Document:

<PAGE>

                                                                   Exhibit 10.32

                        SEPARATION AND RELEASE AGREEMENT

     This SEPARATION AND RELEASE AGREEMENT (the "Agreement"), executed this 20th
day of April, 2000, is entered into by and between Endo Pharmaceuticals Inc., a
Delaware corporation (the "Company"), Endo Pharmaceuticals Holdings Inc., a
Delaware corporation ("Endo") and Louis J. Vollmer (the "Executive").

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

     WHEREAS, the Company has entered into an Agreement and Plan of Merger (the
"Merger Agreement") dated as of November 26, 1999 by and among, Endo, Endo Inc.,
a Delaware corporation and a newly-formed wholly-owned subsidiary of Endo
("Sub"), and Algos Pharmaceutical Corporation, a Delaware corporation ("Algos")
pursuant to which, among other things, Algos will merge with and into Sub (the
"Merger");

     WHEREAS, the Executive is employed by the Company as Executive Vice
President of the Company on the terms and conditions set forth in an employment
agreement by and between the Executive and the Company dated as of August 26,
1997 (the "Employment Agreement"); and

     WHEREAS, the Executive has decided to resign from his position as Executive
Vice President of the Company with such resignation to be effective as of April
20, 2000 ("Effective Time") as set forth in the Executive's letter of
resignation addressed to Carol A. Ammon, the President and Chief Executive
Officer of the Company, dated as of April 20, 2000 (the "Resignation Letter").

     NOW, THEREFORE, in consideration of the mutual agreements and
understandings set forth herein, intending to be legally bound, the parties
hereto hereby agree as follows:

     Section 1. Termination of Employment; Benefits.
                -----------------------------------

            (a) Termination of Employment. The Executive's employment with the
                -------------------------
Company shall terminate on the Effective Time as set forth in the Resignation
Letter.
<PAGE>

            (b) Benefits. In consideration for the Executive's agreement to be
                --------
bound by the terms of this Agreement, including the Release set forth in Section
2 herein, and in lieu of and in full satisfaction of all obligations of the
Company under the Employment Agreement and the Stockholders Agreement (as
defined below), the Executive shall be entitled to receive from the Company the
payments and benefits set forth in subparagraphs (i), (ii), (iii), (iv) and
(vii) of this Section 1(b).

                (i)   Subject to Section 2(a)(iv) hereof, the Executive shall be
entitled to receive a severance payment equal to $1,000,000 (the "Severance
Payment"), which will be payable beginning on the Effective Time in equal
periodic installments over a 48 month period according to the Company's normal
payroll practices, but no less frequently than monthly.

                (ii)  Subject to Section 2(a)(iv) hereof, the Executive shall be
entitled to receive life insurance, tax and financial counseling services (on
the same basis as the tax and financial counseling services provided to the
Executive by the Company immediately prior to the Effective Time),
hospitalization, dental, major medical and other health insurance benefits for
an 18 month period beginning on the Effective Time.

                (iii) Subject to Sections 1(b)(v) and 2(a)(iv) hereof and
notwithstanding anything to the contrary in the Endo Pharmaceutical Holdings
Inc. 1997 Executive Stock Option Plan, as amended (the "Stock Option Plan") and
applicable agreement, the 10,493 outstanding options to purchase shares of Class
A common stock of Endo granted to the Executive under the Class A Stock Option
Agreement by and between Endo and the Executive dated as of November 25, 1997,
the 11,899 outstanding options to purchase shares of Class A common stock of
Endo granted to the Executive under the Class B Stock Option Agreement by and
between Endo and the Executive dated as of November 25, 1997 and the 7,190
outstanding options to purchase shares of Class A common stock of Endo granted
to the Executive under the Class C1 Stock Option Agreement between Endo and the
Executive dated as of November 25, 1997 (collectively, the "Class A, B and C1
Options"), including those which are exercisable as of the Effective Time, shall
be fully vested as of the Effective Time, provided that such Class A, B and C1
Options shall only be exercisable following the Effective Time by the Executive
as follows:

                                       (1)  25% of the Class A, B and C1 Options
     shall become exercisable on the earlier of nine months following the
     Effective Time or on the date of an Exit Event (as defined (from time to
     time) in Section 2 of the Stock Option Plan) for the remaining term of such
     Class A, B and C1 Options.

                                       2
<PAGE>

                                       (2)  25% of the Class A, B and C1 Options
     shall become exercisable on the earlier of 12 months following the
     Effective Time or on the date of an Exit Event for the remaining term of
     such Class A, B and C1 Options.

                                       (3)  25% of the Class A, B and C1 Options
     shall become exercisable on the earlier of 18 months following the
     Effective Time or on the date of an Exit Event for the remaining term of
     such Class A, B and C1 Options.

                                       (4)  25% of the Class A, B and C1 Options
     shall become exercisable on the date of an Exit Event for the remaining
     term of such Class A, B and C1 Options.

                   Within 30 days before the date each tranche of the Class A, B
and C1 Options becomes exercisable in accordance with subparagraphs (iii)(1)
through (iii)(4) above, the Executive shall provide to the President and Chief
Executive Officer of the Company a list of the Class A, B and C1 Options to be
subject to the specified exercisability date. Such allocation shall be final and
binding upon the Executive, the Company and Endo.

                   (iv)   Subject to Sections 1(b)(v) and 2(a)(iv) hereof and
notwithstanding anything to the contrary in the Stock Option Plan and applicable
agreement, the 7,772 outstanding options to purchase shares of Class A common
stock of Endo granted to the Executive under the Class C2 Stock Option Agreement
(the "Class C2 Options") by and between Endo and the Executive dated as of
November 25, 1997 (the "Class C2 Stock Option Agreement") shall be vested
immediately but otherwise shall remain subject to the terms and conditions
(including terms and conditions relating to exercisability) set forth in the
Stock Option Plan and the Class C2 Stock Option Agreement (as these may be
amended in accordance with the Option Consent (defined as in (v) below));
provided, however, that such Class C2 Options shall be exercisable by the
--------  -------
Executive irrespective of whether or not he is an employee of the Company or any
other entity.

                   (v)    Notwithstanding anything in this Section 1(b) to the
contrary, the Executive's Class A, B and C1 Options and Class C2 Options that
remain outstanding following the Effective Time in accordance with this Section
1(b) shall be exercisable in the same manner and conditions as any senior
officer of the Company who holds such options only into shares of Class A common
stock of Endo held by Endo Pharma LLC, as set forth in a side letter to the
Merger Agreement by

                                       3
<PAGE>

and between the Executive and Algos, dated as of November 26, 1999 (the "Option
Consent"), and shall be subject to the other terms and conditions set forth in
the Option Consent.

                (vi)   Except as provided in subsection (iii) and (iv) above,
the Executive's outstanding options to purchase shares of Class A common stock
of Endo shall terminate on the Effective Time.

                (vii)  Endo shall register the 3,000 shares of Endo common stock
now held by the Executive on the registration statement on Form S-4 to be filed
with the Securities and Exchange Commission by Endo in connection with the
issuance of Endo's common stock in the Merger. Endo shall register Endo common
stock subject to the Executive's Class A, B and C1 Options and Class C2 Options
on a Form S-8 to be filed with the Securities and Exchange Commission by Endo in
connection with the issuance of Endo's common stock in the Merger prior to the
date such Class A, B and C1 Options and Class C2 Options first become
exercisable. In the event that the Merger contemplated by the Merger Agreement
is not consummated and the Merger Agreement is terminated, Endo shall register,
on or as soon as practicable following the date Endo common stock becomes
publicly traded, the 3,000 shares of Endo common stock now held by the Executive
and the Endo common stock subject to the Executive's Class A, B and C1 Options
and Class C2 Options. Except as set forth in this Agreement and (to the extent
applicable) the Stockholders Agreement and the applicable stock option
agreement, there are and shall be no additional contractual restrictions on
transferability of the shares of Endo common stock now held by the Executive or
the shares of Endo common stock subject to the Class A, B and C1 Options and the
Class C2 Options.

                (viii) Notwithstanding the foregoing, the Company shall have the
right, in addition to any other rights it might have, to obtain injunctive
relief to restrain any breach or threatened breach by the Executive of this
Agreement or otherwise to specifically enforce any provision of this Agreement;
provided, however, that such right to injunctive relief does not preclude the
--------  -------
Company from seeking monetary damages for a breach by the Executive of this
Agreement, including in the event of an intentional and material breach by the
Executive of either the Non-Competition Covenant (as defined herein) or Section
4 hereof, the Company's right, in addition to any other monetary damages, to
terminate (A) any Class A, B and C1 Options which have not yet become
exercisable in accordance with subparagraphs (iii)(1) through (iii)(4) above,
(B) any Class C2 Options which have not yet become exercisable in accordance
with subsection (iv) above and (C) the Executive's right to receive the payments
and benefits set forth in this Section 1(b) to the extent not yet paid or
provided to the Executive.

                                       4
<PAGE>

     Section 2.   Mutual Release.
                  --------------

            (a)   Release by the Executive.
                  ------------------------

                  (i)    The Executive knowingly and voluntarily releases and
forever discharges the Company, Endo, Kelso & Company, and their parents,
subsidiaries and affiliates, together with all of their respective past and
present directors, managers, officers, shareholders, partners, employees, agents
and attorneys, and each of their predecessors, successors and assigns
(collectively, "Releasees") from any and all claims, charges, complaints,
promises, agreements, controversies, liens, demands, causes of action,
obligations, damages and liabilities of any nature whatsoever, known or unknown,
suspected or unsuspected, which against them the Executive or his executors,
administrators, successors or assigns ever had, now have, or may hereafter claim
to have against any of the Releasees by reason of any matter, cause or thing
whatsoever arising on or before the Effective Time and whether or not previously
asserted before any state or federal court or before any state or federal agency
or governmental entity (the "Release"). The Release includes, without
limitation, any rights or claims relating in any way to the Executive's
employment relationship with the Company or any of the Releasees, or the
termination thereof, or arising under any statute or regulation, including the
Age Discrimination in Employment Act of 1967, Title VII of the Civil Rights Act
of 1964, the Civil Rights Act of 1991, the Americans with Disabilities Act of
1990, the Employee Retirement Income Security Act of 1974, and the Family
Medical Leave Act of 1993, each as amended, or any other federal, state or local
law, regulation, ordinance or common law, or under any policy, agreement,
understanding or promise, whether written or oral, formal or informal, between
any of the Releasees and the Executive, including the Employment Agreement.

                  (ii)   Nothing herein shall be deemed to release (A) any of
the Executive's rights under this Agreement or (B) any of the benefits that the
Executive has accrued prior to the date this Agreement is executed by the
Executive under the Company's qualified retirement plans.

                  (iii)  The Executive represents that the Company has advised
him to consult with an attorney of his choosing prior to signing this Agreement.
The Executive further represents that he understands and agrees that he has the
right and has in fact reviewed this Agreement and, specifically, the Release,
with an attorney of the Executive's choice. The Executive further represents
that he understands and agrees that the Company is under no obligation to offer
him this

                                       5
<PAGE>

Agreement, and that the Executive is under no obligation to consent to the
Release, and that he has entered into this Agreement freely and voluntarily.

