Document:

Exhibit
10.1

AGREEMENT OF APPOINTMENT AND
JOINDER AND

AMENDMENT NO. 1 TO THE

SECOND AMENDED
AND RESTATED RIGHTS AGREEMENT

This Agreement of
Appointment and Joinder and Amendment No. 1 to the Amended and Restated Rights
Agreement dated as of October 27, 2003, by and between Cephalon, Inc., a
Delaware corporation with offices at 41 Moores Road, Frazer, PA 19355 (the “Company”),
and StockTrans, Inc. (“StockTrans”), as the same may be amended from time to
time (the “Rights Agreement”), is entered into as of February 9, 2007 by and
between the Company and American Stock Transfer & Trust Company, a New York
banking corporation with offices at 59 Maiden Lane, New York, NY 10038 (“AST”).

Capitalized terms used
but not otherwise defined herein shall have the meanings ascribed thereto in
the Rights Agreement.

WHEREAS, pursuant
to Section 21 of the Rights Agreement, the Company has removed the Rights
Agent, effective as of the close of business on February 9, 2007; and

WHEREAS, the
Company is required by the terms of the Rights Agreement to appoint a successor
Rights Agent, and desires to appoint AST as successor Rights Agent; and

WHEREAS, AST
wishes to serve as successor Rights Agent; and

NOW, THEREFORE,
intending to be legally bound, and in consideration of the foregoing and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Company and AST hereby agree as follows:

1.             Appointment
of Successor Rights Agent. The Company hereby appoints AST as successor
Rights Agent under the Rights Agreement effective February 9, 2007.

2.             Joinder
to Rights Agreement. AST hereby accepts such appointment and agrees to
serve as Rights Agent under the Rights Agreement effective September 1, 2006,
and to be bound by the terms of the Rights Agreement as if it was an original
signatory to such agreement. All references to the Rights Agent contained in
the Rights Agreement shall mean AST; likewise, all referenced to StockTrans contained
in the Rights Agreement shall mean AST.

3.             Amendment
to Section 21 of the Rights Agreement. 
Section 21 of the Rights Agreement is hereby amended to provide that any
successor Rights Agent shall, at the time of its appointment as Rights Agent,
have a combined capital and surplus of at least $20,000,000, instead of
$50,000,000 as currently provided. The fifth (5th) sentence of Section 21 of
the Rights Agreement shall now read as follows:

“Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be a corporation organized and doing business under the laws of the 

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United
States or the laws of any state of the United States or the District of
Columbia, in good standing, having an office in the Commonwealth of
Pennsylvania or the State of New York, which is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $20
million.”

4.             Amendment
to Section 26 of the Rights Agreement. All references to StockTrans
contained in Section 26 of the Rights Agreement are hereby deleted in their
entirety and replaced with the following:

American Stock Transfer & Trust Company

59 Maiden Lane

New York, New York 10038

Attention: Corporate
Trust Department

With a copy to:

American Stock Transfer & Trust Company

59 Maiden Lane

New York, New York 10038

Attention: General
Counsel

4.             Except
as expressly modified herein, the Rights Agreement shall remain in full force
and effect.

5.             This
Agreement may be executed in one or more counterparts, each of which shall
together constitute one and the same document.

[SIGNATURES ON
FOLLOWING PAGE]

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IN WITNESS WHEREOF, the
parties hereto have executed this Agreement of Appointment and Joinder and
Amendment No. 1 to the Second Amended and Restated Rights Agreement as of the
date first above written.

	
  CEPHALON, INC.

  	
   

  	
  AMERICAN STOCK TRANSFER & TRUST COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/ J. Kevin
  Buchi

  	
   

  	
  By: 

  	
  /s/ Herb Lemmer

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  J. Kevin Buchi

  	
   

  	
  Name:

  	
  Herb Lemmer

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title: 

  	
  Exec. Vice
  President & CFO

  	
   

  	
  Title:

  	
  General Counsel

  	
   

  
									

 

 3Exhibit 10.2

CEPHALON, INC.

2007 MANAGEMENT INCENTIVE
COMPENSATION PLAN

SECTION 1. PURPOSE. The
purpose of the Cephalon, Inc. Management Incentive Compensation Plan (the “Plan”)
is to provide Participants (as defined) employed by Cephalon, Inc. (the “Company”)
and its affiliates with incentive compensation based upon the level of
achievement of financial and other performance criteria. The Plan will enhance
the ability of the Company and its affiliates to attract and retain individuals
of exceptional managerial talent upon whom, in large measure, the sustained
progress, growth and profitability of the Company depends.

SECTION 2. DEFINITIONS.
As used in the Plan, the following terms shall have the meanings set forth
below:

(a)  “AWARD” means a cash payment.

(b)  “BOARD” means the Board of Directors of the
Company.

(c)  “COMMITTEE” means the Stock Option and Compensation
Committee of the Board (or any successor committee).

(d)  “EXECUTIVE OFFICER” means an executive
officer of the Company as appointed by the Board of Directors or other key
employee.

(e)  “MEASUREMENT PERIOD” means a period of time
selected by the Committee for which performance will be measured for purposes
of Section 4.

