole discretion, the sole remedy under this Indenture for an Event of Default relating to the failure to comply with Section 7.02, and for any failure to comply with the requirements of Section 314(a)(1) of the TIA, will consist, for the 180 days after the occurrence of such an Event of Default, exclusively of the right to receive additional interest on the Securities at a rate equal to 0.50% per annum of the aggregate principal amount of the Securities then outstanding up to, but not including, the 181st day thereafter (or, if applicable, the earlier date on which the Event of Default relating to Section 7.02 is cured or waived).  Any such additional interest will be payable in the same manner and on the same dates as the stated interest payable on the Securities.  In no event shall additional interest accrue under the terms of this Indenture at a rate in excess of 0.50% per annum, in the aggregate, for any violation or default caused by the failure of the Company to be current in respect of its Exchange Act reporting obligations.  If the Event of Default is continuing on the 181st day after an Event of Default relating to a failure to comply with Section 7.02, the Securities will be subject to acceleration as provided in this Section 9.02.  The provisions of this Section 9.02(b) will not affect the rights of Holders in the event of the occurrence of any other Events of Default.

In order to elect to pay additional interest as the sole remedy during the first 180 days after the occurrence of an Event of Default relating to the failure to comply with Section 7.02 in accordance with the immediately preceding paragraph, the Company shall notify all Holders and the Trustee and Paying Agent of such election on or before the close of business on the fifth Business Day after the date on which such Event of Default otherwise would occur.  Upon a failure by the Company to timely give such notice or pay additional interest, the Securities will be immediately subject to acceleration as otherwise provided in this Section 9.02.

Section 9.03.  Other Remedies.

If an Event of Default with respect to Securities occurs and is continuing, the Trustee may, but shall not be obligated to, pursue any available remedy by proceeding at law or in equity to collect the payment of the principal of, or any interest on, the Securities or to enforce the performance of any provision of the Securities or this Indenture.

The Trustee may maintain a proceeding even if it does not possess any of the Securities or does not produce any of them in the proceeding.  A delay or omission by the Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default.  No remedy is exclusive of any other remedy.  All available remedies are cumulative to the extent permitted by law.

Section 9.04.  Waiver of Defaults and Events of Default.

Subject to Section 9.07 and 12.02, the Holders of a majority in aggregate principal amount of the Securities then outstanding by notice to the Trustee may waive an existing default or Event of Default and its consequence, except a default or Event of Default in the payment of the principal of, or interest on any Security, a failure by the Company to deliver cash and shares of Common Stock, if any, upon conversion of the Securities or any default or Event of Default in

59

respect of any provision of this Indenture or the Securities which, under Section 12.02, cannot be modified or amended without the consent of the Holder of each Security affected.  When a default or Event of Default is waived, it is cured and ceases.

Section 9.05.  Control by Majority.

The Holders of a majority in aggregate principal amount of the Securities then outstanding may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on it.  However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture, that the Trustee determines may be unduly prejudicial to the rights of another Holder or the Trustee or that may involve the Trustee in personal liability unless the Trustee is offered indemnity or security reasonably satisfactory to it against any loss liability or expense; provided, however, that the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction.

Section 9.06.  Limitations on Suits.

A Holder of a Security may not pursue any remedy with respect to this Indenture or the Securities (except actions for payment of overdue principal, interest or for the conversion of the Securities pursuant to Article 5) unless:

(a)        the Holder gives to the Trustee written notice of a continuing Event of Default;

(b)        the Holders of at least 25% in aggregate principal amount of the then outstanding Securities make a written request to the Trustee to pursue the remedy;

(c)        such Holder or Holders offer to the Trustee reasonable indemnity to the Trustee against any loss, liability or expense;

(d)        the Trustee does not comply with the request within 60 days after receipt of the request and the offer of indemnity; and

(e)        no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in aggregate principal amount of the Securities then outstanding.

A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over such other Holder.

Section 9.07.  Rights of Holders to Receive Payment and to Convert.

Notwithstanding any other provision of this Indenture, the right of any Holder of a Security to receive payment of the principal of, and interest on, if any, on, the Security, on or after the respective due dates expressed in the Security and this Indenture, to convert such Security in accordance with Article 5 and to bring suit for the enforcement of any such payment

60

on or after such respective dates or the right to convert, is absolute and unconditional and shall not be impaired or affected without the consent of the Holder.

Section 9.08.  Collection Suit by Trustee.

If an Event of Default in the payment of principal, interest, if any, specified in clause (a) or (c) of Section 9.01 occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company or another obligor on the Securities for the whole amount of principal, and accrued interest remaining unpaid, if any, together with, to the extent that payment of such interest is lawful, interest on overdue principal, on overdue installments of interest, if any, in each case at the rate of 2½% per annum, and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.

Section 9.09.  Trustee May File Proofs of Claim.

The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders allowed in any judicial proceedings relative to the Company (or any other obligor on the Securities), its creditors or its property and shall be entitled and empowered to collect and receive any money or other property payable or deliverable on any such claims and to distribute the same, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and any other amounts due the Trustee under Section 10.07, and to the extent that such payment of the reasonable compensation, expenses, disbursements and advances in any such proceedings shall be denied for any reason, payment of the same shall be secured by a lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other property which the Holders may be entitled to receive in such proceedings, whether in liquidation or under any plan of reorganization or arrangement or otherwise.  Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to, or, on behalf of any Holder, to authorize, accept or adopt, any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

Section 9.10.  Priorities.

If the Trustee collects any money pursuant to this Article 9, it shall pay out the money in the following order:

First, to the Trustee for amounts due under Section 10.07;

Second, to the holders of Senior Indebtedness to the extent required by Article 6;

61

Third, to Holders for amounts due and unpaid on the Securities for principal, interest, if any, ratably, without preference or priority of any kind, according to the amounts due and payable on the Securities for principal, interest, if any, respectively; and

Fourth, the balance, if any, to the Company.

The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 9.10.

Section 9.11.  Undertaking for Costs.

In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant.  This Section 9.11 does not apply to a suit made by the Trustee, a suit by a Holder pursuant to Section 9.07 or a suit by Holders of more than 10% in aggregate principal amount of the Securities then outstanding.

ARTICLE 10
TRUSTEE

Section 10.01.  Duties of Trustee.

(a)        If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and use the same degree of care and skill in its exercise as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs.

(b)        Except during the continuance of an Event of Default:

(i)            the Trustee need perform only those duties as are specifically set forth in this Indenture and no others; and

(ii)           in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture.  The Trustee, however, shall examine any certificates and opinions which by any provision hereof are specifically required to be delivered to the Trustee to determine whether or not they conform to the requirements of this Indenture.

(c)        The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that:

62

(i)            this paragraph does not limit the effect of subsection (b) of this Section 10.01;

(ii)           the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and

(iii)          the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 9.05.

(d)        No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers unless the Trustee shall have received adequate indemnity in its opinion against potential costs and liabilities incurred by it relating thereto.

(e)        Every provision of this Indenture that in any way relates to the Trustee is subject to subsections (a), (b), (c) and (d) of this Section 10.01.

(f)         The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company.  Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.

(g)        At 5:00 p.m., New York City time, on each Trading Day, the Trustee shall print and retain, for a period of 30 Business Days, the Daily VWAP for such Trading Day, to the extent such Daily VWAP is available on Bloomberg.

Section 10.02.  Rights of Trustee.

Subject to Section 10.01:

(a)        The Trustee may rely conclusively on any document believed by it to be genuine and to have been signed or presented by the proper person.  The Trustee need not investigate any fact or matter stated in the document.

(b)        Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate or an Opinion of Counsel, which shall conform to Section 13.04(b).  The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers’ Certificate or Opinion of Counsel.

(c)        The Trustee may act through its agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care.

(d)        The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers.

63

(e)        The Trustee may consult with counsel of its selection, and the advice or opinion of such counsel as to matters of law shall be full and complete authorization and protection in respect of any such action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel.

(f)         The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee security or indemnity satisfactory to the Trustee against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction.

(g)        The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney at the sole cost of the Company, and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation.

(h)        The Trustee shall not be deemed to have notice of any Default or Event of Default unless a Trust Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a default is received by the Trustee at the Corporate Trust Office, and such notice references the Securities and this Indenture.

(i)         The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and to each agent, custodian and other Person employed to act hereunder.

Section 10.03.  Individual Rights of Trustee.

The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or an Affiliate of the Company with the same rights it would have if it were not Trustee.  Any Agent may do the same with like rights.  However, the Trustee is subject to Section 10.10 and 10.11.

Section 10.04.  Trustee’s Disclaimer.

The Trustee makes no representation as to the validity or adequacy of this Indenture or the Securities, it shall not be accountable for the Company’s use of the proceeds from the Securities, and it shall not be responsible for any statement in the Securities other than its certificate of authentication.

64

Section 10.05.  Notice of Default or Events of Default.

If a default or an Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to each Holder notice of the default or Event of Default within 90 days after it occurs.  However, the Trustee may withhold the notice if and so long as a committee of its Trust Officers in good faith determines that withholding notice is in the interests of Holders, except in the case of a default or an Event of Default in payment of the principal of, or interest on any Security.

Section 10.06.  Reports by Trustee to Holders.

If such report is required by TIA Section 313, within 60 days after each May 15, beginning with the May 15 following the date of this Indenture, the Trustee shall mail to each Holder a brief report dated as of such May 15 that complies with TIA Section 313(a).  The Trustee also shall comply with TIA Section 313(b)(2) and (c).

A copy of each report at the time of its mailing to Holders shall be mailed to the Company and filed with the SEC and each stock exchange, if any, on which the Securities are listed.  The Company shall notify the Trustee whenever the Securities become listed on any stock exchange or listed or admitted to trading on any quotation system and any changes in the stock exchanges or quotation systems on which the Securities are listed or admitted to trading and of any delisting thereof.

Section 10.07.  Compensation and Indemnity.

The Company shall pay to the Trustee from time to time such compensation (as agreed to from time to time by the Company and the Trustee in writing) for its services (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust).  The Company shall reimburse the Trustee upon request for all reasonable disbursements, expenses and advances incurred or made by it.  Such expenses may include the reasonable compensation, disbursements and expenses of the Trustee’s agents and counsel.

The Company shall indemnify the Trustee or any predecessor Trustee (which for purposes of this Section 10.07 shall include its officers, directors, employees and agents) for, and hold it harmless against, any and all loss, liability or expense, including taxes (other than taxes based upon, measured by or determined by the income of the Trustee), including reasonable legal fees and expenses, incurred by it in connection with the acceptance or administration of its duties under this Indenture or any action or failure to act as authorized or within the discretion or rights or powers conferred upon the Trustee hereunder, including the reasonable costs and expenses of the Trustee and its counsel in defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder.  The Trustee shall notify the Company promptly of any claim asserted against the Trustee for which it may seek indemnity.  The Company need not pay for any settlement without its written consent, which shall not be unreasonably withheld.

The Company need not reimburse the Trustee for any expense or indemnify it against any loss or liability incurred by it resulting from its gross negligence or bad faith.

65

To secure the Company’s payment obligations in this Section 10.07, the Trustee shall have a senior claim to which the Securities are hereby made subordinate on all money or property held or collected by the Trustee, except such money or property held in trust to pay the principal of, and interest, if any, on, the Securities.  The obligations of the Company under this Section 10.07 shall survive the satisfaction and discharge of this Indenture or the resignation or removal of the Trustee.

When the Trustee incurs expenses or renders services after an Event of Default specified in clause (i) or (j) of Section 9.01 occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under any Bankruptcy Law.  The provisions of this Section shall survive the termination of this Indenture.

Section 10.08.  Replacement of Trustee.

The Trustee may resign by so notifying the Company.  The Holders of a majority in aggregate principal amount of the Securities then outstanding may remove the Trustee by so notifying the Trustee and may, with the Company’s written consent, appoint a successor Trustee.  The Company may remove the Trustee if:

(a)        the Trustee fails to comply with Section 10.10;

(b)        the Trustee is adjudged a bankrupt or an insolvent;

(c)        a receiver or other public officer takes charge of the Trustee or its property; or

(d)        the Trustee becomes incapable of acting.

If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee.  The resignation or removal of a Trustee shall not be effective until a successor Trustee shall have delivered the written acceptance of its appointment as described below.

If a successor Trustee does not take office within 45 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of 10% in principal amount of the Securities then outstanding may petition any court of competent jurisdiction for the appointment of a successor Trustee at the expense of the Company.

If the Trustee fails to comply with Section 10.10, any Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company.  Immediately after that, the retiring Trustee shall transfer all property held by it as Trustee to the successor Trustee and be released from its obligations (exclusive of any liabilities that the retiring Trustee may have incurred while acting as Trustee) hereunder, the resignation or removal of the retiring Trustee shall become effective, and the

66

successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture.  A successor Trustee shall mail notice of its succession to each Holder.

A retiring Trustee shall not be liable for the acts or omissions of any successor Trustee after its succession.

Notwithstanding replacement of the Trustee pursuant to this Section 10.08, the Company’s obligations under Section 10.07 shall continue for the benefit of the retiring Trustee.

Section 10.09.  Successor Trustee by Merger, etc.

If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust assets (including the administration of this Indenture) to, another corporation, the resulting, surviving or transferee corporation, without any further act, shall be the successor Trustee, provided such transferee corporation shall qualify and be eligible under Section 10.10.  Such successor Trustee shall promptly mail notice of its succession to the Company and each Holder.

Section 10.10.  Eligibility; Disqualification.

The Trustee shall always satisfy the requirements of paragraphs (1), (2) and (5) of TIA Section 310(a).  The Trustee (or its parent holding company) shall have a combined capital and surplus of at least $50,000,000.  If at any time the Trustee shall cease to satisfy any such requirements, it shall resign immediately in the manner and with the effect specified in this Article 10.  The Trustee shall be subject to the provisions of TIA Section 310(b).  Nothing herein shall prevent the Trustee from filing with the SEC the application referred to in the penultimate paragraph of TIA Section 310(b).

Section 10.11.  Preferential Collection of Claims Against Company.

The Trustee shall comply with TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b).  A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated therein.

ARTICLE 11
SATISFACTION AND DISCHARGE

Section 11.01.  Satisfaction and Discharge.

(a)        This Indenture shall cease to be of further effect, and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when

(i)            all Securities theretofore authenticated and delivered (other than (i) Securities which have been destroyed, lost or stolen and which have been replaced or

67

paid as provided in Section 2.07 and (ii) Securities for whose payment money has theretofore been deposited in trust and thereafter repaid to the Company as provided in Section 11.03) have been delivered to the Trustee for cancellation;

(ii)           the Company has paid or caused to be paid all other sums payable hereunder by the Company; and

(iii)          the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with.

Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 10.07 shall survive.

(b)        The Company may discharge its obligations to pay principal of, and interest, if any, on, the Securities when all Securities not theretofore delivered to the Trustee for cancellation

(i)            have become due and payable, or

(ii)           will become due and payable at the Final Maturity Date within one year,

and the Company, in the case of clause (i) or (ii) above, has delivered to Holders or irrevocably deposited or caused to be irrevocably deposited with the Trustee or a Paying Agent (other than the Company or any of its Affiliates) as trust funds in trust for the purpose cash in an amount sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal and interest, to the date of such delivery or deposit (in the case of Securities which have become due and payable) or to the Final Maturity Date.

Section 11.02.  Application of Trust Money.

Subject to the provisions of Section 11.03, the Trustee or a Paying Agent shall hold in trust, for the benefit of the Holders of Securities, all money deposited with it pursuant to Section 11.01(b) with respect to Securities and shall apply the deposited money in accordance with this Indenture and the Securities to the payment of the principal of, and any interest on, the Securities.  Money so held in trust shall not be subject to the subordination provisions of Article 6.

Section 11.03.  Repayment to Company.

The Trustee and each Paying Agent shall promptly pay to the Company upon request any excess money (i) deposited with them pursuant to Section 11.01(b) and (ii) held by them at any time.

The Trustee and each Paying Agent shall pay to the Company upon request any money held by them for the payment of principal or interest that remains unclaimed for two years after a

68

right to such money has matured; provided, however, that the Trustee or such Paying Agent, before being required to make any such payment, may at the expense of the Company cause to be mailed to each Holder entitled to such money notice that such money remains unclaimed and that after a date specified therein, which shall be at least 30 days from the date of such mailing, any unclaimed balance of such money then remaining will be repaid to the Company.  After payment to the Company, Holders entitled to money must look to the Company for payment as general creditors unless an applicable abandoned property law designates another person.

Section 11.04.  Reinstatement.

If the Trustee or any Paying Agent is unable to apply any money in accordance with Section 11.02 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company’s obligations under this Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to Section 11.01(b) until such time as the Trustee or such Paying Agent is permitted to apply all such money in accordance with Section 11.02; provided, however, that, if the Company has made any payment of the principal of, or interest on, any Securities because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive any such payment from the money held by the Trustee or such Paying Agent.

ARTICLE 12
AMENDMENTS, SUPPLEMENTS AND WAIVERS

Section 12.01.  Without Consent of Holders.

The Company and the Trustee may amend or supplement this Indenture or the Securities without notice to or consent of any Holder:

(a)        to comply with Section 5.12 and 8.01;

(b)        to cure any ambiguity, defect or inconsistency;

(c)        to make any other change that does not adversely affect the rights of any Holder;

(d)        to comply with the provisions of the TIA;

(e)        to add to the covenants of the Company for the equal and ratable benefit of the Holders or to surrender any right, power or option conferred upon the Company; or

(f)         to appoint a successor Trustee.

Any amendment or supplement made solely to conform the provisions of this Indenture or the Securities to the description thereof contained in the final prospectus relating to the Securities will be deemed not to adversely affect the rights of any Holder.

69

Section 12.02.  With Consent of Holders.

The Company and the Trustee may amend or supplement the Securities or this Indenture with the written consent of the Holders of at least a majority in aggregate principal amount of the Securities then outstanding.  The Holders of at least a majority in aggregate principal amount of the Securities then outstanding may waive compliance in a particular instance by the Company with any provision of the Securities or this Indenture without notice to any Holder.  However, notwithstanding the foregoing but subject to Section 12.04, without the written consent of each Holder affected, an amendment, supplement or waiver, including a waiver pursuant to Section 9.04, may not:

(a)        change the stated maturity of the principal of, or the date any installment of interest is due on, any Security;

(b)        reduce the principal amount of, or interest on, any Security;

(c)        reduce the amount of principal payable upon acceleration of the maturity of any Security;

(d)        change the place or currency of payment of principal of, or interest on, any Security;

(e)        impair the right of any Holder to receive payment of principal of, or interest on, the Securities of such Holder on or after the due dates therefor;

(f)         impair the right to institute suit for the enforcement of any payment on, or with respect to, any Security;

(g)        modify the provisions with respect to the purchase right of Holders pursuant to Article 3 upon a Fundamental Change in a manner adverse to Holders;

(h)        modify the subordination provisions of Article 6 in a manner materially adverse to the Holders of Securities;

(i)         change the ranking of the Securities;

(j)         adversely affect the right of Holders to convert Securities other than as provided in or under Article 5 of this Indenture; and

(k)        modify any of the provisions of this Section or Section 9.04, except to increase any such percentage or to provide that certain provisions of this Indenture cannot be modified, amended or waived without the consent of the Holder of each outstanding Security affected thereby.

It shall not be necessary for the consent of the Holders under this Section 12.02 to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such consent approves the substance thereof.

70

After an amendment, supplement or waiver under this Section 12.02 becomes effective, the Company shall mail to the Holders affected thereby a notice briefly describing the amendment, supplement or waiver.  Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amendment, supplement or waiver.  An amendment or supplement under this Section 12.02 or under Section 12.01 may not make any change that adversely affects the rights under Article 6 of any holder of an issue of Senior Indebtedness unless the holders of that issue, pursuant to its terms, consent to the change.

Section 12.03.  Compliance with Trust Indenture Act.

Every amendment to or supplement of this Indenture or the Securities shall comply with the TIA as in effect at the date of such amendment or supplement.

Section 12.04.  Revocation and Effect of Consents.

Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder is a continuing consent by the Holder and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder’s Security, even if notation of the consent is not made on any Security.  However, any such Holder or subsequent Holder may revoke the consent as to its Security or portion of a Security if the Trustee receives the notice of revocation before the date the amendment, supplement or waiver becomes effective.

After an amendment, supplement or waiver becomes effective, it shall bind every applicable Holder, unless it makes a change described in any of clauses (a) through (k) of Section 12.02.  In that case the amendment, supplement or waiver shall bind each Holder of a Security who has consented to it and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder’s Security.

Section 12.05.  Notation on or Exchange of Securities.

If an amendment, supplement or waiver changes the terms of a Security, the Trustee may require the Holder of the Security to deliver it to the Trustee.  The Trustee may place an appropriate notation on the Security about the changed terms and return it to the Holder.  Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Security shall issue and the Trustee shall authenticate a new Security that reflects the changed terms.

Section 12.06.  Trustee to Sign Amendments, etc.

The Trustee shall sign any amendment or supplemental indenture authorized pursuant to this Article 12 if the amendment or supplemental indenture does not adversely affect the rights, duties, liabilities or immunities of the Trustee.  If it does, the Trustee may, in its sole discretion, but need not sign it.  In signing or refusing to sign such amendment or supplemental indenture, the Trustee shall be entitled to receive, and, subject to Section 10.01, shall be fully protected in relying upon, an Opinion of Counsel stating that such amendment or supplemental indenture is

71

authorized or permitted by this Indenture.  The Company may not sign an amendment or supplement indenture until the Board of Directors approves it.

Section 12.07.  Effect of Supplemental Indentures.

Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.

ARTICLE 13
MISCELLANEOUS

Section 13.01.  Trust Indenture Act Controls.

If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by any of Sections 310 to 317, inclusive, of the TIA through operation of Section 318(c) thereof, such imposed duties shall control.

Section 13.02.  Notices.

Any demand, authorization, notice, request, consent or communication shall be given in writing and delivered in person or mailed by first-class mail, postage prepaid, addressed as follows or transmitted by facsimile transmission (confirmed by delivery in person or mail by first-class mail, postage prepaid, or by guaranteed overnight courier) to the following facsimile numbers:

If to the Company, to:

Cephalon, Inc.

41 Moores Road,

Frazer, PA 19355

Attention:  Chief Financial Officer

Facsimile No.:  (610) 738-6258

if to the Trustee, to:

U.S. Bank National Association

225 Asylum Street, 23rd Floor

Hartford, Connecticut 06103

Attention:  Corporate Trust Services (Cephalon, Inc.

2.50% Convertible Senior Subordinated Notes due

May 1, 2014)

Facsimile No.:  (860) 241-6881

Such notices or communications shall be effective when received.

72

The Company or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications.

Any notice or communication mailed to a Holder shall be mailed by first-class mail or delivered by an overnight delivery service to it at its address shown on the register kept by the Primary Registrar.

Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders.  If a notice or communication to a Holder is mailed in the manner provided above or delivered electronically, it is duly given, whether or not the addressee receives it.

In the event the Company is required pursuant to this Indenture to deliver any notice, such notice may be given by the Trustee on behalf of the Company.  The Company shall make any notice it is required to deliver to Holders available on its website.

Section 13.03.  Communications by Holders with Other Holders.

Holders may communicate pursuant to TIA Section 312(b) with other Holders with respect to their rights under this Indenture or the Securities.  The Company, the Trustee, the Registrar and any other person shall have the protection of TIA Section 312(c).

Section 13.04.  Certificate and Opinion as to Conditions Precedent.

(a)        Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee at the request of the Trustee:

(i)            an Officers’ Certificate stating that, in the opinion of the signers, all conditions precedent (including any covenants, compliance with which constitutes a condition precedent), if any, provided for in this Indenture relating to the proposed action have been complied with; and

(ii)           an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent (including any covenants, compliance with which constitutes a condition precedent) have been complied with.

(b)        Each Officers’ Certificate and Opinion of Counsel with respect to compliance with a condition or covenant provided for in this Indenture shall include:

(i)            a statement that the person making such certificate or opinion has read such covenant or condition;

(ii)           a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

73

(iii)          a statement that, in the opinion of such person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(iv)          a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with;

provided, however, that with respect to matters of fact an Opinion of Counsel may rely on an Officers’ Certificate or certificates of public officials.

Section 13.05.  Record Date for Vote or Consent of Holders.

The Company (or, in the event deposits have been made pursuant to Section 11.01, the Trustee) may set a record date for purposes of determining the identity of Holders entitled to vote or consent to any action by vote or consent authorized or permitted under this Indenture, which record date shall not be more than 30 days prior to the date of the commencement of solicitation of such action.  Notwithstanding the provisions of Section 12.04, if a record date is fixed, those persons who were Holders of Securities at the close of business on such record date (or their duly designated proxies), and only those persons, shall be entitled to take such action by vote or consent or to revoke any vote or consent previously given, whether or not such persons continue to be Holders after such record date.

Section 13.06.  Rules by Trustee, Paying Agent, Registrar and Conversion Agent.

The Trustee may make reasonable rules (not inconsistent with the terms of this Indenture) for action by or at a meeting of Holders.  Any Registrar, Paying Agent or Conversion Agent may make reasonable rules for its functions.

Section 13.07.  Payment Day or Record Date Not A Business Day.

If a payment date is not a Business Day, payment shall be made on the next succeeding day that is a Business Day, and no interest shall accrue for the intervening period.  If a regular record date is not a Business Day, the record date shall not be affected.

Section 13.08.  Governing Law.

This Indenture and the Securities shall be governed by, and construed in accordance with, the laws of the State of New York.

Section 13.09.  No Adverse Interpretation of Other Agreements.

This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company or a Subsidiary of the Company.  Any such indenture, loan or debt agreement may not be used to interpret this Indenture.

74

Section 13.10.  No Recourse against Others.

All liability described in paragraph 18 of the Securities of any director, officer, employee or shareholder, as such, of the Company is waived and released.

Section 13.11.  Successors.

All agreements of the Company in this Indenture and the Securities shall bind its successor.  All agreements of the Trustee in this Indenture shall bind its successor.

Section 13.12.  Multiple Counterparts.

The parties may sign multiple counterparts of this Indenture.  Each signed counterpart shall be deemed an original, but all of them together represent the same agreement.

Section 13.13.  Separability.

In case any provisions in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

Section 13.14.  Table of Contents, Headings, etc.

The table of contents, cross-reference sheet and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof and shall in no way modify or restrict any of the terms or provisions hereof.

Section 13.15.  Submission to Jurisdiction.

The Company (i) agrees that any suit, action or proceeding against it arising out of or relating to this Indenture or the Securities, as the case may be, may be instituted in any federal or state court sitting in The City of New York; (ii) waives to the fullest extent permitted by applicable law, any objection which it may now or hereafter have to the laying of venue of any such suit, action or proceeding, and any claim that any suit, action or proceeding in such a court has been brought in an inconvenient forum; and (iii) submits to the non-exclusive jurisdiction of such courts in any suit, action or proceeding.

[SIGNATURE PAGE FOLLOWS]

75

IN WITNESS WHEREOF, the parties hereto have hereunto set their hands as of the date and year first above written.

CEPHALON, INC.
By:	/s/ J. Kevin Buchi
	Name:	J. Kevin Buchi
	Title:	Executive Vice President and Chief Financial Officer

U.S. BANK NATIONAL ASSOCIATION, as Trustee
By:	/s/ Arthur L. Blakeslee
	Name:	Arthur L. Blakeslee
	Title:	Vice President

INDENTURE SIGNATURE PAGE

EXHIBIT A

[THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF.

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO CEPHALON, INC. (THE “COMPANY”) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.  TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS TO NOMINEES OF THE DEPOSITORY TRUST COMPANY OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE, AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN ARTICLE TWO OF THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.  THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.](1)

(1) Include for Global Security.

A-1

CEPHALON, INC.

CUSIP: 156708AR0 No.

2.50% CONVERTIBLE SENIOR SUBORDINATED NOTES DUE MAY 1, 2014

Cephalon, Inc., a Delaware corporation (the “Company”, which term shall include any successor corporation under the Indenture referred to on the reverse hereof), promises to pay to [Cede & Co.](2), or registered assigns, the principal sum of           [million] dollars ($                  ) on May 1, 2014 or such greater or lesser amount as is indicated on the Schedule of Exchanges of Securities on the other side of this Security.

This Security is convertible as specified on the other side of this Security. Additional provisions of this Security are set forth on the other side of this Security.

[Signature Page Follows]

(2) Include for Global Security.

A-2

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed on the date written below.

	CEPHALON, INC.
	By:
	Name:
	Title:
Trustee’s Certificate of Authentication: This is one of the Securities referred to in the within-mentioned Indenture.
U.S.BANK NATIONAL ASSOCIATION,
as Trustee
By:
Authorized Signatory
Dated: May 27, 2009(3)

(3) [Note for form of security: Or such other date on which additional Securities may be issued pursuant to the terms of the Indenture.]

A-3

CEPHALON, INC.

2.50% CONVERTIBLE SENIOR SUBORDINATED NOTES DUE MAY 1, 2014

1.             INTEREST AMOUNTS

Cephalon, Inc., a Delaware corporation (the “Company,” which term shall include any successor corporation under the Indenture hereinafter referred to), will pay interest at a rate of 2.50% per annum, on the principal amount of this Security payable as provided in the Indenture.

2.             METHOD OF PAYMENT

The Company shall pay any interest on this Security to the person who is the Holder of this Security at the close of business on April 15 or October 15, as the case may be, next preceding the related interest payment date. The Holder must surrender this Security to a Paying Agent to collect payment of principal and interest, if any.  Interest on the Security will be paid at a rate of 2.50% per annum, payable semi-annually in arrears on May 1 and November 1 of each year, or if any such day is not a Business Day, the immediately following Business Day, commencing November 1, 2009.  Interest is computed on the basis of a 360-day year comprised of twelve 30-day months.  In the event of the maturity, conversion or purchase of the Security by the Company at the option of the Holder, interest shall cease to accrue on the Security.  However, the Company will pay interest on the maturity date to a Holder of record of the Security on the record date immediately preceding the stated maturity date regardless of whether such Holder converts the Security.

The Company will make all payments in respect of a Global Security registered in the name of the Depositary or its nominee to the Depositary or its nominee, as the case may be, by wire transfer of immediately available funds to the account of the Depositary or its nominee.  The Company will make all payments in respect of a Certificated Security (including principal and interest) in U.S. dollars at the office of the Trustee.  At the Company’s option, the Company may make such payments by mailing a check to the registered address of each Holder thereof as such address shall appear on the register or, if requested by a Holder of more than $1,000,000 in aggregate principal amount of Securities, by wire transfer of immediately available funds to the account specified by such Holder.

3.             PAYING AGENT, REGISTRAR AND CONVERSION AGENT

Initially, U.S. Bank National Association (the “Trustee,” which term shall include any successor trustee under the Indenture hereinafter referred to) will act as Paying Agent, Registrar and Conversion Agent. The Company may appoint and change any Paying Agent, Conversion Agent or Registrar without notice, other than notice to the Trustee; provided that the Company will maintain at least one Paying Agent in the United States of America, which shall initially be an office or agency of the Trustee.  The Company or any of its Subsidiaries may, subject to certain limitations set forth in the Indenture, act as Paying Agent or Registrar.

A-4

4.             INDENTURE, LIMITATIONS

This Security is one of a duly authorized issue of Securities of the Company designated as its 2.50% Convertible Senior Subordinated Notes due May 1, 2014 (the “Securities”), issued under an Indenture, dated as of May 27, 2009 (together with any supplemental indentures thereto, the “Indenture”), between the Company and the Trustee. The terms of this Security include those stated in the Indenture and those required by or made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended, as in effect on the date of the Indenture. This Security is subject to all such terms, and the Holder of this Security is referred to the Indenture and said Act for a statement of them.

The Securities are senior subordinated unsecured obligations of the Company limited, except as set forth in the Indenture, to up to $500,000,000 aggregate principal amount. The Indenture does not limit other debt of the Company, secured or unsecured, including Senior Indebtedness.

5.             PURCHASE OF SECURITIES AT OPTION OF HOLDER UPON A FUNDAMENTAL CHANGE

At the option of the Holder and subject to the terms and conditions of the Indenture, the Company shall become obligated to purchase all or any part specified by the Holder (so long as the principal amount of such part is $1,000 or an integral multiple of $1,000 in excess thereof) of the Securities held by such Holder on a date, determined by the Company in its sole discretion, that is not less than 20 Business Days and not more than 30 Business Days after the occurrence of a Fundamental Change, at a purchase price equal to 100% of the principal amount thereof, together with any accrued interest up to, but excluding, the Fundamental Change Purchase Date, unless the Fundamental Change Purchase Date is after a Record Date and on or prior to the related Interest Payment Date, in which case interest accrued to the Interest Payment Date will be paid to Holders of the Securities as of the preceding Record Date and the Fundamental Change Purchase Price payable to any Holder surrendering such Holder’s Security for purchase pursuant to Article 3 of the Indenture shall be equal to the principal amount of Securities subject to purchase and will not include any accrued and unpaid interest.  The Fundamental Change Purchase Price shall be payable in cash. The Holder shall have the right to withdraw any Fundamental Change Purchase Notice (in whole or in a portion thereof that is $1,000 or an integral multiple of $1,000 in excess thereof) at any time prior to 5:00 p.m., New York City time, on the second Scheduled Trading Day immediately preceding the Fundamental Change Purchase Date by delivering a written notice of withdrawal to the Paying Agent in accordance with the terms of the Indenture.

6.             CONVERSION

A Holder of a Security may convert the principal amount of such Security (or any portion thereof equal to $1,000 or any integral multiple of $1,000 in excess thereof) into cash and shares of Common Stock, if any, at any time prior to the close of business on November 1, 2013, subject to the conditions, if any, set forth in Section 5.01 of the Indenture; provided, however, that, if the Security is subject to purchase upon a Fundamental Change, the conversion right will terminate at the close of business on the second Trading Day immediately preceding the Fundamental Change Purchase Date for such Security or such earlier date as the Holder presents

A-5

such Security for purchase (unless the Company shall default in making the Fundamental Change Purchase Price when due, in which case the conversion right shall terminate at the close of business on the date such default is cured and such Security is purchased).

The initial Conversion Price is $69.00 per share, and the initial Conversion Rate is 14.4928 shares of Common Stock, in each case subject to adjustment under certain circumstances as provided in the Indenture. No fractional shares will be issued upon conversion; in lieu thereof, the Company will pay cash in an amount determined by multiplying the Daily VWAP of a full share of Common Stock on the last Trading Day of such Conversion Period by the fractional amount and rounding the product to the nearest whole cent.  Whether fractional shares are issuable upon a conversion will be determined on the basis of the total number of Securities that the Holder is then converting into cash and Common Stock, if any, and the aggregate number of shares, if any, of Common Stock issuable upon such conversion.

To convert a Security, a Holder must (a) complete and manually sign the conversion notice set forth below and deliver such notice to a Conversion Agent, (b) surrender the Security to a Conversion Agent, (c) furnish appropriate endorsements and transfer documents if required by a Registrar or a Conversion Agent and (d) pay any transfer or similar tax, if required. A Holder may convert a portion of a Security equal to $1,000 or any integral multiple thereof.  In the case of a Security held by the Depositary, such conversion shall be done in accordance with the applicable rules and procedures of the Depositary.

A Security in respect of which a Holder had delivered a Fundamental Change Purchase Notice exercising the option of such Holder to require the Company to purchase such Security may be converted only if the Fundamental Change Purchase Notice is withdrawn in accordance with the terms of the Indenture.

7.             SUBORDINATION

The indebtedness evidenced by the Securities is, to the extent and in the manner provided in the Indenture, subordinate and junior in right of payment to the prior payment in full of all Senior Indebtedness of the Company. Any Holder by accepting this Security agrees to and shall be bound by such subordination provisions and authorizes the Trustee to give them effect. In addition to all other rights of Senior Indebtedness described in the Indenture, the Senior Indebtedness shall continue to be Senior Indebtedness and entitled to the benefits of the subordination provisions irrespective of any amendment, modification or waiver of any terms of any instrument relating to the Senior Indebtedness or any extension or renewal of the Senior Indebtedness.

8.             DENOMINATIONS, TRANSFER, EXCHANGE

The Securities are in registered form, without coupons, in denominations of $1,000 and integral multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes or other governmental charges that may be imposed in relation thereto by law or permitted by the Indenture.

A-6

9.             PERSONS DEEMED OWNERS

The Holder of a Security may be treated as the owner of it for all purposes.

10.           UNCLAIMED MONEY

If money for the payment of principal, or interest, if any, remains unclaimed for two years, the Trustee or Paying Agent will pay the money back to the Company at its written request, subject to applicable unclaimed property law. After that, Holders entitled to money must look to the Company for payment as general creditors unless an applicable abandoned property law designates another person.

11.           AMENDMENT, SUPPLEMENT AND WAIVER

Subject to certain exceptions set forth in the Indenture, the Securities and the Indenture may be amended or supplemented with the consent of the Holders of at least a majority in aggregate principal amount of the Securities then outstanding, and an existing default or Event of Default with respect to the Securities and its consequence or compliance with any provision of the Securities or the Indenture may be waived in a particular instance with the consent of the Holders of a majority in aggregate principal amount of the Securities then outstanding. Without the consent of or notice to any Holder, the Company and the Trustee may amend or supplement the Indenture or the Securities to, among other things, cure any ambiguity, defect or inconsistency or make any other change that does not adversely affect the rights of any Holder.

12.          CALCULATIONS IN RESPECT OF SECURITIES

Except to the extent provided therein, the Company will be responsible for making all calculations called for under the Indenture and the Securities.  These calculations include, but are not limited to, determinations of the Closing Sale Price of the Common Stock, adjustments to the Conversion Price, any accrued interest payable on the Securities, the Conversion Price and the Conversion Rate.  The Company will make these calculations in good faith and, absent manifest error, the calculations will be final and binding on Holders of the Securities.  The Company will provide to each of the Trustee and the Conversion Agent a schedule of its calculations, and the Trustee and the Conversion Agent are entitled to rely conclusively upon the accuracy of such calculations without independent verification.  The Trustee will forward the Company’s calculations to any Holder of the Securities upon the request of such Holder.

13.           SUCCESSOR ENTITY

When a successor corporation assumes all the obligations of its predecessor under the Securities and the Indenture in accordance with the terms and conditions of the Indenture, the predecessor corporation (except in certain circumstances specified in the Indenture) shall be released from those obligations.

14.           DEFAULTS AND REMEDIES

Under the Indenture, an “Event of Default” with respect to Securities shall occur if: (i) the Company defaults in the payment of any principal of any Security when the same becomes

A-7

due and payable (whether at maturity, upon required repurchase, following a Fundamental Change or otherwise), whether or not such payment shall be prohibited by the provisions of Article 6 of the Indenture; (ii) the Company fails to pay the cash and deliver the shares of Common Stock, if any, representing the Conversion Obligation upon conversion of any Security (including any Additional Shares) within the time period required by the provisions of the Indenture, whether or not such payment shall be prohibited by the provisions of Article 6 of the Indenture; (iii) the Company defaults in the payment of interest when the same becomes due and payable and the default continues for a period of 30 days, whether or not such payment shall be prohibited by the provisions of Article 6 of the Indenture; (iv) the Company fails to perform or comply with any of its other covenants or agreements contained in the Securities or in the Indenture (other than a covenant or agreement a default in whose performance or whose breach is specifically dealt with in clauses (i), (ii) or (iii) above) and the default continues for 60 days after notice is given in accordance with the Indenture; (v) the Company defaults in the payment of the purchase price of any Security when the same becomes due and payable, whether or not such payment shall be prohibited by the provisions of Article 6 of the Indenture; (vi) the Company fails to provide a Fundamental Change Purchase Notice when required by Section 3.01 of the Indenture; (vii) any indebtedness under any bond, debenture, note or other evidence of indebtedness for money borrowed by the Company or any Significant Subsidiary (or group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary) or under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by, or any other payment obligation of, the Company or any Significant Subsidiary (or group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary) (an “Instrument”) with a principal amount then, individually or in the aggregate, outstanding in excess of $10,000,000, whether such indebtedness now exists or shall hereafter be created, is not paid at final maturity of the Instrument (either at its stated maturity or upon acceleration thereof) or when otherwise due or is accelerated, and such indebtedness is not discharged, or such default in payment or acceleration is not cured or rescinded, within a period of 30 days after there shall have been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in aggregate principal amount of the outstanding Securities a written notice specifying such default and requiring the Company to cause such indebtedness to be discharged or cause such default to be cured or waived or such acceleration to be rescinded or annulled and stating that such notice is a “Notice of Default” under the Indenture; (viii) the Company or any Significant Subsidiary (or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary) fails to pay one or more final and non-appealable judgments entered by a court or courts of competent jurisdiction, the aggregate uninsured or unbonded portion of which is in excess of $10,000,000, if the judgments are not paid, discharged, waived or stayed within 30 days; or (ix) the Company or any Significant Subsidiary (or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary) of the Company, pursuant to or within the meaning of any Bankruptcy Law (as defined in the Indenture): (a) commences a voluntary case or proceeding; (b) consents to the entry of an order for relief against it in an involuntary case or proceeding; (c) consents to the appointment of a Custodian of it or for all or substantially all of its property; or (d) makes a general assignment for the benefit of its creditors; or (x) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (a) is for relief against the Company or any Significant Subsidiary (or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary) of the Company in an involuntary case or proceeding; (b) appoints a Custodian of

A-8

the Company or any Significant Subsidiary (or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary) of the Company for all or substantially all of the property of the Company or any such Significant Subsidiary (or such group of Subsidiaries); or (c) orders the liquidation of the Company or any Significant Subsidiary (or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary) of the Company; and the case of each of clause (a), (b) and (c), the order or decree remains unstayed and in effect for 60 consecutive days.

If an Event of Default with respect to the Securities (other than as a result of certain events of bankruptcy, insolvency or reorganization specified in the Indenture) occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of the Securities then outstanding may declare all unpaid principal to the date of acceleration on the Securities then outstanding to be due and payable immediately, all as and to the extent provided in the Indenture. If an Event of Default occurs as a result of certain events of bankruptcy, insolvency or reorganization specified in the Indenture, unpaid principal of the Securities then outstanding shall become due and payable immediately without any declaration or other act on the part of the Trustee or any Holder, all as and to the extent provided in the Indenture. Holders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Securities. Subject to certain limitations, Holders of a majority in aggregate principal amount of the Securities then outstanding may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing default (except a default in payment of principal or any interest) if it determines that withholding notice is in their interests. The Company is required to file periodic reports with the Trustee as to the absence of default.

Under the terms of the Indenture, at the election of the Company in its sole discretion, the sole remedy for an Event of Default relating to the failure to comply with Section 7.02 of the Indenture, and for any failure to comply with the requirements of Section 314(a)(1) of the TIA, will consist, for the 180 days after the occurrence of such an Event of Default, exclusively of the right to receive additional interest on the notes at a rate equal to 0.50% per annum of the aggregate principal amount of the Securities then outstanding up to, but not including, the 181st day thereafter (or, if applicable, the earlier date on which the Event of Default relating to the reporting obligations is cured or waived).  Any such additional interest will be paid and calculated in the manner set forth in the Indenture.

15.           TRUSTEE DEALINGS WITH THE COMPANY

U.S. Bank National Association, the Trustee under the Indenture, in its individual or any other capacity, may make loans to, accept deposits from and perform services for the Company or an Affiliate of the Company and may otherwise deal with the Company or an Affiliate of the Company, as if it were not the Trustee.

16.           NO RECOURSE AGAINST OTHERS

A director, officer, employee or shareholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. The Holder of this

A-9

Security by accepting this Security waives and releases all such liability. The waiver and release are part of the consideration for the issuance of this Security.

17.           AUTHENTICATION

This Security shall not be valid until the Trustee or an authenticating agent manually signs the certificate of authentication on the other side of this Security.

18.           ABBREVIATIONS AND DEFINITIONS

Customary abbreviations may be used in the name of the Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian) and UGMA (= Uniform Gifts to Minors Act).

All terms defined in the Indenture and used in this Security but not specifically defined herein are used herein as so defined.

19.           INDENTURE TO CONTROL; GOVERNING LAW

In the case of any conflict between the provisions of this Security and the Indenture, the provisions of the Indenture shall control. This Security shall be governed by, and construed in accordance with, the laws of the State of New York.

The Company will furnish to any Holder, upon written request and without charge, a copy of the Indenture. Requests may be made to: Cephalon, Inc., 41 Moores Road, Frazer, PA 19355, (610) 344-0200, Attention: General Counsel.

A-10

ASSIGNMENT FORM

To assign this Security, fill in the form below:

I or we assign and transfer this Security to

	(Insert assignee’s soc. sec. or tax I.D. no.)
	(Print or type assignee’s name, address and zip code)
	and irrevocably appoint
	agent to transfer this Security on the books of the Company. The agent may substitute another to act for him or her.
		Your Signature:
Date:
		(Sign exactly as your name appears on the other side of this Security)
	*Signature guaranteed by:
By:

* The signature must be guaranteed by an institution that is a member of one of the following recognized signature guaranty programs: (i) the Securities Transfer Agent Medallion Program (STAMP); (ii) the New York Stock Exchange Medallion Program (MSP); (iii) the Stock Exchange Medallion Program (SEMP); or (iv) such other guaranty program acceptable to the Trustee.