                  (iv)  The Executive shall have twenty-one (21) days to
consider this Agreement and once he has signed this Agreement, the Executive
shall have seven (7) additional days from the date of execution to revoke his
consent to the Release set forth above. Any such revocation shall be made by
delivering written notification to the President and Chief Executive Officer of
the Company and upon such revocation, the Executive shall immediately repay to
the Company any amounts paid to him pursuant to Section 1(b) hereunder. In the
event that the Executive revokes his Release, all the terms of the other
sections and subsections of this Agreement, other than Section 1(a) hereof,
shall be null and void and shall not become effective. If no such revocation
occurs, the Release and this Agreement shall become effective as of the eighth
(8th) day after the date the Executive signs this Agreement.

           (b)    Release by the Company. As a material inducement to enter into
                  ----------------------
this Agreement, the Company, on its behalf and that of its affiliates and their
officers and directors, agents employees, successors and assigns (in their
capacity as officers or directors of the Company) likewise hereby knowingly and
voluntarily, fully and finally releases, acquits, and forever discharges the
Executive and his agents, employees, successors, heirs, beneficiaries or assigns
(the "Executive Released Parties") from any and all claims, charges, complaints,
liens, demands, causes of action, obligations, damages and liabilities for which
the Company has knowledge as of the Effective Time, that it had, now has, or may
hereafter claim to have against the Executive Released Parties arising out of or
relating in any way to the Executive's employment relationship with the Company,
whether or not previously asserted before any state or federal court or before
any state, federal or regulatory agency or governmental entity. As of the
Effective Time, the Company has no knowledge of any claim, charges, complaints,
liens, demands, causes of action, obligations, damages and liabilities against
the Executive Released Parties arising out of or relating in any way to the
Executive's employment relationship with the Company.

     Section 3.   Mutual Non-Disparagement; Reference. The Executive agrees that
                  -----------------------------------
he will not make or publish any statement which is, or may reasonably be
considered to be, disparaging of (a) the Company or of (b) Kelso Investment
Associates V, L.P. or Kelso Equity Partners V, L.P. (collectively, "Kelso"), the
Company's and Kelso's subsidiaries or affiliates, or directors, officers,
employees of the businesses of the Company or Kelso, or any of their
subsidiaries and affiliates. The Company and Kelso agree that it will not make
or publish any statement which

                                       6
<PAGE>

is, or may reasonably be considered to be disparaging of the Executive. The
Company agrees that if the Executive makes a written request to the Company for
a reference from the Company to be furnished to a prospective employer, such
reference shall be substantially in the form attached hereto as Exhibit A. The
Company further agrees that any verbal reference given by the Company to a
prospective employer of the Executive shall be substantially consistent with the
written reference set forth in the form attached hereto as Exhibit A.

     Section 4.   Confidentiality; Intellectual Property; Disclosure.
                  --------------------------------------------------

            (a)   Following the Effective Time, the Executive shall keep secret
and retain in strictest confidence, any and all Confidential Information (as
hereinafter defined) relating to the Company. For purposes of this Agreement,
"Confidential Information" shall mean any confidential or proprietary
information including, without limitation, plans, specifications, models,
samples, data, customer lists and customer information, computer programs and
documentation, and other technical and/or business information, in whatever
form, tangible or intangible, printed, electronic or magnetic, that can be
communicated by whatever means available at such time, that relates to the
Company's current business or future business contemplated during the period the
Executive served as an executive officer of the Company, products, services
and/or developments, or information received from others that the Company is
obligated to treat as confidential or proprietary, and the Executive shall not
disclose such Confidential Information to any person other than the Company,
except as may be required by law or court or administrative order (in which
event the Executive shall so notify the Company as promptly as practicable).
Following the Effective Time, the Executive shall also keep secret and retain in
the strictest confidence the terms and conditions of this Agreement, except as
may be required by law or court or administrative order (in which event the
Executive shall so notify the Company as promptly as practicable) and except to
his spouse, his attorneys, his financial advisors, his psychiatric or
psychological counselors, if any, and to persons as necessary to comply with or
enforce this Agreement. The Executive shall promptly return to the Company,
reproductions and summaries of Confidential Information in his possession or
control and erase the same from all media in his possession or control, and
shall certify in writing, no later than five business days following the
Effective Time, that he has done so in the form attached hereto as Exhibit B.
All Confidential Information is and shall remain the property of the Company, or
in the case of information that the Company receives from a third party which it
is obligated to treat as confidential, then the property of such third party.

                                       7
<PAGE>

     (b)   All Intellectual Property (as hereinafter defined) created,
developed, co-developed, obtained or conceived of by the Executive during the
period the Executive served as an executive officer of the Company, all
Intellectual Property of Algos Pharmaceutical Corporation and all business
opportunities presented to the Executive during the period the Executive served
as an executive officer of the Company, shall be owned by and belong exclusively
to the Company, provided that they reasonably relate to any of the business of
the Company on the date of such creation, development, obtaining or conception,
and the Executive shall (i) promptly disclose any such Intellectual Property or
business opportunity to the Company, and (ii) promptly execute and deliver to
the Company, without additional compensation, such instruments as the Company
may require from time to time to evidence its ownership of any such Intellectual
Property or business opportunity (the "Intellectual Property Documents"). If the
Company is unable because of the Executive's mental or physical incapacity or
for any other reason to secure the Executive's signature for any Intellectual
Property Document, then the Executive hereby irrevocably designates and appoints
the Company and its duly authorized officers and agents as his agent and
attorney in fact, to act for and in his behalf and stead to execute and file any
Intellectual Property Document and to do all other lawfully permitted acts to
evidence or perfect the Company's ownership and rights of and to any
Intellectual Property or business opportunity with the same legal force and
effect as if executed by the Executive. For purposes of this Confidentiality and
Non-Competition Agreement, the term "Intellectual Property" means any and all of
the following and all statutory and/or common law rights throughout the world
in, arising out of, or associated therewith: (i) all patents and applications
therefor, including docketed patent disclosures awaiting filing, reissues,
divisions, renewals, extensions, provisionals, continuations and continuations-
in-part thereof; (ii) all inventions (whether patentable or not), inventions
disclosures and improvements, all trade secrets, confidential business
information (including ideas, research and development, know-how, compositions,
designs, specifications, pricing and cost information and business and market
plans and proposals), proprietary information, manufacturing, engineering and
technical drawings and specifications, processes, designs and technology; (iii)
all works of authorship, "moral rights," copyrights (including derivative works
thereof), mask works, copyright and mask work registrations and applications
therefor; (iv) all trade names, trade dress, logos, product names, collective
marks, collective membership marks, trademarks certification marks and service
marks, trademark and service mark registrations and applications together with
the goodwill of the business symbolized by the names and the marks; (v) all data
and related documents, object code, databases, passwords, encryption technology,
firmware, development tools, files, records and data, and all media on which any
of the foregoing is recorded; (vi) all information pertaining to the development
of products under the Paragraph 4 Certification Rule; (vii) any

                                       8
<PAGE>

similar, corresponding or equivalent rights to any of the foregoing; (viii) all
documentation related to any of the foregoing; and (ix) all goodwill associated
with any of the foregoing.

     Section 5.   Cooperation. The Executive agrees that he will fully cooperate
                  -----------
in any litigation in which the Company or any of the Company's parents,
subsidiaries and affiliates may become involved. Such cooperation shall include
the Executive making himself reasonably available, upon the request of the
Company, for depositions, court appearances and interviews by Company's counsel;
provided, however, that in absence of exceptional circumstances, the Executive
--------  -------
shall not be required to make himself so available for more than three business
days during any month during the first six months following the Effective Time
or for more than one business day during any other month for the next eighteen
months. The Company shall attempt to schedule such cooperation at mutually
convenient times and places taking into account any employment constraints that
the Executive may have. The Company shall reimburse the Executive for reasonable
expenses, such as telephone, travel, lodging, and meal expenses, incurred by the
Executive at the request of the Company consistent with the Company's generally
applicable policies for employee expenses. To the maximum extent permitted by
law, the Executive agrees that he will notify the President and Chief Executive
Officer of the Company if he is contacted by any government agency, or by any
person contemplating or maintaining any claim or legal action against the
Company or any of the Company's parents, subsidiaries and affiliates, or by any
agent or attorney of such person. In addition, upon documentation in accordance
with the Company's normal procedures, the Company shall pay the Executive's
reasonable legal fees incurred in connection with such cooperation.

     Section 6.   Proceedings. The Executive has not filed, and agrees not to
                  -----------
initiate or cause to be initiated on his behalf, any complaint, charge, claim or
proceeding against the Company before any local, state or federal agency, court
or other body relating to his employment or the separation or termination of his
employment, other than with respect to the obligations of the Company to the
Executive under this Agreement, (each individually, a "Proceeding"), and agrees
not to voluntarily participate or join in any Proceeding. The Executive waives
any right he may have to benefit in any manner from any relief (whether monetary
or otherwise) arising out of any Proceeding.

     Section 7.   Nonadmissibility. Nothing herein nor any negotiations between
                  ----------------
the parties related hereto shall be admissible in any state or federal agency,
court or other body for any purpose other than in an action to enforce or
require

                                       9
<PAGE>

compliance with this Agreement or as required by law or any court or
governmental agency.

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

            (a)   Full Settlement. Except as set forth in Section 1(b)(viii),
                  ---------------
the Company's obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected by any
circumstances, including, without limitation, set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement, nor shall the
amount of any payment hereunder be reduced by any compensation earned by the
Executive as a result of employment by another employer.

            (b)   Termination of Employment Agreement. Except as set forth in
                  -----------------------------------
Sections 8(c) and 8(l) below and as set forth in Section 2.4 of the Employment
Agreement, which provides for the survival of the Company's obligation to
insure, indemnify and defend the Executive against claims, the Company and the
Executive agree that the Employment Agreement is hereby terminated and shall be
void and of no further effect, unless the Executive causes this Agreement to be
revoked pursuant to Section 2(a)(iv) hereof.

            (c)   Survival of Non-Competition Covenant. The Company and the
                  ------------------------------------
Executive agree that Article 8, Section 9.1 and Section 9.2 of the Employment
Agreement (collectively, the "Non-Competition Covenant") shall survive this
Agreement and continue in full force and effect.

            (d)   Termination of Stockholders Agreement. Subject to Section 8(l)
                  -------------------------------------
below, the Company and the Executive agree that the Stockholders Agreement among
Endo, Endo Pharma LLC, Kelso Equity Partners V, L.P. and Kelso Investment
Associates V, L.P., Greenwich Street (as such term is defined therein) and the
Executive, dated as of December 1, 1997 (the "Stockholders Agreement") is hereby
terminated and shall be void and of no further effect to the extent such
Stockholders Agreement is applicable to the Executive.

            (e)   Governing Law; Jurisdiction. This Agreement shall be governed
                  ---------------------------
by and construed in accordance with the laws of the State of Delaware without
regard to its conflicts of law principles.

                                      10
<PAGE>

            (f)   Headings. The section and paragraph headings contained in this
                  --------
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.

