Document:

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                                                                  EXHIBIT 4.5(d)

                                                                  CONFORMED COPY

                          VERNALIS DEVELOPMENT LIMITED

                                     - AND -

                            ENDO PHARMACEUTICALS INC.

                       -----------------------------------

                                LICENSE AGREEMENT

                       -----------------------------------

      THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH
      THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL
      TREATMENT REQUEST IN ACCORDANCE WITH RULE 24B-2 OF THE SECURITIES AND
      EXCHANGE ACT OF 1934, AS AMENDED. REDACTED PORTIONS OF THIS EXHIBIT ARE
      MARKED BY AN ***.

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THIS LICENSE AGREEMENT is made the 14th day of July, 2004

BETWEEN:

(1)   VERNALIS DEVELOPMENT LIMITED whose principal place of business is at
      Oakdene Court, 613 Reading Road, Winnersh, Wokingham, RG41 5UA, England
      ("Vernalis"); and

(2)   ENDO PHARMACEUTICALS INC. whose principal place of business is at 100,
      Painters Drive, Chadds Ford, PA 19317, USA ("Endo").

WHEREAS:

(A) Endo is one of the world's leading specialty pharmaceutical companies with
particular expertise in launching, marketing, selling and managing the lifecycle
of certain specialty pharmaceutical products.

(B) Vernalis owns the rights to the compound called frovatriptan and the
marketed product called FROVA, which has initial product registrations for acute
migraine and is undergoing further trials in respect of menstrual associated
migraine, and has agreed to license those rights to Endo on the terms of the
license and co-promotion rights set out in this document.

IT IS NOW AGREED AS FOLLOWS:

1.    DEFINITIONS

      1.1   In this Agreement the following definitions shall apply and
            initially capitalized terms shall have the meanings ascribed to them
            elsewhere in this Agreement:

            1.1.1 "AFFILIATE" - any company, partnership or other business
                  entity which Controls, is Controlled by or is under common
                  Control with either Party.

            1.1.2 "AGREEMENT" - this document including any and all schedules,
                  appendices and other addenda to it as may be added and/or

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                  amended from time to time in accordance with the provisions of
                  this Agreement.

            1.1.3 "ANNUAL MARKETING PLAN AND BUDGET" - the document delivered
                  pursuant to Clause 6.1.2.

            1.1.4 "API SUPPLY AGREEMENT" - the supply agreement between Vernalis
                  and Evotec OAI Limited (then named Oxford Asymmetry
                  International plc), dated December 28, 2000.

            1.1.5 "BUSINESS DAY" - 9.00 am to 5.00 pm local time on a day other
                  than a Saturday, Sunday, bank or other public holiday in
                  England and Wales or USA.

            1.1.6 "CHANGE OF CONTROL" - the occurrence of a tender offer, stock
                  purchase, other stock acquisition, merger, consolidation,
                  recapitalization, reverse split, sale or transfer of assets or
                  other transaction, as a result of which any person, entity or
                  group, other than an Affiliate of Endo or Vernalis, as the
                  case may be, (a) becomes the beneficial owner, directly or
                  indirectly, of securities of Endo or Vernalis representing
                  more than 50% of the ordinary shares of Endo or Vernalis, as
                  the case may be, or representing more than 50% of the combined
                  voting power with respect to the election of directors, (b)
                  obtains the ability to appoint a majority of the board of
                  directors of Endo or Vernalis, as the case may be, or (c)
                  obtains the ability to direct the operations or management of
                  Endo or Vernalis, as the case may be.

            1.1.7 "CLINICAL STUDY" - any clinical trial and/or other study on
                  Product carried out by or on behalf of Endo including, without
                  limitation, any study carried out in order to obtain a label
                  extension or other new Marketing Authorisation for the Product
                  in the Territory (but for the avoidance of doubt always
                  excluding the MAM & Paediatric Development Program) including,

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                   without limitation, any clinical trial or other study carried
                   out for marketing purposes.

            1.1.8  "CLOSING DATE" - the second Business Day after the date upon
                   which the conditions precedent in Clauses 2.1, 2.5, 2.6 and
                   2.7 are satisfied.

            1.1.9  "COMBINATION PRODUCT" - a product in which the Compound is an
                   active ingredient and in relation to which a Marketing
                   Authorisation has been granted which also:

                        ***

                   and such other pharmaceutical product, active ingredient or
                   active administration or delivery technology, when used as
                   described above, shall be referred to individually or
                   collectively as "Combined Product".

            1.1.10 "COMMERCIALISATION", "COMMERCIALISING", or "COMMERCIALISE" -
                   all activities relating to the import, promotion, marketing,
                   detail, distribution, storage, handling, offering for sale
                   and sale of the Product.

            1.1.11 "COMMERCIALLY REASONABLE EFFORTS" - efforts and resources
                   commonly used in the pharmaceutical industry for a product
                   owned by a pharmaceutical company of similar size and
                   resources or to which it has rights, which product is at a
                   similar stage in its development or product life and is of
                   similar market potential and taking into account the patent
                   and other proprietary position of the product.

            1.1.12 "COMMITMENT" - the amount to be expended in a specified
                   period by Endo, directly or indirectly, in relation to (i)
                   the clinical and education aspects of the Product in the
                   Territory, including (a) Costs associated with Phase IV
                   clinical trials and (b) Costs

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                   relating to clinical and educational promotional activities;
                   (ii) advertising the Product in the Territory; (iii)
                   marketing, selling and promoting the Product in the
                   Territory; (iv) public relations in relation to Product in
                   the Territory, together in each case with Costs relating to
                   the same accrued in a period and payable in a subsequent
                   period and (v) indirect selling, general and administrative
                   costs and expenses allocated to marketing and selling the
                   Product.

            1.1.13 "COMPETENT AUTHORITY" - any national or local agency,
                   authority, department, inspectorate, minister, ministry
                   official, parliament or public or statutory person (whether
                   autonomous or not) of any government of any country having
                   jurisdiction over either any of the activities contemplated
                   by this Agreement or over the Parties.

            1.1.14 "COMPOUND" - the compound known as frovatriptan being
                   R(+)-6-carboxamido-3-N-methylamino-1, 2, 3, 4
                   tetrahydrocarbazole succinate (1:1) monohydrate and
                   "Compound", including any physiologically acceptable salts
                   thereof.

            1.1.15 "CONFIDENTIAL INFORMATION" - in the case of obligations of
                   Endo in relation to Confidential Information, shall mean
                   Vernalis IP and, in the case of obligations of Vernalis in
                   relation to Confidential Information shall mean Endo IP and,
                   in the case of both Vernalis and Endo, shall mean all trade
                   secret and/or confidential information relating to business
                   affairs not limited to development and Commercialisation
                   plans, marketing plans, financial forecasts and projections,
                   of the other supplied or otherwise made available to them or
                   coming into their possession in relation to the performance
                   of this Agreement.

            1.1.16 "CONTROL" (including variations such as "Controls" or
                   "Controlled by") - the ownership, either directly or
                   indirectly, of

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                   more than 50% of the issued share capital or any other
                   comparable equity or ownership interest with respect to a
                   business entity or the legal power to direct or cause the
                   direction of the general management and policies of the Party
                   in question.

            1.1.17 "CO-PROMOTE" - the simultaneous Detailing of a Product by
                   Vernalis field sales force representatives and Endo field
                   sales force representatives.

            1.1.18 "CO-PROMOTION OPTION" - Vernalis' option to Co-promote
                   Product as set forth in Clauses 9.1 and 9.2.

            1.1.19 "COPYRIGHT" - all (if any) right, title and interest of
                   Vernalis in copyright subsisting in the Marketing Materials.

            1.1.20 "COSTS" - Actual out-of-pocket costs and expenses.

            1.1.21 "COST PER DETAIL" - Endo's incremental Cost for the
                   engagement of a sales representative for Specialty Detailing
                   in any particular Year, excluding training, meetings, etc.,
                   which in 2004 is USD *** and which in subsequent Years will
                   be USD ***, adjusted for CPI, divided by ***.

            1.1.22 "COVER" (including variations such as "Covered", "Coverage"
                   or "Covering") - the making, using or Commercialisation of a
                   given product in a Commercialised form that would infringe a
                   Valid Claim of a Patent Right in the absence of a license
                   under such Patent Right. The determination of whether a
                   product is so Covered by a particular Patent Right shall be
                   made on a country-by-country basis.

            1.1.23 "CPI" - the consumer price index for the previous twelve
                   months published by the U.S. Department of Labor.

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            1.1.24 "DDMAC" - the FDA's Division of Drug Marketing, Advertising
                   and Communication.

            1.1.25 "DETAIL" (including variations such as "Detailing")- direct
                   face to face contact between a field sales force
                   representative and medical professional with prescribing or
                   dispensing authority for the purpose of discussing
                   information about a pharmaceutical product(s).

            1.1.26 "DISCLOSING PARTY" - the Party which discloses Confidential
                   Information to the other Party.

            1.1.27 "DOCUMENTS" - reports, research notes, charts, graphs,
                   comments, computations, analyses, recordings, photographs,
                   paper, notebooks, books, files, ledgers, records, tapes,
                   discs, diskettes, CD-ROM, computer programs and documents
                   thereof, computer information storage means, samples of
                   material, other graphic or written data and any other media
                   on which Know How can be permanently stored.

            1.1.28 "DOMAIN NAMES" - the URLs www.frova.com, www.frova.org,
                   www.frova.us, www.frova.net, www.frova.info,
                   www.frovatriptan.com and www.frovatriptan.us (and any
                   equivalent addresses for any successor electronic address
                   system thereto).

            1.1.29 "ELAN ASSET TRANSFER AGREEMENT" - the agreement relating to
                   the North American Frova Assets of Elan between Elan and
                   Vernalis, dated May 18, 2004.

            1.1.30 "ELAN GROUP" - the group of companies the parent of which is
                   Elan Corporation plc, a company incorporated in Ireland
                   (registered no 30356) whose registered office is at Lincoln
                   House, Lincoln Place, Dublin 2, Ireland.

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            1.1.31 "ENCUMBRANCE" - a mortgage, charge, pledge, lien, option,
                   restriction, right of first refusal, right of pre-emption,
                   third party right or interest, other encumbrance or security
                   interest of any kind, or another type of preferential
                   arrangement (including, without limitation, a title transfer
                   or retention arrangement) having similar effect.

            1.1.32 "ENDO COPYRIGHT" - copyright or any other intellectual
                   property analogous to copyright including any rights in
                   designs subsisting or relating to any Documents, designs or
                   other embodiments of the trade dress for the Product, any
                   form of advertisement in whatever media, marketing materials,
                   samples or other promotional gifts or any other materials in
                   which such rights are capable of subsisting as a matter of
                   law in all cases which are generated by or upon behalf of
                   Endo or its Affiliates during the period of this Agreement in
                   connection with the advertising, promotion, marketing or sale
                   or other Commercialisation of Product.

            1.1.33 "ENDO IP" - Endo Patent Rights, Endo Know How, Endo
                   Copyrights, Endo Materials and Endo Trade Marks.

            1.1.34 "ENDO KNOW HOW" - Know How owned by or licensed to Endo or
                   its Affiliates (other than from Vernalis) or acquired by Endo
                   or its Affiliates during the period of this Agreement that is
                   necessary or useful for or which otherwise relates to the
                   development or Commercialisation of Product, including Know
                   How relating to Clinical Studies and Product Enhancements.

            1.1.35 "ENDO MATERIALS" - Materials owned by or licensed to Endo or
                   its Affiliates (other than from Vernalis) or acquired by Endo
                   or its Affiliates during the term of this Agreement that are
                   necessary or useful for or which otherwise relate to the
                   development or

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                   Commercialisation of Product, including Materials used in
                   Clinical Studies or being or relating to Product
                   Enhancements.

            1.1.36 "ENDO PATENT RIGHTS" - Patent Rights owned by or licensed to
                   Endo or its Affiliates (other than from Vernalis) which have
                   claims which Cover Product or the making, using or
                   Commercialisation of the Product or that Cover Product
                   Enhancements or the making, using or Commercialisation of
                   Product Enhancements.

            1.1.37 "ENDO TRADE MARKS" - (i) the name and mark ENDO and the
                   associated Endo logo, and (ii) any other trade marks other
                   than the Vernalis Trade Marks used in relation to Products
                   owned by or licensed to Endo during the term of this
                   Agreement which are the subject of Clause 13.1.

            1.1.38 "ESTIMATED COMMITMENT" - the estimated commitment set out in
                   Schedule 1.

            1.1.39 "ESTIMATED DETAILING EFFORT" - the estimated Detailing effort
                   specified in Schedule 5 for each Year specified in
                   Schedule 5.

            1.1.40 "EVENT OF DEFAULT" - as defined in the Loan Agreement.

            1.1.41 "FDA" - the United States Food and Drug Administration or any
                   successor agency thereto.

            1.1.42 "FORCE MAJEURE" - in relation to either Party, any event or
                   circumstance which is beyond the reasonable control of that
                   Party, which event or circumstance that Party could not
                   reasonably be expected to have taken into account at the date
                   of this Agreement and which results in or causes the failure
                   of that Party to perform any or all of its obligations under
                   this Agreement, including acts of God, lightning, fire,
                   storm, flood, earthquake, accumulation of snow or ice, lack
                   of water arising

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                    from weather or environmental problems, strike, lockout or
                    other industrial or student disturbance, act of the public
                    enemy, war declared or undeclared, threat of war, terrorist
                    act, blockade, revolution, riot, insurrection, civil
                    commotion, public demonstration, sabotage, act of vandalism,
                    energy or other supplies, explosion, fault or failure of
                    plant or machinery (which could not have been prevented by
                    Good Industry Practice), or Legal Requirement governing
                    either Party, provided that lack of funds in and of itself
                    shall not be interpreted as a cause beyond the reasonable
                    control of that Party.

