Exhibit 10.1

ENDO PHARMACEUTICALS HOLDINGS INC.

EXECUTIVE EMPLOYMENT AGREEMENT

THIS AGREEMENT (the “Agreement”) is hereby entered into as of the 11th day of
April, 2008 and is effective as of April 29, 2008 (the “Effective Date”), by and
between Endo Pharmaceuticals Holdings Inc. (the “Company”) and Ivan Gergel (the
“Executive”) (hereinafter collectively referred to as “the parties”).

In consideration of the respective agreements of the parties contained herein,
it is agreed as follows:

 

1. Term. The initial term of this Agreement shall be for the period commencing
on the Effective Date and ending, subject to earlier termination as set forth in
Section 6, on the third anniversary of the Effective Date (the “Employment
Term”). The Employment Term shall automatically renew for an additional one
(1) year unless notice of non-renewal is delivered by either party by no later
than 120 days prior to the expiration of the Employment Term.

 

2. Employment. During the Employment Term:

 

  (a) Executive will have such duties as are assigned or delegated to Executive
by the Chief Executive Officer, and will serve as Executive Vice President,
Research and Development of the Company.

 

  (b) Executive shall devote his full-time attention to the business and affairs
of the Company. Executive may serve on corporate, civil or charitable boards or
committees, subject in all cases to the approval of the Chief Executive Officer.
Executive may manage personal and family investments, participate in industry
organizations and deliver lectures at educational institutions, so long as such
activities do not interfere with the performance of Executive’s responsibilities
hereunder.

 

  (c) Executive shall be subject to and shall abide by each of the Company’s
personnel policies applicable and communicated in writing to senior executives.

 

3. Annual Compensation.

 

  (a)

Base Salary. The Company agrees to pay or cause to be paid to Executive during
the Employment Term a base salary at the rate of $575,000 per annum or such
increased amount as the Board may from time to time determine (hereinafter
referred to as the “Base Salary”). Such Base Salary shall be payable in
accordance with the Company’s customary practices applicable to its executives.
Such Base Salary, upon a recommendation by the Chief Executive Officer, shall be
reviewed at least annually by the Board or by the Compensation Committee of the

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Board (the “Committee”), and may be increased in the sole discretion of the
Committee, but not decreased.

 

  (b) Incentive Compensation. For each fiscal year of the Company ending during
the Employment Term, beginning with the 2008 fiscal year, Executive shall be
eligible to receive a target annual cash bonus of 55% of the Base Salary (such
target bonus, as may hereafter be increased, the “Target Bonus”) with the
opportunity to receive a maximum annual cash bonus of 200% of the Base Salary,
as recommended in good faith by the Chief Executive Officer of the Company and
approved by the Committee in its sole discretion, if the Company and Executive
achieve certain performance targets set by the Committee. Such annual cash bonus
(“Incentive Compensation”) shall be paid in no event later than the 15th day of
the third month following the end of the taxable year (of the Company or
Executive, whichever is later) in which the performance targets have been
achieved.

 

  (c) Equity Compensation Plans. To the extent the Company determines to award
stock options, restricted stock units or other similar consideration to
management personnel based upon duration of employment or achievement of
performance targets, or both, Executive shall be permitted to participate in
such programs. For each Fiscal Year or part thereof during the Employment Term,
Executive shall be eligible to receive equity-based compensation in an amount
equal up to two hundred percent (200%) of the Base Salary for such Fiscal Year
(or such lesser (including zero) or greater percent of the Salary for such
Fiscal Year as is recommended in good faith to the Committee by the Chief
Executive Officer of the Company and approved by the Committee) All such
equity-based awards shall be subject to the terms and conditions set forth in
the applicable plan and agreements, and in all cases shall be as determined by
the Committee. Executive’s 2008 long-term equity incentive to be granted in 2009
will not be prorated based on Executive’s partial year of employment.

 

4. Sign-On Compensation and Benefits

 

  (a) Initial Stock Option Grant. Effective as of the Effective Date, the
Company shall grant Executive stock options to purchase 50,000 shares of Company
stock under the Company’s equity incentive plans, with an exercise price equal
to the closing market price on the Effective Date. Such initial grant of stock
options shall vest ratably over a four-year period, 25% on each anniversary of
the date of grant, provided Executive is employed on such dates by the Company.
All such stock options shall be subject to the terms and conditions set forth in
the applicable plan and applicable award agreement attached as Exhibit A hereto.

 

  (b)

Sign-On Bonus. On the first regular payroll period payment date following the
Effective Date, the Company shall pay Executive a one-time sign-on cash bonus of
$50,000. The Company will also provide a tax gross-up allowance to assist in
payment of federal and state income tax liabilities. All such sums must be
repaid

 

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to the Company in the event Executive voluntarily terminates his employment
within eighteen (18) months of the Effective Date.

 

  (c) Relocation Reimbursement. The Company will provide Executive with a
relocation allowance of up to $300,000 to cover documented and reasonable moving
expenses that are incurred within twelve (12) months of the Effective Date, in
connection with his relocation to the Chadds Ford, PA area. Executive shall also
be eligible for temporary living expense reimbursement, to be pre-approved by
Company, for up to twelve (12) months after the Effective Date. The Company will
also provide a tax gross-up allowance to assist in payment of federal and state
income tax liabilities. All such sums must be repaid to the Company in the event
Executive voluntarily terminates his employment within eighteen (18) months of
the Effective Date.

 

5. Other Benefits.

 

  (a) Employee Benefits. During the Employment Term, Executive shall be entitled
to participate in all employee benefit plans, practices and programs maintained
by the Company and made available to employees generally, including, without
limitation, all pension, retirement, profit sharing, savings, medical,
hospitalization, disability, dental, life or travel accident insurance benefit
plans, to the extent Executive is eligible under the terms of such plans.
Executive’s participation in such plans, practices and programs shall be on the
same basis and terms as are applicable to employees of the Company generally.