A-11

CONVERSION NOTICE

	To convert this Security into Common Stock of the Company, check the box: o
	To convert only part of this Security, state the principal amount to be converted (must be $1,000 or a integral multiple of $1,000): $                    .
	If you want the stock certificate made out in another person’s name, fill in the form below:
	(Insert assignee’s soc. sec. or tax I.D. no.)
	(Print or type assignee’s name, address and zip code)
		Your Signature:
Date:
		(Sign exactly as your name appears on the other side of this Security)
	*Signature guaranteed by:
By:

* The signature must be guaranteed by an institution that is a member of one of the following recognized signature guaranty programs: (i) the Securities Transfer Agent Medallion Program (STAMP); (ii) the New York Stock Exchange Medallion Program (MSP); (iii) the Stock Exchange Medallion Program (SEMP); or (iv) such other guaranty program acceptable to the Trustee.

A-12

OPTION TO ELECT REPURCHASE UPON A FUNDAMENTAL CHANGE

To: Cephalon, Inc.

The undersigned registered owner of this Security hereby irrevocably acknowledges receipt of a notice from Cephalon, Inc. (the “Company”) as to the occurrence of a Fundamental Change with respect to the Company and requests and instructs the Company to redeem the entire principal amount of this Security, or the portion thereof (which is $1,000 or an integral multiple thereof) below designated, in accordance with the terms of the Indenture referred to in this Security at a purchase price equal to the Fundamental Change Purchase Price, payable in Cash.

Dated:
	Signature(s) must be guaranteed by a qualified guarantor institution with membership in an approved signature guarantee program pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934.
	Signature Guaranty
Principal amount to be redeemed (in an integral multiple of $1,000, if less than all):

NOTICE: The signature to the foregoing Election must correspond to the Name as written upon the face of this Security in every particular, without alteration or any change whatsoever.

A-13

SCHEDULE OF EXCHANGES OF NOTES

The following exchanges, redemptions, repurchases or conversions of a part of this global Security have been made:

Principal Amount
of this Global Security
Following Such
Decrease Date
of Exchange (or Increase) Authorized
Signatory of
Securities
Custodian Amount of Decrease in
Principal Amount
of this Global Security Amount of
Increase in
Principal Amount
of this Global Security

A-14

EX-4.2

Exhibit 4.2

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF.

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO CEPHALON, INC. (THE “COMPANY”) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.  TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS TO NOMINEES OF THE DEPOSITORY TRUST COMPANY OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE, AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN ARTICLE TWO OF THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.  THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

CEPHALON, INC.

CUSIP: 156708AR0 No.   R-1

2.50% CONVERTIBLE SENIOR SUBORDINATED NOTES DUE MAY 1, 2014

Cephalon, Inc., a Delaware corporation (the “Company,” which term shall include any successor corporation under the Indenture referred to on the reverse hereof), promises to pay to Cede & Co., or registered assigns, the principal sum of five hundred million dollars ($500,000,000) on May 1, 2014 or such greater or lesser amount as is indicated on the Schedule of Exchanges of Securities on the other side of this Security.

This Security is convertible as specified on the other side of this Security. Additional provisions of this Security are set forth on the other side of this Security.

[Signature Page Follows]

2

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed on the date written below.

CEPHALON, INC.
By:	/s/ J. Kevin Buchi
Name:	J. Kevin Buchi
Title:	Executive Vice President and
	Chief Financial Officer

Trustee’s Certificate of Authentication: This is one of the Securities referred to in the within-mentioned Indenture.

U.S.BANK NATIONAL ASSOCIATION,

as Trustee

By:	/s/ Arthur L. Blakeslee
Authorized Signatory
Dated: May 27, 2009

3

CEPHALON, INC.

2.50% CONVERTIBLE SENIOR SUBORDINATED NOTES DUE MAY 1, 2014

1.INTEREST AMOUNTS

Cephalon, Inc., a Delaware corporation (the “Company,” which term shall include any successor corporation under the Indenture hereinafter referred to), will pay interest at a rate of 2.50% per annum, on the principal amount of this Security payable as provided in the Indenture.

2.METHOD OF PAYMENT

The Company shall pay any interest on this Security to the person who is the Holder of this Security at the close of business on April 15 or October 15, as the case may be, next preceding the related interest payment date. The Holder must surrender this Security to a Paying Agent to collect payment of principal and interest, if any.  Interest on the Security will be paid at a rate of 2.50% per annum, payable semi-annually in arrears on May 1 and November 1 of each year, or if any such day is not a Business Day, the immediately following Business Day, commencing November 1, 2009.  Interest is computed on the basis of a 360-day year comprised of twelve 30-day months.  In the event of the maturity, conversion or purchase of the Security by the Company at the option of the Holder, interest shall cease to accrue on the Security.  However, the Company will pay interest on the maturity date to a Holder of record of the Security on the record date immediately preceding the stated maturity date regardless of whether such Holder converts the Security.

The Company will make all payments in respect of a Global Security registered in the name of the Depositary or its nominee to the Depositary or its nominee, as the case may be, by wire transfer of immediately available funds to the account of the Depositary or its nominee.  The Company will make all payments in respect of a Certificated Security (including principal and interest) in U.S. dollars at the office of the Trustee.  At the Company’s option, the Company may make such payments by mailing a check to the registered address of each Holder thereof as such address shall appear on the register or, if requested by a Holder of more than $1,000,000 in aggregate principal amount of Securities, by wire transfer of immediately available funds to the account specified by such Holder.

3.PAYING AGENT, REGISTRAR AND CONVERSION AGENT

Initially, U.S. Bank National Association (the “Trustee,” which term shall include any successor trustee under the Indenture hereinafter referred to) will act as Paying Agent, Registrar and Conversion Agent. The Company may appoint and change any Paying Agent, Conversion Agent or Registrar without notice, other than notice to the Trustee; provided that the Company will maintain at least one Paying Agent in the United States of America, which shall initially be an office or agency of the Trustee.  The Company or any of its Subsidiaries may, subject to certain limitations set forth in the Indenture, act as Paying Agent or Registrar.

4

4.INDENTURE, LIMITATIONS

This Security is one of a duly authorized issue of Securities of the Company designated as its 2.50% Convertible Senior Subordinated Notes due May 1, 2014 (the “Securities”), issued under an Indenture, dated as of May 27, 2009 (together with any supplemental indentures thereto, the “Indenture”), between the Company and the Trustee. The terms of this Security include those stated in the Indenture and those required by or made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended, as in effect on the date of the Indenture. This Security is subject to all such terms, and the Holder of this Security is referred to the Indenture and said Act for a statement of them.

The Securities are senior subordinated unsecured obligations of the Company limited, except as set forth in the Indenture, to up to $500,000,000 aggregate principal amount. The Indenture does not limit other debt of the Company, secured or unsecured, including Senior Indebtedness.

5.PURCHASE OF SECURITIES AT OPTION OF HOLDER UPON A FUNDAMENTAL CHANGE

At the option of the Holder and subject to the terms and conditions of the Indenture, the Company shall become obligated to purchase all or any part specified by the Holder (so long as the principal amount of such part is $1,000 or an integral multiple of $1,000 in excess thereof) of the Securities held by such Holder on a date, determined by the Company in its sole discretion, that is not less than 20 Business Days and not more than 30 Business Days after the occurrence of a Fundamental Change, at a purchase price equal to 100% of the principal amount thereof, together with any accrued interest up to, but excluding, the Fundamental Change Purchase Date, unless the Fundamental Change Purchase Date is after a Record Date and on or prior to the related Interest Payment Date, in which case interest accrued to the Interest Payment Date will be paid to Holders of the Securities as of the preceding Record Date and the Fundamental Change Purchase Price payable to any Holder surrendering such Holder’s Security for purchase pursuant to Article 3 of the Indenture shall be equal to the principal amount of Securities subject to purchase and will not include any accrued and unpaid interest.  The Fundamental Change Purchase Price shall be payable in cash. The Holder shall have the right to withdraw any Fundamental Change Purchase Notice (in whole or in a portion thereof that is $1,000 or an integral multiple of $1,000 in excess thereof) at any time prior to 5:00 p.m., New York City time, on the second Scheduled Trading Day immediately preceding the Fundamental Change Purchase Date by delivering a written notice of withdrawal to the Paying Agent in accordance with the terms of the Indenture.

6.CONVERSION

A Holder of a Security may convert the principal amount of such Security (or any portion thereof equal to $1,000 or any integral multiple of $1,000 in excess thereof) into cash and shares of Common Stock, if any, at any time prior to the close of business on November 1, 2013, subject to the conditions, if any, set forth in Section 5.01 of the Indenture; provided, however, that, if the Security is subject to purchase upon a Fundamental Change, the conversion right will terminate at the close of business on the second Trading Day immediately preceding the

5

Fundamental Change Purchase Date for such Security or such earlier date as the Holder presents such Security for purchase (unless the Company shall default in making the Fundamental Change Purchase Price when due, in which case the conversion right shall terminate at the close of business on the date such default is cured and such Security is purchased).

The initial Conversion Price is $69.00 per share, and the initial Conversion Rate is 14.4928 shares of Common Stock, in each case subject to adjustment under certain circumstances as provided in the Indenture. No fractional shares will be issued upon conversion; in lieu thereof, the Company will pay cash in an amount determined by multiplying the Daily VWAP of a full share of Common Stock on the last Trading Day of such Conversion Period by the fractional amount and rounding the product to the nearest whole cent.  Whether fractional shares are issuable upon a conversion will be determined on the basis of the total number of Securities that the Holder is then converting into cash and Common Stock, if any, and the aggregate number of shares, if any, of Common Stock issuable upon such conversion.

To convert a Security, a Holder must (a) complete and manually sign the conversion notice set forth below and deliver such notice to a Conversion Agent, (b) surrender the Security to a Conversion Agent, (c) furnish appropriate endorsements and transfer documents if required by a Registrar or a Conversion Agent and (d) pay any transfer or similar tax, if required. A Holder may convert a portion of a Security equal to $1,000 or any integral multiple thereof.  In the case of a Security held by the Depositary, such conversion shall be done in accordance with the applicable rules and procedures of the Depositary.

A Security in respect of which a Holder had delivered a Fundamental Change Purchase Notice exercising the option of such Holder to require the Company to purchase such Security may be converted only if the Fundamental Change Purchase Notice is withdrawn in accordance with the terms of the Indenture.

7.SUBORDINATION

The indebtedness evidenced by the Securities is, to the extent and in the manner provided in the Indenture, subordinate and junior in right of payment to the prior payment in full of all Senior Indebtedness of the Company. Any Holder by accepting this Security agrees to and shall be bound by such subordination provisions and authorizes the Trustee to give them effect. In addition to all other rights of Senior Indebtedness described in the Indenture, the Senior Indebtedness shall continue to be Senior Indebtedness and entitled to the benefits of the subordination provisions irrespective of any amendment, modification or waiver of any terms of any instrument relating to the Senior Indebtedness or any extension or renewal of the Senior Indebtedness.

8.DENOMINATIONS, TRANSFER, EXCHANGE

The Securities are in registered form, without coupons, in denominations of $1,000 and integral multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes or other governmental charges that may be imposed in relation thereto by law or permitted by the Indenture.

6

9.PERSONS DEEMED OWNERS

The Holder of a Security may be treated as the owner of it for all purposes.

10.UNCLAIMED MONEY

If money for the payment of principal, or interest, if any, remains unclaimed for two years, the Trustee or Paying Agent will pay the money back to the Company at its written request, subject to applicable unclaimed property law. After that, Holders entitled to money must look to the Company for payment as general creditors unless an applicable abandoned property law designates another person.

11.AMENDMENT, SUPPLEMENT AND WAIVER

Subject to certain exceptions set forth in the Indenture, the Securities and the Indenture may be amended or supplemented with the consent of the Holders of at least a majority in aggregate principal amount of the Securities then outstanding, and an existing default or Event of Default with respect to the Securities and its consequence or compliance with any provision of the Securities or the Indenture may be waived in a particular instance with the consent of the Holders of a majority in aggregate principal amount of the Securities then outstanding. Without the consent of or notice to any Holder, the Company and the Trustee may amend or supplement the Indenture or the Securities to, among other things, cure any ambiguity, defect or inconsistency or make any other change that does not adversely affect the rights of any Holder.

12.CALCULATIONS IN RESPECT OF SECURITIES

Except to the extent provided therein, the Company will be responsible for making all calculations called for under the Indenture and the Securities.  These calculations include, but are not limited to, determinations of the Closing Sale Price of the Common Stock, adjustments to the Conversion Price, any accrued interest payable on the Securities, the Conversion Price and the Conversion Rate.  The Company will make these calculations in good faith and, absent manifest error, the calculations will be final and binding on Holders of the Securities.  The Company will provide to each of the Trustee and the Conversion Agent a schedule of its calculations, and the Trustee and the Conversion Agent are entitled to rely conclusively upon the accuracy of such calculations without independent verification.  The Trustee will forward the Company’s calculations to any Holder of the Securities upon the request of such Holder.

13.           SUCCESSOR ENTITY

When a successor corporation assumes all the obligations of its predecessor under the Securities and the Indenture in accordance with the terms and conditions of the Indenture, the predecessor corporation (except in certain circumstances specified in the Indenture) shall be released from those obligations.

14.DEFAULTS AND REMEDIES

Under the Indenture, an “Event of Default” with respect to Securities shall occur if: (i) the Company defaults in the payment of any principal of any Security when the same becomes

7

due and payable (whether at maturity, upon required repurchase, following a Fundamental Change or otherwise), whether or not such payment shall be prohibited by the provisions of Article 6 of the Indenture; (ii) the Company fails to pay the cash and deliver the shares of Common Stock, if any, representing the Conversion Obligation upon conversion of any Security (including any Additional Shares) within the time period required by the provisions of the Indenture, whether or not such payment shall be prohibited by the provisions of Article 6 of the Indenture; (iii) the Company defaults in the payment of interest when the same becomes due and payable and the default continues for a period of 30 days, whether or not such payment shall be prohibited by the provisions of Article 6 of the Indenture; (iv) the Company fails to perform or comply with any of its other covenants or agreements contained in the Securities or in the Indenture (other than a covenant or agreement a default in whose performance or whose breach is specifically dealt with in clauses (i), (ii) or (iii) above) and the default continues for 60 days after notice is given in accordance with the Indenture; (v) the Company defaults in the payment of the purchase price of any Security when the same becomes due and payable, whether or not such payment shall be prohibited by the provisions of Article 6 of the Indenture; (vi) the Company fails to provide a Fundamental Change Purchase Notice when required by Section 3.01 of the Indenture; (vii) any indebtedness under any bond, debenture, note or other evidence of indebtedness for money borrowed by the Company or any Significant Subsidiary (or group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary) or under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by, or any other payment obligation of, the Company or any Significant Subsidiary (or group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary) (an “Instrument”) with a principal amount then, individually or in the aggregate, outstanding in excess of $10,000,000, whether such indebtedness now exists or shall hereafter be created, is not paid at final maturity of the Instrument (either at its stated maturity or upon acceleration thereof) or when otherwise due or is accelerated, and such indebtedness is not discharged, or such default in payment or acceleration is not cured or rescinded, within a period of 30 days after there shall have been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in aggregate principal amount of the outstanding Securities a written notice specifying such default and requiring the Company to cause such indebtedness to be discharged or cause such default to be cured or waived or such acceleration to be rescinded or annulled and stating that such notice is a “Notice of Default” under the Indenture; (viii) the Company or any Significant Subsidiary (or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary) fails to pay one or more final and non-appealable judgments entered by a court or courts of competent jurisdiction, the aggregate uninsured or unbonded portion of which is in excess of $10,000,000, if the judgments are not paid, discharged, waived or stayed within 30 days; or (ix) the Company or any Significant Subsidiary (or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary) of the Company, pursuant to or within the meaning of any Bankruptcy Law (as defined in the Indenture): (a) commences a voluntary case or proceeding; (b) consents to the entry of an order for relief against it in an involuntary case or proceeding; (c) consents to the appointment of a Custodian of it or for all or substantially all of its property; or (d) makes a general assignment for the benefit of its creditors; or (x) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (a) is for relief against the Company or any Significant Subsidiary (or any group of Subsidiaries that, taken as a whole, would constitute a Significant

8

Subsidiary) of the Company in an involuntary case or proceeding; (b) appoints a Custodian of the Company or any Significant Subsidiary (or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary) of the Company for all or substantially all of the property of the Company or any such Significant Subsidiary (or such group of Subsidiaries); or (c) orders the liquidation of the Company or any Significant Subsidiary (or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary) of the Company; and the case of each of clause (a), (b) and (c), the order or decree remains unstayed and in effect for 60 consecutive days.

If an Event of Default with respect to the Securities (other than as a result of certain events of bankruptcy, insolvency or reorganization specified in the Indenture) occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of the Securities then outstanding may declare all unpaid principal to the date of acceleration on the Securities then outstanding to be due and payable immediately, all as and to the extent provided in the Indenture. If an Event of Default occurs as a result of certain events of bankruptcy, insolvency or reorganization specified in the Indenture, unpaid principal of the Securities then outstanding shall become due and payable immediately without any declaration or other act on the part of the Trustee or any Holder, all as and to the extent provided in the Indenture. Holders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Securities. Subject to certain limitations, Holders of a majority in aggregate principal amount of the Securities then outstanding may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing default (except a default in payment of principal or any  interest) if it determines that withholding notice is in their interests. The Company is required to file periodic reports with the Trustee as to the absence of default.

Under the terms of the Indenture, at the election of the Company in its sole discretion, the sole remedy for an Event of Default relating to the failure to comply with Section 7.02 of the Indenture, and for any failure to comply with the requirements of Section 314(a)(1) of the TIA, will consist, for the 180 days after the occurrence of such an Event of Default, exclusively of the right to receive additional interest on the notes at a rate equal to 0.50% per annum of the aggregate principal amount of the Securities then outstanding up to, but not including, the 181st day thereafter (or, if applicable, the earlier date on which the Event of Default relating to the reporting obligations is cured or waived).  Any such additional interest will be paid and calculated in the manner set forth in the Indenture.

15.TRUSTEE DEALINGS WITH THE COMPANY

U.S. Bank National Association, the Trustee under the Indenture, in its individual or any other capacity, may make loans to, accept deposits from and perform services for the Company or an Affiliate of the Company and may otherwise deal with the Company or an Affiliate of the Company, as if it were not the Trustee.

16.NO RECOURSE AGAINST OTHERS

A director, officer, employee or shareholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any

9

claim based on, in respect of or by reason of such obligations or their creation. The Holder of this Security by accepting this Security waives and releases all such liability. The waiver and release are part of the consideration for the issuance of this Security.

17.AUTHENTICATION

This Security shall not be valid until the Trustee or an authenticating agent manually signs the certificate of authentication on the other side of this Security.

18.ABBREVIATIONS AND DEFINITIONS

Customary abbreviations may be used in the name of the Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian) and UGMA (= Uniform Gifts to Minors Act).

All terms defined in the Indenture and used in this Security but not specifically defined herein are used herein as so defined.

19.INDENTURE TO CONTROL; GOVERNING LAW

In the case of any conflict between the provisions of this Security and the Indenture, the provisions of the Indenture shall control. This Security shall be governed by, and construed in accordance with, the laws of the State of New York.

The Company will furnish to any Holder, upon written request and without charge, a copy of the Indenture. Requests may be made to: Cephalon, Inc., 41 Moores Road, Frazer, PA 19355, (610) 344-0200, Attention: General Counsel.

10

ASSIGNMENT FORM

To assign this Security, fill in the form below:

I or we assign and transfer this Security to

	(Insert assignee’s soc. sec. or tax I.D. no.)
	(Print or type assignee’s name, address and zip code)
	and irrevocably appoint
	agent to transfer this Security on the books of the Company. The agent may substitute another to act for him or her.
		Your Signature:
Date:
		(Sign exactly as your name appears on the other side of this Security)
	*Signature guaranteed by:
By:
	* The signature must be guaranteed by an institution that is a member of one of the following recognized signature guaranty programs: (i) the Securities Transfer Agent Medallion Program (STAMP); (ii) the New York Stock Exchange Medallion Program (MSP); (iii) the Stock Exchange Medallion Program (SEMP); or (iv) such other guaranty program acceptable to the Trustee.

11

CONVERSION NOTICE

	To convert this Security into Common Stock of the Company, check the box: o
	To convert only part of this Security, state the principal amount to be converted (must be $1,000 or a integral multiple of $1,000): $                        .
	If you want the stock certificate made out in another person’s name, fill in the form below:
	(Insert assignee’s soc. sec. or tax I.D. no.)
	(Print or type assignee’s name, address and zip code)
		Your Signature:
Date:
		(Sign exactly as your name appears on the other side of this Security)
	*Signature guaranteed by:
By:
	* The signature must be guaranteed by an institution that is a member of one of the following recognized signature guaranty programs: (i) the Securities Transfer Agent Medallion Program (STAMP); (ii) the New York Stock Exchange Medallion Program (MSP); (iii) the Stock Exchange Medallion Program (SEMP); or (iv) such other guaranty program acceptable to the Trustee.

12

OPTION TO ELECT REPURCHASE UPON A FUNDAMENTAL CHANGE

To: Cephalon, Inc.

The undersigned registered owner of this Security hereby irrevocably acknowledges receipt of a notice from Cephalon, Inc. (the “Company”) as to the occurrence of a Fundamental Change with respect to the Company and requests and instructs the Company to redeem the entire principal amount of this Security, or the portion thereof (which is $1,000 or an integral multiple thereof) below designated, in accordance with the terms of the Indenture referred to in this Security at a purchase price equal to the Fundamental Change Purchase Price, payable in Cash.

Dated:
	Signature(s) must be guaranteed by a qualified guarantor institution with membership in an approved signature guarantee program pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934.
	Signature Guaranty
Principal amount to be redeemed (in an integral multiple of $1,000, if less than all):

NOTICE: The signature to the foregoing Election must correspond to the Name as written upon the face of this Security in every particular, without alteration or any change whatsoever.

13

SCHEDULE OF EXCHANGES OF NOTES

The following exchanges, redemptions, repurchases or conversions of a part of this global Security have been made:

Principal Amount
of this Global Security
Following Such
Decrease Date
of Exchange (or Increase) Authorized
Signatory of
Securities
Custodian Amount of Decrease in
Principal Amount
of this Global Security Amount of
Increase in
Principal Amount
of this Global Security

14

EX-10.1

Exhibit 10.1

Deutsche Bank

Deutsche Bank AG, London Branch

Winchester house

1 Great Winchester St,

London EC2N 2DB

Telephone: 44 20 7545 8000

c/o Deutsche Bank Securities Inc.