            1.1.43  "FORMAL PRESENTATION" - an oral presentation with supporting
                    written evidence of the outcome of a clinical study given at
                    a time before the formal written report has been completed
                    but which contains a final assessment of the results and
                    conclusions of such study.

            1.1.44  "FTE" - the equivalent of the work of a scientist or other
                    project managerial professional, full time for one year,
                    which equates to *** hours per day, *** days per week,
                    excluding national holidays and reasonable vacation being a
                    total of *** days or *** hours per year of work.

            1.1.45  "GAAP" - generally accepted accounting principles from time
                    to time current in USA.

            1.1.46  "GENERIC VERSION" - any pharmaceutical product that is
                    recognized by a Regulatory Authority in the particular
                    country in the Territory as "AB" rated to a Product (or the
                    equivalent in such country) or is substitutable at the
                    pharmacy for a prescription written for a Product.

            1.1.47  "GCP" - clinical practice as set out in:

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                    (a)  Directive 2001/20/EC and Directive 2001/83/EC as well
                         as ICH-GCP and any other guidelines for good clinical
                         practice for trials on medicinal products in the
                         European Community as amended and applicable from time
                         to time; and

                    (b)  US Code of Federal Regulations Title 21, Parts 50
                         (Protection of Human Subjects), 56 (Institutional
                         Review Boards) and 312 (Investigational New Drug
                         Applications), as may be amended from time to time; and

                    (c)  the Declaration of Helsinki as last amended at the 52nd
                         World Medical Association in October 2000 and any
                         further amendments thereto; and

                    (d)  the equivalent law or regulation in any country in the
                         Territory.

            1.1.48  "GLP" - laboratory practice as set out in:

                    (a)  Directive 2004/9/EC and Directive 2004/10/EC as may be
                         amended or replaced from time to time as well as any
                         Rules Governing Medicinal Products in the European
                         Community Vol III, ISBN 92.825 9619-2 (ex OECD
                         principles of GLP) as amended and applicable from time
                         to time; and

                    (b)  US Code of Federal Regulations, Title 21, Part 58 (Good
                         Laboratory Practice for Nonclinical Laboratory
                         Studies); and

                    (c)  the equivalent law or regulation in any country in the
                         Territory.

            1.1.49  "GOOD MANUFACTURING PRACTICE" or "GMP" - manufacture in
                    accordance with:

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                    (a)  Directive 91/412/EEC and Directive 2003/94/EC or any
                         other applicable European Community Legislation or
                         regulation as amended and applicable from time to time;

                    (b)  those practices in the manufacture of pharmaceutical
                         products that are recognized as the current good
                         manufacturing practices by the FDA in accordance with
                         FDA regulations, guidelines, other administrative
                         interpretations, and rulings in connection therewith,
                         including but not limited to those regulations cited in
                         21 C.F.R. parts 210 and 211, all as they may be amended
                         from time to time; and

                    (c)  the equivalent law or regulation in any country in the
                         Territory.

            1.1.50  "IND" - an investigational new drug application filed with
                    the FDA prior to beginning clinical trials in humans or any
                    comparable application filed with the Regulatory Authority
                    of a country other than the United States prior to beginning
                    trials in humans in that country.

            1.1.51  "INITIAL FDA MEETING" - the meeting between Vernalis and the
                    FDA, with Endo present (if acceptable to the FDA), scheduled
                    to be held on ***, with respect to the MAM & Paediatric
                    Development Program.

            1.1.52  "INSOLVENCY EVENT" - in relation to either Party, means any
                    one of the following:

                    (a)  a notice having been issued to convene a meeting for
                         the purpose of passing a resolution to wind up that
                         Party, or such a resolution having been passed other
                         than a resolution for the solvent reconstruction or
                         reorganisation of that Party or for the purpose of
                         inclusion of any part of

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                         the share capital of that Party in the Official List of
                         the London Stock Exchange or in the list of the New
                         York Stock Exchange or quotation of the same on the
                         National Association of Securities Dealers Automated
                         Quotation System or any other international stock
                         exchange; or

                    (b)  a resolution having been passed by that Party's
                         directors to seek a winding up order or a petition for
                         a winding up order having been presented against that
                         Party which has not been dismissed or withdrawn within
                         7 days of its presentation, or any analogous action is
                         taken in a jurisdiction other than England and Wales;
                         or

                    (c)  a resolution having been proposed by any Party to
                         appoint an administrator, or to apply to court for an
                         administration order, or an application for an
                         administration order having been lodged with the Court
                         whether or not by a Party or any step is taken pursuant
                         to the Insolvency Act 1986, Schedule B1 and/or the
                         Insolvency Rules 1986 to appoint an administrator out
                         of court or any Party enters administration, or any
                         analogous action that is taken in a jurisdiction other
                         than England and Wales; or

                    (d)  a receiver, administrative receiver, receiver and
                         manager, court appointed receiver, interim receiver,
                         custodian, sequestrator or similar officer is appointed
                         in respect of that Party or over any part of that
                         Party's assets or any third party takes steps to
                         appoint such an officer in respect of that Party or an
                         encumbrancer takes steps to enforce or enforces its
                         security over any part of any Party's assets, or any
                         analogous action that is taken in a jurisdiction other
                         than England and Wales; or

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                    (e)  a moratorium comes into force in respect of any Party
                         or a Party's directors resolve to make a proposal for a
                         voluntary arrangement or meetings are convened for
                         consideration of a proposal for a voluntary arrangement
                         made in relation to that Party under Part I and/or
                         Schedule A1 of the Insolvency Act 1986, or any
                         analogous action that is taken in a jurisdiction other
                         than England and Wales; or

                    (f)  an application or proposal is made under section 425
                         Companies Act 1985 (as amended), or any analogous
                         action that is taken in a jurisdiction other than
                         England and Wales; or

                    (g)  a step or event having been taken or arisen outside the
                         United Kingdom which is similar or analogous to any of
                         the steps or events listed at (a) to (f) above in the
                         case of Endo under the US Bankruptcy Code (including a
                         filing under Chapter 11 proceedings) or other relevant
                         laws of the USA which, in the case of a filing made
                         against Endo, shall not have been appealed within 7
                         days of having been lodged or such an order shall have
                         been made and not dismissed within thirty (30) days
                         thereafter; or

                    (h)  a Party takes any step, whether under the Insolvency
                         Act 1986 or otherwise (including starting
                         negotiations), with a view to readjustment,
                         rescheduling or deferral of any part of that Party's
                         indebtedness, or proposes or makes any general
                         assignment, composition or arrangement with or for the
                         benefit of all or some of that Party's creditors or
                         makes or suspends or threatens to suspend making
                         payments to all or some of that Party's creditors or
                         the Party submits to any type of voluntary arrangement,
                         or any

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                         analogous action that is taken in a jurisdiction other
                         than England and Wales; or

                    (i)  where that Party is resident in the United Kingdom it
                         is unable to pay or has no reasonable prospect of being
                         able to pay its debts within the meaning of Section 123
                         Insolvency Act 1986, but disregarding references in the
                         Insolvency Act 1986 to proving this inability to the
                         court's satisfaction, or any analogous event that is
                         taken in a jurisdiction other than England and Wales.

            1.1.53  "INTERIM PERIOD" - the period between the Closing Date and
                    the date of Re-Launch in the USA as notified by Endo to
                    Vernalis under Clause 6.1.1.

            1.1.54  "INVENTORY STATEMENT" - the statement of the quantity and
                    value of Stock at the Closing Date agreed by Vernalis and
                    Endo (or determined) in accordance with Schedule 2.

            1.1.55  "KNOW HOW" - technical and other information which is not in
                    the public domain, including information comprising or
                    relating to concepts, discoveries, data, designs, formulae,
                    ideas, inventions, methods, models, assays, research plans,
                    procedures, designs for experiments and tests and results of
                    experimentation and testing (including results of research
                    or development), processes (including manufacturing
                    processes, specifications and techniques), laboratory
                    records, chemical, pharmacological, toxicological, clinical,
                    analytical and quality control data, trial data, case report
                    forms, data analyses, reports, manufacturing data,
                    information contained in submissions to and information from
                    ethical committees and Regulatory Authorities, data
                    concerning pricing or reimbursement including discounts and
                    rebates to particular customers, data concerning dealings
                    with managed and similar healthcare providers including
                    lists of

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                    customers and key prescribers, data concerning trade
                    inventory levels, data concerning returns and chargebacks
                    and any other data covering the supply chain, and summaries
                    of any of the foregoing. Know How includes Documents
                    containing Know How, including but not limited to any rights
                    including trade secrets, copyright, database or design
                    rights protecting such Know How. The fact that an item is
                    known to the public shall not be taken to preclude the
                    possibility that a compilation including the item, and/or a
                    development relating to the item, is not known to the
                    public.

            1.1.56  "LEGAL REQUIREMENT" - any present or future law, regulation,
                    directive, instruction, direction or rule of any Competent
                    Authority or Regulatory Authority including any amendment,
                    extension or replacement thereof which is from time to time
                    in force.

            1.1.57  "LOAN AGREEMENT" - the loan agreement entered into by the
                    Parties on the Signature Date.

            1.1.58  "MAM" - menstrual associated migraine.

            1.1.59  "MAM & PAEDIATRIC DEVELOPMENT PROGRAM" - the program of work
                    to be conducted and managed by Vernalis hereunder for the
                    clinical development program of the Product for purposes of
                    gaining an approved indication for use in MAM and leading to
                    Marketing Authorisation for the same and for those
                    paediatric studies required by FDA which program is set out
                    in Schedule 3 hereto.

            1.1.60  "MAM PRODUCT" - the Product with a Marketing Authorisation
                    for MAM.

            1.1.61  "MAM PRODUCT IND" - the IND number IND 48,933 (encompassing,
                    inter alia, the identification to study the use of

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                    frovatriptan for the prevention of menstrually-associated
                    migraine) filed in respect of the Product pursuant to C.F.R.
                    Parts 312 of the U.S. Food, Drug and Cosmetic Act 1938.

            1.1.62  "MAM PRODUCT LAUNCH" - the commercial launch of MAM Product
                    in USA.

            1.1.63  "MANAGED CARE AGREEMENTS AND ASSIGNED CONTRACTS" - the
                    agreements set out in Schedule 4.

            1.1.64  "MARKETING AUTHORISATION" - any approval required from a
                    Regulatory Authority to market and sell a Product in any
                    country of the Territory including any approval for a label
                    extension or new indication and also including any pricing
                    or reimbursement approval required or commercially
                    desirable.

            1.1.65  "MARKETING MATERIALS"- any packaging, advertising and
                    promotional literature and materials in each case used in
                    the advertising and promotion of the Product in the
                    Territory in Vernalis' possession at the Closing Date.

            1.1.66  "MATERIAL" - any chemical or biological substance other than
                    the Compound including any:

                    (a)  organic or inorganic element;

                    (b)  drug or pro-drug; and

                    (c)  assay or reagent.

            1.1.67  "MONIES" - all monies due and outstanding to Endo from
                    Vernalis under the Loan Agreement from time to time.

            1.1.68  "NDA" - a new drug license application filed with the FDA to
                    obtain Marketing Authorisation for a pharmaceutical product
                    in the USA, or any comparable application filed with the
                    Regulatory

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                    Authorities in or for a country or group of countries other
                    than the USA to obtain Marketing Authorisation for a
                    pharmaceutical product in or for that country or within that
                    group of countries.

            1.1.69  "NET SALES" - the gross amount invoiced for sales of
                    Product(s), in arm's length sales by Endo or its Affiliates,
                    agents and distributors to Third Parties, less the following
                    deductions from such gross amounts which are actually
                    incurred, allowed, accrued or specifically allocated:

                         (i)   credits, price adjustments or allowances for
                               damaged products, returns, recalls or rejections
                               of such products;

                         (ii)  cash and quantity discounts, allowances and
                               credits and other customary discounts (other than
                               those granted at the time of invoicing which have
                               already been included in the gross amount
                               invoiced) or retroactive price reductions;

                         (iii) chargeback payments and rebates (or the
                               equivalent thereof) granted to group purchasing
                               organizations, managed health care organizations
                               or to federal, state/provincial, local and other
                               governments, including their agencies, or to
                               trade customers;

                         (iv)  any freight charges invoiced by Endo, its
                               Affiliates, its agents or distributors, including
                               postage, shipping, insurance and other
                               transportation charges; and

                         (v)   sales taxes, value-added taxes (to the extent not
                               refundable in accordance with applicable law),
                               and excise taxes, tariffs and duties, and other
                               taxes

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                              directly related to the sale (but not including
                              taxes assessed against the income derived from
                              such sale).

                    "Net Sales" shall not include any provision for unpaid
                    amounts owed by Third Party purchasers of the Products or
                    sales among the Parties and their respective Affiliates or
                    distributors.

                    Such amounts shall be determined from the books and records
                    of Endo maintained in accordance with GAAP consistently
                    applied.

                    In the event that Product is sold as a Combination Product
                    in any country of the Territory, the Net Sales from the
                    Combination Product in that country for the purposes of
                    determining royalty payments shall be determined by ***.

