<PAGE>

                                                                   EXHIBIT 10.27

                   AMENDED AND RESTATED EMPLOYMENT AGREEMENT


     THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement") is made
as of April 26, 2000 by Endo Pharmaceuticals Inc., a Delaware corporation (the
"Employer") and Carol A. Ammon (the "Executive").


                                   RECITALS

     WHEREAS, the Employer and the Executive entered into an employment
agreement, dated as of August 26, 1997 (the "Original Employment Agreement") and
concurrently with the execution and delivery of the Original Employment
Agreement, the Employer purchased from The DuPont Merck Pharmaceutical Company
("DMPC") and Endo Laboratories, L.L.C. ("Endo LLC"), certain assets comprising
their generic and multisource brand drug business (the "Business") pursuant to
an Asset Purchase Agreement, dated as of June 27, 1997 (the "Purchase
Agreement"), among DMPC, Endo LLC, DuPont Merck Pharma Puerto Rico, Employer and
Kelso & Company.  The Executive had been employed by DMPC in the Business and
the Employer continued to employ the Executive in the Business, and the
Executive accepted such continued employment, upon the terms and conditions set
forth in the Original Employment Agreement;

     WHEREAS, the Executive and the Board of Directors of the Employer have each
determined that amending and restating the Original Employment Agreement is
advisable and desirable; and

     WHEREAS, the Board of Directors of the Employer has approved this Agreement
upon the terms set forth herein;

     NOW THEREFORE, in consideration of the premises and agreements contained
herein, the parties hereto, intending to be legally bound, agree as follows:

ARTICLE 1.  DEFINITIONS.
            -----------

          For the purposes of this Agreement, the following terms have the
meanings specified or referred to in this Article 1.

          "Agreement" means this Employment Agreement, including the Exhibits
hereto, as amended from time to time.

          "Basic Compensation" means Salary and Benefits.

          "Benefits" shall have the meaning set forth in Section 3.1(c).

          "Board of Directors" means the board of directors of the Employer.
<PAGE>

          "Confidential Information" means any and all:

          (a) trade secrets concerning the business and affairs of the Employer,
product specifications, data, know-how, formulae, compositions, processes,
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);

          (b) information concerning the business and affairs of the Employer
(which includes historical financial statements, financial projections and
budgets, historical and projected sales, capital spending budgets and plans, the
names and backgrounds of key personnel, personnel training and techniques and
materials) however documented; and

          (c) notes, analysis, compilations, studies, summaries, and other
material prepared by or for the Employer containing or based, in whole or in
part, on any information included in the foregoing.

     "CPI" means the Consumer Price Index-All Urban Consumers, Philadelphia
Region (1982-1984 = 100), as published by the United States Department of Labor.

     "disability" shall have the meaning set forth in Section 6.2.

     "Effective Date"  means  the date stated in the first paragraph of this
Agreement.

     "Employment Period" shall have the meaning set forth in Section 2.2.

     "Fiscal Year" means the Employer's fiscal year, as it exists on the
Effective Date or as changed from time to time.

     "for cause" shall have the meaning set forth in Section 6.3.

     "for good reason" shall have the meaning set forth in Section 6.4.

     "Incentive Compensation" shall have the meaning set forth in Section 3.2.

     "person" means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, or governmental body.

     "Post-Employment Period" shall have the meaning set forth in Article 8.

     "Renewal Term" shall have the meaning set forth in Section 2.2.

                                      -2-
<PAGE>

     "Salary" shall have the meaning set forth in Section 3.1(a).

ARTICLE 2.  EMPLOYMENT TERMS AND DUTIES.
            ----------------------------

          Section 2.1  Employment.  The Employer hereby employs the Executive,
                       ----------
and the Executive hereby accepts employment by the Employer, upon the terms and
conditions set forth in this Agreement.

          Section 2.2  Term.  Subject to the provisions of Article 6, the
                       ----
initial term of the Executive's employment under this Agreement will be four (4)
years, beginning on the Effective Date and ending on the fourth anniversary of
the Effective Date.  The term of this Agreement may be renewed by the Executive
and the Employer for additional periods of one year (each, a "Renewal Term"; the
Initial Term together with all Renewal Terms, if any, are hereinafter referred
to as the "Employment Period").