 

  (b) Executive Benefits. During the Employment Term, Executive shall be
entitled to participate in all executive benefit or incentive compensation plans
now maintained or hereafter established by the Company for the purpose of
providing compensation and/or benefits to comparable executive employees of the
Company including, but not limited to, the Company’s deferred compensation plans
and any supplemental retirement, deferred compensation, supplemental medical or
life insurance or other bonus or incentive compensation plans. Unless otherwise
provided herein, Executive’s participation in such plans shall be on the same
basis and terms, as other senior executives of the Company. No additional
compensation provided under any of such plans shall be deemed to modify or
otherwise affect the terms of this Agreement or any of Executive’s entitlements
hereunder.

 

  (c) Fringe Benefits and Perquisites. During the Employment Term, Executive
shall be entitled to all fringe benefits and perquisites generally made
available by the Company to its senior executives.

 

  (d)

Business Expenses. Upon submission of proper invoices in accordance with the
Company’s normal procedures, Executive shall be entitled to receive prompt
reimbursement of all reasonable out-of-pocket business, entertainment and travel
expenses incurred by Executive in connection with the performance of Executive’s
duties hereunder and incurred in accordance with the Company’s

 

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travel an entertainment policy in effect from time to time. Such reimbursement
shall be made in no event later than the end of the calendar year following the
calendar year in which the expenses were incurred.

 

  (e) Office and Facilities. During the Employment Term Executive shall be
provided with an appropriate office at the Company’s headquarters, with such
secretarial and other support facilities as are commensurate with Executive’s
status with the Company, which facilities shall be adequate for the performance
of Executive’s duties hereunder.

 

  (f) Motor Vehicle Allowance. As of the Effective Date, Executive will be
entitled to use of an automobile, and a replacement thereof, mutually acceptable
to Executive and the Company, at least every three (3) fiscal years after the
Effective Date during the Employment Term. The Company will reimburse Executive
for all operating expenses relating thereto upon Executive’s submission of
appropriate documentation as set forth in Section 5(a). The Company will
determine the actual value, if any, of Executive’s non-business use of such
automobile and will furnish Executive with a W-2 Wage and Tax Statement, grossed
up for taxes, to be included in Executive’s income tax returns, in accordance
with prevailing Internal Revenue Service regulations.

 

  (g) Vacation and Sick Leave. Executive shall be entitled, without loss of pay,
to absent himself voluntarily from the performance of Executive’s employment
under this Agreement, pursuant to the following:

 

  (i) Executive shall be entitled to annual vacation in accordance with the
vacation policies of the Company as in effect from time to time, which shall in
no event be less than four weeks per year; vacation must be taken at such time
or times as approved by the Board; and

 

  (ii) Executive shall be entitled to sick leave (without loss of pay) in
accordance with the Company’s policies as in effect from time to time.

 

6. Termination. The Employment Term and Executive’s employment hereunder may be
terminated under the circumstances set forth below; provided, however, that
notwithstanding anything contained herein to the contrary, Executive shall not
be considered to have terminated employment with the Company for purposes of
this Agreement unless Executive would be considered to have incurred a
“separation from service” from the Company within the meaning of Section 409A of
the Internal Revenue Code of 1986, as amended (the “Code”).

 

  (a)

Disability. The Company may terminate Executive’s employment, on written notice
to Executive after having reasonably established Executive’s Disability. For
purposes of this Agreement, Executive will be deemed to have a “Disability” if,
as a result of any medically determinable physical or mental impairment that can
be expected to result in death or can be expected to last for a continuous
period of not less than twelve (12) months, Executive is unable to perform the

 

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core functions of Executive’s position (with or without reasonable
accommodation) or is receiving income replacement benefits for a period of three
months or more under an accident and health plan covering employees of the
Company. Executive shall be entitled to the compensation and benefits provided
for under this Agreement for any period prior to Executive’s termination by
reason of Disability during which Executive is unable to work due to a physical
or mental infirmity in accordance with the Company’s policies for
similarly-situated executives.

 

  (b) Death. Executive’s employment shall be terminated as of the date of
Executive’s death.

 

  (c) Cause. The Company may terminate Executive’s employment for “Cause,”
effective as of the date of the Notice of Termination (as defined in Section 7
below). “Cause” shall mean, for purposes of this Agreement: (a) the continued
failure by Executive substantially to perform Executive’s duties under this
Agreement (other than any such failure resulting from Disability), (b) the
criminal felony indictment of Executive by a court of competent jurisdiction,
(c) the engagement by Executive in misconduct that has caused, or in the good
faith judgment of the Chief Executive Officer may cause if not discontinued,
harm (financial or otherwise) to the Company or any of its subsidiaries, if any,
such harm to include, without limitation, (i) the disclosure of material secret
or Confidential Information (as defined in Section 11(d)) of the Company or any
of its subsidiaries, if any, (ii) the debarment of the Company or any of its
subsidiaries, if any, by the U.S. Food and Drug Administration or any successor
agency (the “FDA”), or (iii) the registration of the Company or any of its
subsidiaries, if any, with the U.S. Drug Enforcement Administration of any
successor agency (the “DEA”) to be revoked, (d) the debarment of Executive by
the FDA, or (e) the continued material breach by Executive of this Agreement
after written demand is delivered to Executive which specifically identifies the
breach and Executive’s failure to cure within five (5) days of such demand.
Reference in this paragraph to the Company shall also include direct and
indirect subsidiaries of the Company.

 

  (d) Without Cause. The Company may terminate Executive’s employment without
Cause. The Company shall deliver to Executive a Notice of Termination (as
defined in Section 7 below) not less than thirty (30) days prior to the
termination of Executive’s employment without Cause and the Company shall have
the option of terminating Executive’s duties and responsibilities prior to the
expiration of such thirty-day notice period.