                    In the event that the average sale price of the Product in
                    that country can be determined but the average sale price of
                    the Combined Product in that country cannot be determined,
                    or the average sale price of the Combined Product in that
                    country can be determined but the average sale price of the
                    Product in that country cannot be determined, ***.

            1.1.70  "PARTY" or "PARTIES" - Vernalis and/or Endo.

            1.1.71  "PATENT RIGHTS" - patent applications and patents, utility
                    certificates, improvement patents and models and
                    certificates of addition and all foreign counterparts of
                    them in all countries, including any divisional applications
                    and patents, refilings, renewals, re-examinations,
                    continuations, continuations-in-part, patents of addition,
                    extensions, (including patent term extensions,) reissues,
                    substitutions, confirmations, registrations, revalidations,
                    and any equivalents of the foregoing in any and all
                    countries of or to any of them, as well as any supplementary

                                     - 19 -
<PAGE>

                    protection certificates and equivalent protection rights in
                    respect of any of them.

            1.1.72  "PCP" - the Detailing of Product by sales personnel to
                    primary care physicians.

            1.1.73  "PERSON" - an individual or a corporation, partnership,
                    association, trust or any other entity or organization,
                    including a government or political subdivision or an agency
                    or instrumentality thereof.

            1.1.74  "PHASE III CLINICAL TRIALS" - large scale, pivotal
                    multicentre, human clinical trials conducted in a sufficient
                    number of patients to establish safety or efficacy in the
                    particular claim and indication tested and required to
                    obtain Marketing Authorisation.

            1.1.75  "PRIMARY DETAIL" - a full Product presentation presented in
                    the first position during a Detail in which key Product
                    attributes are verbally presented in a balanced manner.

            1.1.76  "PRODUCT(s)" - any pharmaceutical product in which the
                    Compound is an active ingredient and in relation to which
                    Marketing Authorisation has been granted. For the avoidance
                    of doubt it is declared and agreed that this definition
                    includes (i) any form of the Product Commercialised by Endo
                    hereunder regardless of indication which includes all line
                    extensions of the Product (including those that provide for
                    different dosage strengths); and (ii) any Product
                    Enhancements. If a pharmaceutical product can be marketed
                    and sold without pricing or reimbursement approval nothing
                    in this definition requires such approval for it to be
                    classified as a Product for the purposes of this Agreement.

            1.1.77  "PRODUCT ENHANCEMENT" - any improvements made after the
                    Closing Date in the Product's formulation or delivery, any
                    and all

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                    line extensions of the Product (including those that provide
                    for different dosage strengths), and any and all Combination
                    Products and any over-the-counter version of the Product.

            1.1.78  "PRODUCT REGISTRATION"-

                    (a)  the NDA number NDA 021006 filed in respect of the
                         Product pursuant to 21 C.F.R. Part 314 of the U.S.
                         Food, Drug and Cosmetic Act 1938; and

                    (b)  the New Drug Submission control number 065221 made
                         pursuant to Division 8 of the Food and Drugs Act
                         Regulations (Canada); and

                    (c)  all supplements or amendments to any of the foregoing.

            1.1.79  "PRODUCT REGISTRATION INFORMATION"-

                    (a)  the complete NDA, MAM Product IND and New Drug
                         Submission files referred to in or served in relation
                         to the Product Registration or MAM Product IND; and

                    (b)  any and all regulatory correspondence between Elan
                         Group and any Regulatory Authority in the Territory in
                         relation to the Product Registration, MAM Product IND
                         or the Product; and

                    (c)  all dossiers, data, reports and other material in
                         written or electronic form to the extent relating to
                         the Product Registration, MAM Product IND or the
                         Product which have been filed with any Regulatory
                         Authority.

            1.1.80  "QUARTER" - each period of three months ending on 31 March,
                    30 June, 30 September or 31 December and "Quarterly" shall
                    be construed accordingly.

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<PAGE>

            1.1.81  "RECIPIENT PARTY" - the Party which receives Confidential
                    Information from the other Party.

            1.1.82  "REGISTERED TRADEMARKS" - U.S. Federal Trade Mark
                    Registration No. 2,828,476 registered on March 30, 2004 and
                    Canadian trade mark application no. 1123447, each for
                    `FROVA'.

            1.1.83  "REGULATORY AUTHORITY" - any national, supranational (e.g.,
                    the European Commission, the Council of the European Union,
                    the European Agency for the Evaluation of Medicinal
                    Products), regional, state or local regulatory agency,
                    department, bureau, commission, council or other
                    governmental entity including the FDA, in each country
                    involved in the granting of Marketing Authorisation for the
                    Product.

            1.1.84  "RE-LAUNCH" - the first invoiced commercial sale by Endo or
                    its Affiliates of a Product in each country of the Territory
                    ***.

            1.1.85  "RE-LAUNCH DATE" - the date of Re-Launch in each country of
                    the Territory.

            1.1.86  "REPRESENTATIVES" - each of the Parties, their Affiliates or
                    each of their directors, officers, employees, agents and
                    advisors.

            1.1.87  "SAFETY AGREEMENT" - a safety and data exchange agreement
                    between the Parties dealing with each of the Parties
                    responsibilities in respect of pharmacovigilance.

            1.1.88  "SECONDARY DETAIL" - a full Product presentation not
                    presented in the first position during a Detail in which key
                    Product attributes are verbally presented in a balanced
                    manner.

                                     - 22 -
<PAGE>

            1.1.89  "SECURITY AGREEMENT" - the Security Agreement to be entered
                    into between the Parties to which reference is made in the
                    Loan Agreement.

            1.1.90  "SIGNATURE DATE" - the date upon which this Agreement is
                    executed by both of the Parties to it.

            1.1.91  "SPECIALTY DETAILING" - the Detailing of Product by
                    specialty sales personnel to neurologists.

            1.1.92  "SPECIALTY SALES FORCE" - sales personnel employed by Endo
                    for Specialty Detailing, including Vernalis Specialty Sales
                    Personnel.

            1.1.93  "STEERING COMMITTEE" or "SC" - the committee established
                    pursuant to Clause 7.1.

            1.1.94  "STOCK" - the stock of:

                    (a)  Frova 2.5mg Tab, 9 Count Blister with an expiration
                         date on or after the *** month anniversary of the
                         Closing Date;

                    (b)  Those certain *** Frova 2.5 mg Tab 2 Count Blisters
                         with an expiration date on or after *** for use as
                         samples;

                    (c)  ***;

                    (d)  ***; and

                    (e)  ***, subject to the terms set forth in Schedule 2,

                    in each case held by or on behalf of Vernalis at the Closing
                    Date, listed in the Inventory Statement and valued at Cost,
                    excluding in each case inventory which is not good,
                    merchantable and suitable for sale.

            1.1.95  "SUPPLY AND TECHNICAL AGREEMENTS" -

                    (a)  the API Supply Agreement; and

                                     - 23 -
<PAGE>

                    (b)  the Frovatriptan supply agreement between Vernalis and
                         Galen Limited, dated January 1, 2002; and

                    (c)  the other supply and technical agreements listed in
                         Schedule 6.

            1.1.96  "TERRITORY" - Canada, Mexico, the United States of America,
                    its territories and possessions and the Commonwealth of
                    Puerto Rico.

            1.1.97  "TERRITORY STUDY" - a clinical trial and/or other study on
                    Product which is conducted by Vernalis in the Territory, as
                    specified in Clause 8.10.

            1.1.98  "THIRD PARTY" - any Person who or which is neither a Party
                    nor an Affiliate of a Party.

            1.1.99  "TRANSITIONAL SERVICES AGREEMENT" - the transitional
                    services agreement made between Vernalis and certain
                    companies in the Elan Group dated May 18, 2004.

            1.1.100 "UK AFFILIATE" - an Affiliate of Vernalis, then and
                    thereafter existing, incorporated or otherwise organized
                    under the laws of England and Wales or Scotland.

            1.1.101 "UNREGISTERED TRADE MARKS" - Vernalis' right, title and
                    interest in the name and mark FROVA and in the logo
                    reproduced in Schedule 7 (The Frova Logo) in the Territory
                    (in each case).

            1.1.102 "USD" - United States Dollars.

            1.1.103 "USE SUGGESTION" - any suggestion by Vernalis to Endo for a
                    new clinical use or indication for Product (including
                    Combination Product) which suggestion ***, provided that
                    Endo provides evidence of such consideration or
                    contemplation within 10 days of Endo's receipt of such Use
                    Suggestion from Vernalis.

                                     - 24 -
<PAGE>

            1.1.104 "VALID CLAIM" - either:

                    (a)  a claim of an issued and unexpired patent included
                         within Patent Rights, which has not been held
                         permanently revoked, unenforceable or invalid by a
                         decision of a court or other governmental agency of
                         competent jurisdiction, unappealable or un-appealed
                         within the time allowed for appeal, and which has not
                         been admitted to be invalid or unenforceable through
                         reissue or disclaimer or otherwise; or

                    (b)  a claim of a pending patent application included within
                         Patent Rights which claim was filed and is being
                         prosecuted in good faith and has not been abandoned or
                         finally disallowed without the possibility of appeal or
                         refiling of the application.

            1.1.105 "VERNALIS IP" - the Vernalis Patent Rights, Vernalis Know
                    How, Vernalis Materials and Vernalis Trade Marks whether any
                    of the foregoing are in existence as of the Closing Date or
                    subject to the provisions of Clauses 8.11 and 8.12 come into
                    existence during the term of this Agreement.

            1.1.106 "VERNALIS KNOW HOW" - Know How owned by or licensed to
                    Vernalis either at the Closing Date or subject to the
                    provision of Clauses 8.11 and 8.12 during the term of this
                    Agreement (but excluding for the purposes of this definition
                    the Product Registration and Product Registration
                    Information) that relates to (i) the Compound or its
                    development or previous Commercialisation in the Territory;
                    (ii) Commercialisation outside of the Territory to the
                    extent Vernalis has rights to license the same; (iii) the
                    MAM & Paediatric Development Program; and (iv) Product
                    Enhancements, to the extent Vernalis has rights to license
                    the same.

                                     - 25 -
<PAGE>

            1.1.107 "VERNALIS MATERIALS" - Materials owned by or licensed to
                    Vernalis or its Affiliates (other than from Endo) at the
                    Closing Date or subject to the provisions of Clauses 8.11
                    and 8.12 acquired by Vernalis or its Affiliates during the
                    period of this Agreement which are Materials that are
                    necessary or useful for or which otherwise relate to the
                    development or Commercialisation of Product including
                    Materials used in clinical studies or being or relating to
                    Product Enhancements.

            1.1.108 "VERNALIS PATENT RIGHTS" - the Patent Rights which are owned
                    by or licensed to Vernalis at the Closing Date Covering the
                    Compound or its manufacture or use in the Territory set out
                    in Schedule 8 and subject to the provisions of Clauses 8.11
                    and 8.12, any other Patent Rights in the Territory which are
                    owned or become owned by or licensed to Vernalis during this
                    Agreement which Cover (i) the making, using or
                    Commercialisation of Compound or Product in the form in
                    which it exists at the Closing Date; and (ii) Product
                    Enhancements, to the extent Vernalis has rights to license
                    the same.

            1.1.109 "VERNALIS SPECIALITY SALES PERSONNEL" - sales
                    representatives employed by Vernalis and engaged in
                    Specialty Detailing pursuant to the Co-Promotion Agreement.

            1.1.110 "VERNALIS TRADE MARKS" - (i) the Registered Trade Marks, and
                    (ii) the Unregistered Trade Marks.

            1.1.111 "YEAR" - any period of twelve (12) months which ends
                    December 31 in each year.

2.    CONDITION PRECEDENT

      2.1   The coming into force and effect of this Agreement is conditional on
            any applicable waiting period under the Hart Scott Rodino Anti-Trust
            Improvements Act 1976, as amended, and any regulations made

                                     - 26 -
<PAGE>

            thereunder ("HSR Act") relating to the proposed licenses and
            transfer of rights pursuant to this Agreement having expired or been
            terminated. Promptly after the Signature Date, each of Endo and
            Vernalis shall make any necessary filing under the HSR Act, and the
            Parties will cooperate as necessary in coordinating such filings.
            Upon such expiration or termination, and satisfaction of the
            conditions set forth in Clauses 2.5, 2.6 and 2.7 below, this
            Agreement shall come into full force and effect.

      2.2   If the condition in Clause 2.1 has not been satisfied by December
            31, 2004, any Party may terminate this Agreement with immediate
            effect at any time thereafter.

      2.3   From the Signature Date until the Closing Date, Vernalis shall:

            2.3.1   conduct its business with respect to the Product in the
                    Territory only in the ordinary course of business, including
                    maintaining and preserving goodwill associated with the
                    Product and confer with, and provide information to, Endo on
                    a regular basis concerning material operational matters and
                    the status of operations and finances relating to the
                    Product in the Territory;

            2.3.2   afford to Endo employees or representatives, reasonable
                    access to Vernalis' offices, properties, books and records
                    that relate to the Product in the Territory, and, to the
                    extent within Vernalis' rights under its existing
                    contractual relationships, reasonable access to customers,
                    vendors, consultants and suppliers that relate to the
                    Product in the Territory, in each case during normal
                    business hours, in order that Endo may make reasonable
                    inspections, investigations, analyses and audits with
                    respect to the Product; and

            2.3.3   promptly notify Endo in writing of (a) any material notice
                    or other material communication from any Regulatory
                    Authority that may affect the Product in the Territory ,
                    including any notice of

                                     - 27 -
<PAGE>

                    violation; (b) any actions or investigations commenced or
                    threatened related to the Product and (c) the occurrence or
                    non-occurrence of any event, condition or circumstance which
                    would cause any representation or warranty of Vernalis
                    contained in this Agreement to be untrue or inaccurate in
                    any material respect.