60 Wall Street

New York, NY 10005

Telephone: 212-250-2500

DATE:	May 21, 2009
TO:	Cephalon, Inc.
ATTENTION:	Gerald J. Pappert
FACSIMILE:	(610) 738-6258
FROM:	Deutsche Bank AG, London Branch
TELEPHONE:	44 20 7545 0556
FACSIMILE:	44 11 3336 2009
SUBJECT:	Equity Derivatives Confirmation
REFERENCE NUMBER(S):	331714 and 332054

The purpose of this facsimile agreement (this “Confirmation”) is to confirm the amended and restated terms and conditions of the transaction entered into between Deutsche Bank AG, London Branch (“Deutsche”) and Cephalon, Inc. (“Counterparty”) on the Trade Date specified below (the “Transaction”).  This amended and restated Confirmation constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below and amends and restates in its entirety the equity derivatives confirmation regarding options on note hedging units, dated May 21, 2009, and subject to the Agreement (the “Original Confirmation”).  All references to the Original Confirmation in the Agreement or in other documentation between the parties shall be to this amended and restated Confirmation.  This amended and restated Confirmation constitutes the entire agreement and understanding of the parties with respect to the subject matter and terms of the Transaction and supersedes all prior or contemporaneous written and oral communications with respect thereto.

DEUTSCHE BANK AG IS NOT REGISTERED AS A BROKER OR DEALER UNDER THE U.S. SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.  DEUTSCHE BANK SECURITIES INC. (“AGENT”) HAS ACTED SOLELY AS AGENT IN CONNECTION WITH THE TRANSACTION AND HAS NO OBLIGATION, BY WAY OF ISSUANCE, ENDORSEMENT, GUARANTEE OR OTHERWISE WITH RESPECT TO THE PERFORMANCE OF EITHER PARTY UNDER THE TRANSACTION.  DEUTSCHE BANK AG, LONDON BRANCH IS NOT A MEMBER OF THE SECURITIES INVESTOR PROTECTION CORPORATION (SIPC).

Chairman of the Supervisory Board: Clemens Börsig Board of Managing Directors: Hermann-Josef Lamberti, Josef Ackermann, Dr. Hugo Banziger, Anthony DiIorio Deutsche Bank AG is regulated by the FSA for the conduct of designated investment business in the UK, is a member of the London Stock Exchange and is a limited liability company incorporated in the Federal Republic of Germany HRB No. 30 000 District Court of Frankfurt am Main; Branch Registration No. in England and Wales BR000005, Registered address: Winchester House, 1 Great Winchester Street, London EC2N 2DB.

The definitions contained in the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”), as published by the International Swaps and Derivatives Association, Inc., are incorporated into this Confirmation.  In the event of any inconsistency between the Equity Definitions and the terms of this Confirmation, the terms of this Confirmation shall govern.  For the purposes of the Equity Definitions, each reference herein to a Note Hedging Unit shall be deemed to be a reference to a Call or an Option, as context requires.

This Confirmation evidences a complete and binding agreement between Deutsche and Counterparty as to the terms of the Transaction to which this Confirmation relates.  This Confirmation shall supplement, form a part of, and be subject to an agreement (the “Agreement”) in the form of the ISDA 2002 Master Agreement as if Deutsche and Counterparty had executed an agreement in such form (without any Schedule but with the elections set forth in this Confirmation).  For the avoidance of doubt, the Transaction shall be the only transaction under the Agreement.

The Transaction shall be considered a Share Option Transaction for purposes of the Equity Definitions, and shall have the following terms:

General:
Trade Date:	May 21, 2009.
Effective Date:	The closing date for the initial issuance of the Convertible Notes.
Transaction Style:	Modified American, as described below under “Procedure for Exercise”.
Transaction Type:	Note Hedging Units.
Seller:	Deutsche.
Buyer:	Counterparty.
Shares:	The common stock, par value USD 0.01 per share, of Counterparty.
Convertible Notes:	USD 500,000,000 principal amount of 2.5% Convertible Senior Subordinated Notes of Counterparty due May 1, 2014, including the Convertible Notes issued pursuant to the underwriters’ exercise of their option to purchase additional Convertible Notes pursuant to the Underwriting Agreement (as defined below), offered pursuant to a Prospectus Supplement dated May 21, 2009 to the Prospectus dated May 25, 2006 (the “Prospectus Supplement”) and issued pursuant to the indenture to be dated as of the closing date of the initial issuance of the Convertible Notes, by and between Counterparty and U.S. Bank National Association, as trustee (as may be amended, modified or supplemented from time to time, but only if such amendment, modification or supplement does not constitute an Amendment Event (as defined below) or is consented to by Deutsche in writing, the “Indenture”). Certain defined terms used herein have the meanings assigned to them in the Indenture as described in the Prospectus Supplement. In the event of any inconsistency between the terms defined in the Indenture or defined in the Prospectus Supplement and this Confirmation, this Confirmation shall govern. For the avoidance of doubt, references herein to provisions of the Indenture are based on the

2

	description of the Convertible Notes set forth in the Prospectus Supplement. If the relevant provisions of the Indenture differ in any material respect from those described in the Prospectus Supplement, the parties will, if appropriate, amend this Confirmation in good faith to preserve the economic intent of the parties.
Number of Note Hedging Units:	500,000 (being the sum of the Number of Initial Note Hedging Units and the Number of Additional Note Hedging Units)
Number of Initial Note Hedging Units:	435,000
Number of Additional Note Hedging Units:	65,000
Note Hedging Unit Entitlement:	The lesser of (a) USD 1,000 divided by the Strike Price and (b) the “Conversion Rate” (as such term is defined in the Indenture as described in the Prospectus Supplement under “Description of the Notes — Conversion of Notes — General”) at such time.
Strike Price:	USD 69.00.
Number of Shares:	The product of the Number of Note Hedging Units and the Note Hedging Unit Entitlement.
Premium:	As provided in Annex A to this Confirmation.
Additional Premium:	As provided in Annex A to this Confirmation. The Additional Premium shall be paid by Counterparty to Deutsche on the Premium Payment Date.
Premium Payment Date:	The Effective Date.
Exchange:	The NASDAQ Global Select Market.
Related Exchanges:	All Exchanges.
Calculation Agent:	Deutsche.
Procedure for Exercise:
Potential Exercise Dates:	Each Conversion Date.
Conversion Date:	Each “Conversion Date” as defined in the Indenture as described in the Prospectus Supplement under “Description of the Notes — Conversion of Notes — General”.
Required Exercise on Conversion Dates:	On each Conversion Date, a number of Note Hedging Units equal to the number of Convertible Notes in denominations of USD 1,000 principal amount submitted for conversion in respect of such Conversion Date in accordance with the terms of the Indenture shall be exercised automatically, subject to “Notice of Exercise” below; provided that, if

3

	Counterparty has elected the “Exchange in Lieu of Conversion” option (as described in the Prospectus Supplement under “Description of the Notes — Conversion of Notes — Exchange in Lieu of Conversion”), the related number of Note Hedging Units shall not be exercised.
Expiration Date:	May 1, 2014
Multiple Exercise:	Applicable, as provided under “Required Exercise on Conversion Dates”.
Automatic Exercise:	As provided under “Required Exercise on Conversion Dates”.
Notice of Exercise:	Notwithstanding anything to the contrary in the Equity Definitions, in order to exercise any Note Hedging Units, Counterparty must notify Deutsche in writing (and use reasonable efforts to confirm receipt by telephone to Deutsche’s Origination Convertible Desk (telephone: 212-250-5600)) prior to 5:00 PM, New York City time, on the day that is one Scheduled Trading Day prior to the first day of the “Conversion Period” (as defined in the Indenture as described in the Prospectus Supplement under “Description of the Notes — Conversion of Notes — Settlement upon Conversion”) relating to the Convertible Notes converted on the Conversion Date relating to the relevant Exercise Date (the “Notice Deadline”) of (i) the number of Note Hedging Units being exercised on such Exercise Date and (ii) the scheduled commencement date of the “Conversion Period” and the scheduled settlement date under the Indenture for the Convertible Notes converted on the Conversion Date corresponding to such Exercise Date; provided that, notwithstanding the foregoing, such notice shall be effective if given after the Notice Deadline referred to above, but prior to 5:00 PM New York City time, on the fifth Scheduled Trading Day of such “Conversion Period”, in which event the Calculation Agent shall have the right to adjust the Settlement Amount as appropriate to reflect the additional costs (including, but not limited to, hedging mismatches and market losses) and expenses actually incurred by Deutsche in connection with its hedging activities (including the unwinding of any hedge position) as a result of Deutsche not having received such notice prior to the Notice Deadline; provided further that in respect of Convertible Notes with a Conversion Date during the period beginning on, and including the 30th scheduled “Trading Day” (as defined in the Indenture as described in the Prospectus Supplement under “Description of the Notes — Conversion of Notes — Conversion upon Satisfaction of Market Price Condition”) prior to the “Maturity Date” (as defined in the Indenture as described in the Prospectus Supplement under “Description of the Notes — General”) and ending on the close of business on the second scheduled “Trading Day” immediately preceding the “Maturity Date”, the Notice Deadline in respect of the information set forth in clauses (i) and (ii) above shall be 5:00 PM, New York City time, on the scheduled “Trading Day” immediately preceding the “Maturity Date”.

4

Settlement Terms:
Net Share Settlement:	In lieu of the obligations set forth in Sections 8.1 and 9.1 of the Equity Definitions, and subject to “Notice of Exercise” above, in respect of any Exercise Date occurring on a Conversion Date, Deutsche shall deliver to Counterparty, on the related Settlement Date, the Settlement Amount.For the avoidance of doubt, to the extent Deutsche is obligated to deliver Shares hereunder, the provisions of Sections 9.8, 9.9, 9.10, 9.11 and 9.12 of the Equity Definitions shall be applicable to any such delivery of Shares, except that all references in such provisions to “Physical Settlement” and “Physically-settled” shall be read as references to “Net Share Settlement” and “Net Share Settled”; and provided that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws as a result of the fact that Counterparty is the issuer of the Shares.
Settlement Amount:	A number of Shares (and cash in lieu of fractional Shares, if any, as provided below) equal to the aggregate number of Shares that Counterparty is obligated to deliver to the holder(s) of the Convertible Notes converted on such Conversion Date pursuant to the section of the Indenture as described in the Prospectus Supplement under “Description of the Notes — Conversion of Notes — Settlement upon Conversion” (the “Deliverable Shares”) (except that such number of Deliverable Shares shall be determined without taking into consideration any rounding pursuant to the section of the Indenture described in the Prospectus Supplement under “Description of the Notes — Conversion of Notes — Settlement upon Conversion” and shall be rounded down to the nearest whole number) and cash in lieu of fractional Shares, if any, resulting from such rounding (with the value of any such fractional Shares determined pursuant to the section of the Indenture as described in the Prospectus Supplement under “Description of the Notes — Conversion of Notes — Settlement upon Conversion”) (collectively, the “Convertible Obligation”); provided that such obligation shall be determined excluding any Shares or cash that Counterparty is obligated to deliver to holder(s) of the Convertible Notes as a result of any adjustments to the “Conversion Rate” for the issuance of additional Shares or cash as set forth in the section of the Indenture as described in the Prospectus Supplement under “Description of the Notes — Adjustment to Shares Delivered upon Conversion upon a Make Whole Adjustment Event” (a “Fundamental Change Adjustment”) or any voluntary adjustment pursuant to the section of the Indenture as described in the Prospectus Supplement under the seventh to last paragraph of “Description of the Notes — Conversion of Notes — Conversion Price Adjustments” (i.e. the paragraph commencing with “We are permitted to reduce the conversion price...”) (a “Discretionary Adjustment”); provided further that, if such exercise relates to the conversion of Convertible Notes in connection with which holders thereof are entitled to receive additional Shares or cash pursuant to a

5

	Fundamental Change Adjustment, then, notwithstanding the foregoing, the Settlement Amount shall include such additional Shares or cash, except that the Settlement Amount shall be capped so that the value of the Settlement Amount per Note Hedging Unit (with the value of the Shares included in the Settlement Amount determined by the Calculation Agent using the volume-weighted average price per share on the last day of the relevant “Conversion Period”) does not exceed the amount as determined by the Calculation Agent that would be payable by Seller pursuant to Section 6 of the Agreement if such Conversion Date were an Early Termination Date resulting from an Additional Termination Event with respect to which the Transaction (except that, for purposes of determining such amount (x) the Number of Note Hedging Units shall be deemed to be equal to the number of Note Hedging Units exercised on such Exercise Date and (y) such amount payable will be determined as if the section of the Indenture regarding a Fundamental Change Adjustment were deleted) was the sole Affected Transaction and Counterparty was the sole Affected Party (determined without regard to provisions under “Alternative Calculations and Deutsche Payment on Early Termination and on Certain Extraordinary Events” in this Confirmation). If Counterparty is permitted or required to exercise discretion under the terms of the Indenture with respect to any determination, calculation or adjustment relevant to conversion of the Convertible Notes including, but not limited to, the volume-weighted average price of the Shares, Counterparty shall consult with Deutsche with respect thereto and the Calculation Agent shall make such determination, calculation or adjustment for purposes of the Transaction. For the avoidance of doubt, if the “Daily Conversion Value” (as defined in the Indenture as described in the Prospectus Supplement under “Description of the Notes — Conversion of Notes — Settlement upon Conversion”) for each of the “Trading Days” in the relevant “Conversion Period” is less than or equal to USD 40, Deutsche will have no delivery obligation hereunder.
Notice of Delivery Obligation:	No later than the Scheduled Trading Day immediately following the last day of the relevant “Conversion Period”, Counterparty shall give Deutsche notice of the final number of Shares (and cash in lieu of fractional Shares, if any) comprising the Convertible Obligation (it being understood, for the avoidance of doubt, that the requirement of Counterparty to deliver such notice shall not limit Counterparty’s obligations with respect to Notice of Exercise, as set forth above, in any way).
Settlement Date:	In respect of an Exercise Date occurring on a Conversion Date, the settlement date for the Shares to be delivered under the Convertible Notes under the terms of the Indenture; provided that the Settlement Date will not be prior to the Exchange Business Day immediately following the date on which Counterparty gives notice to Deutsche of such Settlement Date prior to 5:00 PM, New York City time.
Settlement Currency:	USD.

6

Restricted Certificated Shares:	Notwithstanding anything to the contrary in the Equity Definitions, Deutsche may, in whole or in part, deliver Shares in certificated form representing the Share portion of the Settlement Amount to Counterparty in lieu of delivery through the Clearance System.
Share Adjustments:
Potential Adjustment Events:	Notwithstanding Section 11.2(e) of the Equity Definitions, a “Potential Adjustment Event” means any occurrence of any event or condition, as set forth in the section of the Indenture as described in the Prospectus Supplement under “Description of the Notes — Conversion of Notes — Conversion Price Adjustments”, that would result in an adjustment to the Conversion Rate of the Convertible Notes; provided that in no event shall there be any adjustment hereunder as a result of an adjustment to the Conversion Rate pursuant to a Fundamental Change Adjustment or a Discretionary Adjustment.
Method of Adjustment:	Calculation Agent Adjustment, which means that, notwithstanding Section 11.2(c) of the Equity Definitions, upon any adjustment to the Conversion Rate of the Convertible Notes pursuant to the Indenture (other than a Fundamental Change Adjustment or a Discretionary Adjustment), the Calculation Agent shall make a corresponding adjustment to any one or more of the Strike Price, Number of Note Hedging Units, the Note Hedging Unit Entitlement and any other variable relevant to the exercise, settlement, payment or other terms of the Transaction.
Extraordinary Events:
Merger Events:	Notwithstanding Section 12.1(b) of the Equity Definitions, a “Merger Event” means the occurrence of any event or condition set forth in the section of the Indenture as described in the Prospectus Supplement under the ninth to last paragraph of “Description of the Notes — Conversion of Notes — Conversion Price Adjustments” (i.e. the paragraph commencing with “In the event of: any reclassification...”).
Notice of Merger Consideration:	Upon the occurrence of a Merger Event that causes the Shares to be converted into or exchanged for more than a single type of consideration (determined based in part upon the form of election of the holders of Shares), Counterparty shall promptly (but in any event prior to the effective date of the Merger Event) notify the Calculation Agent of the weighted average of the kind and amounts of consideration to be received by the holders of Shares in any Merger Event who affirmatively make such an election.
Consequences of Merger Events:	Notwithstanding Section 12.2 of the Equity Definitions, upon the occurrence of a Merger Event, the Calculation Agent shall make the corresponding adjustment in respect of any adjustment under the Indenture to any one or more of the nature of the Shares, the Strike

7

	Price, the Number of Note Hedging Units, the Note Hedging Unit Entitlement and any other variable relevant to the exercise, settlement, payment or other terms of the Transaction, to the extent an analogous adjustment is made under the Indenture; provided that such adjustment shall be made without regard to any adjustment to the Conversion Rate for the issuance of additional shares or cash pursuant to a Fundamental Change Adjustment or a Discretionary Adjustment.
Nationalization, Insolvency and Delisting:	Cancellation and Payment (Calculation Agent Determination); provided that in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system, such exchange or quotation system shall be deemed to be the Exchange. For the avoidance of doubt, the occurrence of any event that is a Merger Event and would otherwise have been a Delisting will have the consequence specified for the relevant Merger Event.
Additional Disruption Events:
Change in Law:	Applicable; provided that Section 12.9(a)(ii) of the Equity Definitions is hereby amended (i) by the replacement of the word “Shares” with “Hedge Positions”; (ii) by adding the phrase “or public announcement” immediately after the phrase “due to the promulgation” in the third line thereof and adding the phrase “formal or informal” before the word “interpretation” in the same line; and (iii) immediately following the word “Transaction” in clause (X) thereof, adding the phrase “in the manner contemplated by the Hedging Party on the Trade Date, unless the illegality is due to an act or omission of the party seeking to elect termination of the Transaction”.
Failure to Deliver:	Applicable
Insolvency Filing:	Applicable
Increased Cost of Hedging:	Applicable
Hedging Party:	Deutsche for all applicable Additional Disruption Events
Determining Party:	Deutsche for all applicable Additional Disruption Events
Acknowledgements:
Non-Reliance:	Applicable
Agreements and Acknowledgements
Regarding Hedging Activities:	Applicable

8

Additional Acknowledgements: Applicable

Mutual Representations: Each of Deutsche and Counterparty represents and warrants to, and agrees with, the other party that:

	(i)	Tax Disclosure.  Notwithstanding anything to the contrary herein, in the Equity Definitions or in the Agreement, and notwithstanding any express or implied claims of exclusivity or proprietary rights, the parties (and each of their employees, representatives or other agents) are authorized to disclose to any and all persons, beginning immediately upon commencement of their discussions and without limitation of any kind, the tax treatment and tax structure of the Transaction, and all materials of any kind (including opinions or other tax analyses) that are provided by either party to the other relating to such tax treatment and tax structure.
	(ii)	Commodity Exchange Act.  It is an “eligible contract participant” within the meaning of Section 1a(12) of the U.S. Commodity Exchange Act, as amended (the “CEA”).  The Transaction has been subject to individual negotiation by the parties.  The Transaction has not been executed or traded on a “trading facility” as defined in Section 1a(33) of the CEA.  It has entered into the Transaction with the expectation and intent that the Transaction shall be performed to its termination date.
	(iii)	Securities Act.  It is a “qualified institutional buyer” as defined in Rule 144A under the U.S. Securities Act of 1933, as amended (the “Securities Act”), or an “accredited investor” as defined under the Securities Act.
	(iv)	ERISA.  The assets used in the Transaction (1) are not assets of any “plan” (as such term is defined in Section 4975 of the U.S. Internal Revenue Code (the “Code”)) subject to Section 4975 of the Code or any “employee benefit plan” (as such term is defined in Section 3(3) of the U.S. Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) subject to Title I of ERISA, and (2) do not constitute “plan assets” within the meaning of Department of Labor Regulation 2510.3-101, 29 CFR Section 2510-3-101.
Counterparty Representations: In addition to the representations and warranties in the Agreement and those contained elsewhere herein, Counterparty represents, warrants, acknowledges and covenants that:
	(i)	Counterparty is not as of the Trade Date, and shall not be after giving effect to the transactions contemplated hereby, “insolvent” (as such term is defined in Section 101(32) of the U.S. Bankruptcy Code (Title 11 of the United States Code) (the “Bankruptcy Code”)) and Counterparty would be able to purchase a number of Shares equal to the Number of Shares in compliance with the laws of the jurisdiction of Counterparty’s incorporation or organization.
	(ii)	Counterparty shall provide written notice to Deutsche as soon as reasonably practicable upon obtaining knowledge of the occurrence of any event that would constitute an Event of Default, a Potential Event of Default, a Potential Adjustment Event, a Merger Event or any other Extraordinary Event; provided, however, that should Counterparty be in possession of material non-public information regarding Counterparty, Counterparty shall not communicate such information to Deutsche in connection with this Transaction.

9

(iii)	Counterparty has (and shall at all times during the Transaction have) the capacity and authority to repurchase the Shares underlying the Transaction and has not entered into the Transaction with the intent to avoid any regulatory filings.
(iv)	Counterparty’s financial condition is such that it has no need for liquidity with respect to its investment in the Transaction and no need to dispose of any portion thereof to satisfy any existing or contemplated undertaking or indebtedness.
(v)	Counterparty’s investments in and liabilities in respect of the Transaction, which it understands are not readily marketable, are not disproportionate to its net worth, and Counterparty is able to bear any loss in connection with the Transaction, including the loss of its entire investment in the Transaction.
(vi)	The representations and warranties of Counterparty set forth in Section 3 of the Agreement and Section 1 of the Underwriting Agreement dated May 21, 2009 between Counterparty and Deutsche Bank Securities Inc. as representative of the underwriters party thereto (the “Underwriting Agreement”) are true and correct and are hereby deemed to be repeated to Deutsche as if set forth herein.
(vii)	Counterparty understands, agrees and acknowledges that Deutsche has no obligation or intention to register the Transaction under the Securities Act, any state securities law or other applicable federal securities law.
(viii)	Counterparty is not, and after giving effect to the transactions contemplated hereby will not be, an “investment company” as such term is defined in the U.S. Investment Company Act of 1940, as amended.
(ix)	Counterparty understands, agrees and acknowledges that no obligations of Deutsche to it hereunder shall be entitled to the benefit of deposit insurance and that such obligations shall not be guaranteed by any affiliate of Deutsche or any governmental agency.
(x)	(A) Counterparty is acting for its own account, and it has made its own independent decisions to enter into the Transaction and as to whether the Transaction is appropriate or proper for it based upon its own judgment and upon advice from such advisers as it has deemed necessary, (B) Counterparty is not relying on any communication (written or oral) of Deutsche or any of its affiliates as investment advice or as a recommendation to enter into the Transaction (it being understood that information and explanations related to the terms and conditions of the Transaction shall not be considered investment advice or a recommendation to enter into the Transaction) and (C) no communication (written or oral) received from Deutsche or any of its affiliates shall be deemed to be an assurance or guarantee as to the expected results of the Transaction.
(xi)	Without limiting the generality of Section 13.1 of the Equity Definitions, Counterparty acknowledges that Deutsche is not making any representations or warranties with respect to the treatment of the Transaction under FASB Statements 128, 133, 149 or 150 (or under any successor statement), EITF Issue No. 00-19, 01-6, 03-6 or 07-5 (or any successor issue statements), under FASB’s Liabilities & Equity Project, or under any other accounting guidance.
(xii)	Counterparty is not entering into the Transaction for the purpose of (i) creating actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for the Shares) or (ii) raising or depressing or otherwise manipulating the price of the Shares (or any security convertible into or exchangeable for the Shares), in either case in violation of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”).