            (g)   Counterparts. This Agreement may be executed in two or more
                  ------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

            (h)   Entire Agreement. This Agreement constitutes the entire
                  ----------------
agreement, and supersedes any and all prior agreements, and understandings, both
written and oral, between the parties hereto with respect to the subject matter
hereof; except as otherwise provided herein.

            (i)   Severability. If any term or other provision of this Agreement
                  ------------
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect.

            (j)   Successors. This Agreement shall be binding upon and shall
                  ----------
inure to the benefit of each of the parties hereto, and their respective heirs,
legatees, executors, administrators, legal representatives, successors and
assigns.

            (k)   Withholding. All payments made by the Company to the Executive
                  -----------
pursuant to Section 1(b) of this Agreement shall be reduced by all federal,
state, city or other taxes that are required to be withheld pursuant to any law
or governmental regulation.

            (l)   Reinstatement of Rights. Except for Sections 1(b)(i),
                  -----------------------
1(b)(ii), 1(b)(iii), 1(b)(iv), 1(b)(vi) and 1(b)(vii) hereof, this Agreement
shall have no force or effect in the event that the Merger contemplated by the
Merger Agreement is not consummated and the Merger Agreement is terminated. In
such case, both the Stockholders Agreement and the Employment Agreement shall be
reinstated to the extent set forth below. If the Stockholders Agreement is
reinstated pursuant to this Section 8(l), for purposes of determining the
Executive's rights and obligations under the Stockholders Agreement, the
Executive's employment shall be treated as terminated for Good Reason (as such
term is defined in Section 4.3(b) of the Stockholders Agreement) with such
termination to be effective on the date the Merger Agreement is terminated. If
the Employment Agreement is reinstated pursuant to this Section 8(l), the
Executive's employment shall be treated, for all purposes under the Employment
Agreement, as terminated for Good Reason (as such term is defined in Section 6.4
of the Employment Agreement) with such termination

                                      11
<PAGE>

to be effective on the Effective Time, provided that, in no case, will there be
duplication of payments or benefits pursuant to Section 6.5(a) of the Employment
Agreement.

                                      12
<PAGE>

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

                                    ENDO PHARMACEUTICALS INC.

                                    By:  /s/ CAROL A. Ammon
                                         ---------------------------------------
                                         Name:    Carol A. Ammon
                                         Title:   Chief Executive Officer

                                    ENDO PHARMACEUTICALS HOLDINGS INC.

                                    By:  /s/ CAROL A. Ammon
                                         ---------------------------------------
                                         Name:    Carol A. Ammon
                                         Title:   Chief Executive Officer

                                         /s/ LOUIS J. VOLLMER
                                         ---------------------------------------
                                         LOUIS J. VOLLMER

                                      13<PAGE>

                                                                   EXHIBIT 10.33

                                 OFFICE LEASE
                                    FOR THE

                           NORTHSTAR OFFICE BUILDING

                CONCORD TOWNSHIP, DELAWARE COUNTY, PENNSYLVANIA

                                    between

                 Northstar Development Company ("Landlord*")

                                      and

                     Endo Pharmaceuticals Inc. ("Tenant")
<PAGE>

                               TABLE OF CONTENTS
                               -----------------

                                                                            Page
                                                                            ----

1. Leased Space..............................................................  1

2. Use.......................................................................  1

3. Lease Term................................................................  1

4. Rent......................................................................  2

5. Rent Adjustments..........................................................  3

6. Definitions...............................................................  3
   (a)"Operating Year".......................................................  3
   (b) "Real Estate Taxes"...................................................  3
   (c) "Operating Expense Statement".........................................  3
   (d) "Operating Expense"...................................................  4

7. Payment of Operating Expense Adjustment...................................  6

8. Improvements .............................................................  7

9. Utilities and Service ....................................................  9

10. Affirmative Covenants of Tenant .........................................  9

11. Negative Covenants of Tenant ............................................ 10

12. Operations .............................................................. 11

13. Common Areas ............................................................ 12

14. Indemnification and Insurance ........................................... 13

15. Total or Partial Destruction ............................................ 14

16. Condemnation ............................................................ 15

17. Additions and Alterations ............................................... 15

18. Covenant Against Liens .................................................. 17

19. Assignment and Subletting ............................................... 17
<PAGE>

<TABLE>

<S> <C>                                                                                                <C>
20. Surrender of Possession .........................................................................  18

21. Holding Over ....................................................................................  18

22. Subordination and Attornment ....................................................................  19

23. Events of Default ...............................................................................  19

24. Remedies upon Default ...........................................................................  20

25. Additional Rent .................................................................................  22

26. Offset Statement ................................................................................  22

27. Quiet Enjoyment .................................................................................  23

28. Notices .........................................................................................  23

29. Security Deposit ................................................................................  23

30. Rights of Expansion .............................................................................  24

31. Broker ..........................................................................................  24

32. Signage and Satellite Equipment .................................................................  25

33. Parking Spaces ..................................................................................  25

34. Miscellaneous ...................................................................................  26
      (a)  Nonwaiver ................................................................................  26
      (b)  Certain Definitions ......................................................................  26
      (c)  Binding Effect ...........................................................................  26
      (d)  Entire Agreement .........................................................................  26
      (e)  Governing Law ............................................................................  27
      (f)  Severability .............................................................................  27
      (g)  Right to Transfer ........................................................................  27
      (h)  No Recording .............................................................................  27
      (i)  Headings .................................................................................  27
      (j)  Counterparts .............................................................................  27
      (K)  Holidays .................................................................................  27
      (l)  Storage Space ............................................................................  28
      (m)  Fitness Center ...........................................................................  28

Exhibit A --DESCRIPTION OF LEASED SPACE .............................................................  30

Exhibit B --LEASE SUPPLEMENT  .......................................................................  31
</TABLE>
<PAGE>

<TABLE>

<S>                                                                                                <C>
Exhibit C -- LEASEHOLD IMPROVEMENTS TO BE FURNISHED BY LANDLORD....................................  32

Exhibit C-l -- ....................................................................................  33

Exhibit D -- BUILDING RULES AND REGULATIONS........................................................  34

Exhibit E -- PERMITTED MATERIALS ..................................................................  38

Exhibit F -- UTILITIES AND SERVICES ...............................................................  39

</TABLE>
<PAGE>

                                  OFFICE LEASE
                                    for the
                               NORTHSTAR BUILDING
                        223 Wilmington West Chester Pike
                Concord Township, Delaware County, Pennsylvania

    THIS IS A LEASE AGREEMENT ("Lease"), dated the 26th day of August, 1997,
by and between Northstar Development Company, a Pennsylvania corporation, whose
mailing address is 223 Wilmington West Chester Pike, Chadds Ford, Pennsylvania
("Landlord"), and Endo Pharmaceuticals Inc., a Delaware corporation, whose
mailing address is P.O. Box 4144, Wilmington, Delaware 19807 ("Tenant").

    NOW, THEREFORE, intending to be legally bound, Landlord and Tenant agree as
follows.

                                     TERMS

    1. Leased Space. Landlord hereby leases to Tenant, which rents from Landlord
       ------------
subject to the terms of this Lease, approximately 10,992 square feet of space as
shown on Exhibit A hereto (the "Leased Space") located on the third floor of the
office building (the "Building") known as the Northstar Building which contains
approximately 44,300 rentable square feet, situate on a lot at 223 Wilmington
West Chester Pike, Concord Township, Delaware County, Pennsylvania ("Land") (the
Building and Land being herein collectively referred to as the "Premises").

    2. Use. Tenant shall use and occupy the Leased Space for general office
       ---
purposes and no other purpose.

    3. Lease Term.
       ----------

          (a) This Lease shall commence ("Commencement Date") on October 1,
1997.

          (b) This Lease shall be for an initial term of five years ("Term").
Tenant shall, if requested by Landlord, execute a supplement to this Lease,
substantially in the form of Exhibit C hereto, setting forth the Commencement
Date and Term.
<PAGE>

               (c)  Tenant shall have the right to extend the initial term of
this Lease for one further five year period by providing Landlord prior written
notice of such extension given no later than six months prior to the expiration
of the then current term of this Lease. Upon Tenant's extension of this Lease,
the term "Term" as used in this Lease shall include such additional five year
period.

      4.  Rent. Tenant agrees to pay to Landlord all rent due under this Lease
          ----
in accordance with the provisions of this Lease and as following:

                    (i)   Tenant shall pay to Landlord, rent at the annual rate
      of $214,344 (the monthly rate of $17,862) for the period commencing on the
      Commencement Date and ending on the day immediately preceding the first
      anniversary of the Commencement Date, for the Leased Space, ("Annual Base
      Rent"); and

                    (ii)  beginning with the first anniversary of the
      Commencement Date and on each anniversary thereafter throughout the
      balance of the Term, the Annual Base Rent shall be increased by a factor
      of two and five tenths (2.5%) percent; and

                    (iii) The Annual Base Rent shall be payable by Tenant
      beginning on the Commencement Date in monthly installments equal to one-
      twelfth the Annual Base Rent ("Monthly Fixed Rent") in advance on the
      first day of each month, at the Landlord's address set forth above or at
      such other place as Landlord may direct Tenant by written notice; and,
      except as expressly otherwise provided herein, shall be payable without
      prior notice or demand, and without any set-off, deduction or counterclaim
      whatsoever. If the Term commences other than on the first day of a month
      or ends other than on the last day of a month, the Monthly Fixed Rent for
      such month shall be prorated. The first installment of Monthly Fixed Rent
      shall be paid at the time of execution of this Lease.

               (a) Tenant shall also pay to Landlord, as additional rent
hereunder, the "Rent Adjustments" provided for in Section 5 of this Lease.

                                       2
<PAGE>

               (b) All sums payable by Tenant under this Lease, whether or not
stated to be Annual Base Rent or additional rent, are included in and shall be
deemed to be "Rent" payable by Tenant to Landlord under this Lease.

           5.  Rent Adjustments. Tenant agrees to pay to Landlord, as additional
               ----------------
rent, an amount equal to 24.8 percent ("Tenant's Pro Rata Share") of the
increase, if any, in the Operating Expenses of the Building and Land for any
Operating Year over the Operating Expenses for the calendar year 1997 ("Base
Year"). The terms "Operating Expense" and "Operating Year" are defined below.
The amount of Tenant's Pro Rata Share of such increase is referred to in this
Lease as the "Operating Expense Adjustment." If the Term applies to less than a
full Operating Year, the Operating Expense Adjustment will be prorated on a per
diem basis.

           6.  Definitions. The words and terms which are set out below by
               -----------
quotation marks and bold face type shall have the meaning stated therefor:

               (a) "Operating Year" means each calendar year occurring during
the Term after the Base Year.

               (b) "Real Estate Taxes" means all taxes, liens, charges,
impositions and assessments of every kind and nature, ordinary or extraordinary,
foreseen or unforeseen, general or special (but not including income or
franchise taxes, capital stock, inheritance, estate, gift or any other taxes
imposed upon or measured by Landlord's income or profits, unless the same shall
be imposed in lieu of ad valorem real estate taxes), levied, assessed or imposed
by any governmental authority on and/or with respect to the Land and/or the
Building which Landlord shall become obligated to pay because of or in
connection with the ownership, leasing and operation of the Land and the
Building. Landlord hereby represents that the Building is fully assessed for
real estate tax purposes.