      2.4   Within 30 days after the Signature Date, Vernalis shall deliver to
            Endo, to the extent in its possession or control (and which it is
            free to disclose) or otherwise available to Vernalis given its
            current contractual arrangements in effect as of the Signature Date,
            the following, to the extent they relate to or affect the Product in
            the Territory, provided, that, delivery of the items set forth in
            this Clause 2.4 shall not be a condition to the Closing Date, and
            provided further that Vernalis shall use its best efforts to obtain
            permission necessary to disclose any of the items set forth in
            Clause 2.4 which it is not free to disclose (which, for the
            avoidance of doubt, shall not require Vernalis to make any payments
            for such permission):

            2.4.1   A list of all investigators ***;

            2.4.2   Documentation as to all formulation work performed to date
                    on the Product, including by both Vernalis, Vernalis'
                    Affiliates and contractors and the Elan Group;

            2.4.3   All documentation relating to the research grants listed on
                    Schedule 4, including investigator-initiated studies of
                    which Vernalis is aware;

            2.4.4   Copies of all Marketing Materials developed prior to and
                    since the Product's initial launch, whether or not actually
                    used to market the Product;

            2.4.5   Copies of all DDMAC correspondence relating to the marketing
                    or sale of the Product prior to and since the initial launch
                    of

                                     - 28 -
<PAGE>

                  Product;

            2.4.6   Lists of prescribers, including physicians, nurse
                    practitioners, physician assistants, pharmacies, hospitals
                    and other organizations, to which Product has been Detailed,
                    including any lists for segmentation;

            2.4.7   Report of sampling activity by physician or healthcare
                    provider including units distributed;

            2.4.8   Copies of all Managed Care Agreements, Assigned Contracts
                    and Non-Assignable Contracts;

            2.4.9   A list of all trade customers (retail, wholesale and other)
                    and any applicable rebates, discounts, or administrative
                    payments for each customer and sales and unit history by lot
                    number since the initial launch of the Product in the
                    Territory;

            2.4.10  Updated sales, returns and rebate reports;

            2.4.11  Updated inventory reports showing WIP, API, finished product
                    and samples;

            2.4.12  Copies of any safety agreements to which Vernalis is a party
                    with respect to the Product; and

            2.4.13  Copies of any purchase orders from Elan or Vernalis to the
                    Sharp Corporation in the 12 months prior to the Signature
                    Date.

      2.5   On or before the Closing Date, Vernalis shall ***.

      2.6   On or before the Closing Date, Vernalis shall deliver to Endo a
            report of "best price" (as defined under the Social Security Act, 42
            U.S.C. Section 1396r-8(c)(1)(c)) and any other pricing offered to a
            governmental entity for the Product.

      2.7   Effective as of the Closing Date, the Parties shall have entered
            into a

                                     - 29 -
<PAGE>

            Safety Agreement, in the form agreed pursuant to Clause 3.6.

3.    LICENSE

      3.1   Subject to (i) Vernalis' right to conduct or have conducted the MAM
            & Paediatric Development Program, (ii) Vernalis' right to conduct a
            Territory Study and (iii) Vernalis' right to co-promote under Clause
            9 and Schedule 10, and in consideration of the payments referred to
            in Clause 11, Vernalis hereby grants to Endo and its Affiliates with
            effect from the Closing Date a sole and exclusive (even as against
            Vernalis) licence for each country of the Territory under Vernalis
            IP to make, have made, use, Commercialise and have Commercialised
            the Product including the right to record sales for its own account.

      3.2   For the avoidance of doubt it is declared and agreed that Endo shall
            not be entitled to sublicense the rights granted to it hereunder
            without the prior written consent of Vernalis, provided that:

            3.2.1  For the purpose of the exploitation of the rights granted to
                   Endo hereunder in Canada, Endo shall be entitled to
                   sublicense to *** or any replacement for such sublicensee
                   from time to time as notified by Endo to Vernalis in writing;

            3.2.2  For the purpose of the exploitation of the rights granted to
                   Endo hereunder in Mexico, Endo shall be entitled to
                   sublicense from time to time as notified to Vernalis in
                   writing;

            3.2.3  Endo shall not be restricted from appointing distributors,
                   advertisers, public relations agencies, consultants or
                   advisors to assist Endo with Commercialising the Product in
                   the Territory; provided, however, that Endo shall not have
                   the right to appoint any contract sales organization or
                   representatives to assist it and its Affiliates in Detailing,
                   except that ***; and

            3.2.4  Notwithstanding the provisions of this Clause 3.2, Endo shall
                   be

                                      - 30 -

<PAGE>

                  entitled to sublicense the rights granted to it hereunder to
                  an Affiliate of Endo.

      3.3   To the extent that Endo is permitted under this Agreement to
            sublicense the rights granted to it hereunder, Endo shall remain
            responsible for all of its obligations hereunder and if the acts or
            omissions of any such sublicensee cause Endo to be in breach of this
            Agreement, Endo shall be responsible therefor regardless of any
            remedy that Endo may have against the sublicensee for breach of the
            sublicense.

      3.4   Forthwith following the Closing Date and during the period of this
            Agreement, Vernalis shall disclose and make available to Endo the
            subject matter of any and all then-existing Vernalis IP for use in
            connection with Endo's making, having made, use and
            Commercialisation of the Product in the Territory, including, but
            subject to Clauses 8.11 and 8.12, any and all Vernalis IP comprising
            or relating to Product Enhancements and relevant Documents. In
            addition to the foregoing, Vernalis shall also disclose and make
            available to Endo all information relevant or necessary for Endo to
            fully exercise its rights and fulfil its obligations hereunder.

      3.5   Vernalis shall, at Vernalis' cost, provide Endo with reasonable
            assistance including meetings, conference calls, exchange of
            documents and other appropriate forms of communication to explain
            knowledge and experience obtained by Vernalis, either directly or
            through a Third Party, with regard to the Product (and for the
            avoidance of doubt in addition to the time spent by Vernalis on the
            Steering Committee) in the period prior to Re-Launch and after the
            Re-Launch. Furthermore, Vernalis shall disclose, make available and,
            at the request of Endo, assign, to the extent that Vernalis has the
            right to do so, to Endo any agreements, rights or obligations which
            become known to Vernalis after the Closing Date and which are, in
            Endo's opinion, necessary for the effective Commercialisation of the
            Product.

                                      - 31 -

<PAGE>

      3.6   On the Closing Date, the Parties shall execute a Safety Agreement in
            a form mutually agreed and which shall be negotiated in good faith.
            Each Party shall comply with the terms and conditions of the Safety
            Agreement, including, but not limited to promptly providing one
            another with all information concerning any charges, complaints or
            claims reportable to any Regulatory Authority relating to the
            Product. Vernalis shall ensure that all of its and its Affiliates'
            future licensees and future sub-licensees outside of the Territory
            become parties to a safety agreement that contains the same material
            terms as those set forth in the Safety Agreement (including
            requirements regarding the timing and substance of reports for
            adverse events) and are bound to report safety information in
            accordance with the terms of such safety agreement. Vernalis shall,
            immediately upon becoming aware of any such information, provide
            Endo with all information Vernalis receives from any of its current
            licensees and sublicensees pursuant to any safety agreement in
            existence on the Signature Date with any of such licensees or
            sublicensees (or any replacement or successor agreement thereof).

      3.7   Vernalis shall, so far as is permitted by Legal Requirements and
            without seeking to amend any license in existence as of the
            Signature Date which it has granted outside the Territory, ensure
            that its Affiliates and the licensees and sub-licensees of it or any
            of its Affiliates of the Compound and/or Product outside the
            Territory do not market or sell such Compound or Product in the
            Territory.

      3.8   Vernalis hereby grants Endo a royalty-free, non-exclusive,
            non-sub-licensable and non-assignable license to use the name and
            mark "Elan", the Elan group corporate logo or any name or mark
            including or comprising "Elan" (including, without limitation, as
            part of any of the corporate or trading names of any Elan Group
            undertaking) and the stylized "e" symbol currently embossed on the
            Product (the "e" Symbol) (the "Elan Marks") as follows:

                                      - 32 -

<PAGE>

            3.8.1  the Elan Marks (other than the "e" Symbol) on packaging of
                   the Product and the "e" Symbol on tablets in both cases which
                   are intended for sale by Endo or its Affiliates on or before
                   February 18, 2005;

            3.8.2  Endo shall no later than *** destroy all existing stocks of
                   Product in packaging bearing any Elan Mark and remove the "e"
                   Symbol from all equipment used to mark the Product in Endo's
                   possession or control; and

            3.8.3  Endo shall not intentionally violate any of the provisions of
                   Clause 11.4 of the Elan Asset Transfer Agreement prior
                   to ***.

4.    TRANSFER OF THE PRODUCT REGISTRATIONS

On or before the Closing Date, or as soon as practicable thereafter, upon
written notice from Endo, Vernalis and Endo shall transfer the Product
Registrations and the Product Registration Information to Endo free from any
Encumbrance. Vernalis shall deliver signed transfer letters to the FDA, Health
Canada or any other Regulatory Authority in the Territory, as the case may be,
and all other notice, application, submission, report and other instrument,
document, correspondence or filing presented to it by Endo that is necessary or
useful for the transfer of the Product Registrations to Endo. From the Signature
Date until the Product Registrations are transferred to Endo, Vernalis shall:
(i) submit all necessary filings, correspondence and reports, attend all
meetings and otherwise conduct all activities required to maintain the Product
Registrations, (ii) promptly submit to Endo copies of all filings and
correspondence that are submitted to any Regulatory Authority which relates to
the Product in the Territory, and (iii) provide Endo with advance written notice
of any meetings or telephone calls with any Regulatory Authority in the
Territory relating to Product Registrations and allow Endo to participate in all
such meetings or telephone calls.

5.    TRANSFER OF OTHER ASSETS/TRANSITIONAL SERVICES AGREEMENT

                                      - 33 -

<PAGE>

      5.1   Vernalis hereby transfers effective on (and contingent upon) the
            Closing Date in the USA transfer to Endo with full title guarantee
            and free of any Encumbrance:

            5.1.1  in a novation or assignment and in a form satisfactory to
                   Endo acting reasonably, the Managed Care Agreements and
                   Assigned Contracts and the Supply and Technical Agreements;

            5.1.2  the Stock;

            5.1.3  all right, title and interest in the Copyrights (including
                   the Marketing Materials) and the registrations for the Domain
                   Names.

      5.2   Vernalis shall during the Interim Period procure the provision to
            Endo of the services specified in the Transitional Services
            Agreement (with the Costs to Vernalis (if any) to be reimbursed by
            Endo to Vernalis within thirty (30) days of receipt by Endo of
            Vernalis receipt therefor), but shall terminate each service
            provided under the Transitional Services Agreement as soon as
            practicable as agreed between Vernalis and Endo. For the avoidance
            of doubt it is declared and agreed that such services may be
            terminated on different dates and, if it is necessary for Vernalis
            to extend the time period for provision of certain services provided
            by the Elan Group pursuant to the Transitional Services Agreement
            (to the extent Vernalis has the right to extend the time period for
            such services pursuant to the Transitional Services Agreement) to
            comply with the provisions of this Clause 5, it shall do so. In
            relation to such services provided by Vernalis, after the Closing
            Date, Vernalis shall provide to Endo on a weekly basis a report,
            which will include a description of actions, if any, taken by
            Vernalis or the Elan Group under the Transitional Services Agreement
            which may materially affect the Product. Except as otherwise
            provided in this Clause 5, Vernalis shall cause the Transitional
            Services Agreement to remain in full force and effect during the
            Interim Period, and thereafter, to the extent requested by

                                      - 34 -

<PAGE>

            Endo, but in no event to extend beyond the expiration date of the
            Transitional Services Agreement.

      5.3   On and after the Closing Date, Vernalis shall deliver to Endo all
            purchase orders for Product received by Vernalis or Elan.

      5.4   After the Closing Date, Vernalis will use Commercially Reasonable
            Efforts to ensure that all Managed Care Agreements relating to the
            Product which are not assigned to Endo hereunder (the "Non-Assigned
            Contracts") are maintained by the Elan Group until the earlier of:
            (i) the date Endo provides written notice to Vernalis to terminate
            the Non-Assigned Contracts or (ii) the expiration of Vernalis'
            rights in such Non-Assigned Contracts.