 

  (e)

Good Reason. Executive may terminate employment with the Company for Good Reason
(as defined below) by delivering to the Company a Notice of Termination (as
defined in Section 7 below) not less than thirty (30) days prior to the
termination of Executive’s employment for Good Reason. The Company shall have
the option of terminating Executive’s duties and responsibilities prior to the
expiration of such thirty-day notice period. For purposes of this Agreement,

 

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“Good Reason” means any of the following: (a) a material diminution in
Executive’s salary or benefits; (b) the assignment of Executive without
Executive’s consent to a position, responsibilities, or duties of a materially
lesser status or degree of responsibility than Executive’s position,
responsibilities, or duties immediately following the Effective Date; or (c) the
Company requiring Executive to be based at any office or location more than
fifty (50) miles from Executive’s current principal business location (except
for any such change in location which is not materially adverse to Executive).
Executive shall provide notice of the existence of the Good Reason condition
within ninety (90) days of the date Executive learns of the condition, and the
Company shall have a period of thirty (30) days during which it may remedy the
condition, and in case of full remedy such condition shall not be deemed to
constitute Good Reason hereunder.

 

  (f) Without Good Reason. Executive may voluntarily terminate Executive’s
employment without Good Reason by delivering to the Company a Notice of
Termination not less than thirty (30) days prior to the termination of
Executive’s employment and the Company shall have the option of terminating
Executive’s duties and responsibilities prior to the expiration of such
thirty-day notice period.

 

7. Notice of Termination. Any purported termination by the Company or by
Executive shall be communicated by written Notice of Termination to the other
party hereto. For purposes of this Agreement, a “Notice of Termination” shall
mean a notice that indicates a termination date, the specific termination
provision in this Agreement relied upon and sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of
Executive’s employment under the provision so indicated. For purposes of this
Agreement, no such purported termination of Executive’s employment hereunder
shall be effective without such Notice of Termination (unless waived by the
party entitled to receive such notice).

 

8. Compensation Upon Termination. Upon termination of Executive’s employment
during the Employment Term, Executive shall be entitled to the following
benefits:

 

  (a) Termination by the Company for Cause or by Executive Without Good Reason.
If Executive’s employment is terminated by the Company for Cause or by Executive
without Good Reason, the Company shall pay Executive all amounts earned or
accrued hereunder through the termination date, including:

 

  (i) any accrued and unpaid Base Salary;

 

  (ii) any Incentive Compensation earned but unpaid in respect of any completed
fiscal year preceding the termination date;

 

  (iii) reimbursement for any and all monies advanced or expenses incurred in
connection with Executive’s employment for reasonable and necessary expenses
incurred by Executive on behalf of the Company for the period ending on the
termination date;

 

  (iv) any accrued and unpaid vacation pay;

 

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  (v) any previous compensation that Executive has previously deferred
(including any interest earned or credited thereon), in accordance with the
terms and conditions of the applicable deferred compensation plans or
arrangements then in effect, to the extent vested as of Executive’s termination
date; and

 

  (vi) any amount or benefit as provided under any benefit plan or program in
accordance with the terms thereof;

(the foregoing items in Sections 8(a)(i) through 8(a)(vi) being collectively
referred to as the “Accrued Compensation”).

 

  (b) Termination by the Company for Disability. If Executive’s employment is
terminated by the Company for Disability, the Company shall pay Executive:

 

  (i) the Accrued Compensation; and

 

  (ii) an amount equal to the Incentive Compensation that Executive would have
been entitled to receive in respect of the fiscal year in which Executive’s
termination date occurs, had Executive continued in employment until the end of
such fiscal year, which amount, determined based on the Company’s actual
performance for such year relative to the performance goals applicable to
Executive, shall be multiplied by a fraction (A) the numerator of which is the
number of days in such fiscal year through termination date and (B) the
denominator of which is 365 (the “Pro-Rata Bonus”) and shall be payable in a
lump sum payment at the time such bonus or incentive awards are payable to other
participants.

Further, upon Executive’s Disability (irrespective of any termination of
employment related thereto), the Company shall pay Executive for twenty-four
(24) consecutive months thereafter regular payments in the amount by which the
monthly Base Salary exceeds Executive’s monthly Disability insurance benefit.

 

  (c) Termination By Reason of Death. If Executive’s employment is terminated by
reason of Executive’s death, the Company shall pay Executive’s beneficiaries

 

  (i) the Accrued Compensation, and

 

  (ii) the Pro-Rata Bonus.

 

  (d) Termination by the Company Without Cause or by Executive for Good Reason
Other Than in Connection with a Change of Control. If Executive’s employment by
the Company shall be terminated by the Company without Cause or by Executive for
Good Reason, either prior to a Change of Control or more than twenty-four
(24) months following a Change of Control, then, subject to Section 15(f) of the
Agreement, Executive shall be entitled to the benefits provided in this
Section 8(d):

 

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  (i) the Company shall pay to Executive the Accrued Compensation;

 

  (ii) the Company shall pay to Executive the Pro-Rata Bonus;

 

  (iii) the Company shall pay to Executive as severance pay and in lieu of any
further Base Salary or other compensation and benefits for periods subsequent to
the termination date, an amount in cash, which amount shall be payable in a lump
sum payment within sixty (60) days following such termination (subject to
Section 10), equal to two (2) times the sum of (A) Executive’s Base Salary and
(B) the Target Bonus; and

 

  (iv) the Company shall provide Executive with continued coverage under any
health, medical, dental, vision or life insurance program or policy in which
Executive was eligible to participate as of the time of Executive’s employment
termination for two (2) years following such termination on terms no less
favorable to Executive and Executive’s dependents (including with respect to
payment for the costs thereof) than those in effect immediately prior to such
termination, which coverage shall become secondary to any coverage provided to
Executive by a subsequent employer and to any Medicare coverage for which
Executive becomes eligible.

 

  (e) Termination by the Company Without Cause or by Executive for Good Reason
Following a Change of Control. If Executive’s employment by the Company shall be
terminated by the Company without Cause or by Executive for Good Reason within
twenty-four (24) months following a Change of Control, then in lieu of the
amounts due under Section 8(d) above and subject to the requirements of
Section 15(f) of the Agreement, Executive shall be entitled to the benefits
provided in this Section 8(e):

 

  (i) the Company shall pay Executive any Accrued Compensation;

 

  (ii) the Company shall pay Executive any Pro-Rata Bonus;

 

  (iii) the Company shall pay Executive as severance pay and in lieu of any
further Base Salary or other compensation and benefits for periods subsequent to
the termination date, an amount in cash, which amount shall be payable in a lump
sum payment within sixty (60) days following such termination (subject to
Section 10), equal to two (2) times the sum of (A) Executive’s Base Salary and
(B) the Target Bonus; and

 

  (iv)

the Company shall provide Executive with continued coverage under any health,
medical, dental, vision or life insurance program or policy in which Executive
was eligible to participate as of the time of Executive’s employment termination
for two (2) years following such termination on terms no less favorable to
Executive and Executive’s dependents (including with respect to payment for the
costs thereof) than those in effect immediately prior to such termination, which
coverage shall become

 

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secondary to any coverage provided to Executive by a subsequent employer.