               (c) "Operating Expense Statement" means a written statement
setting forth: (i)the Operating Expense for the preceding Operating Year (or
portion thereof if less than a full Operating Year), (ii) the Operating Expense
for the Base Year, (iii) Tenant's Operating Expense Adjustment for such
preceding Operating Year, prorated if only a part of the Operating Year falls

                                       3
<PAGE>

within the Term, (iv) the amount of payments ("Monthly Expense Estimate") made
by Tenant against the Operating Expense Adjustment for the preceding Operating
Year, and (v) the Monthly Expense Estimate to be paid against the estimated
Operating Expense Adjustment for the current Operating Year. The Operating
Expense Statement for each Operating Year shall be prepared in accordance with
the terms of this Lease and generally accepted accounting principles, and shall
be sent to Tenant within 90 days after the end of the applicable Operating Year.

                  (d)   "Operating Expense" means the costs and expenses paid by
Landlord in connection with the ownership, operation, repair, maintenance and
management of the Building and the Land, including, but not limited to, those
expenses paid for or in connection with any and all of the item, activities
and provided services described herein. In no event shall increases in the cost
of providing services to, or maintenance of, the Building which are included in
Operating Expense exceed four percent (4%) in any year.

                        (i)  Real Estate Taxes; maintenance and repair of the
        Land, including, without limitation, landscaped areas, lawns, parking
        areas (in including resurfacing and restriping), sidewalks,
        infrastructure and other facilities (but no buildings other than the
        Building) located on the Land; maintenance and repair of the Building;
        janitorial service, cleaning (including window washing) and trash
        removal for the Building; maintenance of the common areas of the Land
        including snow and rubbish removal; Building management, including
        reasonable management fees (but, in any event, limited to a maximum
        amount equal to 4 percent of the net rent received by Landlord after
        deducting Landlord's expenses therefrom), and charges and wages, payroll
        taxes, unemployment insurance costs and benefit payments to or for the
        benefit of Building management employees and/or Landlord's Building on-
        site personnel; all utility service provided to the Land or Building not
        directly metered to and paid by any tenant (but excluding the cost of
        providing electricity to other tenants in excess of the amount supplied
        to Tenant at no charge); those capital improvements required by law or
        which directly reduce other operation and/or maintenance expenses
        (provid-

                                       4
<PAGE>

                ed that the costs of such capital improvements shall be
                amortized over the reasonable useful life of the capital
                improvement and only the yearly amortizing amount, together with
                interest on the unamortized balance of the cost, shall be part
                of Operating Expenses; provided further, that with respect to
                capital improvements which reduce expenses, the amount included
                in any year shall not exceed the lesser of such amortized amount
                and the actual cost savings realized in such year as a result of
                such capital improvement); insurance premiums and other charges
                incurred by Landlord with respect to insurance relating to the
                Building and the Land and the operation and maintenance thereof;
                reasonable auditing and accounting fees; sales and excise taxes
                and similar taxes upon any of the expenses listed herein;
                reasonable legal fees with respect to the Building and Land
                other than those incurred in the negotiation or enforcement of
                tenant leases or in relation to any sale or refinancing of the
                whole or any part of the Building or the Land; and any and all
                other expenditures by Landlord which are properly expensed in
                accordance with generally accepted accounting principles
                consistently applied with respect to the operation, repair,
                maintenance, protection and management of the Building and Land.

                         (ii)  Notwithstanding the foregoing provisions,
                Operating Expense shall not include costs or expenses paid or
                payable for any of the following: repairs or other work
                occasioned by fire, windstorm or other insured casualty or
                hazard, to the extent that Landlord receives insurance proceeds
                for such repair or other work; repairs or rebuilding necessi-
                tated by condemnation; depreciation and amortization of the
                Building; the salaries and benefits of executive officers of
                Landlord or the Building manager, if any; ground lease payments
                or interest and principal payments on any mortgage or other
                indebtedness of Landlord; or capital improvements other than
                those required by law or which reduce the operation expenses of
                the Building.

                         (e)   Landlord shall maintain books of account in
respect of all Operating Expenses which shall be available for inspection by
Tenant upon reasonable prior notice at times reasonably acceptable to Landlord.

                                       5
<PAGE>

In the event any disagreement with respect to any Operating Expense or
Operating Expense Statement shall arise, such dispute may be referred by either
party to an independent  public accountant to be mutually agreed upon and whose
decision on the disagreement shall be final and binding on both parties.

           7.  Payment of Operating Expense Adjustment. Tenant shall pay to
               ---------------------------------------
Landlord, as Rent hereunder, Tenant's Operating Expense Adjustment, as follows:

               (a)  After the end of each Operating Year, Landlord shall furnish
Tenant with an Operating Expense Statement. By no later than the 30th day
following receipt of such Operating Expense Statement ("Expense Adjustment
Date"), Tenant shall pay to Landlord (x) the amount by which the Operating
Expense Adjustment for such previous Operating Year (other than the first Lease
Year) exceeds the aggregate of Monthly Expense Estimates paid by Tenant with
respect to such Operating Year, and (y) the amount by which the Monthly Expense
Estimate for the current Operating Year as shown on the Operating Expense
Statement multiplied by the number of months elapsed in the current Operating
Year (including the month in which payment is made) exceeds the aggregate amount
of payments of the Monthly Expense Estimate theretofore made in the current
Operating Year in which the Operating Expense Statement is issued.

               (b)  On the first day of the first month following receipt by
Tenant of an annual Operating Expense Statement and continuing thereafter on the
first day of each succeeding month until the issuance of the next ensuing
Operating Expense Statement, Tenant shall pay Landlord the amount of the Monthly
Expense Estimate shown on the Operating Expense Statement. If Landlord estimates
that the Operating Expenses for the Operating Year during which this Lease
commences will exceed the Operating Expenses for the Base Year, Tenant shall pay
to Landlord a Monthly amount set by Landlord which is sufficient to pay
Landlord's estimate of the Operating Expense Adjustment for such Operating Year
(or portion thereof) prior to the expiration of the Operating Year.

               (c)  If, on any Expense Adjustment Date, Tenant's payments of the
installments of the Monthly Expense Estimate for the preceding or current year's

                                       6
<PAGE>

Operating Expense Adjustment is greater than the actual Operating Expense
Adjustment for such preceding Operating Year or Monthly Expense Estimate for the
current year, Landlord shall, at the option of Tenant, refund the excess to
Tenant or credit Tenant with any excess, which credit may be offset by Tenant
against any amounts payable  pursuant to sections 7(a)(y) or 7(b) above.

               (d)  If the Term expires prior to the Expense Adjustment Date for
the applicable Operating Year and if it is determined that Tenant's payments of
Monthly Expense Estimate either is more or is less than the Operating Expense
Adjustment, Landlord shall send the Operating Expense Statement to Tenant, and
an appropriate payment from Tenant to Landlord or refund from Landlord to Tenant
shall be made on the Expense Adjustment Date.

               (e)  Notwithstanding the foregoing, in no event shall the Annual
Base Rent or Monthly Fixed Rent be reduced regardless of any decrease in
Operating Expenses from those of the Base Year.

           8.  Improvements.  Prior to the Commencement Date, Landlord will
               ------------
prepare the Leased Space as in accordance with the scope of work attached as
Exhibit C and the plans identified on Exhibit C-l ("Landlord's Work"). The
Leased Space shall be delivered to Tenant fully sprinklered. In the event
Landlord fails to deliver possession of Leased Space to Tenant on the
Commencement Date, the Term of this Lease with respect to the Leased Space shall
nevertheless begin on the Commencement Date but all Rent shall abate until the
Leased Space is ready for occupancy or until Landlord is able to deliver
possession of the Leased Space, and, except as otherwise expressly set forth
herein, Landlord shall have no other liability on account thereof; provided,
however, there shall be no abatement of Rent if the Leased Space is not ready
for occupancy on the Commencement Date because of non-completion of the
installation of special equipment, fixtures or materials ordered by Tenant,
because the same were not timely furnished by or available from suppliers,
because of delays resulting from Tenant's failure to approve or submit plans and
specifications timely in accordance with the Work Letter attached hereto or
other written agreement, or because of changes or additions to Tenant's plans
and specifications requested by Tenant after the initial submission thereof. The
Leased Space

                                       7
<PAGE>

shall not be deemed not ready for occupancy if only insubstantial details of
construction, decoration or mechanical adjustments remain to be done. In any
event, Landlord shall use all reasonable endeavors to ensure that the executive
suite and five additional offices of the Leased Space are completed within
thirty days of the date hereof. If the Leased Space will not be ready on or
before the Commencement Date, Landlord agrees to give Tenant thirty days prior
notice of the date of substantial completion. The determination of Mr. R.
McDonald of RJM Design shall be final and conclusive on both Landlord and Tenant
as to whether the Leased Space is completed and ready for occupancy. If Tenant
shall take possession of any part of the Leased Space prior to the Commencement
Date (which Tenant may not do without Landlord's prior written consent), all of
the covenants and conditions of this Lease shall be binding upon the parties
hereto with respect to such part of the Leased Space as if the first day of the
Term had been fixed as the date when Tenant entered such possession and Tenant
shall pay to Landlord Rent for the period of such occupancy prior to the first
day of the Term of this Lease at the rate of the Annual Base Rent for the
portion of Leased Space so occupied; provided, however, that no rent shall be
payable if Tenant occupies the executive suite and additional offices while
Landlord is completing Landlord's Work. Under no circumstances shall the
occurrence of any of the events hereinabove referred to be deemed to accelerate
or defer the Expiration Date of the Term. Landlord shall not be liable to Tenant
for any cost, loss, expense or charge of any kind whatsoever because of
Landlord's inability to deliver possession of the Leased Space on or before any
date provided herein, but will deliver possession to Tenant as soon thereafter
as possible. Except in relation to delays caused by Tenant as a result of
changes to or the inclusion of long lead time items in the scope of work
attached as Exhibit C or due to events beyond Landlord's control, if the Leased
Space is not completed and ready for occupancy within ninety days of the date
hereof, Tenant shall have the right to terminate this Lease by giving written
notice of such termination to Landlord and thereupon this Lease shall be of no
further effect and the parties hereto shall be released and relieved from any
and all liability hereunder. By entry and commencement of the use and occupancy
of the Leased Space, Tenant shall have acknowledged it has examined the portion
of the Leased Space so occupied and thereby shall

                                       9
<PAGE>

be deemed to accept such as being in the condition required by this Lease,
including Exhibit C, but Tenant shall not be deemed to accept any latent defects
or any other defects in the Leased Space which could not reasonably be detected
due to the season in which occupancy takes place and Landlord shall be obligated
to promptly repair the same upon receiving notice from Tenant of the existence
thereof.