          Section 2.3  Duties.  The Executive will have such duties as are
                       ------
assigned or delegated to the Executive by the Board of Directors, and will
initially serve as President and Chief Executive Officer of the Employer and the
Executive shall have the status, authority, duties and responsibilities
typically recognized as attributes of such position.  The Executive will devote
the Executive's business, time, attention, skill, and energy to the business of
the Employer, will promote the success of the Employer's business, and will
cooperate with the Board of Directors in the advancement of the best interests
of the Employer.  Nothing in this Section 2.3, however, will prevent the
Executive from engaging in additional activities in connection with personal
investments and community affairs that are not inconsistent with the Executive's
duties under this Agreement.  It is expressly understood and agreed that to the
extent any such activities have been conducted by the Executive prior to the
Effective Date, the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the Effective Date
shall not thereafter be deemed to be inconsistent with the Executive's duties
under this Agreement.  The Executive shall, from time to time, inform the Board
of Directors of those additional activities in which the Executive is engaged.
If the Executive is elected as a director of the Employer or as a director or
officer of any of Employer's subsidiaries, the Executive will fulfill the
Executive's duties as such director or officer without additional compensation.

          Section 2.4  Director's and Officer's Liability Coverage.   The
                       --------------------------------------------
Employer shall cause the Executive to be (a) indemnified as an officer and
director of the Employer or any of its affiliates, to the extent applicable, to
the maximum extent permitted by applicable law, and (b) covered by director's
and officer's liability insurance in connection with the Executive serving as an
officer and director of Employer or any of its affiliates.  The provisions of
this Section 2.4 shall survive termination of this Agreement for any reason.


 ARTICLE 3. COMPENSATION.
            -------------

          Section 3.1   Basic Compensation.
                         ------------------

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<PAGE>

          (a)  Salary.  The Executive will be paid an annual salary of $325,000,
               ------
subject to adjustment as provided below (the "Salary"), which will be payable in
equal periodic installments according to the Employer's customary payroll
practices, but no less frequently than monthly. The Salary will be reviewed by
the Board of Directors not less frequently than annually, and be adjusted in the
sole discretion of the Board of Directors, but in no event will the Salary be
less than $325,000 per year. In determining the amount of any adjustment to
Salary, the Board of Directors shall take into account inflation, merit, changes
in responsibilities and industry salary practices for executives. Any increase
in Salary shall not serve to limit or reduce any other obligation to the
Executive under this Agreement. Salary shall not be reduced after such increase
unless such reduction is part of a reduction in salaries of specified management
personnel of the Employer undertaken in a program approved by the Employer's
Board of Directors.

          (b) Standard Benefits.  The Executive will, during the Employment
              -----------------
Period, be permitted to participate in such incentive, savings, pension, profit
sharing, bonus, life insurance, hospitalization and major medical, and other
employee benefit plans, practices, policies and programs, of the Employer that
may be in effect from time to time, to the extent the Executive is eligible
under the terms of those plans (collectively, the "Standard Benefits").

          (c) Supplemental Benefits.  Executive will be eligible to receive
              ---------------------
certain DMPC medical benefits (including dental benefits) given to retirees as a
result of the transactions contemplated by the Purchase Agreement. In order to
receive such DMPC medical benefits, Executive will be required to pay  60% of
the applicable insurance premiums (the "Executive's Co-Pay").  Executive agrees
to waive coverage under Employer's medical benefits included within the Standard
Benefits in return for Employer paying the Executive's Co-Pay.  Upon Executive's
employment with Employer terminating, Employer will continue to pay Executive's
Co-Pay for a period of 18 months thereafter. (The benefits described in this
Section 3.1(c) are hereinafter referred to as the "Supplemental Benefits"; and
the Standard Benefits together with the Supplemental Benefits are hereinafter
referred to as the "Benefits".)

          Section 3.2    Incentive Compensation.   For each Fiscal Year or part
                         ----------------------
thereof during the Employment Period the Executive shall be paid in cash as
additional compensation (the "Incentive Compensation") for the services to be
rendered by the Executive pursuant to this Agreement, an amount equal to fifty
percent (50%) of the Salary for such Fiscal Year (or such lesser (including
zero) or greater (not to exceed two hundred) percent of the Salary for such
Fiscal Year as is recommended in good faith to the Board of Directors by the
Chief Financial Officer of the Employer and approved by the Board of Directors)
if the Employer meets the performance targets set by the Board of Directors (the
"Performance Targets") for such Fiscal Year.  Incentive Compensation for each
Fiscal Year or part thereof shall be paid as soon as practicable following
receipt by the Employer of its audited financial statements for the Fiscal Year
for which the Incentive Compensation is being paid, unless the Executive shall
elect to defer the receipt of such Incentive Compensation.  The Executive shall
be permitted to submit a proposal for additional incentive compensation with
respect to the period commencing on the date hereof and ending at the end of the
Employer's current Fiscal Year, and the Employer shall consider such proposal in
good faith.