 

  (f) No Mitigation. Executive shall not be required to mitigate the amount of
any payment provided for under this Section 8 by seeking other employment or
otherwise and, except as provided in Section 8(d)(iv) above, no such payment
shall be offset or reduced by the amount of any compensation or benefits
provided to Executive in any subsequent employment.

 

  (g) Excise Tax Gross-up. Whether or not Executive becomes entitled to the
severance payments, if any of the payments or benefits received or to be
received by Executive (including any payment or benefits received in connection
with a Change of Control or Executive’s termination of employment, whether
pursuant to the terms of this Agreement or any other plan, arrangement or
agreement) (all such payments and benefits, excluding the Gross-Up Payment,
being hereinafter referred to as the “Total Payments”) will be subject to the
Excise Tax, the Company shall pay to Executive an additional amount (the
“Gross-Up Payment”) such that the net amount retained by Executive, after
deduction of any Excise Tax on the Total Payments and any federal, state and
local income and employment taxes and Excise Tax upon the Gross-Up Payment, and
after taking into account the phase out of itemized deductions and personal
exemptions attributable to the Gross-Up Payment, shall be equal to the Total
Payments. Any Gross-Up Payments shall be made as soon as practicable but in no
event later than the end of calendar year following the calendar year in which
the Excise Tax is paid.

 

9. Change of Control.

 

  (a) “Change of Control” means and shall be deemed to have occurred upon the
first of the following events to occur:

 

  (i) Any “Person” (as defined in Section 9(b) below) is or becomes the
“beneficial owner” (“Beneficial Owner”) within the meaning set forth in Rule
13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), directly or indirectly, of securities of the Company (not including in
the securities beneficially owned by such Person any securities acquired
directly from the Company or its “Affiliates” (as defined in Rule 12b-2
promulgated under Section 12 of the Exchange Act)) representing 30% or more of
the combined voting power of the Company’s then outstanding securities,
excluding any Person who becomes such a Beneficial Owner in connection with a
transaction described in clause (A) of paragraph (iii) below; or

 

  (ii)

The following individuals cease for any reason to constitute a majority of the
number of directors then serving: individuals who, on the date hereof,
constitute the Board and any new director (other than a director whose initial
assumption of office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation,

 

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relating to the election of directors of the Company) whose appointment or
election by the Board or nomination for election by the Company’s stockholders
was approved or recommended by a vote of at least two-thirds ( 2/3) of the
directors then still in office who either were directors on the date hereof or
whose appointment, election or nomination for election was previously so
approved or recommended; or

 

  (iii) There is consummated a merger or consolidation of the Company or any
direct or indirect subsidiary of the Company with any other corporation or other
entity, other than (A) a merger or consolidation which results in (i) the voting
securities of the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or any parent
thereof), in combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any
subsidiary of the Company, at least 60% of the combined voting power of the
securities of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation and (ii) the
individuals who comprise the Board immediately prior thereto constituting
immediately thereafter at least a majority of the board of directors of the
Company, the entity surviving such merger or consolidation or, if the Company or
the entity surviving such merger is then a subsidiary, the ultimate parent
thereof, or (B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no Person is
or becomes the Beneficial Owner, directly or indirectly, of securities of the
Company (not including in the securities Beneficially Owned by such Person any
securities acquired directly from the Company or its Affiliates) representing
30% or more of the combined voting power of the Company’s then outstanding
securities; or

 

  (iv)

The stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company or there is consummated an agreement for the sale or
disposition by the Company of all or substantially all of the Company’s assets
(it being conclusively presumed that any sale or disposition is a sale or
disposition by the Company of all or substantially all of its assets if the
consummation of the sale or disposition is contingent upon approval by the
Company’s stockholders unless the Board expressly determines in writing that
such approval is required solely by reason of any relationship between the
Company and any other Person or an Affiliate of the Company and any other
Person), other than a sale or disposition by the Company of all or substantially
all of the Company’s assets to an entity (A) at least 60% of the combined voting
power of the voting securities of which are owned by stockholders of the Company
in substantially the same proportions as their ownership of the Company
immediately prior to such sale or disposition and (B) the majority of whose
board of directors immediately following such sale or

 

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disposition consists of individuals who comprise the Board immediately prior
thereto.

 

  (b) For purposes of this Section 9, “Person” shall have the meaning given in
Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and
15(d) thereof, except that such term shall not include (i) the Company or any of
its subsidiaries, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its Affiliates, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company.

 

  (c) Notwithstanding the foregoing, a “Change of Control” shall not be deemed
to have occurred by virtue of the consummation of any transaction or series of
integrated transactions immediately following which the record holders of the
common stock of the Company immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate ownership in
an entity which owns all or substantially all of the assets of the Company
immediately following such transaction or series of transactions.

 

10. Section 409A. If any payments or benefits due to Executive hereunder would
cause the application of an accelerated or additional tax under Section 409A of
the Code (“Section 409A”), such payments or benefits shall be restructured in a
manner which does not cause such an accelerated or additional tax. Without
limiting the foregoing and notwithstanding anything contained herein to the
contrary, to the extent required in order to avoid accelerated taxation and/or
tax penalties under Section 409A, amounts that would otherwise be payable and
benefits that would otherwise be provided pursuant to this Agreement during the
six-month period immediately following Executive’s separation from service shall
instead be paid on the first business day after the date that is six months
following Executive’s termination date (or death, if earlier), with interest
from the date such amounts would otherwise have been paid at the short-term
applicable federal rate, compounded semi-annually, as determined under
Section 1274 of the Code for the month in which .payment would have been made
but for the delay in payment required to avoid the imposition of an additional
rate of tax on Executive under Section 409A.