           9.  Utilities and Service.  Landlord will cause to be supplied to the
               ---------------------
Leased Space heat, ventilation and air conditioning for normal office use 24
hours a day in accordance with the specifications set forth in Exhibit F
attached hereto and made a part hereof and shall furnish electricity and water
to the Leased Space in amounts and at times consistent with similar services
provided like office buildings in the immediate area during normal operating
hours (which shall include the hours from 7:00 a.m. to 6:00 p.m. on weekdays and
8:00 a.m. to 1:00 p.m. on Saturdays). Landlord shall provide to the Leased
Space, at no additional charge to Tenant, five watts of electricity per rentable
square foot. Notwithstanding the above, (a) Landlord shall not be liable for
failure to supply any such services on account of causes beyond its reasonable
control, and (b) if Tenant's use of electricity, in Landlord's reasonable
judgment, exceeds normal office use levels whether due to higher demand,
extended office hours, installation of special equipment, or other causes,
Landlord may, at Tenant's expense, (i) install meters in the Leased Space to
measure the electricity consumed by Tenant, or (ii) estimate the electricity
consumed in the Leased Space, billing Tenant the cost thereof above normal
office use (i.e. 5 watts per square foot) levels as additional rent. Landlord
            ---
shall also provide Tenant with elevator access to the Leased Space twenty-four
hours per day, every day of the year, except in the case of casualty or
emergency.

           10. Affirmative Covenants of Tenants. The Tenant covenants and
               --------------------------------
agrees that it shall, without notice or demand from Landlord:

               (a)  keep the Leased Space in good order and repair, reasonable
wear and tear and any structural elements of the Leased Space alone excepted and
be responsible for the repairs and replacements to the Leased Space or Premises
made necessary by reason of damage

                                       9
<PAGE>

caused by Tenant, its officers, agents, employees, invitees or guests;

               (b)  be responsible for the repair of all damage caused by
Tenant, and all maintenance required as a result of the negligent acts of
Tenant, to the plumbing, electrical and other fixtures located within the Leased
Space, except for Building lavatories, heating and air conditioning apparatus,
which will be maintained by Landlord;

               (c)  comply with all laws, ordinances, orders  and regulations of
governmental authorities relating to Tenant's manner of use of the Premises and
the actual conduct of Tenant's business, agreeing to indemnify and hold harmless
from all consequences for failure to do so;

               (d)  promptly notify Landlord in writing of any damage to or
defects in the Leased Space, and of any injury to persons or property which
occur therein or on the Premises of which Tenant has notice;

               (e)  comply with those rules and regulations set forth in Exhibit
D; and

               (f)  not take any action which will increase the amount of
Landlord's insurance premiums in relation to the Premises and will comply with
all reasonable recommendations of Landlord's insurer with respect to any
precautions concerning life and safety and against fire.

           11. Negative Covenants of Tenants.
               -----------------------------
               (a)  In no event shall Tenant permit in the Leased Space highly
flammable products or any other articles of intrinsically dangerous nature
(including without limitation, firearms), and in no event shall Tenant, its
agents, employees or invitees bring any of such products into the Building or
onto the Land. If by reason of the failure of Tenant to comply with the
provisions of this Section, any insurance coverage is jeopardized or insurance
premiums are increased, Landlord, without limiting its rights arising because of
such breach of Tenant's obligations under this Lease, shall have the right to
require Tenant to make immediate payment of any increased insurance premium.

                                       10
<PAGE>

                 (b)  Without limiting the generality of the foregoing,
(i) Tenant shall not, and shall not permit any other person to, locate, store,
generate, manufacture, process, distribute, use, treat, transport, handle,
dispose of, emit, discharge or release any Hazardous Materials (defined
below)on, from or with respective to the Leased Space, (ii) Tenant shall
immediately notify Landlord of any violation of or potential liability under any
federal, state or local law, ordinance, statute, requirement, order, rule or
regulation relating to Hazardous Materials (collectively, "Environmental Laws"),
and (iii)Tenant shall comply with all Environmental Laws relating to its use and
occupancy of the Leased Space. The term "Hazardous" Materials means any
substance or material deemed hazardous or toxic, or required to be disclosed,
reported, treated, removed, disposed of or cleaned up by any applicable federal,
state or local law, ordinance or regulation now or hereafter in effect, and
includes, without limitation, polychlorinated biphenyls, asbestos and petroleum-
based products, but excludes any items set out on Exhibit E that are used in the
ordinary course of Tenant's business and in compliance with law. Without
limitation to any other provision of this Lease, Tenant shall be obligated to
indemnify Landlord from and against all losses, damages, costs and expenses
incurred by Landlord with respect to the matters referred to in this Section.
Landlord shall be obligated to indemnify Tenant from and against all losses,
damages, costs and expenses incurred by Tenant as a result of the failure by
Landlord or any other tenant of the Premises to comply with all Environmental
Laws relating to the use and occupancy of the Building.

           (c) Tenant shall not conduct itself, nor permit its agents, officers,
employees, invitees or guests to conduct themselves, in a manner which
interferes with the rights of other tenants of the Building, or is improper,
unsafe or in violation of the regulations set forth in Exhibit D.

       12. Operations.  Tenant covenants and agrees Landlord shall have the
           ----------
right to do or undertake the following:

           (a) at all reasonable times and (except in emergencies)on giving 24
hours prior notice to Tenant, to enter the Leased Space to, (i)inspect the same,

                                      11
<PAGE>

(ii) make repairs, alterations, additions or improvements thereto (whether or
not caused by fire or other casualty), or install, repair, adjust or alter
electrical wiring or any heating, air conditioning or other equipment or
fixtures therein or in the Building, (iii) fight fire in the Building,
(iv) control conditions resulting from flood, and (v) perform cleaning or
janitorial services as may be required; it being agreed that Landlord shall
obtain Tenant's prior consent (such consent not to be unreasonably withheld)
to any alterations to the Leased Space; the Premises which will modify the
Leased Space in any manner and that in the event Landlord makes any such
repairs, alterations, improvements, installations or adjustments to or in the
Leased Space or Building Landlord shall ensure that all work is performed in
a manner so as to minimize any inconvenience or interruption to the business or
occupancy of Tenant caused thereby, and such action shall in no way affect or
alter Tenant's obligations hereunder;

           (b) to make, and from time to time to alter, add or rescind such
rules and regulations (including but not limited to those set forth in Exhibit
D) as in Landlord's judgment may be necessary or appropriate for the safety,
care and cleanliness of the Premises, but in any event, such rules and
regulations shall be reasonable and enforced in a non-discriminatory manner; and

           (c) at its discretion and on giving at least ten days prior written
notice to Tenant, to do whatever may be necessary in performing any covenant or
agreement which Tenant has fail&ed to perform, to cure any default by Tenant,
and to enter upon the Leased Space for such purpose.

    13. Common Areas. Tenant and its agents, officers, employees and business
        ------------
invitees shall have the right to use the hallways, lobbies, stairways, rest
rooms and lunch rooms indicated as Common Areas on Exhibit A ("Common Area") in
the Building for their intended purpose and for no other purpose. Landlord shall
have the responsibility for maintaining and cleaning all Common Areas.

                                       12
<PAGE>

     14.  Indemnification and Insurance.
          -----------------------------

          (a)  Tenant agrees to indemnify Landlord from any and all liability,
loss, cost, cause of action, suit, claim, demand or judgment of any nature
whatsoever on account of, or arising from: (i) injury to, or death of, any
person or any damage to property in the Leased Space caused by Tenant or in any
manner growing out of or connected with Tenant's use, non-use or condition of
the Leased Space or Tenant's use of the Premises, as well as, (ii) any violation
by Tenant of an agreement or condition of this Lease or of any agreement to
which Tenant is a party or any ordinance or regulation with which Tenant is
obligated to comply pursuant to the terms hereof, in each case affecting the
Premises, Leased Space or any part thereof, or the occupancy or use thereof. In
case any action, suit or proceeding is initiated against Landlord by reason of
any occurrence, as above, Tenant covenants, upon Landlord's request, and without
limitation on Tenant's obligation of indemnity as aforesaid, to resist or defend
such action or proceedings by counsel satisfactory to Landlord, and Landlord
will cooperate and assist in the defense of such action or proceedings if
reasonably requested by Tenant. Nothing in this Section shall be construed as
obligating Tenant to indemnify Landlord for the gross negligence or willful
misconduct of Landlord or its agents, invitees, employees, shareholders,
members, partners, directors or principals. Landlord agrees to indemnify Tenant
from any and all liability, loss, cost, cause of action, suit, claim, demand or
judgment of any nature whatsoever, to the extent the same relates to the Land or
Building (other than the Leased Space) and is not a result of the gross
negligence or willful misconduct of Tenant or its agents, invitees, employees,
shareholders, members, partners, directors or shareholders.

          (b)  Tenant shall maintain in full force and effect during the Term,
at Tenant's own cost and expense, public liability insurance acceptable to
Landlord sufficient in amount to cover the indemnification provided in
subsection (a) above, naming as insured Landlord and Tenant as their respective
interests may appear, with minimum limits of $500,000 on account of bodily
injuries to, or death of more than one person as a result of any one accident,
and $250,000 on account of damage to property. Such policy shall not be
cancelable

                                      13
<PAGE>

without at least ten days prior notice to Landlord and shall provide that no act
or omission of Tenant will invalidate the interest of Landlord under such
insurance. Tenant shall deposit the policy or certificates thereof with Landlord
prior to taking occupancy of the Leased Space or when so requested from time to
time by Landlord. The limits provided herein may be changed from time to time as
Landlord may reasonably require.

          (c)  Landlord, its agents, officers, servants and employees, shall not
be liable for, and Tenant hereby expressly releases Landlord, its agents,
officers, servants and employees from any and all claims for damage to person or
property (including loss or interruption of business) sustained by Tenant, or
any other person claiming through Tenant, prior to the date hereof or during the
Term, resulting from fire, accident, occurrence or condition in or upon the
Leased Space, Building on Premises, and the streets, sidewalks and other areas
abutting or adjacent to the Premises, unless such damage was caused by the
willful act or gross negligence of Landlord.

     15.  Total or Partial Destruction. If during the Term the Building is so
          ----------------------------
damaged by fire, the elements or other casualty that the Leased Space is
rendered unfit for the use provided herein and cannot be repaired within ninety
business days from the occurrence of the casualty or the related loss is not
included in the risks covered by Landlord's then current insurance, this Lease,
at Landlord's option (which must be exercised, if at all, by written notice
given within 40 business days of the casualty) shall terminate as of the date of
the occurrence of the casualty. In the event such restoration can not be, or is
not, completed within 180 days from the date of the casualty, Tenant shall have
the right to terminate this Lease by giving written notice to Landlord within
ten days after learning of such circumstance. In such event, Tenant shall pay
the Rent provided herein apportioned to the date of the occurrence of the
casualty and Landlord may enter upon and repossess the Leased Space. If neither
party elects to terminate this Lease as above, Landlord shall repair the damage
with reasonable dispatch and the Rent shall be apportioned and abated until the
date Landlord advises Tenant in writing the Leased space is ready for occupancy,
all other terms hereof remaining in full force and effect.

