Cephalon (CEPH)

Chairman and Chief Executive Officer

For the Company’s Chairman and Chief Executive Officer (the “CEO”), the Performance Goals consist of a financial component (60% of total) and operational component (40% of total).  The financial component includes two, equally-weighted, performance targets for fiscal 2006: total product sales and diluted adjusted earnings per share. The operational component includes certain pre-established performance goals for the year in the following areas of the Company’s business:  clinical; manufacturing; and research and development.   At the end of the fiscal year, the Compensation Committee will be responsible for assessing the performance of the CEO and providing its recommendation as to any Award under the Plan.  These recommended Awards will then be presented to the Board for final approval.

Awards under the Plan will be determined based on the achievement of Performance Goals.  For the CEO, if he achieves 100% of his Performance Goals, he will receive the “target” Award, which is equal to 100% of his 2006 base salary.  The achievement of a higher or lower percentage of his Performance Goals will impact any Awards under the Plan, which can range from 15% to 300% of the “target” Award.  However, in no event shall the CEO be eligible to receive an Award if he achieves less than 85% of his Performance Goals.

Chairman and Chief Executive Officer

For the Company’s Chairman and Chief Executive Officer (the “CEO”), the Performance Goals consist of a financial component (60% of total) and operational component (40% of total).  The financial component includes two, equally-weighted, performance targets for fiscal 2005: total product sales and diluted adjusted earnings per share. The operational component includes certain pre-established performance goals for the year in the following areas of the Company’s business:  clinical; manufacturing; and research and development.   At the end of the fiscal year, the Compensation Committee will be responsible for assessing the performance of the CEO and providing its recommendation as to any Award under the Plan.  These recommended Awards will then be presented to the Board for final approval.

Awards under the Plan will be determined based on the achievement of Performance Goals.  For the CEO, if he achieves 100% of his Performance Goals, he will receive the “target” Award, which is equal to 100% of his 2005 base salary.  The achievement of a higher or lower percentage of his Performance Goals will impact any Awards under the Plan, which can range from 15% to 300% of his 2005 base salary.  However, in no event shall the CEO be eligible to receive an Award if he achieves less than 85% of his Performance Goals.