 

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11. Records and Confidential Data.

 

  (a) Executive acknowledges that in connection with the performance of
Executive’s duties during the Employment Term, the Company will make available
to Executive, or Executive will develop and have access to, certain Confidential
Information (as defined below) of the Company and its subsidiaries. Executive
acknowledges and agrees that any and all Confidential Information learned or
obtained by Executive during the course of Executive’s employment by the Company
or otherwise, whether developed by Executive alone or in conjunction with others
or otherwise, shall be and is the property of the Company and its subsidiaries.

 

  (b) Except to the extent required to be disclosed at law or pursuant to
judicial process or administrative subpoena, the Confidential Information will
be kept confidential by Executive, will not be used in any manner that is
detrimental to the Company, will not be used other than in connection with
Executive’s discharge of Executive’s duties hereunder, and will be safeguarded
by Executive from unauthorized disclosure.

 

  (c) Following the termination of Executive’s employment hereunder, as soon as
possible after the Company’s written request, Executive will return to the
Company all written Confidential Information that has been provided to Executive
and Executive will destroy all copies of any analyses, compilations, studies or
other documents prepared by Executive or for Executive’s use containing or
reflecting any Confidential Information. Within five (5) business days of the
receipt of such request by Executive, Executive shall, upon written request of
the Company, deliver to the Company a document certifying that such written
Confidential Information has been returned or destroyed in accordance with this
Section 11(c).

 

  (d) For the purposes of this Agreement, “Confidential Information” shall mean
all confidential and proprietary information of the Company and its
subsidiaries, including, without limitation,

 

  (i) trade secrets concerning the business and affairs of the Company and its
subsidiaries, product specifications, data, know-how, formulae, compositions,
processes, non-public patent applications, designs, sketches, photographs,
graphs, drawings, samples, inventions and ideas, past, current, and planned
research and development, current and planned manufacturing or distribution
methods and processes, customer lists, current and anticipated customer
requirements, price lists, market studies, business plans, computer software and
programs (including object code and source code), computer software and database
technologies, systems, structures, and architectures (and related formulae,
compositions, processes, improvements, devices, know-how, inventions,
discoveries, concepts, ideas, designs, methods and information);

 

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  (ii) information concerning the business and affairs of the Company and its
subsidiaries (which includes unpublished financial statements, financial
projections and budgets, unpublished and projected sales, capital spending
budgets and plans, the names and backgrounds of key personnel, to the extent not
publicly known, personnel training and techniques and materials) however
documented; and

 

  (iii) notes, analysis, compilations, studies, summaries, and other material
prepared by or for the Company or its subsidiaries containing or based, in whole
or in part, on any information included in the foregoing. For purposes of this
Agreement, the Confidential Information shall not include and Executive’s
obligation’s shall not extend to (i) information that is generally available to
the public, (ii) information obtained by Executive other than pursuant to or in
connection with this employment and (iii) information that is required to be
disclosed by law or legal process.

 

  (e) Executive’s obligations under this Section 11 shall survive the
termination of the Employment Term.

 

12. Covenant Not to Solicit, Not to Compete, Not to Disparage and to Cooperate
in Litigation.

 

  (a) Covenant Not to Solicit. To protect the Confidential Information and other
trade secrets of the Company as well as the goodwill and competitive business of
the Company, Executive agrees, during the Employment Term and for a period of
twenty-four (24) months after Executive’s cessation of employment with the
Company, not to solicit or participate in or assist in any way in the
solicitation of any employees of the Company. For purposes of this covenant,
“solicit” or “solicitation” means directly or indirectly influencing or
attempting to influence employees of the Company to cease employment with the
Company or to become employed with any other person, partnership, firm,
corporation or other entity. Executive agrees that the covenants contained in
this Section 12(a) are reasonable and desirable to protect the Confidential
Information of the Company, provided, that solicitation through general
advertising not targeted at the Company’s employees or the provision of
references shall not constitute a breach of such obligations.

 

  (b) Covenant Not to Compete.

 

  (i)

To protect the Confidential Information and other trade secrets of the Company
as well as the goodwill and competitive business of the Company, Executive
agrees, during the Employment Term and for a period of twenty-four (24) months
after Executive’s cessation of employment with the Company, that Executive will
not, except in the course of Executive’s employment hereunder, directly or
indirectly manage, operate, control, or participate in the management,
operation, or control of, be employed by, associated with, or in any manner
connected with, lend Executive’s name to, or render services or advice to, any
third

 

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party or any business whose products compete (including as described below) in
whole or in part with the products (both on market and in development) of the
Company (disregarding any non-pain management products that were not products
promoted by the Company during the last three years).

 

  (ii) For purposes of this Section 12(b), any third party or any business whose
products compete includes any entity with which the Company has had a product(s)
licensing agreement during the Employment Term and any entity with which the
Company is at the time of termination actively negotiating, and eventually
concludes within twelve (12) months of the Employment Term, a commercial
agreement.

 

  (c) Nondisparagement. Executive covenants that during and following the
Employment Term, Executive will not disparage or encourage or induce others to
disparage the Company or its subsidiaries, together with all of their respective
past and present directors and officers, as well as their respective past and
present managers, officers, shareholders, partners, employees, agents,
attorneys, servants and customers and each of their predecessors, successors and
assigns (collectively, the “Company Entities and Persons”); provided that such
limitation shall extend to past and present managers, officers, shareholders,
partners, employees, agents, attorneys, servants and customers only in their
capacities as such or in respect of their relationship with the Company and its
subsidiaries. The Company agrees that, during and following the Employment Term,
neither the Company nor any director or officer, will make any statement that
disparages Executive or encourages or induces others to disparage Executive. The
term “disparage” includes, without limitation, comments or statements adversely
affecting in any manner (i) the conduct of the business of the Company Entities
and Persons or Executive, or (ii) the business reputation of the Company
Entities and Persons or Executive. Nothing in this Agreement is intended to or
shall prevent either party from providing, or limiting testimony in response to
a valid subpoena, court order, regulatory request or other judicial,
administrative or legal process or otherwise as required by law.