                                      -4-
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ARTICLE 4.  FACILITIES AND EXPENSES.
            ------------------------

          The Employer will furnish the Executive office space, equipment,
supplies, and such other facilities and personnel as the Employer deems
necessary or appropriate for the performance of the Executive's duties under
this Agreement.  The Employer will pay the Executive's dues in such professional
societies and organizations as are appropriate, and will pay on behalf of the
Executive (or reimburse the Executive for) reasonable expenses incurred by the
Executive at the request of, or on behalf of, the Employer in the performance of
the Executive's duties pursuant to this Agreement, and in accordance with the
Employer's employment policies, including reasonable expenses incurred by the
Executive in attending conventions, seminars, and other business meetings, in
appropriate business entertainment activities, and for promotional expenses. The
Executive must file expense reports with respect to such expenses in accordance
with the Employer's policies.


ARTICLE 5.  VACATIONS AND HOLIDAYS.
            ----------------------

          The Executive will be entitled to paid vacation each Fiscal Year in
accordance with the vacation policies of the Employer in effect for its
executive officers from time to time, provided that in no event shall such
number of paid vacation days be fewer than twenty. Vacation must be taken by the
Executive at such time or times as approved by the Chairman of the Board. The
Executive will also be entitled to the paid holidays and other paid leave set
forth in the Employer's policies.  Vacation days and holidays during any Fiscal
Year that are not used by the Executive during such Fiscal Year may be used in
any subsequent Fiscal Year.


ARTICLE 6.  TERMINATION AND ELECTION NOT TO RENEW.
            -------------------------------------

          Section 6.1  Events of Termination.  The Employment Period, the
                       ---------------------
Executive's Basic Compensation and Incentive Compensation, and any and all other
rights of the Executive under this Agreement or otherwise as an employee of the
Employer will terminate (except as otherwise provided in this Article 6):

          (a) upon the death of the Executive;

          (b) upon the disability of the Executive (as defined in Section 6.2);

          (c) for cause (as defined in Section 6.3), immediately upon notice
from the Employer to the Executive, or at such later time as such notice may
specify, unless otherwise provided in Section 6.3; or

          (d) for good reason (as defined in Section 6.4) upon not less than
thirty days' prior notice from the Executive to the Employer.

                                      -5-
<PAGE>

          Section 6.2  Definition of Disability.  For purposes of Sections 6.1
                       ------------------------
and 6.3, the Executive will be deemed to have a "disability" if, as a result of
the Executive's incapacity due to reasonably documented physical illness or
injury or mental illness, the Executive shall have been unable for more than six
months in any twelve month period to perform Executive's duties hereunder on a
full time basis and within 30 days after written notice of termination has been
give to the Executive, the Executive shall not have returned to the full time
performance of such duties.  The date of termination in the case of a
termination for "disability" shall be the last day of the aforementioned 30-day
period.

          Section 6.3  Definition of "For Cause."  For purposes of Section 6.1,
                       -------------------------
the phrase "for cause" means: (a) the continued failure, after written demand is
delivered to the Executive which specifically identifies the failure, by the
Executive substantially to perform the Executive's duties under this Agreement
(other than any such failure resulting from "disability"), (b) the engagement by
the Executive in serious misconduct that has caused, or in the good faith
judgment of the Board of Directors may cause if not discontinued, material harm
(financial or otherwise) to the Employer or any of its subsidiaries, if any
(provided that with respect to misconduct that the Board of Directors determines
may cause material harm if not discontinued, a written demand is delivered to
the Executive specifically identifying the misconduct and the Executive
continues the misconduct), such material harm to include, without limitation,
(i) the disclosure of material secret or confidential information of the
Employer or any of its subsidiaries, if any, (ii) the debarment of the Employer
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 Employer or
any of its subsidiaries, if any, with the U.S. Drug Enforcement Administration
of any successor agency (the "DEA") to be revoked or an application with the DEA
to be denied, (c) the debarment of the Executive by the FDA, or (d) the
continued material breach by the Executive of this Agreement or the
Stockholder's Agreement, dated as of August 26, 1997, among the Executive, the
Employer and other parties named therein (the "Stockholder's Agreement") after
written demand is delivered to the Executive which specifically identifies the
breach.

