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                                                                   EXHIBIT 10.12



                       ANTI-EPILEPTIC LICENSE AGREEMENT
                       --------------------------------

          This Anti-epileptic License Agreement (the "Agreement") dated the
27th day of October, 1997 (the "Effective Date"), is entered into by and
among The DuPont Merck Pharmaceutical Company ("DuPont Merck"), a Delaware
general partnership, and Endo Laboratories, L.L.C. ("Endo"), a subsidiary of
DuPont Merck (Endo and DuPont Merck together are referred to herein as
"Licensor"), and Endo Pharmaceuticals Inc., a Delaware corporation ("Licensee").

                              W I T N E S S E T H:
                              - - - - - - - - - -

          WHEREAS, Licensor and Licensee are parties to that certain Asset
Purchase Agreement dated June 27, 1997, by and among DuPont Merck, DuPont Merck
Pharma, Endo, and Licensee (the "Asset Purchase Agreement"); and

          WHEREAS, in connection with the transactions contemplated by the Asset
Purchase Agreement, Licensor desires to grant to Licensee an exclusive,
worldwide license with respect to the Patent Rights (as defined below) and
Know-How (as defined below), and Licensee desires to receive such license;

          NOW THEREFORE, in consideration of the foregoing and of the covenants
herein contained, intending to be legally bound, Licensor and Licensee hereby
covenant and agree as follows:

1.   Definitions
     -----------

     1.1  "Confidential Information" means certain secret and proprietary
           ------------------------
     information and documents relating to the Patents and Know-How licensed
     hereunder or relating to or held by any of the parties hereto, and
     includes, without limitation, compounds, intermediates, designs, formulas
     and formulations, methods, processes, know-how, and all other confidential
     scientific, clinical, regulatory, marketing, financial and commercial
     information or data, marketing strategies, product plans, plans for
     research, development and experimental research, test and safety data,
     supplier lists and all information relating to any Licensed Product,
     whether communicated in writing or orally
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     (to be confirmed in writing within sixty (60) days) or by other means,
     which is provided or supplied by one party to the other party in connection
     with this Agreement.

     1.2   "Know-How" means information, materials, methods and practices,
            --------
     including but not limited to, preclinical, clinical, toxicological,
     regulatory, manufacturing, safety and pharmacological information which on
     the Effective Date of this Agreement are in Licensor's possession or
     control, are not generally known to the public and are necessary or useful
     for Licensee in the development, manufacture, use or sale of any Licensed
     Product. Know-How shall not include any such data or information which is
     available to Licensor under a license pursuant to which Licensor does not
     have the right to grant sublicenses.

     1.4   "Licensed Compounds" means the group of 13 anti-epileptic compounds
            ------------------
     referred to within DuPont Merck as R6888, G6164, V4312, R4720, T4767,
     F4345, G4031, D4514, G4157, XD488, E4174, X5263 and XE014.

     1.5   "Licensed Product" means a formulation for human pharmaceutical use
            ----------------
     in dosage form containing one or more Licensed Compounds.

     1.7   "Patent Rights" means the patents and patent applications listed on
            -------------
     Schedule A hereto and any and all patents and patent applications owned by
     or licensed to Licensor as of the Effective Date, which contain one or more
     claims covering any Licensed Product and/or Licensed Compound, or any
     method for synthesis or use thereof, and any and all divisions,
     continuations, and continuations-in-part thereof, and any reissues,
     renewals, reexaminations, extensions or the like of any such patents and
     patent applications and all foreign equivalents of any of the foregoing.
     Patent Rights shall not include any patents or patent rights available to
     Licensor under a license pursuant to which Licensor does not have the right
     to grant sublicenses.

2.   Grant. Licensor hereby grants to Licensee an exclusive, worldwide, fully
     -----
paid-up, irrevocable license (collectively, being the "Licensed Rights"), under
the Patent Rights and Know-How to make, have made, import, use, offer for sale
and sell Licensed Compounds and Licensed Products. The foregoing grant shall
include the right to sue for past infringement, and also the right to grant
exclusive and/or non-exclusive sublicenses to third parties, at Licensee's sole
discretion. The foregoing grant shall be exclusive as to everyone, including
Licensor. It shall be understood, however, that Licensor retains all rights
under the Patent Rights to all com-

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pounds and inventions claimed therein except with respect to Licensed Compounds
and Licensed Products.

3.   Delivery.  Licensor shall disclose and make available to Licensee, within
     --------
thirty (30) days of the Effective Date, copies of all Know-How embodied in
tangible form, in any media, whether electronic, written or otherwise.  Such
disclosure shall, as far as reasonably practicable, be made in writing by
furnishing copies of relevant materials.