(f)  “MAXIMUM AWARD” means the limitation on
awards payable under this Plan in any year, which for the Chairman/Chief
Executive Officer is 300% of his annual base salary and for any other
Participant is 110% of the Participant’s annual base salary.

(g)  “PARTICIPANT” means any Executive Officer selected
by the Committee to participate in the Plan.

(h)  “PERFORMANCE PERIOD” means a period of time
selected by the Committee to which an Award relates.

(i)  “TARGET AWARD” means an Award level that may
be paid if certain performance criteria are achieved.

(j)  “THRESHOLD PERFORMANCE” means a level of
achievement of 85% of target performance for the Chairman/Chief Executive
Officer and 90% of target performance for other Participants.

SECTION 3. ELIGIBILITY.
Persons employed by the Company or any of its affiliates during a Performance
Period in active service in a managerial or professional role for all or any
part of the Performance Period are eligible to be Participants under the Plan
for such Performance Period (whether or not so employed or living at the date
an Award is made) and may be considered by the Committee for an Award. An employee
is not rendered ineligible to be a Participant by reason of being a member of
the Board.

SECTION 4.
AWARDS-GENERAL.

(a) Target
Awards.  The Committee will establish
the Target Awards for Participants at the beginning of each Performance Period.
For the Chairman/Chief Executive Officer, the Target Award shall be 100% of
annual base salary; for Participants other than the Chairman/Chief Executive
Officer, the Target Award shall be 50% of annual base salary.

(b) Performance
Criteria; Award Levels.  The
performance criteria utilized by the Committee for the Chairman/Chief Executive
Officer may be based on individual performance, revenue, earnings per share,
other Company and business unit financial objectives, operational efficiency
measures, and other measurable objectives tied to the Company’s success or such
other criteria as the Committee shall determine in its discretion. The
Committee shall each year also determine specific levels of achievement of the
established performance criteria that correspond to Threshold Performance,
Target Award and Maximum Award.  Performance
criteria for Participants (other than Chairman/Chief Executive Officer) will be
established by management.  For the
Performance Period fiscal year 2007, the performance criteria for the
Chairman/Chief Executive Officer and the other Participants, and the
relationship between achievement of such performance criteria and respective
Award levels, are set out in the Schedules 1 and 2, respectively, to the Plan.

(c) Awards.  Awards will be made by the Committee
following the end of each Performance Period. Awards shall be paid after the
end of the Performance Period, except to the extent that a Participant has made
an election to defer the receipt of such Award pursuant to the Company’s
deferred compensation plan. The Award amount determined in accordance with
Schedule 2 may be increased or decreased by the Committee, provided, however,
than any Award may not exceed the applicable Maximum Award amount.

SECTION 5. OTHER
CONDITIONS.

(a) No person shall have any claim to an Award under the Plan and there
is no obligation for uniformity of treatment of Participants under the Plan.
Awards under the Plan may not be assigned or alienated.

(b) Neither the
Plan nor any action taken hereunder shall be construed as giving to any
Participant the right to be retained in the employ of the Company or any
affiliate.

(c) The Company or
any affiliate shall have the right to deduct from any Award to be paid under
the Plan any federal, state or local taxes required by law to be withheld with
respect to such payment.

(d) Awards under
the Plan will not be included in base compensation or covered compensation
under the retirement programs of the company for purposes of determining
pensions, retirement and death related benefits.

SECTION 6. DESIGNATION OF
BENEFICIARIES. A Participant may, if the Committee permits, designate a
beneficiary or beneficiaries to receive all or part of the Award which may be
made to the Participant, or may be payable, after such Participant’s death. A
designation of beneficiary shall be made in accordance with procedures
specified by the Company and may be replaced by a new designation or may be
revoked by the Participant at any time. In case of the Participant’s death, an
Award with respect to which a designation of beneficiary has been made (to the
extent it is valid and enforceable under applicable law) shall be paid to the
designated beneficiary or beneficiaries. Any Award granted or payable to a
Participant who is deceased and not subject to such a designation shall be
distributed to the Participant’s estate. If there shall be any question as to
the legal right of any beneficiary to receive an Award under the Plan, the
amount in question may be paid to the estate of the Participant, in which event
the Company or its affiliates shall have no further liability to anyone with
respect to such amount.

SECTION 7. PLAN
ADMINISTRATION.

(a) The Committee
shall have full discretionary power to administer and interpret the Plan and to
establish rules for its administration (including the power to delegate
authority to others to act for and on behalf of the Committee) subject to such
resolutions, not inconsistent with the Plan, as may be adopted by the Board. In
making any determinations under or referred to in the Plan, the Committee (and
its delegates, if any) shall be entitled to rely on opinions, reports, analysis
or statements of employees of the Company and its affiliates and of counsel,
public accountants and other professional or expert persons.

(b) The Plan shall
be governed by the laws of the State of Delaware and applicable Federal law.

SECTION 8.
MODIFICATION OR TERMINATION OF PLAN. The Board may modify or terminate the Plan
at any time, effective at such date as the Board may determine.

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