                                      14
<PAGE>

     16.  Condemnation.
          ------------

          (a)  If the Leased Space or any part thereof shall be condemned for
public or quasi-public use, this Lease shall terminate as of the date possession
of the Leased Space is surrendered to the condemning authority with the Rent and
additional rent to be paid to that date and all rent paid in advance apportioned
as of the date of termination. In the event of a partial taking or condemnation
which does not render the Leased Space unsuitable for the businese of the
Tenant, Landlord shall promptly restore the Leased Space to a condition
comparable to that at the time of condemnation, less the portion lost in the
taking, and this Lease shall continue in full force and effect, but the Rent
shall abate proportionately. In the event of a taking or condemnation of any
part of the Promises (whether or not the Leased Space shall be affected),
Landlord may terminate this Lease by written notice to Tenant within sixty days
after the date of taking, in which event this Lease shall terminate thirty days
thereafter with the Rent and additional rent apportioned as of the date of
termination.

          (b)  Tenant shall make no claim against Landlord, nor the condemning
authority, for the value of any unexpired portion of the Term. Tenant hereby
assigns to Landlord any award or payment to which Tenant is or may become
entitled by reason of a taking of the Leased Space or any part thereof.
Notwithstanding the above, Tenant shall have the right, to the extent such claim
shall not diminish the awards referred to above, to seek from the condemning
authority, but not Landlord, such compensation as may be separately awarded or
recovered by Tenant in its own right for any cost which Tenant may incur in
removing its furniture, fixtures and equipment from the Leased Space, as well as
Tenant's moving expenses and business dislocation damages.

     17.  Additions and Alterations.
          -------------------------

          (a)  Tenant may make non-structural alterations to the Leased Space
without Landlord's consent, provided Tenant has given prior written notice and
reasonable details of such alterations to Landlord. Tenant shall not make any
structural alterations or improvements to the Leased Space without the prior
written consent of Landlord. Landlord need not give any such consent, but

                                      15
<PAGE>

if Landlord does, it may impose such-conditions with respect thereto as Landlord
deems appropriate, including, without limitation, requiring Tenant to furnish
Landlord with security for the payment of all costs to be incurred in connection
with such work and insurance against liabilities which may arise out of such
work, as determined by Landlord. If Landlord does give its consent, the further
provisions below shall apply to the alterations or improvements.

          (b)  The work neceseary to make any structural alterations or
improvements shall be done at Tenant's expense by employees of or contractors
hired by Landlord, except to the extent Landlord gives its written consent to
Tenant's hiring its own contractors. Tenant shall promptly pay to Landlord or to
Tenant's contractors, as the case may be, when due, the cost of all such work,
and upon completion deliver to Landlord, if payment is to be made directly to
Contractors, evidence of payment, including contractors' affidavits and full and
final releases of all liens for labor, services or materials; and Tenant shall
defend and hold Landlord and the Land and Building harmlees from all costs,
damages, liens and expenses related thereto.

          (c)  No work shall be commenced by any contractor engaged directly by
Tenant until all necessary permits have been obtained and Tenant has provided
Landlord with (i) all available assurances that the Building and Land will not
be subject to any mechanic's lien claim because of non-payment of the contractor
or any subcontractor, and (ii) evidence of liability insurance coverage
reasonably requested by Landlord. All work done by Tenant or its contractors
shall be done in a first-class, workmanlike manner using only good grades of
materials and shall comply with all insurance requirements and all applicable
laws and ordinances and rules and regulations of governmental departments or
agencies. All required permits shall be applied for by Landlord at Tenant's
expense.

          (d)  All alterations and improvements to the Leased Space, whether
temporary or permanent in character, whether made or paid for by Landlord or by
Tenant, shall without compensation to Tenant become Landlord's property at the
time the same are made or installed and shall, unless Landlord requests the
removal

                                      16
<PAGE>

of specialty alterations not consistent with the use of the Leased Premises as
offices (in which case Tenant shall remove such specialty alterations as
hereinafter provided), be relinquished to Landlord in good condition, ordinary
wear excepted.

     18.  Covenant Against Liens. Tenant shall not cause or permit any lien or
          ----------------------
encumbrance of any kind whether created by act of Tenant, operation of law Or
otherwise, to attach to or be placed upon Landlord's title or interest in the
Land, Building or Leased Space, and any and all liens and encumbrances created
by or arising as a result of any work done for or requested by Tenant, other
than the performance of Landlord's Work, may attach to Tenant's interest only.
In case of any such lien, Tenant shall cause it to be forthwith released and
removed of record or bonded in manner satisfactory to Landlord.

     19.  Assignment and Subletting.
          -------------------------

          (a)  Tenant shall not, without the prior written consent of Landlord
(such consent not to be unreasonably withheld) (i) assign, pledge, mortgage or
otherwise transfer or encumber this Lease or any interest hereunder; (ii) permit
any assignment of this Lease by operation of law; (iii) sublet the Leased Space
or any part thereof, or (iv) permit the use of the Leased Space by any parties
other than Tenant, its agents and employees, except that the Landlord agrees
that it will not withhold its consent to any proposed assignment or subletting
if the proposed assignee or sublessee (in Landlord's reasonable judgment) has a
financial condition comparable to or better than that of Tenant as of such date
and has a good reputation in the business community. No assignment of this Lease
shall be effective or binding upon Landlord unless the assignee shall execute an
appropriate instrument assuming all of the obligations of Tenant hereunder and
unless Tenant acknowledges therein its continued liability under this Lease.
Tenant shall pay to Landlord upon demand all reasonable costs and reasonable
counsel fees incurred by Landlord in connection with any request by Tenant for
Landlord's consent to an assignment or subletting by Tenant.

          (b)  Notwithstanding anything to the contrary contained in this
section, Tenant shall have the

                                      17
<PAGE>

right to assign this Lease or sublet the Leased Space without the consent of
Landlord (i) to any corporation which is a successor to Tenant either by merger
or consolidation, (ii) to a purchaser of all or substantially all of Tenant's
assets or stock, or (iii) to a corporation or other entity which shall control,
be under the control of, or be under common control with Tenant (the term
"control" as used herein shall be deemed to mean ownership of more than 50
percent of the outstanding voting stock of a corporation, or other majority
equity and control interest).

     20.  Surrender of Possession. Upon the expiration of the Term or upon the
          -----------------------
termination of Tenant's right of possession, whether by lapse of time or at the
option of Landlord as herein provided, Tenant shall at once surrender the Leased
Space to Landlord in good order, repair and in broom-clean condition, ordinary
wear excepted, and remove all of its property therefrom, and if such possession
is not immediately surrendered, Landlord may forthwith re-enter the Leased Space
and repossess itself thereof and remove all persons and effects therefrom.
Without limiting the generality of the foregoing, Tenant agrees to remove at the
termination of the Term or of its right of possession the following items of
property: office furniture, trade fixtures, office equipment, merchandise and
all other items of Tenant's property on the Leased Space, and Tenant shall pay
to Landlord upon demand the cost of repairing any damage caused by any such
removal. If Tenant shall fail or refuse to remove any such property from the
Leased Space, Tenant shall be conclusively presumed to have abandoned same, and
title thereto shall thereupon pass to Landlord without any cost either by
setoff, credit, allowance or otherwise, and Landlord may at its option accept
the title to such property or at Tenant's expense may (i) remove the same or any
part in any manner that Landlord shall choose, and (ii) store, destroy or
otherwise dispose of the same without incurring liability to Tenant or any other
person.

     21.  Holding Over. Tenant shall pay to Landlord 150 percent of the Annual
          ------------
Base Rent plus 150 percent of the Rent Adjustments then applicable for each
month or portion thereof for which Tenant shall retain possession of the Leased
Space or any part thereof after the termination of the Term or Tenant's right of
possession,

                                      18
<PAGE>

whether by lapse of time or otherwise. The provisions of this Section shall not
be deemed to limit any rights of Landlord; provided, however, that in no event
shall Tenant be liable for consequential damages.

     22.  Subordination and Attornment.
          ----------------------------

          (a)  This Lease and Tenant's rights hereunder are and shall be subject
and subordinate to all mortgages and other encumbrances now or hereafter placed
upon the Premises or Building by Landlord, as well as all advances made upon the
security thereof, provided that the mortgagee or holder of any deed of trust
shall execute a non-disturbance agreement in favor of Tenant stating that, in
the event such mortgage or deed of trust shall be foreclosed, this Lease shall
not terminate so long as Tenant continues to pay the Rent and otherwise complies
with the terms hereof; provided further, however, that Landlord Shall deliver
such a non-disturbance agreement to Tenant from all existing lenders.

          (b)  Notwithstanding the subordination of this Lease as above, Tenant
hereby agrees that at the option of the mortgagee or purchaser at foreclosure,
this Lease shall not terminate in the event of the foreclosure of any mortgage
or lien, and Tenant shall attorn to and recognize the mortgagee or the purchaser
at foreclosure as Tenant's landlord for the balance of the Term, subject to the
provisions hereof.

          (c)  The subordination and attornment provisions of this Lease shall
be self-operative and any mortgagee or purchaser may rely upon such provisions.
Tenant shall from time to time execute those further instruments as evidence of
the same as Landlord may reasonably request.

     23.  Events of Default. Any of the following occurrences shall constitute
          -----------------
an Event of Default under this Lease, notwithstanding the pendency of any
proceedings at law, in equity or before an administrative tribunal which have or
might have the effect of preventing Tenant from complying with the terms of this
Lease:

          (a)  Tenant fails to pay the required amount within five days of
receiving written notice that

                                      19
<PAGE>

any installment of Rent, or other payment required hereunder has not been paid
when due;

          (b)  Tenant fails to perform, observe or cure any of its obligations,
covenants or agreements hereunder within thirty days after written notice
thereof is given by the Landlord, unless Tenant shall have commenced action
during such 30 day period to remedy such default and is continuing diligently to
complete such cure;

          (c)  Tenant shall assign this Lease in violation of its terms; or

          (d)  Tenant manifests an intent to, or in fact does liquidate its
business, become insolvent, make an assignment for the benefit of its creditors,
files or has filed against it a petition in bankruptcy, bill in equity or other
proceeding for the appointment of a receiver or custodian for its property, or
if proceedings for a reorganization or composition with creditors under any law
is instituted by or against Tenant, or if any levy or sale on execution of any
kind is made with respect to any property or assets of Tenant in the Leased
Space.