4.   Term.  The license to the Patent Rights hereunder shall commence upon the
     ----
Effective Date and continue on a country-by-country basis until the expiration
of the last to expire of the Patent Rights in such country. The license to the
Know-How hereunder shall be perpetual. Notwithstanding the foregoing, the
licenses granted hereunder will terminate if Licensee shall cease to carry on
business or shall go into liquidation or a receiver shall be appointed to
Licensee's assets, except in the case where Licensee has assigned this Agreement
upon prior written consent of Licensor, or if Licensee shall become bankrupt or
insolvent or Licensee shall acknowledge in writing that it is generally unable
or unwilling to meet its financial obligations.

5.   Patent Maintenance and Patent Infringement
     ------------------------------------------

     5.1  Patent Maintenance.  Licensor shall be responsible for prosecuting and
          ------------------
     maintaining the Patent Rights. In meeting such responsibility, Licensor
     shall rely on its staff attorneys or outside counsel to the same extent it
     usually does in prosecuting similar patents and patent applications owned
     by Licensor delete. Licensor acknowledges its obligation to pay all
     maintenance fees and annuities as they become due and payable to the U.S.
     Patent and Trademark Office and other patent offices throughout the world,
     in order to avoid premature expiration of any of the Patent Rights. In the
     event that Licensor does not wish to continue to prosecute and/or maintain
     any of the Patent Rights, Licensor shall inform Licensee of such decision
     in writing as soon as practicable and Licensee shall have the right, but
     not the obligation, to take such steps itself at its own expense.

     5.2  Notice of Infringement.  Each party shall immediately give notice to
          ----------------------
     the other of (i) any potential infringement or actual infringement by a
     third party of any Patent Rights or any misappropriation of Know-How of
     which it becomes aware, or (ii) any certification of which it becomes aware
     filed under the United States "Drug Price Competition and Patent Term
     Restoration Act of 1984" claiming (x) that Patent Rights covering any
     Licensed

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     Product are invalid or unenforceable or (y) that infringement will not
     arise from the manufacture, use or sale of Licensed Product by a third
     party.

     5.3  Licensee's Right to Bring Suit.  With respect to any infringement of
          ------------------------------
     the Licensed Rights with respect to any Licensed Compound and/or Licensed
     Product, Licensee shall have the exclusive right, in its discretion, to
     settle with the infringer or to bring suit or other proceeding at its
     expense against the infringer. Licensee shall keep Licensor advised at all
     times of such suit or proceedings brought by Licensee. Licensor agrees to
     cooperate with Licensee in its efforts to protect the Patent Rights,
     including joining as a party where necessary. Licensee agrees to prosecute
     diligently any litigation it initiates under this Section 5.3. Licensee
     shall retain the full amount of any recovery hereunder, after reimbursing
     Licensor for its out-of-pocket expenses in connection with its
     participation in such suit or proceeding.

     5.4  Licensee Accused of Infringement.  In the event that Licensor or
          --------------------------------
     Licensee receives notice that a suit or other proceeding has been
     instituted against Licensee, claiming that by exercising the Patent Rights
     with respect to any Licensed Compound and/or Licensed Product, Licensee is
     infringing or has infringed the intellectual property of a third party,
     each party shall notify the other of the same.

     5.5  Patent Term Extension.  The parties hereto shall cooperate with each
          ---------------------
     other in obtaining patent term extension or supplemental protection
     certificates or their equivalents in any country applicable to the Patent
     Rights, as follows: The parties will notify each other within five (5)
     business days of receiving approval for any Licensed Product from the
     U.S. Food & Drug Administration or its equivalent in any country. The
     parties will promptly negotiate in good faith extension strategies that
     would permit both parties to take maximum advantage of extensions for all
     Patent Rights hereunder.

6.   Indemnification and Warranties
     ------------------------------

     6.1  Indemnification.  Licensee hereby indemnifies and holds Licensor
          ---------------
     harmless from any and all claims of personal injury or property damage
     which may result from the manufacture, use or sale of any Licensed Products
     or Licensed Compounds.

     6.2  Warranties.  Licensor represents and warrants that it has sole and
          ----------
     exclusive right, title and interest in and to the Patent Rights; that it
     has not

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     entered into any other agreement that would conflict with this Agreement;
     that it has the full legal right to grant the licenses provided hereunder;
     that it has not granted rights in or to the Patent Rights or the Know-How
     with respect to the Licensed Compounds to any person other than Licensee;
     that no patent search has been conducted to ascertain whether the exercise
     of the Licensed Rights will not infringe any patent rights owned by third
     parties; and to the best of its knowledge, the Patent Rights have not been
     limited such that Licensor does not have the right to grant sublicenses.
     Licensor hereby indemnifies and holds harmless Licensee from all damages
     (including attorneys' fees) arising from any breach of the forgoing
     representations and warranties.

