Document:

<PAGE>

                                                                   EXHIBIT 10.30

                  AMENDED AND RESTATED EMPLOYMENT AGREEMENT

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

                                   RECITALS

     WHEREAS, the Employer and the Executive entered into an employment
agreement, dated as of August 26, 19997 ( the "Original Employment Agreement")
and concurrently with the execution and delivery of  the Original Employment
Agreement, the Employer purchased from The DuPont Merck Pharmaceutical Company
("DMPC") and Endo Laboratories, L.L.C. ("Endo LLC"), certain assets comprising
their generic and multisource brand drug business (the "Business") pursuant to
an Asset Purchase Agreement, dated as of June 27, 1997 (the "Purchase
Agreement"), among DMPC, Endo LLC, DuPont Merck Pharma Puerto Rico, Employer and
Kelso & Company.  The Executive had been employed by DMPC in the Business, and
the Employer continued to employ the Executive in the Business, and the
Executive accepted such continued employment, upon the terms and conditions set
forth in the Original Employment Agreement.

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

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

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

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

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

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

          "Basic Compensation" means Salary and Benefits.

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

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

          "Confidential Information" means any and all:

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

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

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

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

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

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

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

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

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

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

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

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

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

                                      -2-
<PAGE>

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

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

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

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

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

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

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

                                      -3-
<PAGE>

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

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

          (a) Salary.  The Executive will be paid an annual salary of $300,000,
              ------
subject to adjustment as provided below (the "Salary"), which will be payable in
equal periodic installments according to the Employer's customary payroll
practices, but no less frequently than monthly.  The Salary will be reviewed by
the Chief Executive Officer and the Board of Directors not less frequently than
annually, and be adjusted in the sole discretion of the Chief Executive Officer
and the Board of Directors, but in no event will the Salary be less than
$300,000 per year. In determining the amount of any adjustment to Salary, the
Chief Executive Officer and the Board of Directors shall take into account
inflation, merit, changes in responsibilities and industry salary practices for
executives.  Any increase in Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement.  Salary shall not be reduced
after such increase unless such reduction is part of a reduction in salaries of
specified management personnel of Employer undertaken in a program approved by
the Employer's Board of Directors.

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

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

          Section 3.2  Incentive Compensation.   For each Fiscal Year or part
                       ----------------------
thereof during the Employment Period the Executive shall be paid in cash as
additional compensation (the "Incentive Compensation") for the services to be
rendered by the Executive pursuant to this Agreement, an amount equal to forty
percent (40%) of the Salary for such Fiscal Year (or such lesser (including
zero) or greater (not to exceed two hundred) percent of the Salary for such
Fiscal Year as is recommended in good faith to the Board of Directors by the
Chief Executive Officer of the Employer and approved by the Board of Directors)
if the Employer meets the performance targets set by the Board of Directors (the
"Performance Targets") for such Fiscal Year.  Incentive Compensation for each
Fiscal Year or part thereof shall be paid as soon as practicable following
receipt by the Employer of its audited financial statements for the Fiscal Year
next following the Fiscal Year for which the Incentive Compensation is being
paid, unless the Executive shall elect to defer the receipt of such Incentive
Compensation.  The Executive

                                      -4-
<PAGE>

shall be permitted to submit a proposal for additional incentive compensation
with respect to the period commencing on the date hereof and ending at the end
of the Employer's current Fiscal Year, and the Employer shall consider such
proposal in good faith.

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

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

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

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

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

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

          (a)  upon the death of the Executive;

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

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

                                      -5-
<PAGE>

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

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

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

          Section 6.4  Definition of "For Good Reason."  For purposes of Section
                       ------------------------------
6.1, the phrase "for good reason" means any of the following: (a) The Employer's
material breach Section 2.4, 3.1 or 3.2 or of this Agreement or its obligations
under the Stockholder's Agreement for the benefit of Executive; or (b) the
assignment of the Executive without the Executive's consent to a position,
responsibilities, or duties of a materially lesser status or degree of
responsibility than the Executive's position, responsibilities, or duties at the
Effective Date.

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

                                      -6-
<PAGE>

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

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

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

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

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

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

          Section 6.6  Election Not to Renew.  If the Executive elects to renew
                       ---------------------
this Agreement for a Renewal Term, but Employer does not, and Employer's
election not to renew is

                                      -7-
<PAGE>

not for cause, the Executive will be entitled to receive, the Salary for the
remainder, if any, of the calendar month in which such termination is effective
and for eighteen (18) consecutive calendar months thereafter and the Benefits
for eighteen (18) consecutive months after the date of termination.

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

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

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

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

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

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

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

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

          (d) Upon termination of this Agreement by either party, or upon the
request of the Employer during the Employment Period, the Executive will return
to the Employer all Confidential Information in the Executive's possession or
subject to the Executive's control, and

                                      -8-
<PAGE>

the Executive may not retain any copies, abstracts, sketches, or other physical
embodiment of any of the Confidential Information.