     24.  Remedies upon Default.
          ---------------------

          (a)  If an Event of Default occurs during the Term, subject to the
limitation contained in Section 24(c) hereof, Landlord shall have the right, but
not the obligation, in addition to all other rights and remedies afforded by
law, to do any one or more of the following, without notice to Tenant;

               (i)  declare due and payable all unpaid Rent for the unexpired
     portion of the Term as if such rent were payable in advance, as well as to
     seek all costs and commissions (including attorney fees) permitted by law,
     in which case the Rent due for the full unexpired balance of the Term shall
     be computed based upon the yearly average of the Rent payable by Tenant for
     the Lease Year immediately preceding the Event of Default;

               (ii) declare this Lease terminated, in which event Tenant shall
     pay Landlord all Rent due

                                      20
<PAGE>

     hereunder and unpaid to the date of termination, together with liquidated
     damages in an amount of the total of the Rent required to be paid under
     this Lease from the date of termination to the end of the Term as if the
     same had not been terminated, which rents shall be computed as provided in
     subparagraph (1) above, the parties acknowledging that the damages to which
     Landlord is entitled in the event of a breach of this Lease and subsequent
     termination by Landlord are not easily computed being subject to many
     variable factors, thus the parties have agreed to the liquidated damages
     above to avoid extended litigation;

               (iii) enter the Leased Space and distrain upon and sell any
     property or equipment located therein;

               (iv)  let all or any part of the Leased space to another party
     with or without first altering the same, and the rent realized therefrom
     shall be applied first to the payment of any indebtedness other than Rent
     due hereunder; second, to the payment of any costs and expenses of
     reletting, including brokerage fees, commissions, attorney's fees and costs
     of alteration; and third to the payment of all rents due and unpaid
     hereunder;

               (v)   confess judgment for and on behalf of Tenant for all
     amounts due hereunder, together with interest thereon at the rate provided
     herein for delinquent rents, as well as associated costs and attorney's
     fees equal to the lesser of fifteen percent of such amount or $5,000, using
     this Lease or a copy hereof as authority for such action; and

               (vi)  enter an action or judgment in ejectment against Tenant,
     using this Lease or a copy hereof as authority, and cause a writ of
     possession to be issued.

          (b)  Tenant hereby empowers any attorney of a Pennsylvania Court of
Record to appear for Tenant on one or more times and to take on its behalf any
or all of the actions described above including the entry of judgment by
confession, agreement or otherwise.

                                      21
<PAGE>

          (c)  Notwithstanding anything to the contrary contained herein, the
total maximum cumulative amount recoverable by Landlord from Tenant under this
Section 24 and otherwise as a result of a default by Tenant in its obligations
hereunder shall be limited to an amount equal to the Annual Base Rent and
Additional Rent for the year in which the default took place.

     25.  Additional Rent. Tenant will pay as additional rent on the first day
          ---------------
of the month after the Landlord notifies Tenant of the amount of such additional
rent;

          (a)  all sums due or to become due by reason of Tenant's failure to
comply with any of the covenants, terms or conditions of this Lease, and all
damages, costs and expenses (including attorney's fees) which Landlord may
suffer or incur by reason of any default by Tenant or its failure to comply with
said covenants, terms and conditions, as well as all damages to the Building,
Leased Space or Premises caused by any act, omission or neglect of Tenant, its
officers, agents, employees, invitees or guests;

          (b)  all sums which may be paid or advanced by Landlord, at its sole
discretion, on account of repairs, alterations or cleaning of the Premises or
Leased Space required by the term of this Lease to be made or performed by
Tenant, except that this Section 25(b) shall only apply to sums paid or advanced
by Landlord after at least ten days' prior notice to Tenant;

          (c)  all increases in the insurance premiums applicable to policies
pertaining to the Premises caused by any act, omission or neglect of Tenant,
its officers, agents, employees, guests or invitees;

          (d)  interest on each of the aforesaid items, as well as any
delinquent Rent, calculated at the rate of one percent per month for each month,
or portion thereof, from the date such item becomes due until it is paid in
full.

     26.  Offset Statement. Either party to this Lease shall, without charge and
          ----------------
within ten days after the other party's written request, deliver a statement in
recordable form satisfactory to the requesting party certi-

                                      22
<PAGE>

fying that this Lease is in full force and effect, there being no defenses or
offsets thereto or modifications thereof, or stating those claimed by the
certifying party. The statement shall also provide such additional information
concerning the status of this Lease as may reasonably be requested, it being
intended that such statement may be relied upon by a proposed mortgagee,
purchaser or investor of the Premises, as well as any proposed assignee or
subtenant of Tenant, but in no event shall such statement be relied upon by
either Landlord or Tenant. Failure of either party to comply with a request for
such a statement within the ten day period shall be deemed a material breach of
this Lease.

     27.  Quiet Enjoyment. Upon payment by Tenant of all rents and other amounts
          ---------------
provided herein, and the due observance and performance of all covenants, terms
and conditions on Tenant's part to be observed and performed hereunder, Tenant
shall peaceably and quietly have, hold and enjoy the Leased Space for the Term.

     28.  Notices. All notices, consents and other instruments required by this
          -------
Lease must be in writing and sent by certified mail, or delivered in person, to
the Landlord or Tenant at the address listed in the caption of this Lease, or to
such other address as either party may hereafter give the other in writing for
such purpose in accordance herewith, all such notices or consents (except as set
forth below in the next sentence) being deemed to have been given only when so
mailed or delivered. In addition, notices may be sent by telefacsimile, provided
the sender obtains confirmation of its receipt and such notices or consents
shall be deemed received on the day faxed, unless received after 4:3O p.m.
local time or on a Saturday, Sunday or legal holiday, in which event such notice
or consent shall be deemed to have been received on the following business day.

     29.  Security Deposit.
          ----------------

          (a)  As security for the faithful performance of all terms and
conditions of this Lease and for the of payment of any damages to which Landlord
may be entitled on account of an Event of Default, Tenant has deposited with
Landlord the sum of $17,862 which amount, less any portion thereof applied by
Landlord to Tenant's defaults hereunder as permitted by the terms hereof,

                                      23
<PAGE>

shall be returned to Tenant with interest, thirty days after the date of
expiration of the Term, or thirty days after the actual termination of this
Lease, whichever shall be earlier. Landlord shall have the right, but not the
obligation, to apply all or a portion of the security deposit to cure any
default of Tenant hereunder, and if Landlord does so, Tenant shall, upon demand,
deposit with Landlord a sum equal to one and one-half times the amount applied
so Landlord shall have an adequate security deposit at all times during the
Term.

          (b)  In the event of a sale or transfer of Landlord's interest in the
Building or Premises, the Landlord shall have the right to assign the security
deposit to the transferee and Landlord shall thereafter be automatically
released from all liability for the security deposit, and Tenant shall look
solely to the transferee for the return of the security deposit.

     30.  Rights of Expansion. If at any time Landlord reaches an agreement with
          -------------------
respect to the economic terms ("Terms") of a lease of all or any part of the
remaining space on the third floor of the Building and/or all or any part of
the storage space in the basement of the Building, Landlord shall send written
notice ("Offer Notice") of such Terms to Tenant stating that it intends to lease
such space on the Terms and the party with whom it intends to contract
("Offeree"). Tenant shall have the right, within five business days after the
receipt of the Offer Notice, to lease such space by sending written notice
("Acceptance Notice") to Landlord. Upon delivery of the Acceptance Notice,
Landlord and Tenant shall enter into an amendment to this Lease including such
space within the Leased Space and incorporating the Terms. In the event Tenant
fails to deliver an Acceptance Notice, Landlord shall have the right to enter
into a lease for such space with the Offeree, provided such lease is consistent
with the Terms. If Landlord fails to lease such space to Offeree, or desires to
enter into a lease with the Offeree which is on terms more favorable to the
tenant than the Terms, Landlord will be required to comply with the requirements
of this Section 30 again with respect to any such lease.

     31.  Broker. The Tenant warrants and represents that the sole brokers with
          ------
whom it has dealt in this transaction are Patterson Schwartz and The Flynn

                                      24
<PAGE>

Company. Landlord shall be responsible for any commissions due to such brokers.

     32.  Signage and Satellite Equipment.
          -------------------------------

          (a)  Provided Tenant shall have obtained any required government
approvals, from the date hereof throughout the duration of the Term, Tenant may
erect and maintain a sign reasonably acceptable to Landlord on the exterior of
the Building provided that the cost of such signee, and the installation
thereof, shall be borne solely by Tenant. Landlord shall at its own expense
remove the existing exterior sign, prepare and clean such area for the
installation of Tenant's signage and provide Tenant with use of the letters from
the existing signage to the extent that (i) Landlord is not required to return
the same to the Tenant named thereby, and (ii) such letters are not damaged
during their removal. Landlord shall not be liable for any damage to the
existing signage which occurs during its removal.

          (b)  Tenant shall have the right to install and maintain at its own
expense satellite equipment on the roof of the Building provided that (i) the
location of such equipment shall be reasonably acceptable to Landlord, (ii) such
equipment shall not interfere with any antennane or satellite dishes then
operating on the roof, and (iii) Tenant shall ensure that the equipment
installation contractor provides insurance coverage for such equipment
installation as is reasonable acceptable to Landlord.

     33.  Parking Spaces. Landlord shall provide eight parking spaces for
          --------------
Tenant's sole and exclusive use, such spaces to be located adjacent to and on
either side of the main entrance to the Building. Tenant, at Tenant's sole cost
and expense, shall install signage designating such spaces as belonging to
Tenant; provided that such signage shall be reasonably acceptable to Landlord.
In addition, Tenant shall have the use of the number of parking spaces equal to
the difference between (i) the product of (a) 3.8, and (b) the quotient obtained
by dividing the square feet contained within the Leased Space by 1,000, minus
(ii) eight.

                                      25
<PAGE>

     34.  Miscellaneous.
          -------------

          (a)  Nonwaiver. No delay or forbearance by Landlord in exercising any
               ---------
of its rights or remedies hereunder or in undertaking or performing any act or
matter which is not expressly required to be undertaken by Landlord hereunder
shall be construed to be a waiver of any of Landlord's rights or remedies
hereunder or to represent any agreement by Landlord to undertake or perform such
act or matter thereafter, or to be a waiver of Landlord's right to enforce
Tenant's strict performance under all provisions of this Lease.

          (b)  Certain Definitions. "Landlord" as used herein means the Landlord
               -------------------
named above and all persons acting for it, as well as its and their successors
and assigns. The liability of the Landlord under this Lease is hereby expressly
limited to its interest or estate in the Building and no other assets of
Landlord, its partners, agents, affiliates or associates shall be affected by
reason of any liability which Landlord may have to Tenant or any other person by
reason of this Lease or the acquisition of Landlord's interest in the Building,
Premises or this Lease. "Tenant" as used herein means the Tenant named above,
its successors and assigns, subject to Section 20, irrespective of the pronoun
used with respect to that term. If there is more than one Tenant named in this
Lease, those named shall be bound jointly and severally to the terms of this
Lease and any notice required or permitted hereby may be given by or to any one
thereof and such notice shall have the same force and effect as if given by or
to all.

          (c)  Binding Effect. This Lease shall bind and inure to the benefit of
               --------------
Landlord, its successors and assigns, and the Tenant. If Landlord assigns its
interest in this Lease all liability of Landlord hereunder will end at the time
of the assignments as to matters arising thereafter.

          (d)  Entire Agreement. This Lease contains the entire agreement of
               ----------------
Landlord and Tenant (except for changes to the rules and regulations set out in
Exhibit E) and is subject to change only by a written statement referring to
this Lease and signed by both Landlord and Tenant. Tenant hereby acknowledges
and affirms that no oral warranties, conditions or represen-

                                      26
<PAGE>

tations have been made for or on account of the Landlord with respect to the
Leased Space, Building, Land, Premises or this Lease.

          (e)  Governing Law. The laws of the Commonwealth of Pennsylvania shall
               -------------
govern the validity interpretation, performance and enforcement of this Lease.