     6.3  No Other Warranties.  LICENSOR MAKES NO OTHER WARRANTIES, EXPRESSED
          -------------------
     OR IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING, WITHOUT LIMITATION, THE
     CONDITION, MERCHANTABILITY OR FITNESS FOR PURPOSE OF ANY PRODUCTS OR
     PROCESSES COVERED BY THE PATENT RIGHTS.

7.   Confidentiality
     ---------------

     7.1  Nondisclosure Obligation.  All Confidential Information hereunder
          ------------------------
     disclosed by one party to another, whether in the past or in the future,
     shall be governed by the terms and conditions of this Section 7. The
     parties hereto agree that all Confidential Information shall be maintained
     in confidence by the recipient and shall not be disclosed by the recipient
     to any other natural person, or any corporation, firm, partnership or other
     business entity, or any government or any agency thereof, without the prior
     written consent of the other party, except to the extent that such
     Confidential Information:

          (i)   is known by recipient at the time of its receipt as documented
          by business records;

          (ii)  is properly in the public domain through no fault of the
          receiving party;

          (iii) is subsequently disclosed to the receiving party by a third
     party who may lawfully do so and is not under an obligation of
     confidentiality to the disclosing party;

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          (iv)  is developed by the receiving party independently of
          Confidential Information or other information received from the other
          party;

          (v)   is disclosed to governmental or other regulatory agencies in
          order to obtain patents or to gain approval to conduct clinical trials
          or to market Licensed Products, but such disclosure may be only to the
          extent reasonably necessary to obtain patents or authorizations;

          (vi   is necessary or useful to be disclosed to prospective investors,
          sublicensees, agents, consultants and/or other third parties for the
          research and development, manufacturing, marketing and or sale of
          Licensed Products (or for such parties to determine their interest in
          performing such activities) in accordance with this Agreement on the
          condition that such third parties agree to be bound by the
          confidentiality obligations contained in this Agreement, provided
          that the term of confidentiality for such third parties shall be no
          less than five (5) years from the date of disclosure; or

          (vii) is required to be disclosed by law or court order, provided that
          notice is promptly delivered to the other party in order to provide an
          opportunity to challenge or limit the disclosure obligations.

The receiving party shall use the same level of care, but no less than a
reasonable level of care, to prevent the use or disclosure of Confidential
Information received under this Agreement, as it exercises in protecting its own
secret and proprietary information of similar nature. The receiving party shall
only communicate Confidential Information to its employees, legal and financial
advisors who need to know such Confidential Information, who have been
previously made aware of the terms of this Agreement pertaining to Confidential
Information and who have agreements with the receiving party obligating them to
keep confidential such Confidential Information.

     7.2  Use of Confidential Information.  Both parties agree that the
          -------------------------------
     Confidential Information shall only be used in connection with the exercise
     of the parties' respective rights and the fulfillment of their obligations
     under this Agreement.

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8.   Miscellaneous
     -------------

     8.1  This Agreement shall be construed in accordance with the laws of the
     United States and the laws of the State of Delaware, without regard for
     principles of conflicts of law thereof.

     8.2  This Agreement contains the entire and only agreement between the
     parties, and supersedes all preexisting oral or written agreements between
     them regarding the subject matter hereof. Any changes or modifications
     hereto shall be effective only if made in writing and signed by both
     parties.

     8.3  Licensee may transfer or assign this Agreement to a successor or third
     party without the need for consent from Licensor.

     8.4  In the event that any provision of this Agreement is held invalid or
     unenforceable in any circumstance by a court of competent jurisdiction, the
     remainder of this Agreement, and application of such provision in any other
     circumstances, shall not be affected thereby.

     8.5  The headings of this Agreement are for convenience of reference only
     and shall not affect the meaning or interpretation of this Agreement in any
     way.

     8.6  Each party hereto is an independent contractor and neither the making
     of this Agreement nor the performance of any of the provisions hereof shall
     be construed to make one party an agent, employee or legal representative
     of another party for any purpose, nor shall this Agreement be deemed to
     establish a joint venture or partnership.

     8.7  The failure of either party to assert a right hereunder or to insist
     upon compliance with any term or condition of this Agreement shall not
     constitute a waiver of that right or excuse a similar subsequent failure to
     perform any such term or condition by the other party.

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          IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.

THE DUPONT MERCK PHARMACEUTICAL COMPANY

By: __________________________________
    Name:
    Title:


ENDO LABORATORIES, L.L.C.


By: __________________________________
    Name:
    Title:


ENDO PHARMACEUTICALS INC.


By: __________________________________
    Name:
    Title:

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                                  SCHEDULE A
                                  ----------


[List patents/patent applications relating to Licensed Compounds, including the
following:]

U.S. 4,213,773

U.S. 4,219,550

U.S. 5,109,002

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