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

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

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

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

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

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

                                      -9-
<PAGE>

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

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

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

          Section 9.4  Representations and Warranties by the Executive.  The
                       -----------------------------------------------
Executive represents and warrants to the Employer that the execution and
delivery by the Executive of this Agreement do not, and the performance by the
Executive of the Executive's obligations hereunder will not, with or without the
giving of notice or the passage of time, or both: (a) violate any judgment,
writ, injunction, or order of any court, arbitrator, or governmental agency
applicable to the Executive; or (b) conflict with, result in the breach of any
provisions of or the termination of, or constitute a default under, any
agreement to which the Executive is a party or by which the Executive is or may
be bound.

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

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

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

                                      -10-
<PAGE>

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

          If to the Employer:       Endo Pharmaceuticals Inc.
          ------------------
                                    223 Wilmington West Chester Pike
                                    Chadds Ford, PA 19317
                                    Attention: Carol A. Ammon

          If to the Executive:      Mariann T. MacDonald
          -------------------
                                    5 Chesterton Road
                                    Landenberg, PA 19350

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

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

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

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

          Section 9.12 Counterparts.  This Agreement may be executed in one or
                       ------------
more counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.

                              [SIGNATURES FOLLOW]

                                      -11-
<PAGE>

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

                                   ENDO PHARMACEUTICALS INC.

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

                                      /s/ Mariann T. MacDonald
                                      -----------------------------------------
                                      MARIANN T. MACDONALD

                                      -12-<PAGE>

                                                                   Exhibit 10.31

                       SEPARATION AND RELEASE AGREEMENT

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

                                  WITNESSETH
                                  ----------

     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 General Counsel,
Secretary and Senior Vice President of Business Development 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 September 13, 1997 (the "Employment
Agreement"); and

     WHEREAS, the Executive has decided to resign from his position as General
Counsel, Secretary and Senior Vice President of Business Development of the
Company with such resignation to be effective as of April 1, 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
March 2, 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.
                -----------------------------------
<PAGE>

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

     (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) and (iv) of this
Section 1(b).

         (i)  Subject to Section 2(a)(iv) hereof, the Executive shall be
entitled to receive the payments and benefits set forth in Section 6.5(a) of the
Employment Agreement in accordance with the terms thereof.

         (ii) Subject to Section 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, all
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 Class B Stock Option
Agreement by and between Endo and the Executive dated as of November 25, 1997
and the Class C1 Stock Option Agreement between Endo and the Executive dated as
of November 25, 1997, including those which are exercisable as of the Effective
Time (collectively, the "Stock Options"), shall be exercisable only as follows:

                   (1) 25% of the Stock 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 Stock Options.

                   (2) 25% of the Stock 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 Stock Options.

                   (3) 25% of the Stock Options shall become exercisable on the
     earlier of 18 months following the Effective Time or on the date of an Exit
     Event for the

                                       2
<PAGE>

     remaining term of such Stock Options.

                   (4) 25% of the Stock Options shall become exercisable on the
     date of an Exit Event for the remaining term of such Stock Options.

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

           (iii) Except as provided in subsection (ii) above, the Executive's
outstanding Stock Options shall terminate on the Effective Time.

           (iv) Endo shall register the 400 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 Stock Options on a Form S-8 to be filed with the Securities
and Exchange Commission by Endo prior to the date such Stock Options first
become exercisable.

           (v) 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
Stock Options which have not yet become exercisable in accordance with
subparagraphs (ii)(1) through (ii)(4) above and (B) 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.

                                       3
<PAGE>

                (vi) For the avoidance of doubt, all conditions to
exercisability of the Stock Options except those set forth in subsection (ii)
above (including any performance-based conditions) shall be waived by the
Company as of the Effective Time.

     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.

                                       4
<PAGE>

     (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 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.

                                       5
<PAGE>

      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 is, or may reasonably be considered to be
disparaging of the Executive. The Company agrees that if the Executive requests
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.

      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).
Upon the request of the Company, 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, if the Company so requests, shall certify in writing that he has
done so. 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.

              (b) All Intellectual Property (as hereinafter defined) created,
developed, co-developed, obtained or conceived of by the Executive during the

                                       6
<PAGE>

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 similar, corresponding or equivalent rights to any of the
foregoing; (viii) all

                                       7
<PAGE>

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. 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, provided that the
Executive would not otherwise have incurred such fees and that such fees are not
in connection with any misconduct of the Executive.

     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.

                                       8
<PAGE>

     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.

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

             (a) Full Settlement. Except as set forth in Section 1(b)(v), 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, 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.

                                       9
<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 Section 1(b)(ii) 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),

                                      10
<PAGE>

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 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.

                                      11
<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/ OSAGIE O. IMASOGIE
                                        ------------------------------------
                                        OSAGIE O. IMASOGIE

                                      12

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"}]]