          Section 6.4  Definition of "For Good Reason."  For purposes of Section
                       ------------------------------
6.1, the phrase "for good reason" means any of the following: (a) The Employer's
material breach Section 2.4, 3.1 or 3.2 or of this Agreement or its obligations
under the Stockholder's Agreement for the benefit of Executive; (b) the
assignment of the Executive without the Executive's consent to a position,
responsibilities, or duties of a materially lesser status or degree of
responsibility than the Executive's position, responsibilities, or duties at the
Effective Date; or (c) sale of all or substantially all of the assets of the
Employer, sale of all or substantially all of the stock of the Employer, merger
of the Employer with one or more other related or unrelated entities, or other
similar transaction vesting control of the Employer with a third party or
parties.

          Section 6.5  Termination Pay. Effective upon the termination of this
                       ---------------
Agreement, the Employer will be obligated to pay the Executive (or, in the event
of Executive's death, Executive's designated beneficiary as defined below) only
such compensation as is provided in this Section 6.5 or Section 6.6. For
purposes of this Section 6.5, the Executive's designated beneficiary will be
such individual beneficiary or trust, located at such address, as the Executive
may designate by notice to the Employer from time to time or, if the Executive
fails to

                                      -6-
<PAGE>

give notice to the Employer of such a beneficiary, the Executive's estate.
Notwithstanding the preceding sentence, the Employer will have no duty, in any
circumstances, to attempt to open an estate on behalf of the Executive, to
determine whether any beneficiary designated by the Executive is alive or to
ascertain the address of any such beneficiary, to determine the existence of any
trust, to determine whether any person or entity purporting to act as the
Executive's personal representative (or the trustee of a trust established by
the Executive) is duly authorized to act in that capacity, or to locate or
attempt to locate any beneficiary, personal representative, or trustee.

          (a) Termination by the Executive for Good Reason.  If the Executive
              --------------------------------------------
terminates this Agreement for good reason, the Employer will (i) pay (A) monthly
to the Executive the Executive's Salary for the remainder of the Employment
Period or eighteen (18) months, whichever is longer, and (B) the Executive's
Incentive Compensation for the Fiscal Year during which the termination is
effective, prorated through the date of termination, provided that the
applicable Performance Targets are met, and (ii) continue to provide the
Executive with the Benefits for the remainder of the Employment Period or
eighteen (18) months, whichever is longer.

          (b) Termination by the Employer for Cause.  If the Employer terminates
              -------------------------------------
this Agreement for cause, the Executive will be entitled to receive the
Executive's Salary  and Incentive Compensation prorated through the date such
termination is effective.

          (c) Termination upon Disability.  If this Agreement is terminated by
              ---------------------------
either party as a result of the Executive's disability, as determined under
Section 6.2, the Employer will pay the Executive the Salary and Incentive
Compensation (if the applicable Performance Targets are met) through the
remainder of the calendar month during which such termination is effective and
the period until disability insurance benefits commence ("Disability Coverage
Commencement") under the disability insurance coverage furnished by the Employer
to the Executive.  From and after Disability Coverage Commencement and for
eighteen (18) consecutive months thereafter, the Employer will make regular
payments to the Executive in the amount by which the Salary exceeds the
Executive's  disability insurance benefits.

          (d) Termination upon Death.  If this Agreement is terminated because
              ----------------------
of the Executive's death, the Executive will be entitled to receive the
Executive's Salary through the end of the calendar month in which the
Executive's death occurs, and Incentive Compensation (if the applicable
Performance Targets are met) for the Fiscal Year during which the Executive's
death occurs, prorated through the date of the Executive's death.

          (e) Benefits.  Unless otherwise specifically provided herein or
              --------
otherwise provided for in the Standard Benefits, the Executive's accrual of, or
participation in plans providing for, the Benefits will cease at the effective
date of the termination of this Agreement, and the Executive will be entitled to
accrued Benefits pursuant to such plans only as provided in such plans.

                                      -7-
<PAGE>

          Section 6.6  Election Not to Renew.  If the Executive elects to renew
                       ---------------------
this Agreement for a Renewal Term, but Employer does not, and Employer's
election not to renew is not for cause, the Executive will be entitled to
receive, the Salary for the remainder, if any, of the calendar month in which
such termination is effective and for eighteen (18) consecutive calendar months
thereafter and the Benefits for eighteen (18) consecutive months after the date
of termination.

          Section 6.7  Adjustments for CPI.  The amounts payable to the
                       -------------------
Executive pursuant to Sections 6.5(a) and (c) and Section 6.6 shall be adjusted
based on CPI every 12 months to account for changes in the cost of living.