      5.5   Payment Obligations.

            5.5.1  Vernalis shall be responsible for any payments, rebates,
                   administrative fees or chargebacks ("Commercial Payments")
                   due to customers (including those payments due under Managed
                   Care Agreements and Non-Assigned Contracts) for Products sold
                   or dispensed up to and on the Closing Date, and Endo shall be
                   responsible for Commercial Payments to customers for Products
                   sold or dispensed after the Closing Date. After the Closing
                   Date, (i) Vernalis shall (through the Transitional Services
                   Agreement) process and pay all Commercial Payments in respect
                   of requests received by it or the Elan Group and (ii) Endo
                   shall process and pay all Commercial Payments in respect of
                   requests received by it. In the event that, with respect to
                   Products sold or dispensed during the Quarter in which the
                   Closing Date occurs, the Parties cannot determine the date on
                   which such Products were sold or dispensed, then the Party
                   that has made a Commercial Payment for such Product shall be
                   entitled to obtain reimbursement from the other Party on a
                   pro rata basis for such Commercial Payment (with Vernalis'
                   pro rata share constituting the proportion of days

                                      - 35 -

<PAGE>

                   in the Quarter up to and including the Closing Date, and
                   Endo's pro rata share constituting the proportion of days in
                   such Quarter following the Closing Date). Either Party that
                   has made a Commercial Payment, all or a portion of which is
                   the responsibility of the other Party, shall submit a payment
                   request to the other Party, with supporting documentation,
                   and such other Party shall reimburse the requesting Party for
                   the Commercial Payment (or portion thereof) for which it is
                   responsible within 30 days of receipt of such request.
                   Notwithstanding the provisions of this Clause 5.5.1, if Endo
                   notifies Vernalis that it disputes in good faith the payment
                   of any Commercial Payment for which it would otherwise be
                   responsible and which Vernalis has processed and paid
                   pursuant to the terms hereof, Vernalis shall take all
                   commercially reasonable measures to dispute such Commercial
                   Payment and obtain a refund thereof and Endo shall have no
                   responsibility to reimburse Vernalis for the disputed portion
                   of such Commercial Payment until the dispute is resolved.

            5.5.2  Vernalis shall be responsible for any rebates due to a
                   governmental entity ("Government Rebates") applicable to any
                   Product sold up to and on the Closing Date. The Parties
                   acknowledge that the request for such payments is submitted
                   to the NDC holder of the Product and, as such, Vernalis will
                   receive, process and pay Government Rebates on all Product
                   bearing the Elan NDC and shall within 30 days of payment,
                   submit to Endo an invoice for the amounts of any Government
                   Rebates made on Product sold after the Closing Date. In the
                   event that, with respect to Products sold or dispensed during
                   the Quarter in which the Closing Date occurs, the Parties
                   cannot determine the date on which such Products were sold or
                   dispensed, then the Party that has made a Government Rebate
                   for such Product shall be entitled to obtain reimbursement
                   from the other Party on a pro

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<PAGE>

                   rata basis for such Government Rebate (with Vernalis' pro
                   rata share constituting the proportion of days in the Quarter
                   up to and including the Closing Date, and Endo's pro rata
                   share constituting the proportion of days in such Quarter
                   following the Closing Date). Either Party that has made a
                   Government Rebate, all or a portion of which is the
                   responsibility of the other Party, shall submit a payment
                   request to the other Party, with supporting documentation,
                   and such other Party shall reimburse the requesting Party for
                   the Government Rebate (or portion thereof) for which it is
                   responsible within 30 days of receipt of such request.

            5.5.3  Vernalis shall be responsible for returns from any customer
                   in respect of all Products sold or dispensed on or prior to
                   the Closing Date and Endo shall be responsible for returns in
                   respect of all Product sold or dispensed after the Closing
                   Date, regardless of when such return occurs. Neither Party
                   shall seek to encourage Product returns or accept Product
                   returns other than in the ordinary course of business save,
                   in each case, with the written consent of the other Party.
                   Endo shall process all Product returns received by it and
                   shall destroy the returned Product. Vernalis shall reimburse
                   Endo (within 10 days of request therefor) with respect to any
                   returns of Product sold on or prior to the Closing Date for
                   all Costs relating to the return, including the Cost of
                   destruction and related administrative costs and expenses.

      5.6   For the avoidance of doubt, after the Closing Date, Endo shall book
            sales in connection with all the Product in the Territory.

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6.    ENDO COMMERCIALISATION

      6.1   Endo and its Affiliates' core obligations in relation to
            Commercialisation of Product in the Territory shall be as follows
            (it being agreed that Vernalis' sole remedies for breach by Endo or
            its Affiliates of Clauses 6.1.2 and 6.1.3 shall be limited to the
            remedies specified therein):

            6.1.1  to use its Commercially Reasonable Efforts to achieve
                   Re-Launch as soon as practicable. Endo shall promptly inform
                   Vernalis in writing of the occurrence of Re-Launch in each
                   country of the Territory. Endo shall also keep Vernalis
                   notified in writing of Endo's anticipated date of Re-Launch
                   in each country of the Territory;

            6.1.2  within *** days following the Closing Date Endo shall provide
                   to Vernalis a marketing plan for the period commencing on the
                   Closing Date and ending ***. Endo shall also provide to
                   Vernalis no later than *** of each Year, an Annual Marketing
                   Plan and Budget for the upcoming Year that reflects its own
                   internal plans and budgets and is supportive of maximizing
                   the market potential of the Product, including (i) the
                   information set out in Schedule 9, which, with respect to
                   each of Years *** following MAM Product Launch, shall be no
                   less than the *** for such Years, and (ii) the number of
                   Details for the subsequent Year, which, with respect to each
                   of Years *** and ***, and each of the *** following MAM
                   Product Launch, shall be no less than the *** for such Years.
                   The budget shown in any such Annual Marketing Plan and Budget
                   shall be the fixed budget for the Year indicated ("Fixed
                   Budget") and the number of Details shown in any such Annual
                   Marketing Plan and Budget shall be the fixed number of
                   Details for the Year indicated ("Fixed Details"). No later
                   than (i) *** days after the end of each Year of this
                   Agreement or (ii) the date each Year on which Endo is
                   obligated

                                      - 38 -

<PAGE>

                   under applicable law to file its annual report on Form 10-K
                   with the United States Securities and Exchange Commission,
                   whichever is later, Endo shall report to Vernalis (i) the
                   amount actually expended by Endo on Commitment in relation to
                   the Product in the Territory in the previous Year and (ii)
                   the number of Details in relation to the Product in the
                   Territory in the previous Year consistent with Schedule 5. If
                   for any two (2) consecutive Years such report shows Endo has
                   not met *** of the Estimated Commitments in each of such
                   Years, royalties payable to Vernalis for the subsequent two
                   (2) years under Clauses 11.9.2 or 11.9.3, as the case may be,
                   shall be calculated as if each of the royalty levels A, B, C,
                   D and E in such clauses were each *** higher;

            6.1.3  use Commercially Reasonable Efforts to provide the Estimated
                   Detailing Effort in each Year specified in Schedule 5. If for
                   any two (2) consecutive Years such report shows that Endo has
                   not met a minimum of *** of the Estimated Detailing Efforts
                   in each of such Years, then Vernalis shall have the right,
                   but not the obligation, to carry out a minimum number of
                   Details equivalent to the average of those not carried out by
                   Endo or its Affiliates in the two Years in question under the
                   Annual Marketing Plan and Budget. If Vernalis elects to
                   increase its number of sales force representatives to make up
                   such shortfall in Details, then for the following two Years,
                   the cost and expenses for such minimum number of additional
                   Details undertaken by such additional sales force
                   representatives shall be borne by Endo under the terms set
                   forth in Clause 9 hereto. Vernalis shall cooperate and
                   coordinate with Endo the deployment of any such additional
                   sales force representatives and Detailing effort; and

            6.1.4  use Commercially Reasonable Efforts to exploit the lifecycle
                   of the Product in accordance with best practice in the

                                      - 39 -

<PAGE>

                   pharmaceutical industry by carrying out, where appropriate as
                   determined by Endo in its reasonable opinion, Clinical
                   Studies and obtaining new Marketing Authorisations for the
                   Product in the Territory.

      6.2   Subject always to the provisions of Clause 6.1, Endo and its
            Affiliates shall use Commercially Reasonable Efforts to
            Commercialise Product in the Territory as follows:

            6.2.1  at all times deploy sales personnel (including any Vernalis
                   Specialty Sales Personnel utilized in accordance with the
                   Co-Promotion Option) as may be necessary to promote the
                   Product in the Territory, taking into account the sales
                   volume of the Product, the number of competitors, the
                   regulatory environment, the potential for sales in a
                   geographic area, the cost of sales personnel, and other
                   factors affecting Commercialisation;

            6.2.2  market and promote the Product in accordance with the
                   Marketing Authorisation;

            6.2.3  provide Vernalis with (i) copies of any scientific or
                   technical publications relating to the Product, the Compound
                   or any Clinical Study that it proposes to publish no later
                   than *** days prior to submission for publication and (ii)
                   copies of advertising, marketing or promotional information
                   or materials (in written, electronic or other forms) relating
                   to the Product, the Compound, any Clinical Study (including
                   reports of Clinical Studies used as promotional material) or
                   any Product Enhancement;

            6.2.4  notify Vernalis of the outcome of any inspections by any
                   Regulatory Authority of which Endo becomes aware (either in
                   the Territory or outside of the Territory) of the facilities
                   at which Product is formulated, packaged and labelled;

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<PAGE>

            6.2.5  not engage, either directly or indirectly, in the manufacture
                   or distribution of any pharmaceutical products which is or
                   contains a triptan and which therefore compete with the
                   Product in the Territory, provided, however, that in the
                   event of a Change of Control of Endo, the restrictions in
                   this Clause 6.2.5 shall no longer be effective, but instead,
                   for the Year following such Change of Control of Endo, if (i)
                   Endo (or its successor) does not meet (A) *** of the
                   Estimated Commitments as set forth in Clause 6.1.2 (if
                   applicable) or (B) *** of the Estimated Detailing Efforts as
                   set forth in Clause 6.1.3 (if applicable) or (ii) if such
                   Change of Control occurs after the *** anniversary of the
                   Closing Date and in the Year subsequent to such Change of
                   Control Endo (or its successor) fails to meet at least *** of
                   the Fixed Details and Fixed Budget set forth in the Annual
                   Marketing Plan and Budget for such Year, Vernalis shall have
                   the right to then terminate this Agreement on *** written
                   notice to Endo;

            6.2.6  not seek customers, establish any branch or maintain any

                   distribution depot for the Product in any country which is
                   outside the Territory; and

            6.2.7  not promote or otherwise solicit sales of the Product in any
                   country outside of the Territory.

      6.3   Before using a Domain Name, Endo and Vernalis shall agree as to the
            design of the homepage of such Domain Name, such agreement not to be
            unreasonably withheld or delayed.

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<PAGE>

7.    MANAGEMENT OF THE RELATIONSHIP

      7.1   With effect from the Closing Date the Parties shall establish and
            run the Steering Committee ("SC") as follows:

            7.1.1  The SC shall comprise six (6) persons ("Members") and Endo
                   and Vernalis respectively shall be entitled to appoint three
                   (3) Members, to remove any Member appointed by it and to
                   appoint any person to fill a vacancy arising from the removal
                   or retirement of such Member appointed by it. The initial
                   Members shall be as follows:

                                  ENDO MEMBERS

                      ***
                      ***
                      ***

                                VERNALIS MEMBERS

                      ***
                      ***
                      ***

                   Endo and Vernalis respectively shall each notify the other of
                   any change in the identities of their Members from time to
                   time. Members may be represented at any meeting by another
                   person designated by the absent Member. There will be a
                   Chairperson who will alternate between one of the Vernalis
                   Members and one of the Endo Members at each meeting.

            7.1.2  The SC is not a decision making body but a forum through
                   which the Parties can liase concerning the Commercialisation
                   of the Product both inside and outside the Territory.
                   Vernalis acknowledges and agrees that all decisions relating
                   to the Commercialisation of the Product in the Territory
                   shall be in the sole discretion of Endo, provided always that
                   nothing in this

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<PAGE>

                   provision shall derogate from Endo's obligations under this
                   Agreement.

            7.1.3  The venue for meetings shall alternate between the premises
                   of the Parties. Each Party shall be responsible for its own
                   expenses, including travel and accommodation Costs incurred
                   in connection with SC meetings.

            7.1.4  The SC shall have power to invite persons whose special
                   skills or influence might assist an SC meeting, in confidence
                   and upon behalf of the SC, to attend and address meetings of
                   the SC. For the avoidance of doubt it is agreed that such
                   persons shall not be Members.

            7.1.5  The SC Chairperson is responsible for promptly preparing the
                   minutes of any SC meeting, seeking unanimous approval of
                   those minutes from the Members who participated in the
                   meeting, signing and dating the approved minutes and promptly
                   distributing a copy of the signed minutes to each Party. It
                   is only such signed and dated minutes which shall constitute
                   acceptance by the SC.

      7.2   The SC shall hold meetings in person as frequently as the Members
            may agree shall be necessary during the period of this Agreement, or
            more frequently upon the reasonable request of either Party, but in
            any event no less frequently than monthly during the first six
            months following the Closing Date and no less frequently than once a
            Quarter thereafter. Dates of meetings to be held in person shall be
            agreed by the Parties not less than thirty (30) days beforehand;
            responsibility for arranging the meetings, including, at least,
            providing notice and an agenda, shall alternate between the Parties;
            the first meeting will take place as soon as practicable after the
            Closing Date, but in no event later than twenty (20) Business Days
            after the Closing Date and will be organised by Endo.

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<PAGE>

      7.3   No later than ten (10) days prior to each meeting of the SC, Endo
            and Vernalis will each provide the other with written copies of all
            materials they intend to present at any SC meeting, which until
            completion of the MAM & Paediatric Development Program shall include
            a written report from Vernalis summarising its conduct of the MAM &
            Paediatric Development Program since the previous meeting and any
            material results. After receipt of any such report, either Party may
            request additional information, and the Party to whom such request
            is made shall promptly provide to the other Party such information.