 

  (d)

Cooperation in Any Investigations and Litigation. Executive agrees that
Executive will reasonably cooperate with the Company, and its counsel, in
connection with any investigation, inquiry, administrative proceeding or
litigation relating to any matter in which Executive becomes involved or of
which Executive has knowledge as a result of Executive’s service with the
Company by providing truthful information. The Company agrees to promptly
reimburse Executive for reasonable expenses reasonably incurred by Executive, in
connection with Executive’s cooperation pursuant to this Section 12(d). Such
reimbursements shall be made as soon as practicable, and in no event later than
the calendar year following the year in which the expenses are incurred.
Executive agrees that, in the event Executive is subpoenaed by any person or
entity (including, but not limited to, any government agency) to give testimony
(in a deposition, court proceeding or otherwise) which in any way relates to

 

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Executive’s employment by the Company, Executive will, to the extent not legally
prohibited from doing so, give prompt notice of such request to the Chief Legal
Officer of the Company so that the Company may contest the right of the
requesting person or entity to such disclosure before making such disclosure.
Nothing in this provision shall require Executive to violate Executive’s
obligation to comply with valid legal process.

 

  (e) Blue Pencil. It is the intent and desire of Executive and the Company that
the provisions of this Section 12 be enforced to the fullest extent permissible
under the laws and public policies as applied in each jurisdiction in which
enforcement is sought. If any particular provision of this Section 12 shall be
determined to be invalid or unenforceable, such covenant shall be amended,
without any action on the part of either party hereto, to delete therefrom the
portion so determined to be invalid or unenforceable, such deletion to apply
only with respect to the operation of such covenant in the particular
jurisdiction in which such adjudication is made.

 

  (f) Survive. Executive’s obligations under this Section 12 shall survive the
termination of the Employment Term.

 

13. Remedies for Breach of Obligations under Sections 11 or 12 hereof. Executive
acknowledges that the Company will suffer irreparable injury, not readily
susceptible of valuation in monetary damages, if Executive breaches Executive’s
obligations under Sections 11 or 12 hereof. Accordingly, Executive agrees that
the Company will be entitled, in addition to any other available remedies, to
obtain injunctive relief against any breach or prospective breach by Executive
of Executive’s obligations under Sections 11 or 12 hereof in any Federal or
state court sitting in the State of Delaware, or, at the Company’s election, in
any other state in which Executive maintains Executive’s principal residence or
Executive’s principal place of business. Executive hereby submits to the
non-exclusive jurisdiction of all those courts for the purposes of any actions
or proceedings instituted by the Company to obtain that injunctive relief, and
Executive agrees that process in any or all of those actions or proceedings may
be served by registered mail, addressed to the last address provided by
Executive to the Company, or in any other manner authorized by law.

 

14. Representations and Warranties by Executive. Executive represents and
warrants to the Company that the execution and delivery by Executive of this
Agreement do not, and the performance by Executive of Executive’s obligations
hereunder will not, with or without the giving of notice or the passage of time,
or both: (a) violate any judgment, writ, injunction, or order of any court,
arbitrator, or governmental agency applicable to Executive; or (b) conflict
with, result in the breach of any provisions of or the termination of, or
constitute a default under, any agreement to which Executive is a party or by
which Executive is or may be bound.

 

15. Miscellaneous.

 

  (a) Successors and Assigns.

 

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  (i) This Agreement shall be binding upon and shall inure to the benefit of the
Company, its successors and permitted assigns and the Company shall require any
successor or assign to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform if no such succession or assignment had taken place. The Company may not
assign or delegate any rights or obligations hereunder except to a successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company. The term
“the Company” as used herein shall include a corporation or other entity
acquiring all or substantially all the assets and business of the Company
(including this Agreement) whether by operation of law or otherwise.

 

  (ii) Neither this Agreement nor any right or interest hereunder shall be
assignable or transferable by Executive, Executive’s beneficiaries or legal
representatives, except by will or by the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by Executive’s legal
personal representatives.

 

  (b) Right to Counsel. Executive acknowledges that Executive has had the
opportunity to consult with legal counsel of Executive’s choice in connection
with the drafting, negotiation and execution of this Agreement and related
employment arrangements.

 

  (c) Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by Certified mail, return receipt requested,
postage prepaid, addressed to the respective addresses last given by each party
to the other, provided that all notices to the Company shall be directed to the
attention of the Chief Legal Officer of the Company with a copy to the Chief
Executive Officer. All notices and communications shall be deemed to have been
received on the date of delivery thereof or on the third business day after the
mailing thereof, except that notice of change of address shall be effective only
upon receipt.

 

  (d) Indemnification. Executive shall be indemnified by the Company as provided
in Company’s by-laws and Certificate of Incorporation. The obligations under
this paragraph shall survive any termination of the Employment Term.

 

  (e) Withholding. The Company shall be entitled to withhold the amount, if any,
of all taxes of any applicable jurisdiction required to be withheld by an
employer with respect to any amount paid to Executive hereunder. The Company, in
its sole and absolute discretion, shall make all determinations as to whether it
is obligated to withhold any taxes hereunder and the amount hereof.

 

  (f)

Release of Claims. The termination benefits described in Sections 8(d) and 8(e)
of this Agreement shall be conditioned on Executive delivering to the Company, a

 

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signed release of claims in the form of Exhibit B hereto within forty-five
(45) days or twenty-one (21) days, as may be applicable under the Age
Discrimination in Employment Act of 1967, as amended by the Older Workers
Benefit Protection Act, following Executive’s termination date, and not revoking
Executive’s consent to such release of claims within seven (7) days of such
execution; provided, however, that Executive shall not be required to release
any rights Executive may have to be indemnified by the Company under
Section 15(d) of this Agreement.

 

  (g) Modification. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by Executive and the Company. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreement or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not expressly set forth in this
Agreement.