          Section 6.8  Shareholder Approval.  Employer represents and warrants
                       --------------------
that this Agreement has been approved by the shareholders of Employer in a
manner designed to satisfy the requirements of Section 280G(b)(5) of the
Internal Revenue Code of 1986, as amended (which section exempts from the term
"parachute payments" payments meeting the shareholder approval requirements
specified therein).  The effectiveness of this Agreement is subject to such
shareholder approval.


ARTICLE 7.  NON-DISCLOSURE COVENANT.
            ------------------------

          Section 7.1  Acknowledgments by the Executive.   The Executive
                       --------------------------------
acknowledges that (a) during the Employment Period and as a part of the
Executive's employment, the Executive will be afforded access to Confidential
Information; and (b) public disclosure of such Confidential Information could
have an adverse effect on the Employer and its business.

          Section 7.2  Agreements of the Executive.  In consideration of the
                       ---------------------------
compensation and benefits to be paid or provided to the Executive by the
Employer under this Agreement, the Executive covenants as follows:

          (a) During and following the Employment Period, the Executive will
hold in confidence the Confidential Information and will not disclose it to any
person except with the specific prior written consent of the Employer, as
otherwise may be required by law or legal process or except as otherwise
expressly permitted by the terms of this Agreement.

          (b) If any information that the Employer deems to be a trade secret is
found by a court of competent jurisdiction not to be a trade secret for purposes
of this Agreement, such information will, nevertheless, be considered
Confidential Information for purposes of this Agreement.  The Executive hereby
waives any requirement that the Employer submit proof of the economic value of
any trade secret or post a bond or other security.

          (c) None of the foregoing obligations and restrictions applies to any
part of the Confidential Information that the Executive demonstrates was or
became generally available to the public other than as a result of a disclosure
by the Executive.

                                      -8-
<PAGE>

          (d) Upon termination of this Agreement by either party, or upon the
request of the Employer during the Employment Period, the Executive will return
to the Employer all Confidential Information in the Executive's possession or
subject to the Executive's control, and the Executive may not retain any copies,
abstracts, sketches, or other physical embodiment of any of the Confidential
Information.


ARTICLE 8.  NON-COMPETITION AND NON-INTERFERENCE.
            -------------------------------------

          The Executive covenants that the Executive will not, directly or
indirectly during the Employment Period, except in the course of the Executive's
employment hereunder, and during the Post-Employment Period, 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 the Executive's name to, or render services or advice to,
any third party (including without limitation DPMC and its affiliates) which
manufactures, markets, sells, distributes or develops any pharmaceutical product
that constitutes an API (as defined in the Purchase Agreement) or is Derivative
(as defined in the Purchase Agreement) of any API, or any business whose
products compete in whole or in part with the products of the Employer
(disregarding any non-pain management products that were not products of the
Employer during the Employment Period).

          For purposes of this Article 8, the term "Post-Employment Period"
means the period beginning on the effective date of termination of the
Executive's employment hereunder and ending on the later to occur of (i) 18
months after the effective date of such termination or (ii) the date amounts
payable to Executive under Section 6.5 (a) and (c) and Section 6.6 are to have
been paid in full pursuant to this Agreement (provided that notwithstanding
anything in this Agreement to the contrary, such amounts are being timely paid
by the Employer).

          If any covenant in this Article 8 is held to be unreasonable,
arbitrary, or against public policy, such covenant will be considered to be
divisible with respect to scope, time, and geographic area, and such lesser
scope, time, or geographic area, or all of them, as a court of competent
jurisdiction may determine to be reasonable, not arbitrary, and not against
public policy, will be effective, binding, and enforceable against the
Executive.


ARTICLE 9.  GENERAL PROVISIONS.
            -------------------

          Section 9.1  Injunctive Relief and Additional Remedy.  The Executive
                       ---------------------------------------
acknowledges that the injury that would be suffered by the Employer as a result
of a breach of the provisions of this Agreement (including any provision of
Articles 7 and 8) would be irreparable and that an award of monetary damages to
the Employer for such a breach would be an inadequate remedy. Consequently, the
Employer will have the right, in addition to any other rights it may have, to
obtain injunctive relief to restrain any breach or threatened breach or
otherwise to specifically enforce any provision of this Agreement, and the
Employer will not be obligated to post bond or other security in seeking such
relief.