      7.4   The SC shall have the following particular functions:

            7.4.1  it shall be the forum through which Vernalis reports its
                   progress with and the results of the MAM & Paediatric
                   Development Program;

            7.4.2  it shall be the forum through which each Party reports to the
                   other Party details of any clinical study in relation to
                   Product or Product Enhancements which, in the case of Endo,
                   it or its Affiliates, or which, in the case of Vernalis it,
                   its Affiliates and its and its Affiliate's licensees and for
                   each of Endo's and Vernalis' and their respective Affiliate's
                   sub-licensees are proposing to carry out;

            7.4.3  it shall be the forum through which the results of any such
                   clinical study are reported and through which any
                   publications or other advertising, marketing or promotional
                   information or materials are exchanged;

            7.4.4  it shall be the forum through which each Party reports to the
                   other Party details of any Product Enhancement made by the
                   first Party or its Affiliates, or in the case of Vernalis,
                   Vernalis, its Affiliates and licensees and sub-licensees of
                   it or any of its Affiliates. In this respect, each Party
                   shall have a positive obligation to report

                                      - 44 -

<PAGE>

                   at each SC meeting upon any such Product Enhancements which
                   have been made by it since the previous SC meeting; and

            7.4.5  it shall be the forum through which Vernalis makes Use
                   Suggestions to Endo.

      7.5   Both Parties acknowledge and agree that they intend to be as
            transparent as reasonably possible with each other on all material
            issues relating to Commercialisation of Product, its further
            development and the development and Commercialisation of Product
            Enhancements both inside and outside the Territory and that the
            forum for achieving such transparency shall be the SC.

8.    FURTHER DEVELOPMENT OF THE PRODUCT

      8.1   Subject to Clause 8.2, Vernalis shall undertake and assume
            responsibility for completion of the MAM & Paediatric Development
            Program. *** of the cost and expense of the MAM & Paediatric
            Development Program, including internal FTE cost and expense
            directly related to the conduct thereof, shall be the responsibility
            of Vernalis, and Vernalis shall liase with Endo through the SC in an
            effort to obtain a "***" (as defined in Schedule 1) indication for
            the MAM Product. Notwithstanding the foregoing, and without
            prejudice to any rights and remedies of Endo hereunder, Endo at its
            option may assume the cost and expense of the MAM and Paediatric
            Development Program following notice to Vernalis. Within thirty (30)
            days of the completion of any clinical trial forming part of the MAM
            & Paediatric Development Program (such completion to have occurred
            when the data on safety and efficacy have been analysed
            statistically and have undergone quality control in accordance with
            GCP) by Vernalis it shall make a Formal Presentation in relation
            thereto to Endo and shall supply to Endo all Vernalis Know How
            necessary or useful in the case of the MAM Product for Endo to
            prepare and submit a filing for an NDA for the MAM Product in the
            Territory and, in the case of the Paediatric study, for Endo to
            submit to the FDA.

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<PAGE>

            Endo shall be responsible for registration of the Product for MAM in
            the Territory. Endo shall keep Vernalis fully informed concerning
            the progress of such registration and shall invite Vernalis to
            participate in any meeting or conference calls held with FDA, Health
            Canada or other Regulatory Authority concerning such registration.

      8.2   Vernalis shall use Commercially Reasonable Efforts to complete the
            MAM & Paediatric Development Program as follows:

            8.2.1  Until the Initial FDA Meeting, Vernalis shall hold and be the
                   party of record for the MAM Product IND. Promptly following
                   the Initial FDA Meeting, Vernalis shall transfer the MAM
                   Product IND to Endo free from any Encumbrance. Vernalis shall
                   deliver signed transfer letters to the FDA and all other
                   notice, application, submission, report and other instrument,
                   document, correspondence or filing presented to it by Endo
                   that is necessary or useful for the transfer of MAM Product
                   IND to Endo.

            8.2.2  Vernalis shall ensure that the MAM & Paediatric Development
                   Program is carried out in accordance with GLP, GCP and GMP.
                   Any animals involved in the MAM & Paediatric Development
                   Program shall be provided humane care and treatment in
                   accordance with current generally accepted veterinary
                   practice;

            8.2.3  Vernalis shall keep or cause to be kept detailed written
                   records and reports of the progress of the MAM & Paediatric
                   Development Program in sufficient detail and in good
                   scientific manner appropriate for all purposes including
                   Marketing Authorisation purposes and patent purposes. These
                   written records and reports shall properly reflect all the
                   work done and the results achieved in carrying out the MAM &
                   Paediatric Development Program;

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<PAGE>

            8.2.4  During the period of the MAM & Paediatric Development
                   Program, Vernalis shall be responsible at its cost and
                   expense for supplying all quantities of Product required for
                   the purposes of conducting any human or other studies within
                   the MAM & Paediatric Development Program; and

            8.2.5  Vernalis shall conduct and complete, prior to the date
                   required by the FDA (or any extensions agreed with the FDA),
                   the Paediatric development program of the Product set out in
                   Schedule 3 hereto.

      8.3   Vernalis shall provide Endo with copies of any scientific or
            technical publications produced by Vernalis, its Affiliates, and
            licensees and sub-licensees of Vernalis or any of its Affiliates
            regarding the Product or Compound no later than ten (10) days prior
            to submission for publication.

      8.4   Endo shall prepare, submit and prosecute all NDAs and other
            Regulatory Authority filings and applications required to obtain all
            necessary Marketing Authorisations and pricing approvals to
            Commercialise the MAM Product in each country of the Territory. Endo
            shall be the owner and party of record for all such filings,
            applications and approvals. The Costs associated with the
            preparation, submission and prosecution of all NDAs and other
            regulatory filings and applications shall be borne by Endo. At the
            request of Endo, Vernalis shall take all necessary and appropriate
            actions to assist Endo in the preparation of all NDAs and other
            Regulatory Authority filings and applications, including providing
            required information with respect to the study design, data
            collection and results of the MAM & Paediatric Development Program.
            Endo shall promptly inform Vernalis in writing of each NDA filing
            made or Marketing Authorisation obtained by Endo or its Affiliates
            in each country of the Territory in relation to the MAM Product.

      8.5   During the term of the MAM & Paediatric Development Program and for
            a period of three (3) years thereafter, Vernalis shall retain
            accurate and

                                      - 47 -

<PAGE>

            complete records showing the time devoted and activities performed
            by each Vernalis person in performing Vernalis' obligations under
            the MAM & Paediatric Development Program in sufficient detail such
            that the number of Vernalis FTEs applied to the MAM & Paediatric
            Development Program during each Quarter thereof can be accurately
            determined.

      8.6   Endo shall communicate the form and protocol of any Clinical Study
            it proposes to undertake or have undertaken on its behalf to the SC
            and the form and protocol of any such Clinical Study as reviewed by
            a Regulatory Authority, in each case prior to the commencement of
            any such study. Endo shall give due consideration to the views of
            the SC in respect of any Clinical Study. Endo shall be responsible
            for the design and cost and expense of the conduct of any such
            Clinical Study. Endo may request Vernalis to conduct any such
            Clinical Study or otherwise provide assistance to Endo in relation
            to any such Clinical Study, and, if the Parties can agree to terms
            therefor (which shall include Endo paying the Cost of such Clinical
            Study), Vernalis shall conduct such Clinical Study or provide such
            other assistance. Subject to any such involvement of Vernalis, Endo
            shall be responsible for the conduct of any such Clinical Study,
            shall provide all medical resources and Clinical Study monitors and
            shall keep appropriate and complete data and records of all such
            trials and testing activities. Endo shall keep the SC regularly
            informed as to the conduct, progress and results of any Clinical
            Study and of its communications with any Regulatory Authority in
            connection therewith including details of any prospective meetings
            or calls and shall provide to Vernalis copies of correspondence and
            meeting notes with a Regulatory Authority which in Endo's reasonable
            opinion are material. Vernalis may, at its sole option and expense,
            attend any meeting or participate in any call with a Regulatory
            Authority relating to such a Clinical Study or in any meeting with a
            clinical research organisation appointed by Endo to conduct the
            Clinical Study or the research

                                      - 48 -

<PAGE>

            investigators. Endo shall (at a SC meeting) give a Formal
            Presentation to Vernalis in relation to each Clinical Study
            conducted by it or on its behalf and Vernalis shall have prompt and
            full unrestricted access to the final report and results of any
            Clinical Study and the related Endo Know How.

      8.7   If, having received the final form and protocol of any Clinical
            Study which Endo wishes to carry out, Vernalis using its
            commercially reasonable judgement decides that the conduct or
            outcome of that Clinical Study could seriously damage the world-wide
            market for the Product, Vernalis shall have the right to submit to
            Endo its reasons together with verifiable data supporting such
            reasons. If Endo still wishes to go ahead with such Clinical Study,
            Endo and Vernalis shall meet and endeavour to agree to a plan for
            the conduct of a Clinical Study in similar form which could be
            carried out. If following such a meeting the Parties still cannot
            agree whether the Clinical Study is likely to seriously damage the
            world-wide market for the Product, Endo will not conduct such
            Clinical Study.

      8.8   Vernalis shall communicate the form and protocol of any clinical
            study it, its Affiliates, or any licensee or sub-licensee of it or
            its Affiliates proposes to undertake in relation to Product or
            Product Enhancements or have undertaken to the SC and the form and
            protocol of any such clinical study as reviewed by a Regulatory
            Authority, in each case prior to the commencement of any such study.
            Vernalis shall give due consideration to the views of the SC in
            respect of any such clinical study. Vernalis shall keep the SC
            regularly informed as to the conduct, progress and results of any
            such clinical study and of the communications of it, its Affiliates,
            or any licensee or sub-licensee of it or its Affiliates, with any
            Regulatory Authority in connection therewith, including details of
            any prospective meetings or calls and shall provide to Endo copies
            of correspondence and meeting notes with a Regulatory Authority
            which in Vernalis' reasonable opinion are material. Endo may, at its
            sole option and expense, attend any meeting or participate in any
            call with a

                                      - 49 -

<PAGE>

            Regulatory Authority relating to such a clinical study or in any
            meeting with a clinical research organisation appointed by Vernalis,
            its Affiliates, or any licensee or sub-licensee of Vernalis or its
            Affiliates to conduct the clinical study or the research
            investigators. Vernalis shall (at a SC meeting) give a Formal
            Presentation to Endo in relation to each clinical study conducted by
            it, its Affiliates, or a licensee or sub-licensee of it or its
            Affiliates in relation to Product or Product Enhancements, and Endo
            shall have prompt and full unrestricted access to the final report
            and results of any such clinical study and the related Vernalis Know
            How.

      8.9   If, having received the final form and protocol of any clinical
            study which Vernalis, its Affiliates, or a licensee or sub-licensee
            of Vernalis or its Affiliates wishes to carry out in relation to
            Product or Product Enhancements, Endo using its commercially
            reasonable judgement decides that the conduct or outcome of that
            clinical study could seriously damage the market for the Product in
            the Territory, Endo shall have the right to submit to Vernalis its
            reasons together with verifiable data supporting such reasons. If
            Vernalis, its Affiliates, or the licensee or sub-licensee of
            Vernalis or its Affiliates still wishes to go ahead with such
            clinical study, Endo and Vernalis shall meet and endeavour to agree
            a plan for the conduct of a clinical study in similar form which
            could be carried out. If following such a meeting the Parties still
            cannot agree whether the clinical study should be carried out,
            Vernalis, its Affiliates, or the licensee or sub-licensee of
            Vernalis or its Affiliates will not conduct such clinical study.

      8.10  In the event that Vernalis or any of its Affiliates seeks to
            undertake a Territory Study, it shall communicate the form and
            protocol of such Territory Study to the SC. Vernalis shall not
            undertake any Territory Study without the prior written consent of
            Endo.

      8.11  In the event that Vernalis or its Affiliates develop a Product
            Enhancement during the term of this Agreement, Endo shall have the

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<PAGE>

            option, but not the obligation, to take responsibility at its sole
            cost for the technical, clinical and commercial development of such
            Product Enhancement in the Territory. Endo may exercise such option
            at any time following the date of notification of the Product
            Enhancement by Vernalis at the SC meeting. Regardless of whether
            Endo exercises the option under this Clause 8.11, Vernalis or its
            Affiliates shall not be entitled to exploit or utilise the Product
            Enhancement in the Territory.

      8.12  In the event that Endo exercises the option granted in Clause 8.11,
            Vernalis shall, subject to Clause 8.13, transfer and make available
            to Endo the Vernalis Know How relating to such Product Enhancement
            and Endo's license under Clause 3.1 to such Product Enhancement
            shall become effective.

      8.13  Endo shall not be obliged to make any upfront or milestone payment
            to Vernalis in respect of the Product Enhancement licence to which
            reference is made in Clause 8.12, but shall pay royalties on Net
            Sales of such Product Enhancement either as if it were Product or
            Combination Product as the case may be. Any Net Sales of such
            Product Enhancement shall be taken into account with Net Sales of
            the Product when calculating the milestone events and royalty levels
            as specified in Clause 11.6 or 11.9. The period for the payment of
            royalties specified in Clause 11.11 with respect to a Product
            Enhancement for which Endo has exercised the option set forth in
            Clause 8.11 shall be extended, on a country by country basis,
            according to whether such Product Enhancement is (i) Covered by
            Valid Claims of Vernalis Patent Rights in patents, or (ii) granted
            orphan designation or other regulatory or administrative protection,
            in each case conferring market exclusivity to Endo for the Product
            in such country in the Territory and only for so long as Endo in its
            sole discretion decides to continue to sell such Product Enhancement
            Covered by such patents or granted orphan designation or other
            administrative protection.