10

	(xiii)	Counterparty’s filings under the Exchange Act and other applicable securities laws that are required to be filed have been filed and, as of the respective dates thereof, there was no misstatement of material fact contained therein or omission of a material fact required to be stated therein or necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading.
	(xiv)	Counterparty has not violated, and shall not take any action that violates (including, without limitation, any violation by Counterparty involving Deutsche), any applicable law (including, without limitation, the Securities Act and the Exchange Act) in connection with the Transaction.
	(xv)	The Transaction, and any repurchase of the Shares by Counterparty in connection with the Transaction, is pursuant to a publicly announced Share repurchase program that has been approved by Counterparty’s board of directors (including engaging in derivative transactions) and any such repurchase has been, or shall when and to the extent so required be, publicly disclosed in its periodic filings under the Exchange Act, including any financial statements and notes therein.
	(xvi)	Counterparty shall deliver to Deutsche an opinion of counsel, dated as of the Trade Date and reasonably acceptable to Deutsche in form and substance, with respect to the matters set forth in Section 3(a) of the Agreement and such other matters as Deutsche may reasonably request.
Miscellaneous:
	Netting and Set-Off. The parties hereto agree that the Transaction shall not be subject to netting or set off with any other transaction.
	Qualified Financial Contracts. It is the intention of the parties that, in respect of Counterparty, (a) the Transaction shall constitute a “qualified financial contract” within the meaning of 12 U.S.C. Section 1821(e)(8)(D)(i) and (b) a Non-defaulting Party’s rights under Sections 5 and 6 of the Agreement constitute rights of the kind referred to in 12 U.S.C. Section 1821(e)(8)(A).
	Method of Delivery. Whenever delivery of funds or other assets is required hereunder by or to Counterparty, such delivery shall be effected through Agent. In addition, all notices, demands and communications of any kind relating to the Transaction between Deutsche and Counterparty shall be transmitted exclusively through Agent.
	Staggered Settlement. If upon advice of counsel with respect to applicable legal and regulatory requirements or related policies and procedures applicable to Deutsche, Deutsche reasonably determines that it would not be advisable to deliver, or to acquire Shares to deliver, any or all of the Shares to be delivered by Deutsche on a Settlement Date for this Transaction, Deutsche may, by notice to Counterparty prior to any Settlement Date (a “Nominal Settlement Date”), elect to deliver the Shares deliverable on such Nominal Settlement Date on two or more dates (each, a “Staggered Settlement Date”) or at two or more times on the Nominal Settlement Date as follows: (i) in such notice, Deutsche will specify to Counterparty the related Staggered Settlement Dates (each of which will be on or prior to such Nominal Settlement Date, but not prior to the beginning of the related “Conversion Period”) or delivery times and how it will allocate the Shares it is required to deliver under “Net Share Settlement” above among the Staggered Settlement Dates or delivery times; and (ii) the aggregate number of Shares that Deutsche will deliver to Counterparty hereunder on all such Staggered Settlement Dates and delivery times will equal the number of Shares that Deutsche would otherwise be required to deliver on such Nominal Settlement Date.
	Additional Termination Events. The occurrence of (i) an “Event of Default” with respect to Counterparty under the terms of the Convertible Notes as set forth in the section of the Indenture as described in the Prospectus Supplement under “Description of the Notes — Events of Default”, (ii) an Amendment Event or (iii) a Repayment Event shall be an Additional Termination Event, in each case with the Transaction as the sole Affected Transaction and Counterparty as the sole Affected Party and Deutsche as the party entitled to designate an Early

11

Termination Date pursuant to Section 6(a) of the Agreement; provided that in the case of a Repayment Event the Transaction shall be subject to termination only in respect of the portion of the Transaction corresponding to the number of Convertible Notes subject to such Repayment Event.

“Amendment Event” means that Counterparty amends, modifies, supplements or obtains a waiver with respect to any term of the Indenture or the Convertible Notes if such amendment, modification, supplement or waiver has a material adverse effect on this Transaction or Deutsche’s ability to hedge all or a portion of this Transaction, with such materiality determination to be made in the sole discretion of the Calculation Agent. For the avoidance of doubt, Counterparty electing to increase the Conversion Rate pursuant to a Discretionary Adjustment shall not constitute an Amendment Event.

“Repayment Event” means that (A) any Convertible Notes are repurchased (whether in connection with or as a result of a change of control, howsoever defined, or for any other reason) by Counterparty or any of its subsidiaries, (B) any Convertible Notes are delivered to Counterparty or any of its subsidiaries in exchange for delivery of any property or assets of Counterparty or any of its subsidiaries (howsoever described), (C) any principal of any of the Convertible Notes is repaid prior to the final maturity date of the Convertible Notes (whether following acceleration of the Convertible Notes or otherwise), or (D) any Convertible Notes are exchanged by or for the benefit of the holders thereof for any other securities of Counterparty or any of its affiliates (or any other property, or any combination thereof) pursuant to any exchange offer or similar transaction; provided that, in the case of clause (B) and clause (D), conversions of the Convertible Notes pursuant to the terms of the Indenture as in effect on the date hereof shall not be Repayment Events.

Disposition of Hedge Shares. Counterparty hereby agrees that if, in the good faith reasonable judgment of Deutsche, the Shares (the “Hedge Shares”) acquired by Deutsche for the purpose of hedging its obligations pursuant to the Transaction cannot be sold in the public market by Deutsche without registration under the Securities Act, Counterparty shall, at its election: (i) in order to allow Deutsche to sell the Hedge Shares in a registered offering, make available to Deutsche an effective registration statement under the Securities Act to cover the resale of such Hedge Shares and (A) enter into an agreement, in form and substance reasonably satisfactory to Deutsche, substantially in the form of an underwriting agreement for underwritten offerings of equity securities of companies of comparable size and lines of business, (B) provide accountant’s “comfort” letters in customary form for registered offerings of equity securities, (C) provide disclosure opinions of nationally recognized outside counsel to Counterparty reasonably acceptable to Deutsche, (D) provide other customary opinions, certificates and closing documents customary in form for registered offerings of equity securities and (E) afford Deutsche a reasonable opportunity to conduct a “due diligence” investigation with respect to Counterparty customary in scope for underwritten offerings of equity securities; provided, however, that if Deutsche, in its sole reasonable discretion, is not satisfied with access to due diligence materials, the results of its due diligence investigation, or the procedures and documentation for the registered offering referred to above, then clause (ii) or clause (iii) of this paragraph shall apply at the election of Counterparty; (ii) in order to allow Deutsche to sell the Hedge Shares in a private placement, enter into a private placement agreement substantially similar to private placement purchase agreements customary for private placements of equity securities, in form and substance satisfactory to Deutsche, including customary representations, covenants, blue sky and other governmental filings and/or registrations, indemnities to Deutsche, due diligence rights (for Deutsche or any designated buyer of the Hedge Shares from Deutsche), opinions and certificates and such other documentation as is customary for private placements agreements, all reasonably acceptable to Deutsche (in which case, the Calculation Agent shall make any adjustments to the terms of the Transaction that are necessary, in its reasonable judgment, to compensate Deutsche for any discount from the public market price of the Shares incurred on the sale of Hedge Shares in a private placement); or (iii) purchase the Hedge Shares from Deutsche at the VWAP Price on such Exchange Business Days, and in the amounts, requested by Deutsche. “VWAP Price” means, on any Exchange Business Day, the per Share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg page CEPH <equity> AQR (or any successor thereto) in respect of the period from 9:30 a.m. to 4:00 p.m. (New York City time) on such Exchange Business Day (or if such volume-weighted average price is unavailable, the market value of one Share on such Exchange Business Day, as determined by the Calculation Agent using a volume-weighted method). This paragraph shall survive the termination, expiration or early unwind of the Transaction.

12

Status of Claims in Bankruptcy. Deutsche acknowledges and agrees that this Confirmation is not intended to convey to Deutsche rights with respect to the Transaction that are senior to the claims of common stockholders in any U.S. bankruptcy proceedings of Counterparty; provided that nothing herein shall limit or shall be deemed to limit Deutsche’s right to pursue remedies in the event of a breach by Counterparty of its obligations and agreements with respect to the Transaction; provided, further, that nothing herein shall limit or shall be deemed to limit Deutsche’s rights in respect of any transactions other than the Transaction.

No Collateral. Notwithstanding any provision of this Confirmation, the Agreement, Equity Definitions, or any other agreement between the parties to the contrary, the obligations of Counterparty under the Transaction are not secured by any collateral.

Securities Contract; Swap Agreement. The parties hereto agree and acknowledge that Deutsche is a “financial institution,” “swap participant” and “financial participant” within the meaning of Sections 101(22), 101(53C) and 101(22A) of the Bankruptcy Code. The parties hereto further agree and acknowledge (A) that this Confirmation is (i) a “securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “settlement payment” or a “transfer” within the meaning of Section 546 of the Bankruptcy Code, and (ii) a “swap agreement,” as such term is defined in Section 101(53B) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” a “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “transfer” within the meaning of Section 546 of the Bankruptcy Code, and (B) that Deutsche is entitled to the protections afforded by, among other sections, Section 362(b)(6), 362(b)(17), 362(b)(27), 362(o), 546(e), 546(g), 546(j), 548(d)(2), 555, 560 and 561 of the Bankruptcy Code.

Repurchase Notices. Counterparty shall, on any day on which Counterparty effects any repurchase of Shares, give Deutsche a written notice of such repurchase (a “Repurchase Notice”) on such day if, following such repurchase, the Unit Equity Percentage as determined on such day is greater by 1.0% or more than the Unit Equity Percentage included in the immediately preceding Repurchase Notice (or, in the case of the first such Repurchase Notice, greater by 1.0% or more than the Unit Equity Percentage as of the date hereof). The “Unit Equity Percentage” as of any day is the fraction, expressed as a percentage, (i) the numerator of which is the product of the number of Note Hedging Units and the Note Hedging Unit Entitlement, and (ii) the denominator of which is the number of Shares outstanding on such day. Counterparty agrees to indemnify and hold harmless Deutsche and its affiliates and their respective officers, directors, employees, advisors, agents and controlling persons (each, a “Section 16 Indemnified Person”) from and against any and all losses (including losses relating to Deutsche’s hedging activities as a consequence of becoming, or of the risk of becoming, a Section 16 “insider”, including without limitation, any forbearance from hedging activities or cessation of hedging activities and any losses in connection therewith with respect to the Transaction), claims, damages, judgments, liabilities and expenses (including reasonable attorney’s fees), joint or several, to which a Section 16 Indemnified Person may become subject, as a result of Counterparty’s failure to provide Deutsche with a Repurchase Notice on the day and in the manner specified in this paragraph, and to reimburse, upon written request, each of such Section 16 Indemnified Persons for any reasonable legal or other expenses incurred in connection with investigating, preparing for, providing testimony or other evidence in connection with or defending any of the foregoing. Counterparty shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, Counterparty agrees to indemnify any Section 16 Indemnified Person from and against any loss or liability by reason of such settlement or judgment. Counterparty shall not, without the prior written consent of the Section 16 Indemnified Person, effect any settlement of any pending or threatened proceeding in respect of which any Section 16 Indemnified Person is or could have been a party and indemnity could have been sought hereunder by such Section 16 Indemnified Person, unless such settlement includes an unconditional release of such Section 16 Indemnified Person from all liability on claims that are the subject matter of such proceeding on terms reasonably satisfactory to such Section 16 Indemnified Person. If the indemnification provided for in this paragraph is unavailable to a Section 16 Indemnified Person or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then

13

Counterparty, in lieu of indemnifying such Section 16 Indemnified Person thereunder, shall contribute to the amount paid or payable by such Section 16 Indemnified Person as a result of such losses, claims, damages or liabilities. The remedies provided for in this paragraph are not exclusive and shall not limit any rights or remedies that may otherwise be available to any Section 16 Indemnified Person at law or in equity. The indemnity and contribution agreements contained in this paragraph shall remain operative and in full force and effect regardless of the termination of the Transaction.

Alternative Calculations and Deutsche Payment on Early Termination and on Certain Extraordinary Events. If Deutsche owes Counterparty any amount in connection with the Transaction pursuant to Sections 12.2, 12.3 (and “Consequences of Merger Events” above), 12.6, 12.7 or 12.9 of the Equity Definitions (except in the case of an Extraordinary Event in which the consideration or proceeds to be paid to holders of Shares as a result of such event consists solely of cash) or pursuant to Section 6(d)(ii) of the Agreement (except in the case of an Event of Default in which Counterparty is the Defaulting Party or a Termination Event in which Counterparty is the Affected Party, other than (x) an Event of Default of the type described in Section 5(a)(iii), (v), (vi) or (vii) of the Agreement or (y) a Termination Event of the type described in Section 5(b)(i), (ii), (iii), (iv), (v) or (vi) of the Agreement that in the case of either (x) or (y) resulted from an event or events outside Counterparty’s control) (a “Deutsche Payment Obligation”), Counterparty shall have the right, in its sole discretion, to require Deutsche to satisfy any such Deutsche Payment Obligation by delivery of Termination Delivery Units (as defined below) by giving irrevocable telephonic notice to Deutsche, confirmed in writing within one Scheduled Trading Day, between the hours of 9:00 a.m. and 4:00 p.m. New York time on the Early Termination Date or other date the transaction is terminated, as applicable (“Notice of Deutsche Termination Delivery”). Within a commercially reasonable period of time following receipt of a Notice of Deutsche Termination Delivery, Deutsche shall deliver to Counterparty a number of Termination Delivery Units having a cash value equal to the amount of such Deutsche Payment Obligation (such number of Termination Delivery Units to be delivered to be determined by the Calculation Agent as the number of whole Termination Delivery Units that could be purchased over a commercially reasonable period of time with the cash equivalent of such payment obligation). If the provisions set forth in this paragraph are applicable, the provisions of Sections 9.8, 9.9, 9.10, 9.11 (modified as described above) and 9.12 of the Equity Definitions shall be applicable, except that all references to “Shares” shall be read as references to “Termination Delivery Units”.

“Termination Delivery Unit” means (a) in the case of a Termination Event, an Event of Default or an Extraordinary Event (other than an Insolvency, Nationalization or Merger Event), one Share or (b) in the case of an Insolvency, Nationalization or Merger Event, a unit consisting of the number or amount of each type of property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Insolvency, Nationalization or Merger Event. If a Termination Delivery Unit consists of property other than cash or New Shares and Counterparty provides irrevocable written notice to the Calculation Agent on or prior to the Closing Date that it elects to receive cash, New Shares or a combination thereof (in such proportion as Counterparty designates) in lieu of such other property, the Calculation Agent shall replace such property with cash, New Shares or a combination thereof as components of a Termination Delivery Unit in such amounts, as determined by the Calculation Agent in its discretion by commercially reasonable means, as shall have a value equal to the value of the property so replaced. If such Insolvency, Nationalization or Merger Event involves a choice of consideration to be received by holders, such holder shall be deemed to have elected to receive the maximum possible amount of cash.

No Material Non-Public Information. On each day during the period beginning on the date on which the offering of the Convertible Notes was first announced and ending on the earlier of (a) the day on which Deutsche has informed Counterparty in writing that Deutsche has completed all purchases of Shares or other transactions to hedge initially its exposure with respect to the Transaction and (b) the Effective Date, Counterparty represents and warrants to Deutsche that it is not aware of any material nonpublic information concerning itself or the Shares.

Right to Extend. Deutsche may postpone any potential Exercise Date or postpone or extend any other date of valuation or delivery with respect to some or all of the relevant Note Hedging Units (in which event the Calculation Agent shall make appropriate adjustments to the Settlement Amount for such Note Hedging Units), if

14

Deutsche determines, in its reasonable discretion, that (a) a Regulatory Disruption has occurred or (b) such extension is reasonably necessary or appropriate to (i) preserve Deutsche’s hedging or hedge unwind activity hereunder in light of existing liquidity conditions or (ii) enable Deutsche to effect purchases of Shares in connection with its hedging, hedge unwind or settlement activity hereunder in a manner that would, if Deutsche were the Issuer or an affiliated purchaser of the Issuer, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Deutsche; provided that, in the case of a postponement or extension as a result of clause (b)(i), such postponement or extension shall be limited to 25 scheduled “Trading Days”. “Regulatory Disruption” shall mean any event that Deutsche, in its commercially reasonable discretion upon the advice of outside counsel, determines makes it appropriate with regard to any legal, regulatory or self-regulatory requirements or related policies and procedures (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Deutsche, and including without limitation Rule 10b-18, Rule 10b-5, Regulation 13D-G and Regulation 14E under the Exchange Act and Regulation M and/or analyzing Deutsche as if Deutsche were the Issuer or an affiliated purchaser of the Issuer), for Deutsche to refrain from or decrease any market activity in connection with the Transaction.

Transfer or Assignment. Counterparty may not transfer any of its rights or obligations under the Transaction without the prior written consent of Deutsche. Deutsche may transfer or assign all or a portion of its Note Hedging Units hereunder at any time to any nationally recognized dealer in over-the-counter equity derivatives transactions with a rating (or whose guarantor has a rating) for its long term, unsecured and unsubordinated indebtedness of A+ or better by Standard & Poor’s Ratings Services or its successor (“S&P”), or A1 or better by Moody’s Investors Service, Inc. or its successor (“Moody’s”) or, if either S&P or Moody’s ceases to rate such debt, at least an equivalent rating or better by a substitute agency rating mutually agreed by Counterparty and Deutsche, without the consent of Counterparty.

If, as determined in Deutsche’s sole discretion, (a) at any time (1) the Equity Percentage exceeds 8% or (2) Deutsche, Deutsche Group (as defined below) or any person whose ownership position would be aggregated with that of Deutsche or Deutsche Group (Deutsche, Deutsche Group or any such person, a “Deutsche Person”) under Section 203 of the Delaware General Corporation Law (the “DGCL Takeover Statute”) or other federal, state or local laws, regulations or regulatory orders applicable to ownership of Shares (excluding Section 13 of the Exchange Act and the rules promulgated thereunder, “Applicable Laws”), owns, beneficially owns, constructively owns, controls, holds the power to vote or otherwise meets a relevant definition of ownership, or could be reasonably viewed as meeting any of the foregoing, in excess of a number of Shares equal to (x) the number of Shares that would give rise to reporting, registration, filing or notification obligations or other requirements (including obtaining prior approval by a state or federal regulator) of a Deutsche Person under Applicable Laws (including, without limitation, “interested shareholder” or “acquiring Person” status under the DGCL Takeover Statute) and with respect to which such requirements have not been met or the relevant approval has not been received minus (y) 1% of the number of Shares outstanding on the date of determination (either such condition described in clause (1) or (2), an “Excess Ownership Position”), and (b) Deutsche is unable, after commercially reasonable efforts, to effect a transfer or assignment on pricing and terms and within a time period reasonably acceptable to it of all or a portion of this Transaction pursuant to the preceding paragraph such that an Excess Ownership Position no longer exists, Deutsche may designate any Scheduled Trading Day as an Early Termination Date with respect to a portion (the “Terminated Portion”) of this Transaction, such that an Excess Ownership Position no longer exists following such partial termination. In the event that Deutsche so designates an Early Termination Date with respect to a portion of this Transaction, a payment shall be made pursuant to Section 6 of the Agreement as if (i) an Early Termination Date had been designated in respect of a Transaction having terms identical to this Transaction and a Number of Note Hedging Units equal to the Terminated Portion, (ii) Counterparty shall be the sole Affected Party with respect to such partial termination and (iii) such Transaction shall be the only Terminated Transaction (and, for the avoidance of doubt, the provisions set forth under the caption “Alternative Calculations and Deutsche Payment on Early Termination and on Certain Extraordinary Events” shall apply to any amount that is payable by Deutsche to Counterparty pursuant to this sentence). The “Equity Percentage” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the number of Shares that Deutsche and any of its affiliates subject to aggregation with Deutsche for purposes of the “beneficial ownership” test under Section 13 of the Exchange Act and all persons who may form a “group” (within the meaning of Rule 13d-5(b)(1) under the Exchange Act) with Deutsche (collectively,

15

“Deutsche Group”) “beneficially own” (within the meaning of Section 13 of the Exchange Act) without duplication on such day and (B) the denominator of which is the number of Shares outstanding on such day.

Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Deutsche to purchase, sell, receive or deliver any shares or other securities to or from Counterparty, Deutsche may designate any of its affiliates to purchase, sell, receive or deliver such shares or other securities and otherwise to perform Deutsche’s obligations in respect of the Transaction and any such designee may assume such obligations. Deutsche shall be discharged of its obligations to Counterparty to the extent of any such performance.

Severability; Illegality. If compliance by either party with any provision of the Transaction would be unenforceable or illegal, (a) the parties shall negotiate in good faith to resolve such unenforceability or illegality in a manner that preserves the economic benefits of the transactions contemplated hereby and (b) the other provisions of the Transaction shall not be invalidated, but shall remain in full force and effect.

Waiver of Jury Trial. EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING RELATING TO THE TRANSACTION. EACH PARTY (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF SUCH A SUIT, ACTION OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HAVE BEEN INDUCED TO ENTER INTO THE TRANSACTION, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS PROVIDED HEREIN.

Early Unwind. In the event the sale of Convertible Notes is not consummated with the underwriters thereof for any reason by the close of business in New York on May 27, 2009 (or such later date as agreed upon by the parties) (May 27, 2009 or such later date as agreed upon being the “Early Unwind Date”), the Transaction shall automatically terminate (the “Early Unwind”) on the Early Unwind Date and (a) the Transaction and all of the respective rights and obligations of Deutsche and Counterparty under the Transaction shall be cancelled and terminated, (b) each party shall be released and discharged by the other party from and agrees not to make any claim against the other party with respect to any obligations or liabilities of the other party arising out of and to be performed in connection with the Transaction either prior to or after the Early Unwind Date and (c) Deutsche shall return to Counterparty any Premium paid by Counterparty to Deutsche in respect of this Transaction (net of any amounts payable by Counterparty to Deutsche pursuant to the following proviso); provided that Counterparty shall purchase from Deutsche on the Early Unwind Date all Shares purchased by Deutsche or one or more of its affiliates, and assume, or reimburse the cost of, derivatives and other hedging activities entered into by Deutsche or one or more of its affiliates, in each case, in connection with hedging of the Transaction and the unwind of such hedging activities. The amount payable by Counterparty shall be Deutsche’s (or its affiliates) actual cost of such Shares and unwind cost of such derivatives and other hedging activities as Deutsche informs Counterparty and shall be paid in immediately available funds on the Early Unwind Date. Deutsche and Counterparty represent and acknowledge to the other that, subject to the proviso included in the preceding sentence, upon an Early Unwind, all obligations with respect to the Transaction shall be deemed fully and finally discharged.