          (f)  Severability. If any provision of this Lease or application
               ------------
thereof shall subsequently be found or deemed invalid or unenforceable, the
remaining provisions hereof, and any other application of such provision, shall
not be affected thereby. Each term and provision of this Lease shall be valid
and enforceable to the extent permitted by law.

          (g)  Right to Transfer. Tenant acknowledges that Landlord has the
               -----------------
right to transfer its interest in the Land and Building and in this Lease, and
Tenant agrees that in the event of any such transfer to a tranferee that has
assumed all of Landlord's liabilities and obligations hereunder, Landlord shall
be released from all liability under this Lease and Tenant agrees to attorn to
such transferee and to look solely to such transferee for the performance of
Landlord's obligations hereunder. In the event that any lease superior in lien
to this Lease is terminated, Tenant agrees to attorn automatically (without the
necessity of any further writing) to the lessor under such superior lease.

          (h)  No Recording. This Lease shall not be recorded in whole or in
               ------------
memorandum form by either party without the prior written consent of the other.

          (i)  Headings. The various Section headings used herein have been
               --------
inserted for convenient reference only and shall not be deemed to modify, amend
or otherwise affect the provisions of this Lease.

          (j)  Counterparts. This Lease may be signed in one or more
               ------------
counterparts, all of which taken together shall constitute one and the same
instrument.

          (k)  Holidays. Wherever this Lease provides for a date, day or period
               --------
of time on or prior to which action or events are to occur or not occur, and if

                                      27

<PAGE>

any such date, day or last day of such period of time falls on a Saturday,
Sunday or legal holiday, then same shall be deemed to fall on the immediately
following business day.

          (l)  Storage Space. At any time during the Term of this Lease,
               -------------
provided the same is still available, Tenant shall have the right by giving
written notice to Landlord to lease up to 4,250 rentable square feet in the
basement of the Building at the annual rate of $8.00 per rentable square foot.
Any such notice given to Landlord shall designate the amount of square footage
required by Tenant.

          (m)  Fitness Center. Tenant's employees shall have use of the Building
               --------------
fitness center at no charge throughout the Term of the Lease. The fitness center
is located on the basement level of the Building.

                                       28
<PAGE>

     IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have executed and delivered this Lease as of the day and year first
above written.

NORTHSTAR DEVELOPMENT                  ENDO PHARMACEUTICALS INC.,
  COMPANY                              a Delaware corporation
a Pennsylvania corporation

By: /s/ James J. Gorman                 By:    /s/ Carol A. Ammon
   ----------------------------            -----------------------------
Name:   General Partner                Name:       Carol A. Ammon
      -------------------------              ---------------------------
Title:  President                      Title: President & CEO
      -------------------------              ---------------------------

                                       29
<PAGE>

                            LEASE AMENDMENT AGREEMENT

     THIS AGREEMENT, made this 16th day of December, 1997, by and between
Northstar Development Company (hereinafter referred to as "Landlord") and Endo
Pharmaceuticals, Inc. (hereinafter referred to as "Tenant").

                                  WITNESSETH

     WHEREAS, by Lease dated August 26, 1997, Landlord did lease unto Tenant
10,992 square feet of rentable area located at 223 Wilmington West Chester Pike,
Concord Township, Delaware County, PA, for a current term to expire September
30, 2002.

     WHEREAS, the parties hereto desire to expand Tenant's Leased Space.

     NOW THEREFORE, in consideration of the foregoing and of the mutual promises
hereinafter contained, the parties hereto, intending to be legally bound, hereby
agree with each other as follows:

     1.   Commencing December 1, 1997 Tenant's Leased Space shall increase from
          10,992 to 13,740 square feet in accordance with the attached Exhibit
          "A".

     2.   Commencing March 1, 1998 Tenant's annual rent as outlined in Article 4
          section (i) of the Lease shall be increased from $214,344 to $267,930
          (the monthly rate equals $22,327.50) which rent shall increase in
          accordance with section (ii) and is further subject to ah the
          provisions of Article 4.

     3.   Commencing March 1, 1998 Tenant's Pro Rata Share as outlined in
          Article 5 of the Lease shall increase from 24.8% to 31%.

     4.   Landlord, at its expense, shall paint and carpet the additional Leased
          Space. Tenant otherwise accepts the additional Leased Space in its
          present as is condition.

     5.   Except as herein provided, all other terms, covenants, conditions and
          stipulations contained in the aforementioned Lease dated August
          26, 1997, are to be continued during the term, with like effect and to
          all intents and purposes as if included in a new and formal Lease
          containing identical terms, covenants, conditions and stipulations as
          in the original Lease, except as herein amended and modified, until
          the expiration of the term and the same is hereby ratified and
          affirmed.

                                  Page 1 of 2
<PAGE>

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

WITNESSED:                        LANDLORD:
                                  Northstar Development Corporation

/s/ Beth Stewart                  By: /s/ Nancy F. Marra
----------------------                ---------------------------
                                          Nancy F. Marra

                                  Its: Secretary
                                       --------------------------

                                  Dated: 12/16/97
                                         ------------------------

WITNESSED:                        TENANT:
                                  Endo Pharmaceuticals, Inc.,
                                  a Delaware Corporation

/s/ Betty McKelligott
--------------------------        By: /s/ Marian T. McDonald
                                     ----------------------------
                                          Marian T. McDonald

                                  Its: President & CEO
                                      ---------------------------

                                  Dated: 12/16/98
                                        -------------------------

                                  Page 2 of 2
<PAGE>

                           LEASE AMENDMENT AGREEMENT

     THIS AGREEMENT, made this 6th day of January, 1999, by and between
Northstar Development Company (hereinafter referred to as "Landlord") and Endo
Pharmaceuticals, Inc. (hereinafter referred to as "Tenant").

                                  WITNESSETH

     WHEREAS, by Lease dated August 26,1997, Landlord did lease unto Tenant
10,992 square feet of rentable area located at 223 Wilmington West Chester Pike,
Concord Township, Delaware County, PA, for a current term to expire September
30, 2002.

     WHEREAS, the parties hereto desire to expand Tenant's Leased Space.

     NOW THEREFORE, in consideration of the foregoing and of the mutual promises
hereinafter contained, the parties hereto, intending to be legally bound, hereby
agree with each other as follows:

     1.   Commencing February 1, 1999 Tenant's Leased Space shall increase from
          13,740 to 14,490 square feet in accordance with the attached Exhibit
          "A".

     2.   Commencing February 1,1999 Tenant's annual rent outlined in Article 4
          section (i) of the Lease shall be increased from $267,930 to $282,555
          (the monthly rate equals $23,546.25) which rent shall increase in
          accordance with section (ii) and is further subject to all the
          provisions of Article 4.

     3.   Commencing February 1,1999 Tenant's Pro Rata Share as outlined in
          Article 5 of the Lease shall increase from to 31% to 32.7%.

     4.   Tenant accepts the additional Leased Space in its present "as is"
          condition and will have Landlord bid on the tenant improvements.

     5.   Except as herein provided, all other terms, covenants, conditions and
          stipulations contained in the aforementioned Lease dated August
          26,1997, are to be continued during the term, with like effect and to
          all intents and purposes as if included in a new and formal Lease
          containing identical terms, covenants, conditions and stipulations as
          in the original Lease, except as herein amended and modified, until
          the expiration of the term and the same is hereby ratified and
          affirmed.

                                  Page 1 of 2
<PAGE>

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

WITNESSED:                             LANDLORD:
                                       Northstar Development Corporation

------------------------               By: /s/ Frank Phillips
                                          ----------------------------
                                               Frank Phillips

                                       Its: Vice President
                                           ---------------------------

                                       Dated: 1-7-99
                                             -------------------------

WITNESSED:                             TENANT:
                                       Endo Pbarmaceuticab, Inc.,
                                       a Delaware Corporation

------------------------               By: /s/ Mariann T. MacDonald
                                          -----------------------------
                                               Mariann T. MacDonald

                                       Its: Executive Vice President,
                                           ----------------------------
                                            Operations
                                           ----------------------------

                                       Dated: 1-7-99
                                             -------------------------

                                  Page 2 of 2
<PAGE>

                           LEASE AMENDMENT AGREEMENT

     THIS AGREEMENT, made and entered into this 23rd day of November, 1999, by
and between ROUTE 202-CONCORD PARTNERS (hereinafter referred to as "Landlord")
and END0 PHARMACEUTICALS, INC. (hereinafter referred to as "Tenant").

                                  WITNESSETH

     WHEREAS, by Lease dated August 26, 1997, Tenant entered into an Office
Lease with Northstar Development Company ("Northstar"), which Lease has been
assigned to Landlord by assignment dated July 15, 1999, wherein Northstar did
lease unto Tenant 10,992 square feet of rentable area located at 223 Wilmington
West Chester Pike, Concord Township, Delaware County, PA, for a current term to
expire September 30, 2002 (the "Office Lease"); and

     WHEREAS, by Lease Amendment dated January 6, 1999, Northstar did lease unto
Tenant additional Leased Space as set forth in the Lease Amendment heretofore
mentioned; and

     WHEREAS, the parties hereto desire to expand Tenant's Leased Space.

     NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises hereinafter contained, the parties, intending to be legally bound,
hereby agree as follows, to wit:

     1.   Commencing January 1, 2000 Tenant's Leased Space shall increase by
4755 square feet in accordance with the attached Exhibit "A" (the "Additional
Space").

     2.   Commencing January 1, 2000 Tenant's annual rent for the Additional
Space shall be $97,477.50 (the monthly rate equals $8,123.13) which rent shall
increase in accordance with section 4(ii) and is further subject to all of the
provisions of Article 4 of the Office Lease.

     3.   Commencing January 1, 2000 Tenant's Pro Rate Share as outlined in
Article 5 of the Office Lease shall increase from 32.7% to 50%.

     4.   Tenant accepts the Additional Space in its present "as is" condition
and will have Landlord bid on the tenant improvements which bid will be awarded
to Landlord if the terms thereof are acceptable to Tenant.

     5.   Except as herein provided, the termination date of this Amendment,
option to renew and operating expense adjustments and all other terms,
covenants, conditions and stipulations contained in the Office Lease are to be
continued during the term, with like effect and to all intents and purposes as
if included in a new and formal Lease containing identical terms, covenants,
conditions and stipulations as in the Office Lease until the expiration of the
term and the same is hereby ratified, confirmed and incorporated herein by
reference.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day
and
<PAGE>

year above written.

WITNESSED:                                LANDLORD:
                                                  ROUTE 202-CONCORD PARTNERS

/s/ Kelly Jo Berwanger
-------------------------                     By: /s/ James J. Gorman
                                                 ------------------------------

                                              Its: /s/ General Partner
                                                  -----------------------------

                                              Dated:  11/24/99
                                                    ---------------------------

WITNESSED:                                TENANT:
                                              Endo Pharmaceuticals, Inc.,
                                              a Delaware Corporation

/s/ Betty McKelligott
---------------------------                   By: /s/  Mariann MacDonald
                                                 ------------------------------

                                              Its:  Executive Vice President
                                                  -----------------------------
                                                    Operations
                                                  -----------------------------

                                              Dated:  11/23/99
                                                    ---------------------------

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00075-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00075-of-00352.parquet"}]]