                                      -9-
<PAGE>

          Section 9.2  Essential and Independent Covenants.  The covenants by
                       -----------------------------------
the Executive in Articles 7 and 8 are essential elements of this Agreement, and
without the Executive's agreement to comply with such covenants, the Employer
would not have entered into the Purchase Agreement and the Employer would not
have entered into this Agreement or employed or continued the employment of the
Executive.  The Employer and the Executive have independently consulted their
respective counsel and have been advised in all respects concerning the
reasonableness and propriety of such covenants, with specific regard to the
nature of the business conducted by the Employer.

          If the Executive's employment hereunder expires or is terminated, this
Agreement will continue in full force and effect as is necessary or appropriate
to enforce the covenants and agreements of the Executive in Articles 7 and 8.

          Section 9.3  Duty to Mitigate.  The Executive shall not be required to
                       ----------------
mitigate damages or the amount of any payment required under this Agreement, nor
shall the payments due Executive hereunder be reduced or offset by reason of any
payments Executive receives from any other source.

          Section 9.4  Representations and Warranties by the Executive.  The
                       -----------------------------------------------
Executive represents and warrants to the Employer that the execution and
delivery by the Executive of this Agreement do not, and the performance by the
Executive of the 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 the 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 the Executive is a party or by which the Executive is or may
be bound.

          Section 9.5  Waiver.  The rights and remedies of the parties to this
                       ------
Agreement are cumulative and not alternative.  Neither the failure nor any delay
by any party in exercising any right, power, or privilege under this Agreement
will operate as a waiver of such right, power, or privilege, and no single or
partial exercise of any such right, power, or privilege will preclude any other
or further exercise of such right, power, or privilege or the exercise of any
other right, power, or privilege.

          Section 9.6  Binding Effect; Delegation of Duties Prohibited.  This
                       -----------------------------------------------
Agreement shall inure to the benefit of, and shall be binding upon, the parties
hereto and their respective successors, assigns, heirs, and legal
representatives, including any entity with which the Employer may merge or
consolidate or to which all or substantially all of its assets may be
transferred.  The duties and covenants of the Executive under this Agreement,
being personal, may not be delegated.

          Section 9.7  Notices.  All notices, consents, waivers, and other
                       -------
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by hand (with written confirmation of
receipt), (b) sent by telecopier (with written confirmation of receipt),
provided that a copy is mailed by registered mail, return receipt requested, or
(c) when received by the addressee, if sent by a nationally recognized overnight

                                      -10-
<PAGE>

delivery service (receipt requested), in each case to the appropriate addresses
and telecopier numbers set forth below (or to such other addresses and
telecopier numbers as a party may designate by notice to the other parties):

          If to the Employer:       Endo Pharmaceuticals Inc.
          ------------------
                                    223 Wilmington West Chester Pike
                                    Chadds Ford, PA 19317
                                    Attention:  Board of Directors

          If to the Executive:      Carol A. Ammon
          -------------------
                                    1019 Kent Road
                                    Wilmington, DE 19807

          Section 9.8  Entire Agreement; Amendments.  This Agreement contains
                       ----------------------------
the entire agreement between the parties with respect to the subject matter
hereof and supersedes all prior agreements and understandings, oral or written,
between the parties hereto with respect to the subject matter hereof.  This
Agreement may not be amended orally, but only by an agreement in writing signed
by the parties hereto.

          Section 9.9  Governing Law.  This Agreement will be governed by and
                       -------------
construed under the laws of the State of Delaware without regard to conflicts of
laws principles.

          Section 9.10  Section Headings, Construction.  The headings of
                        ------------------------------
Sections in this Agreement are provided for convenience only and will not affect
its construction or interpretation.  All references to "Section" or "Sections"
refer to the corresponding Section or Sections of this Agreement unless
otherwise specified.  All words used in this Agreement will be construed to be
of such gender or number as the circumstances require.  Unless otherwise
expressly provided, the word "including" does not limit the preceding words or
terms.

          Section 9.11  Severability.  If any provision of this Agreement is
                        ------------
held invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect.  Any
provision of this Agreement held invalid or unenforceable only in part or degree
will remain in full force and effect to the extent not held invalid or
unenforceable.

          Section 9.12  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.


                              [SIGNATURES FOLLOW]

                                      -11-
<PAGE>

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


                                   ENDO PHARMACEUTICALS INC.


                                   By: /s/ Jeffrey R. Black
                                      -----------------------------------------
                                      Name:  Jeffrey R. Black
                                      Title: Chief Financial Officer


                                   /s/ Carol A. Ammon
                                   -------------------------------------------
                                   CAROL A. AMMON

                                      -12-