Governing law:  The law of the State of New York.

Contact information. For purposes of the Agreement (unless otherwise specified in the Agreement), the addresses for notice to the parties shall be:

(a) Counterparty

Cephalon, Inc.
41 Moores Road
Frazer, PA 19355
Attention:	Gerald J. Pappert
Fax:	(610) 738-6258

16

(b) Deutsche

Deutsche Bank AG, London Branch
c/o Deutsche Bank Securities Inc.
60 Wall Street
New York, NY 10005
Attention:	Andrew Yaeger
Telephone:	(212) 250-2717
Email:	Andrew.Yaeger@db.com
with a copy to:
Deutsche Bank AG, London Branch
c/o Deutsche Bank Securities Inc.
60 Wall Street
New York, New York 10005
Attention:	Lars Kestner
Telephone:	(212) 250-6043
Email:	Lars.Kestner@db.com

17

This Confirmation may be executed in several counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

Counterparty hereby agrees to check this Confirmation and to confirm that the foregoing correctly sets forth the terms of the Transaction by signing in the space provided below and returning to Deutsche a facsimile of the fully-executed Confirmation to Deutsche at 44 113 336 2009.  Originals shall be provided for your execution upon your request.

We are very pleased to have executed the Transaction with you and we look forward to completing other transactions with you in the near future.

Very truly yours,

DEUTSCHE BANK AG, LONDON BRANCH

By:	/s/ Lars Kestner
	Name:	Lars Kestner
	Title:	Managing Director
By:	/s/ John Arnone
	Name:	John Arnone
	Title:	Managing Director
DEUTSCHE BANK SECURITIES INC.,
acting solely as Agent in connection with this Transaction
By:	/s/ Lars Kestner
	Name:	Lars Kestner
	Title:	Managing Director
By:	/s/ John Arnone
	Name:	John Arnone
	Title:	Managing Director

Counterparty hereby agrees to, accepts and confirms the terms of the foregoing as of the Trade Date.

CEPHALON, INC.

By:	/s/ J. Kevin Buchi
	Name:	J. Kevin Buch
	Title:	Executive Vice President and Chief Financial Officer

18

EX-10.2

Exhibit 10.2

Deutsche Bank

Deutsche Bank AG, London Branch

Winchester house

1 Great Winchester St,

London EC2N 2DB

Telephone:  44 20 7545 8000

c/o Deutsche Bank Securities Inc.

60 Wall Street

New York, NY 10005

Telephone: 212-250-2500

DATE:	May 21, 2009
TO:	Cephalon, Inc.
ATTENTION:	GeraldJ. Pappert
FACSIMILE:	(610) 738-6258
FROM:	Deutsche Bank AG, London Branch
TELEPHONE:	44 20 7545 0556
FACSIMILE:	44 11 3336 2009
SUBJECT:	Equity Derivatives Confirmation
REFERENCE NUMBER(S):	331715 and 332055

The purpose of this facsimile agreement (this “Confirmation”) is to confirm the amended and restated terms and conditions of the transaction entered into between Deutsche Bank AG, London Branch (“Deutsche”) and Cephalon, Inc. (“Counterparty”) on the Trade Date specified below (the “Transaction”).  This amended and restated Confirmation constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below and amends and restates in its entirety the equity derivatives confirmation regarding the sale of warrants, dated May 21, 2009, and subject to the Agreement (the “Original Confirmation”).  All references to the Original Confirmation in the Agreement or in other documentation between the parties shall be to this amended and restated Confirmation.  This amended and restated Confirmation constitutes the entire agreement and understanding of the parties with respect to the subject matter and terms of the Transaction and supersedes all prior or contemporaneous written and oral communications with respect thereto.

DEUTSCHE BANK AG IS NOT REGISTERED AS A BROKER OR DEALER UNDER THE U.S. SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.  DEUTSCHE BANK SECURITIES INC. (“AGENT”) HAS ACTED SOLELY AS AGENT IN CONNECTION WITH THE TRANSACTION AND HAS NO OBLIGATION, BY WAY OF ISSUANCE, ENDORSEMENT, GUARANTEE OR OTHERWISE WITH RESPECT TO THE PERFORMANCE OF EITHER PARTY UNDER THE TRANSACTION.  DEUTSCHE BANK AG, LONDON BRANCH IS NOT A MEMBER OF THE SECURITIES INVESTOR PROTECTION CORPORATION (SIPC).

Chairman of the Supervisory Board: Clemens Börsig Board of Managing Directors: Hermann-Josef Lamberti, Josef Ackermann, Dr. Hugo Banziger, Anthony DiIorio Deutsche Bank AG is regulated by the FSA for the conduct of designated investment business in the UK, is a member of the London Stock Exchange and is a limited liability company incorporated in the Federal Republic of Germany HRB No. 30 000 District Court of Frankfurt am Main; Branch Registration No. in England and Wales BR000005, Registered address: Winchester House, 1 Great Winchester Street, London EC2N 2DB.

The definitions contained in the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”), as published by the International Swaps and Derivatives Association, Inc., are incorporated into this Confirmation.  In the event of any inconsistency between the Equity Definitions and the terms of this Confirmation, the terms of this Confirmation shall govern.  For the purposes of the Equity Definitions, each reference herein to a Warrant shall be deemed to be a reference to a Call or an Option, as context requires.

This Confirmation evidences a complete and binding agreement between Deutsche and Counterparty as to the terms of the Transaction to which this Confirmation relates.  This Confirmation shall supplement, form a part of, and be subject to an agreement (the “Agreement”) in the form of the ISDA 2002 Master Agreement as if Deutsche and Counterparty had executed an agreement in such form (without any Schedule but with the elections set forth in this Confirmation).  For the avoidance of doubt, the Transaction shall be the only transaction under the Agreement.

The Transaction is a Warrant Transaction, which shall be considered a Share Option Transaction for purposes of the Equity Definitions, and shall have the following terms:

General:
Trade Date:	May 21, 2009.
Effective Date:	May 27, 2009.
Components:	The Transaction will be divided into individual Components, each with the terms set forth in this Confirmation, and, in particular, with the Number of Warrants and Expiration Date set forth in this Confirmation. The payments and deliveries to be made upon settlement of the Transaction will be determined separately for each Component as if each Component were a separate Transaction under the Agreement.
Warrant Style:	European.
Warrant Type:	Call.
Seller:	Counterparty.
Buyer:	Deutsche.
Shares:	The common stock, par value USD 0.01 per share, of Counterparty.
Number of Warrants:	For each Component, as provided in Annex C to this Confirmation.
Strike Price:	As provided in Annex B to this Confirmation.
Premium:	As provided in Annex B to this Confirmation.
Additional Premium:	As provided in Annex B to this Confirmation. The Additional Premium shall be paid by Deutsche to Counterparty on the Premium Payment Date.
Premium Payment Date:	The Effective Date.
Exchange:	The NASDAQ Global Select Market.

2

Related Exchanges:	All Exchanges.
Calculation Agent:	Deutsche.
Procedure for Exercise:
In respect of any Component:
Expiration Date:	As provided in Annex C to this Confirmation (or, if such date is not a Scheduled Trading Day, the next following Scheduled Trading Day that is not already an Expiration Date for another Component); provided that if that date is a Disrupted Day, the Expiration Date for such Component shall be the first succeeding Scheduled Trading Day that is not a Disrupted Day and is not or is not deemed to be an Expiration Date in respect of any other Component of the Transaction hereunder; and provided further that if the Expiration Date has not occurred pursuant to the preceding proviso as of the Final Disruption Date, the Final Disruption Date shall be the Expiration Date (irrespective of whether such date is an Expiration Date in respect of any other Component for the Transaction) and, notwithstanding anything to the contrary in this Confirmation or the Equity Definitions, the Relevant Price for the Expiration Date shall be the prevailing market value per Share determined by the Calculation Agent in a commercially reasonable manner. Notwithstanding the foregoing and anything to the contrary in the Equity Definitions, if a Market Disruption Event occurs on any Expiration Date, the Calculation Agent may determine that such Expiration Date is a Disrupted Day only in part, in which case the Calculation Agent shall make adjustments to the number of Warrants for the relevant Component for which such day shall be the Expiration Date and shall designate the Scheduled Trading Day determined in the manner described in the immediately preceding sentence as the Expiration Date for the remaining Warrants for such Component. Section 6.6 of the Equity Definitions shall not apply to any Valuation Date occurring on an Expiration Date. “Final Disruption Date” has the meaning provided in Annex B to this Confirmation.
Automatic Exercise:	Applicable. Each Warrant not previously exercised will be deemed to be automatically exercised on the Expiration Time on the relevant Expiration Date.
Market Disruption Event:	Section 6.3(a) of the Equity Definitions is hereby amended by deleting the words “during the one hour period that ends at the relevant Valuation Time, Latest Exercise Time, Knock-in Valuation Time or Knock-out Valuation Time, as the case may be,” in clause (ii) thereof, and by replacing the words “or (iii) an Early Closure.” with “(iii) an Early Closure or (iv) a Regulatory Disruption, in each case that the Calculation Agent determines is material.”

3

	Section 6.3(d) of the Equity Definitions is hereby amended by deleting the remainder of the provision following the term “Scheduled Closing Time” in the fourth line thereof.
Regulatory Disruption:	Any event that Deutsche, in its commercially reasonable discretion upon the advice of outside counsel, determines makes it appropriate with regard to any legal, regulatory or self-regulatory requirements or related policies and procedures (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Deutsche, and including without limitation Rule 10b-18, Rule 10b-5, Regulation 13D-G and Regulation 14E under the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Regulation M and/or analyzing Deutsche as if Deutsche were the Issuer or an affiliated purchaser of the Issuer), for Deutsche to refrain from or decrease any market activity in connection with the Transaction. Deutsche shall notify Counterparty as soon as reasonably practicable that a Regulatory Disruption has occurred and the Expiration Dates affected by it.
Settlement Terms:
In respect of any Component:
Net Share Settlement:	On each Settlement Date, Counterparty shall deliver to Deutsche a number of Shares equal to the Net Share Amount for such Settlement Date to the account specified by Deutsche, and cash in lieu of any fractional shares valued at the Relevant Price for the Valuation Date corresponding to such Settlement Date. If Deutsche, upon the advice of counsel, reasonably determines that the Shares deliverable hereunder would not be immediately freely transferable by Deutsche under Rule 144 (“Rule 144”) under the U.S. Securities Act of 1933, as amended (the “Securities Act”) or any successor provision, then Deutsche may elect to either (x) accept delivery of such Shares notwithstanding the fact that such Shares are not immediately freely transferable by Deutsche under Rule 144 or any successor provision or (y) require that such delivery take place pursuant to the provisions set forth opposite the caption “Registration/Private Placement Procedures” below.
Net Share Amount:	For any Exercise Date, a number of Shares, as calculated by the Calculation Agent, equal to (x) the product of (i) the number of Warrants being exercised or deemed exercised on such Exercise Date and (ii) the excess, if any, of the Relevant Price for the Valuation Date occurring on such Exercise Date over the Strike Price (such product, the “Net Share Settlement Amount”) divided by (y) such Relevant Price.
Relevant Price:	On any Valuation Date, the volume weighted average price per Share for the regular trading session of the Exchange as displayed under the heading “Bloomberg VWAP” on Bloomberg Page CEPH <equity>

4

	AQR on such Valuation Date in respect of the period from 9:30 am to 4:00 p.m. (New York City time) on such Valuation Date (or if such volume weighted average price is not available, the Calculation Agent’s reasonable, good faith estimate of such price on such Valuation Date).
Settlement Currency:	USD.
Other Applicable Provisions:	The provisions of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws as a result of the fact that Counterparty is the Issuer of the Shares) and 9.12 of the Equity Definitions will be applicable, except that all references in such provisions to “Physical Settlement” and “Physically-settled” shall be read as references to “Net Share Settlement” and “Net Share Settled”. “Net Share Settled” in relation to any Warrant means that Net Share Settlement is applicable to such Warrant.
Dividends:
In respect of any Component:
Dividend Adjustments:	Counterparty agrees to notify Deutsche promptly of the announcement of an ex-dividend date for any cash dividend by Counterparty. If an ex-dividend date for any cash dividend occurs at any time from, but excluding, the Trade Date to, and including, the Expiration Date, then in lieu of any adjustments as provided under “Method of Adjustment” below, the Calculation Agent shall make such adjustments to the Strike Price and/or the Number of Warrants as it deems appropriate to preserve for the parties the intended economic benefits of the Transaction.
Adjustments:
In respect of any Component:
Method of Adjustment:	Calculation Agent Adjustment; provided, however, that the Equity Definitions shall be amended by replacing the words “diluting or concentrative” in Sections 11.2(a), 11.2(c) (in two instances) and 11.2(e)(vii) with the word “material” and by adding the words “or the Transaction” after the words “theoretical value of the relevant Shares” in Sections 11.2(a), 11.2(c) and 11.2(e)(vii); provided further that adjustments may be made to account for changes in expected volatility, expected dividends, expected correlation, expected stock loan rate and expected liquidity relative to the relevant Share.

5

Extraordinary Events:
New Shares:	In the definition of New Shares in Section 12.1(i) of the Equity Definitions, the text in clause (i) thereof shall be deleted in its entirety and replaced with “publicly quoted, traded or listed on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors)”.
Modified Calculation Agent Adjustment:	If, in respect of any Merger Event to which Modified Calculation Agent Adjustment applies, the adjustments to be made in accordance with Section 12.2(e)(i) of the Equity Definitions would result in Counterparty being different from the issuer of the Shares, then with respect to such Merger Event, as a condition precedent to the adjustments contemplated in Section 12.2(e)(i) of the Equity Definitions, Counterparty and the issuer of the Shares shall, prior to the Merger Date, have entered into such documentation containing representations, warranties and agreements relating to securities law and other issues as requested by Deutsche that Deutsche has determined, in its reasonable discretion, to be reasonably necessary or appropriate to allow Deutsche to continue as a party to the Transaction, as adjusted under Section 12.2(e)(i) of the Equity Definitions, and to preserve its hedging or hedge unwind activities in connection with the Transaction in a manner compliant with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Deutsche, and if such conditions are not met or if the Calculation Agent determines that no adjustment that it could make under Section 12.2(e)(i) of the Equity Definitions will produce a commercially reasonable result, then the consequences set forth in Section 12.2(e)(ii) of the Equity Definitions shall apply. For greater certainty, the definition of “Modified Calculation Agent Adjustment” in Sections 12.2 and 12.3 of the Equity Definitions shall be amended by adding the following italicized language to the stipulated parenthetical provision: “(including adjustments to account for changes in expected volatility, expected dividends, expected correlation, expected stock loan rate or expected liquidity relevant to the Shares or to the Transaction) from the Announcement Date to the Merger Date (Section 12.2) or Tender Offer Date (Section 12.3)”.
Announcement Event:	If an Announcement Event occurs, the Calculation Agent will determine the economic effect of the Announcement Event on the theoretical value of each Component of the Transaction (including without limitation any change in expected volatility, expected dividends, expected correlation, expected stock loan rate or expected liquidity relevant to the Shares or to the Transaction) from the potential Announcement Date to the Expiration Date for such Component and, if such economic effect is material, the Calculation Agent will adjust the terms of the Transaction to reflect such economic effect. “Announcement Event” shall mean the occurrence of a potential Announcement Date of a Merger Event or Tender Offer, if the Merger Date or Tender Offer Date does not, or is not anticipated to, occur on or prior to the Expiration Date for, or any earlier termination of, the relevant Component.

6

Consequences of Merger Events:
(a) Share-for-Share:	Modified Calculation Agent Adjustment.
(b) Share-for-Other:	Cancellation and Payment (Calculation Agent Determination).
(c) Share-for-Combined:	Component Adjustment.
Tender Offer:	Applicable
Consequences of Tender Offers:
(a) Share-for-Share:	Modified Calculation Agent Adjustment.
(b) Share-for-Other:	Modified Calculation Agent Adjustment.
(c) Share-for-Combined:	Modified Calculation Agent Adjustment.
Nationalization, Insolvency and Delisting:	Cancellation and Payment (Calculation Agent Determination); provided that in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system, such exchange or quotation system shall be deemed to be the Exchange. For the avoidance of doubt, the occurrence of any event that is a Merger Event and would otherwise have been a Delisting will have the consequence specified for the relevant Merger Event.
Additional Disruption Events:
Change in Law:	Applicable; provided that Section 12.9(a)(ii) of the Equity Definitions is hereby amended (i) by the replacement of the word “Shares” with “Hedge Positions”; (ii) by adding the phrase “or public announcement” immediately after the phrase “due to the promulgation” in the third line thereof and adding the phrase “formal or informal” before the word “interpretation” in the same line; and (iii) immediately following the word “Transaction” in clause (X) thereof, adding the phrase “in the manner contemplated by the Hedging Party on the Trade Date, unless the illegality is due to an act or omission of the party seeking to elect termination of the Transaction”.
Failure to Deliver:	Inapplicable
Insolvency Filing:	Applicable
Loss of Stock Borrow:	Applicable
Maximum Stock Loan Rate:	300 basis points per annum
Increased Cost of Stock Borrow:	Applicable

7

Initial Stock Loan Rate:	25 basis points per annum
Increased Cost of Hedging:	Applicable
Hedging Disruption:	Applicable
Hedging Party:	Deutsche for all applicable Additional Disruption Events
Determining Party:	Deutsche for all applicable Additional Disruption Events
Acknowledgements:
Non-Reliance:	Applicable
Agreements and Acknowledgements
Regarding Hedging Activities:	Applicable
Additional Acknowledgements:	Applicable

Mutual Representations: Each of Deutsche and Counterparty represents and warrants to, and agrees with, the other party that:

(i)	Tax Disclosure. Notwithstanding anything to the contrary herein, in the Equity Definitions or in the Agreement, and notwithstanding any express or implied claims of exclusivity or proprietary rights, the parties (and each of their employees, representatives or other agents) are authorized to disclose to any and all persons, beginning immediately upon commencement of their discussions and without limitation of any kind, the tax treatment and tax structure of the Transaction, and all materials of any kind (including opinions or other tax analyses) that are provided by either party to the other relating to such tax treatment and tax structure.
(ii)	Commodity Exchange Act. It is an “eligible contract participant” within the meaning of Section 1a(12) of the U.S. Commodity Exchange Act, as amended (the “CEA”). The Transaction has been subject to individual negotiation by the parties. The Transaction has not been executed or traded on a “trading facility” as defined in Section 1a(33) of the CEA. It has entered into the Transaction with the expectation and intent that the Transaction shall be performed to its termination date.
(iii)	Securities Act. It is a “qualified institutional buyer” as defined in Rule 144A under the Securities Act, or an “accredited investor” as defined under the Securities Act.
(iv)	ERISA. The assets used in the Transaction (1) are not assets of any “plan” (as such term is defined in Section 4975 of the U.S. Internal Revenue Code (the “Code”)) subject to Section 4975 of the Code or any “employee benefit plan” (as such term is defined in Section 3(3) of the U.S. Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) subject to Title I of ERISA, and (2) do not constitute “plan assets” within the meaning of Department of Labor Regulation 2510.3-101, 29 CFR Section 2510-3-101.

Counterparty Representations: In addition to the representations and warranties in the Agreement and those contained elsewhere herein, Counterparty represents, warrants, acknowledges and covenants that:

8

(i)	Counterparty shall provide written notice to Deutsche as soon as reasonably practicable upon obtaining knowledge of the occurrence of any event that would constitute an Event of Default, a Potential Event of Default, a Potential Adjustment Event, a Merger Event or any other Extraordinary Event; provided, however, that should Counterparty be in possession of material non-public information regarding Counterparty, Counterparty shall not communicate such information to Deutsche in connection with this Transaction.
(ii)	(A) Counterparty is acting for its own account, and it has made its own independent decisions to enter into the Transaction and as to whether the Transaction is appropriate or proper for it based upon its own judgment and upon advice from such advisers as it has deemed necessary, (B) Counterparty is not relying on any communication (written or oral) of Deutsche or any of its affiliates as investment advice or as a recommendation to enter into the Transaction (it being understood that information and explanations related to the terms and conditions of the Transaction shall not be considered investment advice or a recommendation to enter into the Transaction) and (C) no communication (written or oral) received from Deutsche or any of its affiliates shall be deemed to be an assurance or guarantee as to the expected results of the Transaction.
(iii)	Counterparty is not entering into the Transaction for the purpose of (i) creating actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for the Shares) or (ii) raising or depressing or otherwise manipulating the price of the Shares (or any security convertible into or exchangeable for the Shares), in either case in violation of the Exchange Act.
(iv)	Counterparty’s filings under the Exchange Act and other applicable securities laws that are required to be filed have been filed and, as of the respective dates thereof, there was no misstatement of material fact contained therein or omission of a material fact required to be stated therein or necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading.
(v)	Counterparty has not violated, and shall not take any action that violates (including, without limitation, any violation by Counterparty involving Deutsche), any applicable law (including, without limitation, the Securities Act and the Exchange Act) in connection with the Transaction.
(vi)	The representations and warranties of Counterparty set forth in Section 3 of the Agreement and Section 1 of the Underwriting Agreement dated May 21, 2009 between Counterparty and Deutsche Bank Securities Inc. as representative of the underwriters party thereto (the “Underwriting Agreement”) are true and correct and are hereby deemed to be repeated to Deutsche as if set forth herein.
(vii)	The Shares issuable upon exercise of all Warrants (the “Warrant Shares”) have been duly authorized and, when delivered pursuant to the terms of such Transaction, shall be validly issued, fully-paid and non-assessable, and such issuance of the Warrant Shares shall not be subject to any preemptive or similar rights and shall, upon such issuance, be accepted for listing or quotation on the Exchange.
(viii)	Counterparty is not as of the Trade Date and as of the date on which Counterparty delivers any Termination Delivery Units, and shall not be after giving effect to the transactions contemplated hereby, “insolvent” (as such term is defined in Section 101(32) of the U.S. Bankruptcy Code (Title 11 of the United States Code) (the “Bankruptcy Code”)).
(ix)	Counterparty is not, and after giving effect to the transactions contemplated hereby will not be, an “investment company” as such term is defined in the U.S. Investment Company Act of 1940, as amended.