 

  (h) Effect of Other Law. Anything herein to the contrary notwithstanding, the
terms of this Agreement shall be modified to the extent required to meet the
provisions of the Sarbanes-Oxley Act of 2002, Section 409A, or other federal law
applicable to the employment arrangements between Executive and the Company. Any
delay in providing benefits or payments, any failure to provide a benefit or
payment, or any repayment of compensation that is required under the preceding
sentence shall not in and of itself constitute a breach of this Agreement,
provided, however, that the Company shall provide economically equivalent
payments or benefits to Executive to the extent permitted by law.

 

  (i) Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware applicable to
contracts executed in and to be performed entirely within such State, without
giving effect to the conflict of law principles thereof.

 

  (j) No Conflicts. Executive represents and warrants to the Company that
Executive is not a party to or otherwise bound by any agreement or arrangement
(including, without limitation, any license, covenant, or commitment of any
nature), or subject to any judgment, decree, or order of any court or
administrative agency, that would conflict with or will be in conflict with or
in any way preclude, limit or inhibit Executive’s ability to execute this
Agreement or to carry out Executive’s duties and responsibilities hereunder.

 

  (k) Severability. The provisions of this Agreement shall be deemed severable
and the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof.

 

17

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  (l) Entire Agreement. This Agreement constitutes the entire agreement between
the parties hereto and supersedes all prior agreements, if any, understandings
and arrangements, oral or written, between the parties hereto with respect to
the subject matter hereof.

 

  (m) Counterparts. This Agreement may be executed in one or more counterparts,
each of which will be deemed to be an original copy of this Agreement and all of
which, when taken together, will be deemed to constitute one and the same
agreement.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
duly authorized officer and Executive has executed this Agreement as of the day
and year first above written.

 

ENDO PHARMACEUTICALS HOLDINGS INC. By:  

/s/ DAVID P. HOLVECK

Name:   David P. Holveck Title:   President and CEO By:  

/s/ IVAN GERGEL

Name:   Ivan Gergel

 

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EXHIBIT A

[Form of Initial Option Agreement]

Grant No.

ENDO PHARMACEUTICALS HOLDINGS INC.

2007 STOCK INCENTIVE PLAN

STOCK OPTION AGREEMENT

This Stock Option Agreement (the “Option Agreement”) is made and entered into as
of the date of grant set forth below (the “Date of Grant”) by and between Endo
Pharmaceutical Holdings Inc., a Delaware corporation (the “Company”), and the
optionee named below (the “Optionee”). Capitalized terms not defined herein
shall have the meaning ascribed to them in the Company’s 2007 Stock Incentive
Plan (the “Plan”).

 

Name of Optionee:    Ivan Gergel Social Security No.:    Address:    100 Endo
Boulevard    Chadds Ford, PA 19317 Shares Subject to Option:    50,000 Exercise
Price Per Share:    $ [closing price on first date of employment] Date of Grant:
   April     , 2008 Expiration Date:    April     , 2018 Vesting Dates:    25%
of the Option Shares on first anniversary of Date of Grant    25% of the Option
Shares on second anniversary of Date of Grant    25% of the Option Shares on
third anniversary of Date of Grant    25% of the Option Shares on fourth
anniversary of Date of Grant Classification of Option    (Check one):   

¨        Incentive Stock Option

  

x       Non-Qualified Stock Option

1. Number of Shares. The Company hereby grants to the Grantee an option (the
“Option”) to purchase the total number of shares of Company Stock set forth
above as Shares Subject to Option (the “Option Shares”) at the Exercise Price
Per Share set forth above

 

1

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(the “Exercise Price”), subject to all of the terms and conditions of this
Option Agreement and the Plan.

2. Incorporation of Plan. The Plan is hereby incorporated by reference and made
a part hereof, and the Option and this Option Agreement shall be subject to all
terms and conditions of the Plan.

3. Option Term. The term of the Option and of this Option Agreement (the “Option
Term”) shall commence on the Date of Grant set forth above and, unless
previously terminated pursuant to Section 7 of the Plan or Paragraph 4 of this
Option Agreement, shall terminate upon the Expiration Date set forth above. As
of the Expiration Date, all rights of the Optionee hereunder shall terminate.

4. Vesting. Except as provided in Section 7 of the Plan, the Option shall become
exercisable with respect to the number of Option Shares specified on the
Exercisability Dates set forth above. Once exercisable, the Option shall
continue to be exercisable at any time or times prior to the Expiration Date,
subject to the provisions hereof and of the Plan.

5. Authority of the Committee. The Committee shall have full authority to
interpret and construe the terms of the Plan and this Option Agreement. The
determination of the Committee as to any such matter of interpretation or
construction shall be final, binding and conclusive.

6. Notices. All notices and other communications under this Agreement shall be
in writing and shall be given by first class mail, certified or registered with
return receipt requested, and shall be deemed to have been duly given three days
after mailing to the respective parties named below:

 

If to Company:    Endo Pharmaceuticals Holdings Inc.    100 Endo Boulevard   
Chadds Ford, PA 19317    Attention: Treasurer If to the Optionee:    At the
address noted above.

Either party hereto may change such party’s address for notices by notice duly
given pursuant hereto.

7. Amendments. This Option Agreement may be amended or modified at any time only
by an instrument in writing signed by each of the parties hereto.

8. Governing Law. This Option Agreement shall be governed by and construed
according to the laws of the State of Delaware without regard to its principles
of conflict of laws.

 

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9. Acceptance. The Optionee hereby acknowledges receipt of a copy of the Plan
and this Option Agreement. The Optionee has read and understand the terms and
provision thereof, and accepts the Option subject to all the terms and
conditions of the Plan and this Agreement.

IN WITNESS WHEREOF, the parties hereto have executed and delivered this Option
Agreement on the day and year first above written.

 

ENDO PHARMACEUTICALS HOLDINGS INC.

By

 

 

Name:

 

Title:

 

 

 

Ivan Gergel, Optionee

 

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EXHIBIT B

FORM OF RELEASE AGREEMENT

THIS RELEASE AGREEMENT (the “Release”) is made as of this      day of
                    ,         , by and between Ivan Gergel (“Executive”) and
Endo Pharmaceuticals Holdings Inc. (the “Company”).