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      8.14  In the event that Endo or its Affiliates develops a Product
            Enhancement during the term of this Agreement, Vernalis shall have
            the option, but not the obligation, to take responsibility at its
            sole cost for the technical, clinical and commercial development of
            such Product Enhancement outside the Territory. Vernalis may
            exercise this option at any time following the date of notification
            of the Product Enhancement by Endo at an SC meeting. Regardless of
            whether Vernalis exercises the option under this Clause 8.14, Endo
            shall not be entitled to exploit or utilise the Product Enhancement
            outside the Territory.

      8.15  In the event that Vernalis exercises the option granted in Clause
            8.14 Endo shall, subject to Clause 8.15.1 or 8.15.2, as applicable,
            transfer and make available to Vernalis the Endo Know How relating
            to such Product Enhancement and Vernalis shall have the following
            license (to the extent Endo has rights to license the same):

            8.15.1  in the case of Endo IP relating solely to a Product
                    Enhancement where Endo or its Affiliates or contractors have
                    generated the Endo Know How or Endo Patent Rights as a
                    result of a Use Suggestion, Vernalis shall have a
                    sub-licensable, fully paid-up, royalty free license to
                    develop, make, have made, use, Commercialise and have
                    Commercialised such Product Enhancements outside the
                    Territory; or

            8.15.2  in the case of Endo IP relating to the Product Enhancement
                    where Endo or its Affiliates or contractors have not
                    generated such Endo IP as a result of a Use Suggestion,
                    Vernalis shall have a sub-licensable royalty-bearing license
                    to develop, make, have made, use, Commercialise and have
                    Commercialised such Product Enhancements outside the
                    Territory on terms to be agreed between Endo and Vernalis
                    negotiating in good faith. Vernalis shall not use or
                    sub-license such Endo IP unless and until such a license is
                    entered into in writing by the Parties.

                                      - 52 -
<PAGE>

      8.16  Vernalis shall use its best efforts to procure that its and its
            Affiliates' licensees and sub-licensees make Product Enhancements
            available (through Vernalis) in the Territory for use by Endo on at
            least as favorable terms as are available to Vernalis or its
            Affiliates from their licensees or sublicensees outside the
            Territory.

9.    CO-PROMOTION

      9.1   For so long as Endo is deploying sales force representatives to
            Commercialise the Product in the USA, Vernalis shall have the option
            to co-promote the Product with Endo in USA with effect from ***
            using Vernalis Specialty Sales Personnel as part of a Specialty
            Sales Force. Endo shall reimburse Vernalis a portion of the Cost of
            such Vernalis Specialty Sales Personnel. This shall be calculated by
            reference to a percentage of the Cost per Detail up to a maximum
            number of Details carried out by Vernalis in the five Years 2006,
            2007, 2008, 2009 and 2010, as specified in the following table. The
            percentage of the Cost per Detail will vary according to whether the
            Vernalis Specialty Sales Personnel exclusively Detail the Product or
            whether they Detail the Product and any other product according to
            the following table.

<TABLE>
<CAPTION>
           YEARS                    2006        2007        2008        2009        2010
--------------------------          ----        ----        ----        ----        ----
<S>                                 <C>         <C>         <C>         <C>         <C>
Maximum no. of Details to            ***         ***        ***          ***         ***
be reimbursed

% of  *** where ***                  ***         ***        ***          ***         ***
Vernalis Specialty Sales
Personnel Detail only the
Product

% of  *** where ***                  ***         ***        ***          ***         ***
Vernalis Specialty Sales
Personnel Detail one or
more other products
</TABLE>

            9.1.1   On the basis of the foregoing financial terms, Vernalis
                    Specialty Sales Personnel shall have the right to Detail
                    other products in

                                      - 53 -

<PAGE>

                    addition to the Product, provided that such other products
                    are not for the treatment of migraine or post herpetic
                    neuralgia or in direct competition with products in other
                    therapeutic areas that are being Commercialised by Endo or
                    are in Phase III Clinical Trial or have completed clinical
                    proof of principle by Endo.

            9.1.2   If at any time Vernalis wishes to provide additional Details
                    in excess of the number of Details to be reimbursed by Endo,
                    it may provide such additional Details provided that the
                    total number of Details provided by Vernalis (including
                    Details provided pursuant to Clause 9.1) does not exceed ***
                    the maximum number of Details required to be reimbursed by
                    Endo pursuant to Clause 9.1 (unless otherwise agreed in
                    writing by Endo) at Vernalis' own cost. Endo shall support
                    any such additional Detailing effort with the provision of
                    marketing materials, samples and, to the extent reasonable,
                    training comparable to that given to Endo's own field force
                    representatives at Endo's cost through ***, and thereafter
                    at Vernalis' cost.

      9.2   The Co-Promotion Option may be exercised by Vernalis by written
            notice to Endo at any time during the period prior to *** specifying
            the number of Details which Vernalis is proposing to carry out in
            the Year ***. The precise number of Details up to the maximum in any
            Year to be provided by Vernalis in any Year after *** shall be
            notified in writing by Vernalis to Endo no later than *** the
            previous Year.

      9.3   Upon the exercise by Vernalis of its Co-Promotion Option, the
            Parties shall on or before *** negotiate and agree to detailed terms
            of a Co-Promotion Agreement for USA which will come into effect on
            *** in the USA based on the terms set out in Schedule 10. If the
            Parties fail to agree detailed terms of a Co-Promotion Agreement for
            USA, Vernalis shall nonetheless have the right to promote the
            Product in the USA for so

                                      - 54 -

<PAGE>

            long as Endo is Commercialising the Product in the USA using its own
            sales force representatives on the following basis:

            9.3.1   on the terms of Clause 9.1;

            9.3.2   liasing regularly with Endo on the sales force call and
                    deployment plan, including providing Endo with a copy of
                    Vernalis proposed call and deployment plan, and, so far as
                    Vernalis is reasonably able to do so, cooperating and
                    coordinating with Endo on creation and implementation of
                    that call and deployment plan;

            9.3.3   Endo shall support such promotion efforts of Vernalis at
                    Endo's Cost through *** with the provision of marketing
                    materials, samples, and, to the extent reasonable, training;

            9.3.4   with no restriction on Vernalis' ability to provide or
                    co-promote other products at the same time utilising the
                    same sales representatives, provided that such other
                    products are not for the treatment of migraine or post
                    herpetic neuralgia or in direct competition with products in
                    other therapeutic areas that are being Commercialised by
                    Endo or are in Phase III Clinical Trial or have completed
                    clinical proof of principle by Endo; and

            9.3.5   all sales of the Product or MAM Product generated as a
                    result of any of Vernalis promotional activities shall be
                    booked by Endo and the applicable royalty under Clause 11
                    paid to Vernalis by Endo.

10.   INTELLECTUAL PROPERTY - OWNERSHIP

      10.1  Any and all Vernalis IP shall as between Endo and Vernalis be owned
            by Vernalis. Vernalis shall own all right, title and interest in and
            to all Product Enhancements made by or on behalf of Vernalis subject
            always to the provisions of Clause 8.11 and Clause 8.12.

                                      - 55 -
<PAGE>

      10.2  Any and all Endo IP shall as between Vernalis and Endo be owned by
            Endo. Endo shall own all right, title and interest in and to all
            Product Enhancements made by or on behalf of Endo subject always to
            the provisions of Clause 8.14 and Clause 8.15.

11.   PAYMENTS

      11.1  In consideration of the license rights granted hereunder Endo will
            pay to Vernalis on the Closing Date an upfront fee equal to thirty
            million USD (USD 30,000,000).

      11.2  In consideration of the Stock sold hereunder (i) within thirty (30)
            days of agreement or determination of the Inventory Statement to
            which reference is made in Schedule 2, Endo will pay to Vernalis a
            sum equal to the actual Cost specified in the Inventory Statement
            and (ii) if appropriate, Vernalis shall pay Endo any amounts due
            pursuant to paragraph 10 of Schedule 2.

      11.3  Within thirty (30) days of the first anniversary of the Closing Date
            and Endo's receipt of an invoice therefor, Endo will pay to Vernalis
            a one year anniversary payment equal to fifteen million USD (USD
            15,000,000).

      11.4  Within thirty (30) days of the second anniversary of the Closing
            Date and Endo's receipt of an invoice therefor, Endo will pay to
            Vernalis a two year anniversary payment equal to fifteen million USD
            (USD 15,000,000).

      11.5  The following development milestone payment shall be paid by Endo to
            Vernalis in relation to the MAM Product:

            11.5.1  forty million USD (USD 40,000,000) upon receipt of the
                    Marketing Authorisation in the USA of the Product for MAM.

                                      - 56 -
<PAGE>

      11.6  The following sales milestone payments shall be payable as set forth
            below:

            11.6.1  *** USD (USD ***) one time payment for the first time that
                    aggregate Net Sales in a Year surpass *** USD (USD ***);

            11.6.2  *** USD (USD ***) one time payment for the first time that
                    aggregate Net Sales in a Year surpass *** US dollars
                    (USD ***);

            11.6.3  *** USD (USD ***) one time payment for the first time that
                    aggregate Net Sales in a Year surpass *** US dollars (USD
                    ***);

            11.6.4  *** USD (USD ***) one time payment for the first time that
                    aggregate Net Sales in a Year surpass *** US dollars (USD
                    ***);

            11.6.5  *** USD (USD ***) one time payment for the first time that
                    aggregate Net Sales in a Year surpass *** US dollars (USD
                    ***); and

            11.6.6  Seventy-five million USD (USD 75,000,000) one time payment
                    for the first time that aggregate Net Sales in a Year
                    surpass one thousand two hundred million US dollars (USD
                    1,200,000,000).

      11.7  Each of the milestone payments subject to Clauses 11.5 and 11.6
            shall only be payable by Endo upon the first occurrence of the
            applicable event whenever it occurs and shall be payable even if
            more than one applicable event occurs in a Year, unless otherwise
            noted. Such milestone payments are non-refundable in any
            circumstances whatsoever and are not creditable against the
            royalties due under Clause 11.9.

      11.8  Endo shall report the occurrence of each milestone event to Vernalis
            within thirty (30) days of its occurrence and at the same time shall
            make the milestone payment to Vernalis for which Clauses 11.5 and
            11.6 provide.

      11.9  Endo will pay to Vernalis royalties on a Product by Product basis
            for all Products as set forth below:

                                      - 57 -
<PAGE>

            11.9.1  Except as otherwise provided in this Clause 11.9.1, no
                    royalties shall be payable with respect to any Year ending
                    on or before ***. Notwithstanding the foregoing, if
                    aggregate Net Sales of Product in the Territory by Endo, its
                    Affiliates, its agents and its sublicensees in any Year
                    ended on or before *** are greater than *** USD (USD ***),
                    then Endo shall pay to Vernalis royalties on aggregate Net
                    Sales of the Product in the Territory in excess of USD ***,
                    but only to the extent Net Sales of the Product in the
                    Territory exceed USD *** for such Year, in accordance with
                    the royalty rates set forth in Clause 11.9.2 or Clause
                    11.9.3, as applicable. No royalties shall be payable with
                    respect to the first USD *** of Net Sales of Product in the
                    Territory for any Year ending on or before ***.

            11.9.2  If Marketing Authorisation for Product for MAM has not been
                    approved, then royalties shall be calculated as follows:

                    royalty = A + B + C + D + E

                    where,

                    A equals *** per cent (***%) of that portion of aggregate
                    Net Sales of Product in the Territory, which, during the
                    Year in question, is less than or equal to *** USD (USD
                    ***);

                    B equals *** percent (***%) of that portion of aggregate Net
                    Sales of Product in the Territory, which, during the Year in
                    question, is greater than *** USD (USD ***) and less than or
                    equal to *** USD (USD ***);

                    C equals *** percent (***%) of that portion of aggregate Net
                    Sales of Product in the Territory, which, during the Year in
                    question, is greater than *** USD (USD ***) and less than or
                    equal to *** USD (USD ***);

                                      - 58 -
<PAGE>

                    D equals *** percent (***%) of that portion of aggregate Net
                    Sales of Product in the Territory, which, during the Year in
                    question, is greater than *** USD (USD ***) and less than or
                    equal to *** USD (USD ***); and

                    E equals *** percent (***%) of that portion of aggregate Net
                    Sales of Product in the Territory, which, during the Year in
                    question, is greater than *** USD (USD ***).

            11.9.3  if Marketing Authorisation for the MAM indication has been
                    approved, then royalties shall be calculated as follows for
                    Net Sales subsequent to the effective date of such Marketing
                    Authorization:

                    royalty = A + B + C + D + E

                    where,

                    A equals *** per cent (***%) of that portion of aggregate
                    Net Sales of Product in the Territory, which, during the
                    Year in question, is less than or equal to *** USD (USD
                    ***);

                    B equals *** percent (*** %) of that portion of aggregate
                    Net Sales of Product in the Territory, which, during the
                    Year in question, is greater than *** USD (USD ***) and less
                    than or equal to *** USD (USD ***);

                    C equals *** percent (***%) of that portion of aggregate Net
                    Sales of Product in the Territory, which, during the Year in
                    question, is greater than *** USD (USD ***) and less than or
                    equal to *** USD (USD ***);

                    D equals *** percent (***%) of that portion of aggregate Net
                    Sales of Product in the Territory, which, during the Year in
                    question, is greater than *** USD (USD ***) and less than or
                    equal to *** USD (USD ***); and

                                      - 59 -
<PAGE>

                    E equals *** percent (***%) of that portion of aggregate Net
                    Sales of Product in the Territory, which, during the Year in
                    question, is greater than *** USD (USD ***).

