Stock Option and Compensation Committee Charter

Purpose

Membership
Authority and Responsibilities
Structure and Operations


Purpose

The purpose of the Stock Option and Compensation Committee (the "Committee") of the Board of Directors (the "Board") of Cephalon, Inc. (the "Company") is to (i) discharge the Board's responsibilities relating to the compensation of the Company's executive officers, (ii) oversee the administration of the Company's compensation and employee benefits plans, in particular the incentive compensation and equity-based plans of the Company, (iii) review the Company's succession plans for the Chairman and Chief Executive Officer, and for the Senior Vice Presidents, and (iv) prepare the annual report on executive compensation required by the rules and regulations of the Securities and Exchange Commission (the "SEC") to be included in the Company's annual proxy statement.

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Membership

The Committee shall consist of no fewer than three (3) members, the exact number to be determined from time to time by the Board.

The Committee shall consist of members:

  1. each of whom shall meet the independence requirements imposed by the listing standards of the Nasdaq National Market ("Nasdaq");

 

  1. at least two of whom qualify as "Non-Employee Directors" under Rule 16b-3 of the Securities Exchange Act of 1934, as amended; and

 

  1. at least two of whom qualify as as "outside directors" for the purposes of Section 162(m) of the Internal Revenue Code, as in effect from time to time ("Section 162(m)").


The members of the Committee shall be appointed by a majority vote of the Board from among its members based on the recommendations of the Corporate Governance and Nominating Committee and shall serve until such member's successor is duly appointed and qualified or until such member's resignation or removal by a majority vote of the Board.

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Authority and Responsibilities


The Committee shall have the following specific authority and responsibilities (in addition to any others that the Board may from time to time delegate to the Committee):

Executive Compensation

 

 

Succession Planning

Director Compensation

Equity Compensation Plans

 

 

401(k) Plan

 

Health and Welfare Plans

SEC Report

Performance Evaluation

 

Retention of Consultants and Advisors

 

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Structure and Operations

The Board shall designate one member of the Committee to act as its chairperson. The Committee shall meet in person or telephonically at least three (3) times a year at such times and places determined by the Committee chairperson, with further meetings to occur, or actions to be taken by unanimous written consent, when deemed necessary or desirable by the Committee or its chairperson. The chairperson, with input from the other members of the Committee, shall set the agendas for Committee meetings. Two members of the Committee shall constitute a quorum; when more than two members are present, the act of a majority of such members at a meeting at which a quorum exists shall be the act of the Committee, and when only two members are present, the unanimous vote of the two members shall constitute the act of the Committee.

The Committee may request that any directors, executive officers or other employees of the Company, or any other persons whose advice and counsel are sought by the Committee, attend any meeting of the Committee to provide such pertinent information as the Committee requests. The Committee may exclude from its meetings any persons it deems appropriate in order for it to fulfill its responsibilities.

The Committee may, in its discretion, delegate all or a portion of its duties, responsibilities and authority to subcommittees, whether or not such delegation is specifically contemplated under any plan or program.

The Committee shall maintain minutes or other records of its meetings and shall give regular reports to the Board summarizing these meetings. Reports to the Board may take the form of oral reports by the chairperson of the Committee or any other member of the Committee designated by the Committee to give such report.

Except as expressly provided in this Charter, the Company's bylaws or the Company's Corporate Governance Guidelines, or as required by law, regulation or Nasdaq listing standards, the Committee shall set its own rules of procedure.