 

1.

FOR AND IN CONSIDERATION of the payments and benefits provided in the Employment
Agreement between Executive and the Company dated as of April 1, 2008, (the
“Employment Agreement”), Executive, for himself or herself, his or her
successors and assigns, executors and administrators, now and forever hereby
releases and discharges the Company, together with all of its past and present
parents, subsidiaries, and affiliates, together with each of their officers,
directors, stockholders, partners, employees, agents, representatives and
attorneys, and each of their subsidiaries, affiliates, estates, predecessors,
successors, and assigns (hereinafter collectively referred to as the
“Releasees”) from any and all rights, claims, charges, actions, causes of
action, complaints, sums of money, suits, debts, covenants, contracts,
agreements, promises, obligations, damages, demands or liabilities of every kind
whatsoever, in law or in equity, whether known or unknown, suspected or
unsuspected, which Executive or Executive’s executors, administrators,
successors or assigns ever had, now has or may hereafter claim to have by reason
of any matter, cause or thing whatsoever; arising from the beginning of time up
to the date of the Release: (i) relating in any way to Executive’s employment
relationship with the Company or any of the Releasees, or the termination of
Executive’s employment relationship with the Company or any of the Releasees;
(ii) arising under or relating to the Employment Agreement; (iii) arising under
any federal, local or state statute or regulation, including, without
limitation, the Age Discrimination in Employment Act of 1967, as amended by the
Older Workers Benefit Protection Act, Title VII of the Civil Rights Act of 1964,
the Americans with Disabilities Act of 1990, the Employee Retirement Income
Security Act of 1974, and/or the applicable state law against discrimination,
each as amended; (iv) relating to wrongful employment termination or breach of
contract; or (v) arising under or relating to any policy, agreement,
understanding or promise, written or oral, formal or informal, between the
Company and any of the Releasees and Executive; provided, however, that
notwithstanding the foregoing, nothing contained in the Release shall in any way
diminish or impair: (a) any rights Executive may have, from and after the date
the Release is executed, under Sections 8(d) or 8(e) or 12(c) or 12(d) of the
Employment Agreement; (b) any rights to indemnification that may exist from time
to time under the Company’s certificate of incorporation or bylaws, or state
law; (c) any rights Executive may have to vested benefits under employee benefit
plans or incentive compensation plans of the Company; (d) Executive’s ability to
bring appropriate proceedings to enforce the Release; or (e) any rights or
claims Executive may have that cannot be waived under applicable law
(collectively, the “Excluded Claims”). Executive further acknowledges and agrees
that, except with respect to Excluded Claims, the Company and the Releasees have
fully satisfied any and all obligations whatsoever owed to Executive arising out
of Executive’s

 

1

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employment with the Company or any of the Releasees, and that no further
payments or benefits are owed to Executive by the Company or any of the
Releasees.

 

2. Executive understands and agrees that, except for the Excluded Claims,
Executive has knowingly relinquished, waived and forever released any and all
rights to any personal recovery in any action or proceeding that may be
commenced on Executive’s behalf arising out of the aforesaid employment
relationship or the termination thereof, including, without limitation, claims
for backpay, front pay, liquidated damages, compensatory damages, general
damages, special damages, punitive damages, exemplary damages, costs, expenses
and attorneys’ fees.

 

3. Executive acknowledges and agrees that Executive has been advised to consult
with an attorney of Executive’s choosing prior to signing the Release. Executive
understands and agrees that Executive has the right and has been given the
opportunity to review the Release with an attorney of Executive’s choice should
Executive so desire. Executive also agrees that Executive has entered into the
Release freely and voluntarily. Executive further acknowledges and agrees that
Executive has had at least [twenty-one (21)] [forty-five (45)] calendar days to
consider the Release, although Executive may sign it sooner if Executive wishes.
In addition, once Executive has signed the Release, Executive shall have seven
(7) additional days from the date of execution to revoke Executive’s consent and
may do so by writing to:                     . The Release shall not be
effective, and no payments shall be due hereunder, until the eighth (8th) day
after Executive shall have executed the Release and returned it to the Company,
assuming that Executive had not revoked Executive’s consent to the Release prior
to such date.

 

4. It is understood and agreed by Executive that the payment made to Executive
is not to be construed as an admission of any liability whatsoever on the part
of the Company or any of the other Releasees, by whom liability is expressly
denied.

 

5. The Release is executed by Executive voluntarily and is not based upon any
representations or statements of any kind made by the Company or any of the
other Releasees as to the merits, legal liabilities or value of Executive’s
claims. Executive further acknowledges that Executive has had a full and
reasonable opportunity to consider the Release and that Executive has not been
pressured or in any way coerced into executing the Release.

 

6. The exclusive venue for any disputes arising hereunder shall be the state or
federal courts located in the State of Delaware, and each of the parties hereto
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought in such a
court has been brought in an inconvenient forum. Each of the parties hereto also
agrees that any final and unappealable judgment against a party hereto in
connection with any action, suit or other proceeding may be enforced in any
court of competent jurisdiction, either within or outside of the United States.
A certified or exemplified copy of such award or judgment shall be conclusive
evidence of the fact and amount of such award or judgment.

 

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7. The Release and the rights and obligations of the parties hereto shall be
governed and construed in accordance with the laws of the State of Delaware. If
any provision hereof is unenforceable or is held to be unenforceable, such
provision shall be fully severable, and this document and its terms shall be
construed and enforced as if such unenforceable provision had never comprised a
part hereof, the remaining provisions hereof shall remain in full force and
effect, and the court construing the provisions shall add as a part hereof a
provision as similar in terms and effect to such unenforceable provision as may
be enforceable, in lieu of the unenforceable provision.

 

8. The Release shall inure to the benefit of and be binding upon the Company and
its successors and assigns.

IN WITNESS WHEREOF, Executive and the Company have executed the Release as of
the date and year first written above.

 

 

    

 

ENDO PHARMACEUTICALS HOLDINGS INC      IVAN GERGEL

 

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