9

(x)	Without limiting the generality of Section 13.1 of the Equity Definitions, Counterparty acknowledges that Deutsche is not making any representations or warranties with respect to the treatment of the Transaction under FASB Statements 128, 133, 149 or 150 (or under any successor statement), EITF Issue No. 00-19, 01-6, 03-6 or 07-5 (or any successor issue statements), under FASB’s Liabilities & Equity Project, or under any other accounting guidance.
(xi)	Counterparty understands, agrees and acknowledges that no obligations of Deutsche to it hereunder, if any, shall be entitled to the benefit of deposit insurance and that such obligations shall not be guaranteed by any affiliate of Deutsche or any governmental agency.
(xii)	Counterparty shall deliver to Deutsche an opinion of counsel, dated as of the Trade Date and reasonably acceptable to Deutsche in form and substance, with respect to the matters set forth in Section 3(a) of the Agreement and such other matters as Deutsche may reasonably request.
(xiii)	On each anniversary of the Trade Date, Counterparty shall deliver to Deutsche an officer’s certificate, signed by an authorized officer, stating the number of Available Shares (as defined in the provision titled “Limitation On Delivery of Shares” below)

Miscellaneous:

Effectiveness. If, on or prior to the Effective Date, Deutsche reasonably determines that it is advisable to cancel the Transaction because of concerns that Deutsche’s related hedging activities could be viewed as not complying with applicable securities laws, rules or regulations, the Transaction shall be cancelled and shall not become effective, and neither party shall have any obligation to the other party in respect of the Transaction.

Netting and Set-Off. The parties hereto agree that the Transaction shall not be subject to netting or set off with any other transaction.

Qualified Financial Contracts. It is the intention of the parties that, in respect of Counterparty, (a) the Transaction shall constitute a “qualified financial contract” within the meaning of 12 U.S.C. Section 1821(e)(8)(D)(i) and (b) a Non-defaulting Party’s rights under Sections 5 and 6 of the Agreement constitute rights of the kind referred to in 12 U.S.C. Section 1821(e)(8)(A).

Method of Delivery. Whenever delivery of funds or other assets is required hereunder by or to Counterparty, such delivery shall be effected through Agent. In addition, all notices, demands and communications of any kind relating to the Transaction between Deutsche and Counterparty shall be transmitted exclusively through Agent.

Status of Claims in Bankruptcy. Deutsche acknowledges and agrees that this Confirmation is not intended to convey to Deutsche rights with respect to the Transaction that are senior to the claims of common stockholders in any U.S. bankruptcy proceedings of Counterparty; provided that nothing herein shall limit or shall be deemed to limit Deutsche’s right to pursue remedies in the event of a breach by Counterparty of its obligations and agreements with respect to the Transaction; provided, further, that nothing herein shall limit or shall be deemed to limit Deutsche’s rights in respect of any transactions other than the Transaction.

No Collateral. Notwithstanding any provision of this Confirmation, the Agreement, Equity Definitions, or any other agreement between the parties to the contrary, the obligations of Counterparty under the Transaction are not secured by any collateral.

Securities Contract; Swap Agreement. The parties hereto agree and acknowledge that Deutsche is a “financial institution,” “swap participant” and “financial participant” within the meaning of Sections 101(22), 101(53C) and 101(22A) of the Bankruptcy Code. The parties hereto further agree and acknowledge (A) that this Confirmation is (i) a “securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment

10

amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “settlement payment” or a “transfer” within the meaning of Section 546 of the Bankruptcy Code, and (ii) a “swap agreement,” as such term is defined in Section 101(53B) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” a “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “transfer” within the meaning of Section 546 of the Bankruptcy Code, and (B) that Deutsche is entitled to the protections afforded by, among other sections, Section 362(b)(6), 362(b)(17), 362(b)(27), 362(o), 546(e), 546(g), 546(j), 548(d)(2), 555, 560 and 561 of the Bankruptcy Code.

Alternative Calculations and Counterparty Payment on Early Termination and on Certain Extraordinary Events. If Counterparty owes Deutsche any amount in connection with the Transaction pursuant to Sections 12.2, 12.3, 12.6, 12.7 or 12.9 of the Equity Definitions (except in the case of an Extraordinary Event in which the consideration or proceeds to be paid to holders of Shares as a result of such event consists solely of cash) or pursuant to Section 6(d)(ii) of the Agreement (except in the case of an Event of Default in which Counterparty is the Defaulting Party or a Termination Event in which Counterparty is the Affected Party, other than (x) an Event of Default of the type described in Section 5(a)(iii), (v), (vi) or (vii) of the Agreement or (y) a Termination Event of the type described in Section 5(b)(i), (ii), (iii), (iv), (v) or (vi) of the Agreement that in the case of either (x) or (y) resulted from an event or events outside Counterparty’s control) (a “Counterparty Payment Obligation”), Counterparty shall have the right, in its sole discretion, to satisfy any such Counterparty Payment Obligation by delivery of Termination Delivery Units (as defined below) by giving irrevocable telephonic notice to Deutsche, confirmed in writing within one Scheduled Trading Day, between the hours of 9:00 a.m. and 4:00 p.m. New York time on the Early Termination Date or other date the transaction is terminated, as applicable (“Notice of Counterparty Termination Delivery”). Within a commercially reasonable period of time following receipt of a Notice of Counterparty Termination Delivery, Counterparty shall deliver to Deutsche a number of Termination Delivery Units having a cash value equal to the amount of such Counterparty Payment Obligation (such number of Termination Delivery Units to be delivered to be determined by the Calculation Agent as the number of whole Termination Delivery Units that could be sold over a commercially reasonable period of time to generate proceeds equal to the cash equivalent of such payment obligation). In addition, if, in the good faith reasonable judgment of Deutsche, for any reason, the Termination Delivery Units deliverable pursuant to this paragraph would not be immediately freely transferable by Deutsche under Rule 144 or any successor provision, then Deutsche may elect either to (x) accept delivery of such Termination Delivery Units notwithstanding any restriction on transfer or (y) require that such delivery take place pursuant to the provisions set forth opposite the caption “Registration/Private Placement Procedures” below. If the provisions set forth in this paragraph are applicable, the provisions of Sections 9.8, 9.9, 9.10, 9.11 (modified as described above) and 9.12 of the Equity Definitions shall be applicable, except that all references to “Shares” shall be read as references to “Termination Delivery Units”.

“Termination Delivery Unit” means (a) in the case of a Termination Event, an Event of Default or an Extraordinary Event (other than an Insolvency, Nationalization, Merger Event or Tender Offer), one Share or (b) in the case of an Insolvency, Nationalization, Merger Event or Tender Offer, a unit consisting of the number or amount of each type of property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Insolvency, Nationalization, Merger Event or Tender Offer. If a Termination Delivery Unit consists of property other than cash or New Shares and Counterparty provides irrevocable written notice to the Calculation Agent on or prior to the Closing Date that it elects to deliver cash, New Shares or a combination thereof (in such proportion as Counterparty designates) in lieu of such other property, the Calculation Agent shall replace such property with cash, New Shares or a combination thereof as components of a Termination Delivery Unit in such amounts, as determined by the Calculation Agent in its discretion by commercially reasonable means, as shall have a value equal to the value of the property so replaced. If such Insolvency, Nationalization, Merger Event or Tender Offer involves a choice of consideration to be received by holders, such holder shall be deemed to have elected to receive the maximum possible amount of cash.

Registration/Private Placement Procedures. If, in the reasonable opinion of Deutsche, following any delivery of Shares or Termination Delivery Units to Deutsche hereunder, such Shares or Termination Delivery Units would be in the hands of Deutsche subject to any applicable restrictions with respect to any registration or

11

qualification requirement or prospectus delivery requirement for such Shares or Termination Delivery Units pursuant to any applicable federal or state securities law (including, without limitation, any such requirement arising under Section 5 of the Securities Act as a result of such Shares or Termination Delivery Units being “restricted securities”, as such term is defined in Rule 144) (such Shares or Termination Delivery Units, “Restricted Shares”), then delivery of such Restricted Shares shall be effected pursuant to either clause (i) or (ii) of Annex A hereto at the election of Counterparty, unless waived by Deutsche. Notwithstanding the foregoing, solely in respect of any Warrants exercised or deemed exercised on any Exercise Date, Counterparty shall elect, prior to the first Settlement Date for the first Exercise Date, a Private Placement Settlement (as defined in Annex A hereto) or Registration Settlement (as defined in Annex A hereto) for all deliveries of Restricted Shares for all such Exercise Dates which election shall be applicable to all Settlement Dates for such Warrants. If the Private Placement Settlement or the Registration Settlement shall not be effected as set forth in clauses (i) or (ii) of Annex A, as applicable, then failure to effect such Private Placement Settlement or such Registration Settlement shall constitute an Event of Default with respect to which Counterparty shall be the Defaulting Party.

Share Deliveries. Counterparty acknowledges and agrees that, to the extent that Deutsche is not then an affiliate, as such term is used in Rule 144, of Counterparty and has not been such an affiliate of Counterparty for 90 days (it being understood that Deutsche shall not be considered such an affiliate of Counterparty solely by reason of its right to receive Shares pursuant to a Transaction hereunder), any Shares or Termination Delivery Units delivered hereunder at any time after one year from the Premium Payment Date shall be eligible for resale under Rule 144 or any successor provision, and Counterparty agrees to promptly remove, or cause the transfer agent for such Shares or Termination Delivery Units to remove, any legends referring to any restrictions on resale under the Securities Act from the certificates representing such Shares or Termination Delivery Units. Counterparty further agrees that with respect to any Shares or Termination Delivery Units delivered hereunder at any time after 6 months from the Premium Payment Date but prior to 1 year from the Premium Payment Date, to the extent that Counterparty then satisfies the current information requirement of Rule 144, Counterparty shall promptly remove, or cause the transfer agent for such Shares or Termination Delivery Units to remove, any legends referring to any such restrictions or requirements from the certificates representing such Share or Termination Delivery Units upon delivery by Deutsche to Counterparty or such transfer agent of any customary seller’s and broker’s representation letters in connection with resales of such Shares or Termination Delivery Units pursuant to Rule 144, without any further requirement for the delivery of any certificate, consent, agreement, opinion of counsel, notice or any other document, any transfer tax stamps or payment of any other amount or any other action by Deutsche. Counterparty further agrees and acknowledges that Deutsche shall run a holding period under Rule 144 with respect to the Warrants and/or any Shares or Termination Delivery Units delivered hereunder notwithstanding the existence of any other transaction or transactions between Counterparty and Deutsche relating to the Shares. Counterparty further agrees that Shares or Termination Delivery Units delivered hereunder prior to the date that is 6 months from the Premium Payment Date may be transferred by Deutsche to its affiliates in transactions exempt from registration under the Securities Act, and Counterparty shall effect such transfer without any further action by Deutsche. Notwithstanding anything to the contrary herein, Counterparty agrees that any delivery of Shares or Termination Delivery Units shall be effected by book-entry transfer through the facilities of the Clearance System if, at the time of such delivery, the certificates representing such Shares or Termination Delivery Units would not contain any restrictive legend as described above. Notwithstanding anything to the contrary herein, to the extent the provisions of Rule 144 or any successor rule are amended, or the applicable interpretation thereof by the Securities and Exchange Commission or any court changes after the Trade Date, the agreements of Counterparty herein shall be deemed modified to the extent necessary, in the opinion of outside counsel of Counterparty, to comply with Rule 144, including Rule 144(b) or any successor provision, as in effect at the time of delivery of the relevant Shares or Termination Delivery Units.

No Material Non-Public Information. On each day during the period beginning on the Trade Date and ending on the earlier of (a) the day on which Deutsche has informed Counterparty in writing that Deutsche has completed all purchases or sales of Shares or other transactions to hedge initially its exposure with respect to the Transaction and (b) the Effective Date, Counterparty represents and warrants to Deutsche that it is not aware of any material nonpublic information concerning itself or the Shares.

Limit on Beneficial Ownership. Notwithstanding any other provisions hereof, Deutsche may not exercise any Warrant hereunder, Automatic Exercise shall not apply with respect thereto, and no delivery hereunder (including

12

pursuant to provisions opposite the headings “Alternative Calculations and Counterparty Payments on Early Termination and on Certain Extraordinary Events,” “Registration/Private Placement Procedures,” “Limitation on Delivery of Shares” or Annex A) shall be made, to the extent (but only to the extent) that the receipt of any Shares upon such exercise or delivery would result in the Equity Percentage (as defined below) exceeding 9% or an Ownership Trigger (as defined below) being met. Any purported delivery hereunder shall be void and have no effect to the extent (but only to the extent) that such delivery would result in the Equity Percentage exceeding 9% or an Ownership Trigger being met. If any delivery owed to Deutsche or exercise hereunder is not made, in whole or in part, as a result of this provision, Counterparty’s obligation to make such delivery and Deutsche’s right to exercise a Warrant shall not be extinguished and Counterparty shall make such delivery as promptly as practicable after, but in no event later than one Clearance System Business Day after, Deutsche gives notice to Counterparty that such exercise or delivery would not result in the Equity Percentage exceeding 9% or an Ownership Trigger being met.

Repurchase Notices. Counterparty shall, on any day on which Counterparty effects any repurchase of Shares, give Deutsche a written notice of such repurchase (a “Repurchase Notice”) on such day if, following such repurchase, the Warrant Equity Percentage (as defined below) is greater by 1.0% or more than the Warrant Equity Percentage set forth in the immediately preceding Repurchase Notice (or, in the case of the first such Repurchase Notice, greater by 1.0% or more than the Warrant Equity Percentage as of the date hereof). The “Warrant Equity Percentage” as of any day is the fraction, expressed as a percentage, of (1) the numerator of which is the Number of Warrants, and (2) the denominator of which is the number of Shares outstanding on such day. Counterparty agrees to indemnify and hold harmless Deutsche and its affiliates and their respective officers, directors, employees, affiliates, advisors, agents and controlling person (each, an “Indemnified Person”) from and against any and all losses (including losses relating to Deutsche’s hedging activities as a consequence of becoming, or of the risk of becoming, an “insider” as defined under Section 16 of the Exchange Act, including without limitation, any forbearance from hedging activities or cessation of hedging activities and any losses in connection therewith with respect to this Transaction), claims, damages, judgments, liabilities and expense (including reasonable attorney’s fees), joint or several, which an Indemnified Person actually may become subject to, as a result of Counterparty’s failure to provide Deutsche with a Repurchase Notice on the day and in the manner specified herein, and to reimburse, upon written request, each of such Indemnified Persons for any reasonable legal or other expenses incurred in connection with investigating, preparing for, providing testimony or other evidence in connection with or defending any of the foregoing. Counterparty shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, Counterparty agrees to indemnify any Indemnified Person from and against any loss or liability by reason of such settlement or judgment. Counterparty shall not, without the prior written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party and indemnity could have been sought hereunder by such Indemnified Person, unless such settlement includes an unconditional release of such Indemnified Person from all liability on claims that are the subject matter of such proceeding on terms reasonably satisfactory to such Indemnified Person. If the indemnification provided for in this paragraph is unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then Counterparty, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities. The remedies provided for in this paragraph are not exclusive and shall not limit any rights or remedies that may otherwise be available to any Indemnified Person at law or in equity. The indemnity and contribution agreements contained in this paragraph shall remain operative and in full force and effect regardless of the termination of the Transaction.

Limitation On Delivery of Shares. Notwithstanding anything herein or in the Agreement to the contrary, in no event shall Counterparty be required to deliver Shares in connection with the Transaction in excess of 14,492,754 Shares (the “Maximum Delivery Amount”). Counterparty represents and warrants (which shall be deemed to be repeated on each day that the Transaction is outstanding) that the Maximum Delivery Amount is equal to or less than the number of authorized but unissued Shares of Counterparty that are not reserved for future issuance in connection with transactions in the Shares (other than the Transaction) on the date of the determination of the Maximum Delivery Amount (such Shares, the “Available Shares”). In the event Counterparty shall not have delivered the full number of Shares otherwise deliverable as a result of this paragraph (the resulting deficit, the “Deficit Shares”), Counterparty shall be continually obligated to deliver, from time to time until the full number

13

of Deficit Shares have been delivered pursuant to this paragraph, Shares when, and to the extent, that (i) Shares are repurchased, acquired or otherwise received by Counterparty or any of its subsidiaries after the Trade Date (whether or not in exchange for cash, fair value or any other consideration), (ii) authorized and unissued Shares reserved for issuance in respect of other transactions prior to such date which prior to the relevant date become no longer so reserved and (iii) Counterparty additionally authorizes any unissued Shares that are not reserved for other transactions. Counterparty shall immediately notify Deutsche of the occurrence of any of the foregoing events (including the number of Shares subject to clause (i), (ii) or (iii) and the corresponding number of Shares to be delivered) and promptly deliver such Shares thereafter. Notwithstanding the provisions of Section 5(a)(ii) of the Agreement, in the event of a failure by Counterparty to comply with the agreement set forth in this provision, there shall be no grace period for remedy of such failure.

Additional Termination Event.  The occurrence of any of the following shall constitute an Additional Termination Event with respect to which (1) Counterparty shall be the sole Affected Party and (2) the Transaction shall be the sole Affected Transaction; provided that with respect to any Additional Termination Event, Deutsche may choose to treat part of the Transaction as the sole Affected Transaction, and, upon termination of the Affected Transaction, a Transaction with terms identical to those set forth herein except with a Number of Warrants equal to the unaffected number of Warrants shall be treated for all purposes as the Transaction, which shall remain in full force and effect:

(i)Deutsche reasonably determines that it is advisable to terminate a portion of the Transaction so that Deutsche’s related hedging activities will comply with applicable securities laws, rules or regulations;

(ii)The Shares are not approved for listing on the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or any of their respective successors);

(iii)any “person” or “group” (as such terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act or any successor provisions, including any group acting for the purpose of acquiring, holding, voting or disposing of securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act or any successor provision) is or becomes the “beneficial owner” (as that term is used in Rule 13d-3 under the Exchange Act as in effect on the Effective Date, except that the number of shares of Counterparty’s voting stock will be deemed to include, in addition to all outstanding shares of Counterparty’s voting stock and shares of voting stock not outstanding that are subject to options, warrants, rights to purchase or conversion privileges exercisable within 60 days of the date of determination (“unissued shares”) deemed to be held by the “person” or “group” or other person with respect to which the determination is being made, all unissued shares deemed to be held by all other persons), directly or indirectly, of shares representing 50% or more of the total voting power of all outstanding classes of Counterparty’s capital stock or other interests normally entitled (without regard to the occurrence of any contingency) to vote in the election of the board of directors, managers or trustees (“voting stock”) or has the power, directly or indirectly, to elect a majority of the members of Counterparty’s board of directors, unless the exception provided in clause (iv)(2) below applies;

(iv)Counterparty consolidates with, enters into a binding share exchange with, or merges with or into, another person, or Counterparty sells, assigns, conveys, transfers, leases or otherwise disposes of all or substantially all of its assets, or any person consolidates with, or merges with or into, Counterparty, in any such event, other than any transaction:

(1) pursuant to which the persons that “beneficially owned,” directly or indirectly, the shares of Counterparty’s voting stock immediately prior to such transaction “beneficially own,” directly or indirectly, shares of Counterparty’s voting stock representing at least a majority of the total voting power of all outstanding classes of voting stock of the surviving or transferee person and such holders’ proportional voting power immediately after such transaction vis-à-vis each other with respect to the securities they receive in such transaction shall be in substantially the same proportions as their respective voting power vis-à-vis each other immediately prior to such transaction; or

(2) in which at least 90% of the consideration paid for the Shares (other than cash payments for fractional shares or pursuant to dissenters’ appraisal rights) consists of shares of common stock traded on the New

14

York Stock Exchange, The NASDAQ Global Market or The NASDAQ Global Select Market (or any of their respective successors) (or which will be so traded immediately following such transaction); or

(3) which is effected solely to change Counterparty’s jurisdiction of incorporation and results in a reclassification, conversion or exchange of outstanding Shares solely into shares of common stock of the surviving person; or

(v)the holders of Counterparty’s capital stock approve any plan or proposal for liquidation or dissolution of Counterparty.

Transfer or Assignment.  Notwithstanding any provision of the Agreement to the contrary, Deutsche may, subject to applicable law, freely transfer and assign all of its rights and obligations under the Transaction without the consent of Counterparty.

If, as determined in Deutsche’s sole discretion, (a) at any time (1) the Equity Percentage exceeds 8% or (2) Deutsche, Deutsche Group (as defined below) or any person whose ownership position would be aggregated with that of Deutsche or Deutsche Group (Deutsche, Deutsche Group or any such person, a “Deutsche Person”) under Section 203 of the Delaware General Corporation Law (the “DGCL Takeover Statute”) or other federal, state or local laws, regulations or regulatory orders applicable to ownership of Shares (excluding Section 13 of the Exchange Act and the rules promulgated thereunder, “Applicable Laws”), owns, beneficially owns, constructively owns, controls, holds the power to vote or otherwise meets a relevant definition of ownership, or could be reasonably viewed as meeting any of the foregoing, in excess of a number of Shares equal to (x) the number of Shares that would give rise to reporting, registration, filing or notification obligations or other requirements (including obtaining prior approval by a state or federal regulator) of a Deutsche Person under Applicable Laws (including, without limitation, “interested shareholder” or “acquiring Person” status under the DGCL Takeover Statute) and with respect to which such requirements have not been met or the relevant approval has not been received (this clause (2)(x), the “Ownership Trigger”) minus (y) 1% of the number of Shares outstanding on the date of determination (either such condition described in clause (1) or (2), an “Excess Ownership Position”), and (b) Deutsche is unable, after commercially reasonable efforts, to effect a transfer or assignment on pricing and terms and within a time period reasonably acceptable to it of all or a portion of this Transaction pursuant to the preceding paragraph such that an Excess Ownership Position no longer exists, Deutsche may designate any Scheduled Trading Day as an Early Termination Date with respect to a portion (the “Terminated Portion”) of this Transaction, such that an Excess Ownership Position no longer exists following such partial termination.  In the event that Deutsche so designates an Early Termination Date with respect to a portion of this Transaction, a payment shall be made pursuant to Section 6 of the Agreement as if (i) an Early Termination Date had been designated in respect of a Transaction having terms identical to this Transaction and a Number of Warrants equal to the Terminated Portion (allocated among the Components thereof in the discretion of Deutsche), (ii) Counterparty shall be the sole Affected Party with respect to such partial termination and (iii) such Transaction shall be the only Terminated Transaction (and, for the avoidance of doubt, the provisions set forth under the caption “Alternative Calculations and Counterparty Payment on Early Termination and on Certain Extraordinary Events” shall apply to any amount that is payable by Counterparty to Deutsche pursuant to this sentence).  The “Equity Percentage” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the number of Shares that Deutsche and any of its affiliates subject to aggregation with Deutsche for purposes of the “beneficial ownership” test under Section 13 of the Exchange Act and all persons who may form a “group” (within the meaning of Rule 13d-5(b)(1) under the Exchange Act) with Deutsche (collectively, “Deutsche Group”) “beneficially own” (within the meaning of Section 13 of the Exchange Act) without duplication on such day and (B) the denominator of which is the number of Shares outstanding on such day.

Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Deutsche to purchase, sell, receive or deliver any shares or other securities to or from Counterparty, Deutsche may designate any of its affiliates to purchase, sell, receive or deliver such shares or other securities and otherwise to perform Deutsche’s obligations in respect of the Transaction and any such designee may assume such obligations.  Deutsche shall be discharged of its obligations to Counterparty to the extent of any such performance.

15

Severability; Illegality.  If compliance by either party with any provision of the Transaction would be unenforceable or illegal, (a) the parties shall negotiate in good faith to resolve such unenforceability or illegality in a manner that preserves the economic benefits of the transactions contemplated hereby and (b) the other provisions of the Transaction shall not be invalidated, but shall remain in full force and effect.

Securities Act.  The securities represented hereby have not been registered under the Securities Act or under the securities laws of certain states.  These securities may not be offered, sold or otherwise transferred, pledged or hypothecated except as permitted under the Securities Act and applicable state securities laws pursuant to registration or an exemption therefrom.

Waiver of Jury Trial.  EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING RELATING TO THE TRANSACTION.  EACH PARTY (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF SUCH A SUIT, ACTION OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HAVE BEEN INDUCED TO ENTER INTO THE TRANSACTION, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS PROVIDED HEREIN.

Governing law:  The law of the State of New York.

Contact information. For purposes of the Agreement (unless otherwise specified in the Agreement), the addresses for notice to the parties shall be:

(a) Counterparty

Cephalon, Inc.
41 Moores Road
Frazer, PA 19355
Attention:	Gerald J. Pappert
Fax:	(610) 738-6258

(b) Deutsche

Deutsche Bank AG, London Branch
c/o Deutsche Bank Securities Inc.
60 Wall Street
New York, NY 10005
Attention: Andrew Yaeger
Telephone:	(212) 250-2717
Email:	Andrew.Yaeger@db.com
with a copy to:
Deutsche Bank AG, London Branch
c/o Deutsche Bank Securities Inc.
60 Wall Street
New York, New York 10005
Attention: Lars Kestner
Telephone:	(212) 250-6043
Email:	Lars.Kestner@db.com

16

This Confirmation may be executed in several counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

Counterparty hereby agrees to check this Confirmation and to confirm that the foregoing correctly sets forth the terms of the Transaction by signing in the space provided below and returning to Deutsche a facsimile of the fully-executed Confirmation to Deutsche at 44 113 336 2009. Originals shall be provided for your execution upon your request.

We are very pleased to have executed the Transaction with you and we look forward to completing other transactions with you in the near future.

Very truly yours,

DEUTSCHE BANK AG, LONDON BRANCH

By:	_/s/ Lars Kestner
	Name: Lars Kestner
	Title:   Managing Director
By:	_/s/ John Arnone
	Name: John Arnone
	Title:   Managing Director

DEUTSCHE BANK SECURITIES INC.,

acting solely as Agent in connection with this Transaction

By:	_/s/ Lars Kestner
	Name: Lars Kestner
	Title:   Managing Director
By:	_/s/ John Arnone
	Name: John Arnone
	Title:   Managing Director

Counterparty hereby agrees to, accepts and confirms the terms of the foregoing as of the Trade Date.

CEPHALON, INC.

By:	_/s/ J. Kevin Buchi
	Name: J. Kevin Buch
	Title:   Executive Vice President and Chief Financial Officer

17

Chairman of the Supervisory Board: Clemens Börsig Board of Managing Directors: Hermann-Josef Lamberti, Josef Ackermann, Dr. Hugo Banziger, Anthony Dilorio Deutsche Bank AG is regulated by the FSA for the conduct of designated investment business in the UK, is a member of the London Stock Exchange and is a limited liability company incorporated in the Federal Republic of Germany HRB No. 30 000 District Court of Frankfurt am Main; Branch Registration No. in England and Wales BR000005, Registered address: Winchester House, 1 Great Winchester Street, London EC2N 2DB.

EX-99.1

Exhibit 99.1

Cephalon Announces Proposed Public Offering of Common Stock and Convertible Senior Subordinated Notes

For Immediate Release

Frazer, PA – May 20, 2009 – Cephalon, Inc. (Nasdaq: CEPH) announced today that it intends to offer, subject to market and other conditions, $300 million of common stock and $350 million in aggregate principal amount of convertible senior subordinated notes due 2014 through two concurrent public offerings.  Cephalon will grant the underwriters a 30-day option, solely to cover over-allotments, to purchase up to an additional $45 million of common stock, with respect to the common stock offering, and to purchase up to an additional $52.5 million in aggregate principal amount of the notes, with respect to the notes offering.

The notes will be convertible into cash and, if applicable, shares of Cephalon’s common stock based on a conversion rate to be determined. The interest rate, conversion price and other terms of the notes will be determined at the time of pricing of the offering by negotiations between Cephalon and the underwriters.  The notes will be subordinate to existing and future senior indebtedness, equal to existing and future senior subordinated indebtedness and senior in right of payment to existing and future subordinated indebtedness of Cephalon.

The offerings are being made pursuant to an effective shelf registration statement previously filed with the U.S. Securities and Exchange Commission.  For each offering, a prospectus supplement and accompanying prospectus describing the terms of the offering will be filed with the U.S. Securities and Exchange Commission.  Neither of these offerings is contingent upon the consummation of the other offering.

Cephalon intends to use a portion of the net proceeds of the notes offering to enter into a hedging transaction on its common stock with Deutsche Bank AG, London Branch (the “hedge counterparty”), an affiliate of the representative of the underwriters.  Holders of the notes will not have any rights with respect to any hedging transactions entered into by Cephalon.  Cephalon also expects to enter into separate warrant transactions with the hedge counterparty, which would result in additional proceeds to Cephalon.  The Company intends to use the remaining proceeds from the convertible notes offering and the proceeds from the common stock offering for general corporate purposes.

In connection with the convertible note hedge and warrant transactions, the hedge counterparty or its affiliates may enter into various derivative transactions with respect to Cephalon’s common stock concurrently with or shortly after the pricing of the notes.  These transactions could have the effect of increasing or preventing a decline in the price of Cephalon’s common stock concurrently with or following the pricing of the notes.  In addition, the hedge counterparty or its affiliates may from time to time, after the pricing of the notes, modify their respective hedge positions by entering into or unwinding various derivative transactions with respect to Cephalon’s common stock or by purchasing or selling Cephalon’s common stock in

secondary market transactions during the term of the notes (and are likely to do so during any applicable conversion reference period related to conversion of the notes).  These activities could have the effect of decreasing the price of Cephalon’s common stock and could adversely affect the price of the notes during any such applicable conversion reference period.

The sole book-running manager for both offerings will be Deutsche Bank Securities Inc.

When available, copies of both preliminary prospectus supplements and the accompanying prospectus may be obtained from Deutsche Bank Securities Inc.’s prospectus department at 100 Plaza One, Second Floor, Jersey City, NJ 07311 (telephone: 1-800-503-4611) or from the SEC at www.sec.gov.

This announcement is neither an offer to sell nor a solicitation to buy any of these securities and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale is unlawful.

About Cephalon, Inc.

Founded in 1987, Cephalon, Inc. is an international biopharmaceutical company dedicated to the discovery, development and commercialization of products in four core therapeutic areas: central nervous system, inflammatory diseases, pain and oncology. Cephalon currently employs approximately 3,000 people in the United States and Europe. U.S. sites include the company’s headquarters in Frazer, Pennsylvania, and offices, laboratories or manufacturing facilities in West Chester, Pennsylvania, Salt Lake City, Utah, and suburban Minneapolis, Minnesota.

Cephalon has a growing presence in Europe, the Middle East and Africa.  The Cephalon European headquarters and pre-clinical development center are located in Maisons-Alfort, France, just outside of Paris.  Key business units are located in England, Ireland, France, Germany, Italy, Spain, the Netherlands for the Benelux countries, and Poland for Eastern and Central European countries.  Cephalon Europe markets more than 30 products in four areas: central nervous system, pain, primary care and oncology.

The company’s proprietary products in the United States include: TREANDA® (bendamustine hydrochloride) for Injection, AMRIX® (cyclobenzaprine hydrochloride extended-release capsules), FENTORA® (fentanyl buccal tablet) [C-II], PROVIGIL® (modafinil) Tablets [C-IV], TRISENOX® (arsenic trioxide) injection, GABITRIL® (tiagabine hydrochloride), NUVIGIL®(armodafinil) Tabl ets [C-IV] and ACTIQ® (oral transmucosal fentanyl citrate) [C-II].  The company also markets numerous products internationally.  Full prescribing information on U.S. products is available by calling 1-800-896-5855.

# # #

In addition to historical facts or statements of current condition, this press release may contain forward-looking statements. Forward-looking statements provide Cephalon’s current expectations or forecasts of future events. These may include statements regarding anticipated scientific progress on its research programs; development of potential pharmaceutical products; interpretation of clinical results;

2

prospects for regulatory approval; manufacturing development and capabilities; market prospects for its products; and other statements regarding matters that are not historical facts. You may identify some of these forward-looking statements by the use of words in the statements such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe” or other words and terms of similar meaning. Cephalon’s performance and financial results could differ materially from those reflected in these forward-looking statements due to general financial, economic, regulatory and political conditions affecting the biotechnology and pharmaceutical industries as well as more specific risks and uncertainties facing Cephalon such as those set forth in its reports on Form 8-K, 10-Q and 10-K filed with the U.S. Securities and Exchange Commission. Given these risks and uncertainties, any or all of these forward-looking statements may prove to be incorrect. Therefore, you should not rely on any such factors or forward-looking statements. Furthermore, Cephalon does not intend to update publicly any forward-looking statement, except as required by law. The Private Securities Litigation Reform Act of 1995 permits this discussion.

# # #

Source: Cephalon, Inc.

Contacts:

United States
Media:	Investor Relations:
Sheryl Williams	Chip Merritt
+1 610-738-6493 (office)	+1 610-738-6376 (office)
610-457-5257 (cell)	cmerritt@cephalon.com
swilliam@cephalon.com

# # #

3

EX-99.2

Exhibit 99.2

Cephalon Prices 5 Million Shares of Common Stock and $435 Million in 2.50% Convertible Senior Subordinated Notes in Public Offerings

For Immediate Release

FRAZER, PA — May 21, 2009 — Cephalon, Inc. (Nasdaq: CEPH) announced today the pricing of its concurrent public offerings of 5 million shares of common stock, at a price of $60 per share, and $435 million in aggregate principal amount of 2.50% convertible senior subordinated notes due 2014.  Cephalon has also granted the underwriters a 30-day option, solely to cover over-allotments, to purchase up to an additional 750,000 shares of common stock, with respect to the common stock offering, and to purchase up to an additional $65 million in aggregate principal amount of the notes, with respect to the notes offering.

The notes will bear interest at a rate of 2.50% per year, payable on May 1 and November 1 of each year, commencing on November 1, 2009.  The notes will mature on May 1, 2014.  Holders may require the Company to repurchase all or a portion of their notes upon a fundamental change (as defined in the prospectus supplement relating to the notes) at a cash repurchase price equal to 100% of the principal amount plus accrued and unpaid interest.  Cephalon may not redeem the notes prior to the maturity date.

The notes are convertible prior to maturity, subject to certain conditions, into cash and shares, if any, of the Company’s common stock at an initial conversion price of $69.00 per share of common stock (equivalent to a conversion rate of approximately 14.4928 shares per $1,000 principal amount of notes). The notes will be subordinate to existing and future senior indebtedness, equal to existing and future senior subordinated indebtedness and senior in right of payment to existing and future subordinated indebtedness of Cephalon.

The aggregate net proceeds from the sale of shares of common stock and the notes being offered are expected to be approximately $709.5 million, after deducting the underwriters’ discounts and estimated offering expenses payable by the Company, assuming the underwriters do not exercise their option to purchase additional notes or shares of common stock.

Cephalon intends to use a portion of the net proceeds of the notes offering in connection with its entry into a convertible note hedge transaction (the “convertible note hedge”) on its common stock with Deutsche Bank AG, London Branch (the “hedge counterparty”), an affiliate of the representative of the underwriters.  The convertible note hedge will have the impact of increasing the effective conversion price of the new notes from the Company’s perspective to $100.00 per share.  Cephalon also has entered into a separate warrant transaction with the hedge counterparty (the “warrant transaction”), which would result in additional proceeds to Cephalon.  If the underwriters exercise their over-allotment option to purchase additional notes, Cephalon expects to use a portion of the net proceeds from the sale of such additional notes to increase the number of shares of common stock underlying the convertible note hedge and the warrant transaction. 

1

Holders of the notes will not have any rights with respect to the convertible note hedge or the warrant transaction.  The Company intends to use the remaining proceeds from the convertible notes offering and the proceeds from the common stock offering for general corporate purposes.

In connection with the convertible note hedge and warrant transactions, the hedge counterparty or its affiliates may enter into various derivative transactions with respect to Cephalon’s common stock concurrently with or shortly after the pricing of the notes.  These transactions could have the effect of increasing or preventing a decline in, or having a negative effect on, the price of Cephalon’s common stock concurrently with or following the pricing of the notes.  In addition, the hedge counterparty or its affiliates may from time to time, after the pricing of the notes, modify their respective hedge positions by entering into or unwinding various derivative transactions with respect to Cephalon’s common stock or by purchasing or selling Cephalon’s common stock in secondary market transactions during the term of the notes (and are likely to do so during any applicable conversion reference period related to conversion of the notes).  These activities could have the effect of decreasing the price of Cephalon’s common stock and could adversely affect the price of the notes during any such applicable conversion reference period.

The offerings are being made pursuant to an effective shelf registration statement previously filed with the U.S. Securities and Exchange Commission.  For each offering, a prospectus supplement and accompanying prospectus describing the terms of the offering will be filed with the U.S. Securities and Exchange Commission.  Neither of these offerings is contingent upon the consummation of the other offering.  Completion of each offering is subject to customary closing conditions, and each offering is expected to close on May 27, 2009.

Until the closing of the offerings, the Company is suspending its basic adjusted income per common share guidance for the second quarter 2009 and full year 2009.  The Company will issue revised basic adjusted income per common share guidance following the completion of the offerings.  The Company is not suspending its sales and adjusted net income guidance for the second quarter 2009 and full year 2009.

The sole book-running manager for both offerings is Deutsche Bank Securities Inc.

When available, copies of both prospectus supplements and the accompanying prospectus may be obtained from Deutsche Bank Securities Inc.’s prospectus department at 100 Plaza One, Second Floor, Jersey City, NJ 07311 (telephone: 1-800-503-4611) or from the SEC at www.sec.gov.

This announcement is neither an offer to sell nor a solicitation to buy any of these securities and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale is unlawful.

2

About Cephalon, Inc.

Founded in 1987, Cephalon, Inc. is an international biopharmaceutical company dedicated to the discovery, development and commercialization of products in four core therapeutic areas: central nervous system, inflammatory diseases, pain and oncology. Cephalon currently employs approximately 3,000 people in the United States and Europe. U.S. sites include the company’s headquarters in Frazer, Pennsylvania, and offices, laboratories or manufacturing facilities in West Chester, Pennsylvania, Salt Lake City, Utah, and suburban Minneapolis, Minnesota.

Cephalon has a growing presence in Europe, the Middle East and Africa.  The Cephalon European headquarters and pre-clinical development center are located in Maisons-Alfort, France, just outside of Paris.  Key business units are located in England, Ireland, France, Germany, Italy, Spain, the Netherlands for the Benelux countries, and Poland for Eastern and Central European countries.  Cephalon Europe markets more than 30 products in four areas: central nervous system, pain, primary care and oncology.

The company’s proprietary products in the United States include: TREANDA® (bendamustine hydrochloride) for Injection, AMRIX® (cyclobenzaprine hydrochloride extended-release capsules), FENTORA® (fentanyl buccal tablet) [C-II], PROVIGIL® (modafinil) Tablets [C-IV], TRISENOX® (arsenic trioxide) injection, GABITRIL® (tiagabine hydrochloride), NUVIGIL® (armodafinil) Tablets [C-IV] and ACTIQ® (oral transmucosal fentanyl citrate) [C-II].  The company also markets numerous products internationally.  Full prescribing information on U.S. products is available by calling 1-800-896-5855.

# # #

In addition to historical facts or statements of current condition, this press release may contain forward-looking statements. Forward-looking statements provide Cephalon’s current expectations or forecasts of future events. These may include statements regarding anticipated scientific progress on its research programs; development of potential pharmaceutical products; interpretation of clinical results; prospects for regulatory approval; manufacturing development and capabilities; market prospects for its products; and other statements regarding matters that are not historical facts. You may identify some of these forward-looking statements by the use of words in the statements such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe” or other words and terms of similar meaning. Cephalon’s performance and financial results could differ materially from those reflected in these forward-looking statements due to general financial, economic, regulatory and political conditions affecting the biotechnology and pharmaceutical industries as well as more specific risks and uncertainties facing Cephalon such as those set forth in its reports on Form 8-K, 10-Q and 10-K filed with the U.S. Securities and Exchange Commission. Given these risks and uncertainties, any or all of these forward-looking statements may prove to be incorrect. Therefore, you should not rely on any such factors or forward-looking statements. Furthermore, Cephalon does not intend to update publicly any forward-

3

looking statement, except as required by law. The Private Securities Litigation Reform Act of 1995 permits this discussion.

# # #

Source: Cephalon, Inc.

Contacts:

United States
Media:	Investor Relations:
Sheryl Williams	Chip Merritt
+1 610-738-6493 (office)	+1 610-738-6376 (office)
610-457-5257 (cell)	cmerritt@cephalon.com
swilliam@cephalon.com

# # #

4

EX-99.3

Exhibit 99.3

Cephalon Announces Exercise of $65 Million Over-allotment Option on 2.50% Convertible Senior Subordinated Notes

For Immediate Release

FRAZER, Pa., — May 22, 2009 — Cephalon, Inc. (Nasdaq: CEPH) announced today that the underwriters of its previously announced offering of $435 million in aggregate principal amount of 2.50% convertible senior subordinated notes due 2014 have exercised in full their over-allotment option to purchase $65 million of additional notes, bringing the total amount of the notes to be issued to $500 million. Completion of the notes offering, including the additional notes, is subject to customary closing conditions, and is expected to close on May 27, 2009.

Subject to certain conditions, the additional notes are convertible prior to maturity into cash and shares, if any, of the company’s common stock at an initial conversion price of $69.00 per share of common stock (equivalent to a conversion rate of approximately 14.4928 shares per $1,000 principal amount of notes). As previously disclosed, Cephalon will use a portion of the net proceeds of the offering to pay the net cost of the convertible note hedge and warrant transactions that Cephalon entered into in connection with offering of the notes.  As the underwriters have exercised their option to purchase additional notes, Cephalon expects to increase the number of shares of common stock underlying the convertible note hedge and warrant transactions on a pro rata basis, and Cephalon expects to use a portion of the net proceeds from the sale of the additional notes to pay the net cost of such increase.  Holders of the notes will not have any rights with respect to the convertible note hedge or the warrant transaction. The notes will be subordinate to existing and future senior indebtedness, equal to existing and future senior subordinated indebtedness and senior in right of payment to existing and future subordinated indebtedness of Cephalon.

This announcement is neither an offer to sell nor a solicitation to buy any of these securities and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale is unlawful.

About Cephalon, Inc.

Founded in 1987, Cephalon, Inc. is an international biopharmaceutical company dedicated to the discovery, development and commercialization of products in four core therapeutic areas: central nervous system, inflammatory diseases, pain and oncology. Cephalon currently employs approximately 3,000 people in the United States and Europe. U.S. sites include the company’s headquarters in Frazer, Pennsylvania, and offices, laboratories or manufacturing facilities in West Chester, Pennsylvania, Salt Lake City, Utah, and suburban Minneapolis, Minnesota.

Cephalon has a growing presence in Europe, the Middle East and Africa.  The Cephalon European headquarters and pre-clinical development center are located in Maisons-Alfort, France, just outside of Paris.  Key business units are located in England,

1

Ireland, France, Germany, Italy, Spain, the Netherlands for the Benelux countries, and Poland for Eastern and Central European countries.  Cephalon Europe markets more than 30 products in four areas: central nervous system, pain, primary care and oncology.

The company’s proprietary products in the United States include: TREANDA® (bendamustine hydrochloride) for Injection, AMRIX® (cyclobenzaprine hydrochloride extended-release capsules), FENTORA® (fentanyl buccal tablet) [C-II], PROVIGIL® (modafinil) Tablets [C-IV], TRISENOX® (arsenic trioxide) injection, GABITRIL® (tiagabine hydrochloride), NUVIGIL® (armodafinil) Tablets [C-IV] and ACTIQ® (oral transmucosal fentanyl citrate) [C-II].  The company also markets numerous products internationally.  Full prescribing information on U.S. products is available by calling 1-800-896-5855.

# # #

In addition to historical facts or statements of current condition, this press release may contain forward-looking statements. Forward-looking statements provide Cephalon’s current expectations or forecasts of future events. These may include statements regarding anticipated scientific progress on its research programs; development of potential pharmaceutical products; interpretation of clinical results; prospects for regulatory approval; manufacturing development and capabilities; market prospects for its products; and other statements regarding matters that are not historical facts. You may identify some of these forward-looking statements by the use of words in the statements such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe” or other words and terms of similar meaning. Cephalon’s performance and financial results could differ materially from those reflected in these forward-looking statements due to general financial, economic, regulatory and political conditions affecting the biotechnology and pharmaceutical industries as well as more specific risks and uncertainties facing Cephalon such as those set forth in its reports on Form 8-K, 10-Q and 10-K filed with the U.S. Securities and Exchange Commission. Given these risks and uncertainties, any or all of these forward-looking statements may prove to be incorrect. Therefore, you should not rely on any such factors or forward-looking statements. Furthermore, Cephalon does not intend to update publicly any forward-looking statement, except as required by law. The Private Securities Litigation Reform Act of 1995 permits this discussion.

# # #

Source: Cephalon, Inc.

Contacts:

United States
Media:	Investor Relations:
Sheryl Williams	Chip Merritt

2

+1 610-738-6493 (office)	+1 610-738-6376 (office)
610-457-5257 (cell)	cmerritt@cephalon.com
swilliam@cephalon.com

# # #

3