      11.10  For the purposes of milestone and royalty payments under Clauses
             11.6 and 11.9, all formulations (e.g. tablets, gel caps, topical
             formulations, parenteral formulations, sustained release
             formulations etc) of a Product will be considered to be the same
             Product, regardless of the indications for which such Product may
             be used.

      11.11  Royalties under Clause 11.9 shall be payable on a country by
             country basis for a Product for the shorter of (i) the period of
             time that (a) there are Valid Claims of those Vernalis Patent
             Rights set out in Schedule 8 or Endo Patent Rights which result
             from a Use Suggestion for such Product, or (b) such Product is
             granted orphan designation or other regulatory administrative
             protection as a result of a Use Suggestion, in each case conferring
             market exclusivity to Endo for such Product in such country of
             sale, whichever is longer, or (ii) the date when a Generic Version
             of such Product is first offered in such country for sale, but in
             no event for longer than twenty (20) years from the Closing Date in
             each country of the Territory (unless and for so long as Endo sells
             Product Enhancements as set forth in Clause 8.13, pursuant to which
             royalties shall be paid with regard to such Product Enhancements).

      11.12  In the event that for any Product in any country of the Territory
             royalties are no longer payable under Clause 11.11(i) and it is
             prior to the twenty (20) year anniversary of the Closing Date, Endo
             may thereafter continue to use (i) the Vernalis Trade Marks or (ii)
             any trade marks used by Endo pursuant to Clause 13.1 for the MAM
             Product or for any indication other than the indication of migraine
             existing at the Closing Date or in relation to a Combination
             Product or a Product Enhancement (excluding the ENDO name, mark and
             associated logo (or successor mark or logo)) (the "Endo-Developed
             MAM Trade Marks") (and for the avoidance of doubt

                                      - 60 -
<PAGE>

             Endo shall have the right to terminate such use in such
             circumstances on a country-by-country basis upon giving written
             notice to Vernalis), provided that Endo shall, for the balance of
             such period in such country to the extent it chooses to make such
             use, pay to Vernalis a trade mark usage fee of *** of Net Sales of
             the Product sold under Vernalis Trade Marks and/or the
             Endo-Developed MAM Trade Marks in such country in the Territory,
             and shall, following such 20 Year period, have the right to
             continue using the Vernalis Trade Marks on a royalty-free basis
             (the Parties acknowledging that Endo, as the owner of the
             Endo-Developed MAM Trade Marks, shall have such right and all other
             rights with respect to such Endo-Developed MAM Trade Marks).

      11.13  Endo shall make the royalty payments due to Vernalis under Clause
             11.9 or 11.12 at Quarterly intervals. Within *** days of the end of
             each Quarter after Closing Date in any country, Endo shall pay all
             monies due to Vernalis under Clause 11.9 or Clause 11.12. Each
             royalty payment shall be accompanied by a report summarising the
             Net Sales of the Product (including the various elements of the Net
             Sales calculation) on a country-by-country basis in the Territory
             during the relevant Quarter the currency conversion rate, if
             applicable, the taxes withheld, if any, which royalty calculation
             is being applied and the total royalty payments due.

      11.14  Whenever for the purpose of calculating royalties conversion from
             any foreign currency shall be required, such conversion shall be
             made as follows. When calculating the Net Sales, the amount of such
             sales in foreign currencies shall be converted into USD using the
             average monthly rate of exchange for such currencies at the time
             published in Wall Street Journal in accordance with Endo's then
             current standard practices;

      11.15  Endo shall make all payments to Vernalis under this Agreement in
             USD from the USA. All payments under this Agreement shall be made
             free and clear of and without set off, deduction or deferment in
             respect of any

                                      - 61 -
<PAGE>

             taxes, disputes or claims whatsoever unless required by law or
             practice of any Competent Authority provided always that (i) Endo
             shall have the right to set off against any sums due from it to
             Vernalis under this Agreement any Monies following an Event of
             Default until all such Monies have been paid but for no longer, and
             (ii) both Parties shall have a right of set off as set forth in
             Clause 15.11. Endo and Vernalis shall co-operate to minimize any
             deduction or withholding in relation to any payments pursuant to
             this Agreement and, without limitation, Vernalis shall provide Endo
             with a W-8BEN (or successor form) duly executed by Vernalis.

      11.16  Endo and its Affiliates shall keep and shall require its
             sublicensees to keep, full, true and accurate records and books of
             account containing all particulars that may be necessary for the
             purpose of calculating all royalties payable to Vernalis and in
             compiling the reports due from Endo under Clauses 6.1.2 and 6.1.3
             for a minimum period of *** years. Upon timely request by Vernalis,
             Vernalis shall have the right to instruct an independent,
             internationally recognized, accounting firm to perform an audit,
             conducted so far as appropriate in accordance with GAAP, as is
             reasonably necessary to enable such accounting firm to report to
             Vernalis the Net Sales of Product for the period or periods
             requested by Vernalis or to report to Vernalis on the accuracy of
             the reports issued by Endo under Clauses 6.1.2 and 6.1.3 on the
             following basis:

            11.16.1  such firm of accountants shall be given access to and shall
                     be permitted to examine and copy such books and records
                     upon twenty (20) Business Days notice having been given by
                     Vernalis and at all reasonable times on Business Days for
                     the purpose of certifying to Vernalis either that the Net
                     Sales calculated and reported by Endo or its Affiliates
                     during any Year were calculated correctly in accordance
                     with this Agreement (and if such certification cannot be
                     given specifying the reasons why which

                                      - 62 -
<PAGE>

                    will enable the Parties to recalculate the relevant sums) or
                    that a report issued by Endo under Clause 6.1.2 or 6.1.3 was
                    accurate;

            11.16.2 prior to any such examination taking place, such firm of
                    accountants shall undertake to Endo that they shall keep all
                    information and data contained in such books and records,
                    strictly confidential and shall not disclose such
                    information or copies of such books and records to any third
                    person including Vernalis, but shall only use the same for
                    the purpose of the reviews and/or calculations which they
                    need to perform in order to issue the certificate to
                    Vernalis which this Clause 11.16 envisages;

            11.16.3 any such access examination and certification shall occur no
                    more frequently than once per year and will not go back over
                    records more than *** years old unless a discrepancy is
                    found;

            11.16.4 Endo shall make available personnel to answer queries on all
                    books and records required for the purpose of that
                    certification;

            11.16.5 any such certification shall be final in so far as it
                    relates to a report issued by Endo under Clause 6.1.2 or
                    6.1.3; and

            11.16.6 if the certification is in disagreement with the Net Sales
                    as calculated by Endo, Endo shall notify Vernalis within ten
                    (10) days of receipt by Endo whether or not Endo agrees with
                    the certification. If Endo notifies its agreement with the
                    certification within the ten (10) day period or fails to
                    give any notification with that period, the Net Sales
                    calculated by the certification shall be used for purposes
                    of calculating any monies owed and any monies owed by one
                    Party to the other shall be paid by that Party. The Cost of
                    the accountant shall be the responsibility of Endo if the
                    recalculation shows the Endo's previous figures supplied to
                    Vernalis to be inaccurate by more than the lesser of USD$
                    *** or *** and the responsibility of Vernalis otherwise.

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<PAGE>

            11.16.7 If within ten (10) days starting on the day after receipt of
                    the notification referred to in Clause 11.16.6, Endo and
                    Vernalis have not agreed to the terms in dispute in relation
                    to the certification, either Party may refer the items in
                    dispute to a partner of at least 10 years qualified
                    experience at an independent, internationally recognized,
                    public accounting firm agreed by the Parties in writing for
                    final and binding resolution, or failing agreement on the
                    identity of the public accounting firm within fifteen (15)
                    days starting on the day after receipt of the notification
                    referred to in Clause 11.16.6, an independent,
                    internationally recognized, public accounting firm appointed
                    on the application of either Party by the President for the
                    time being of the Institute of Chartered Accountants in
                    England and Wales. Such person appointed shall act on the
                    following basis:

                    11.16.7.1 such person shall act as an expert and not as an
                              arbitrator;

                    11.16.7.2 such person's terms of reference shall be to
                              determine the matters in dispute within 20 days of
                              his appointment;

                    11.16.7.3 the Parties shall each provide such person with
                              all information relating to the items in dispute
                              which such person reasonably requires and such
                              person shall be entitled (to the extent he
                              considers appropriate) to base his determination
                              on such information;

                    11.16.7.4 the decision of such person is, in the absence of
                              fraud or manifest error, final and binding on the
                              Parties; and

                                      - 64 -
<PAGE>

            11.16.7.5 such person's Costs shall be paid by Endo and Vernalis as
                      such person may determine.

      11.17 All payments made to Vernalis under this Agreement shall be made by
            wire transfer to the account of Vernalis Development Limited at
            Barclays Bank plc, London Corporate Banking, PO Box 544, 54 Lombard
            Street, London EC3P 3AH, Sort Code 20-30-19, USD Account No.***
            or any other bank account that may be notified by Vernalis to Endo
            from time to time.

      11.18 If either Party fails to make any payment to the other Party
            hereunder on the due date for payment and the payment is not in
            dispute between the Parties, and the dispute has not been resolved
            pursuant to dispute resolution under Clause 22.2, without prejudice
            to any other right or remedy available to that Party, that Party
            expecting payment shall be entitled to charge the other Party
            interest (both before and after judgement) on the amount unpaid at
            the annual rate of LIBOR or EURIBOR plus *** calculated on a daily
            basis until payment in full is made without prejudice to that
            Party's right to receive payment on the due date. If a payment is in
            dispute between the Parties, any such dispute shall be promptly
            submitted for resolution according to Clause 22.2.

12.   INTELLECTUAL PROPERTY - PROSECUTION, MAINTENANCE AND ENFORCEMENT - PATENT
      RIGHTS

      12.1  Vernalis shall at its own cost and expense be solely responsible for
            the filing, prosecution and maintenance of Vernalis Patent Rights in
            accordance with the patent strategy that Vernalis and Endo, in
            consultation with each other, reasonably devise, but using all
            reasonable endeavours to prosecute all patent applications forming
            part of Vernalis Patent Rights to grant in whichever countries of
            the Territory Vernalis and Endo, in consultation with each other,
            deem commercially reasonable, including the conduct of any claims or
            proceedings relating to them (including but not limited to any
            interference, reissue or re-examination or opposition or revocation
            proceedings). Vernalis shall promptly keep Endo informed of all
            material developments in relation to

                                      - 65 -

<PAGE>

            the Vernalis Patent Rights and shall, upon Endo's request, provide
            Endo with copies of relevant documents related to the filing,
            prosecution and maintenance of the Vernalis Patent Rights. Vernalis
            will take account of Endo's interest hereunder when making any
            submission to a patent office (including the scope of foreign
            filings) and in the conduct of any proceedings in relation to such
            Vernalis Patent Rights.

      12.2  In the event that Vernalis declines to file or, having filed,
            declines to further prosecute and maintain any pending Vernalis
            Patent Rights, Vernalis shall provide Endo with written notice
            thereof. In the case where Vernalis has filed but is declining to
            further prosecute or maintain, such notice shall be given prior to
            the expiration of any deadline relating to such activities, but in
            any event at least thirty (30) Business Days prior to such deadline.
            In any of such circumstances Endo shall have the right to decide
            that Endo should continue to file or prosecute such Vernalis Patent
            Rights, and, in such case, Endo shall give written notice to
            Vernalis. Vernalis shall upon receipt of any such notice from Endo
            assign its right, title and interest in and to the relevant Vernalis
            Patent Rights to Endo at Vernalis' cost and expense.

      12.3  Endo shall at its own cost and expense be solely responsible for the
            filing, prosecution and maintenance of Endo Patent Rights in
            accordance with the strategy that Endo reasonably devises but using
            all reasonable endeavours to prosecute all patent applications
            forming part of Endo Patent Rights to grant in whichever countries
            Endo deems commercially reasonable, including the conduct of any
            claims or proceedings relating to them (including but not limited to
            any interference, reissue or re-examination or opposition or
            revocation proceedings). Endo shall keep Vernalis promptly informed
            of all filings made for Endo Patent Rights including sending
            Vernalis a copy of any such filing and otherwise shall keep Vernalis
            informed of all material developments in relation to the Endo Patent
            Rights and shall, upon Vernalis' request, provide Vernalis

                                      - 66 -

<PAGE>

            with copies of relevant documents related to the filing, prosecution
            and maintenance of the Endo Patent Rights.

      12.4  In the event that Endo declines to file or, having filed, declines
            to further prosecute and maintain any pending Endo Patent Rights
            Endo shall provide Vernalis with written notice thereof. In the case
            where Endo has filed but is declining to further prosecute or
            maintain such notice shall be given prior to the expiration of any
            deadline relating to such activities, but in any event at least
            thirty (30) Business Days prior to such deadline. In any of such
            circumstances Vernalis shall have the right to decide that Vernalis
            should continue to file or prosecute such Endo Patent Rights and in
            such case Vernalis shall give written notice to Endo. Endo shall
            upon receipt of any such notice from Vernalis assign its right,
            title and interest in and to the relevant Endo Patent Rights to
            Vernalis at Endo's cost and expense.

      12.5  The Parties shall cause their patent attorneys to liase so far as
            practicable with respect to the filing, prosecution and maintenance
            of Patent Rights falling within Vernalis Patent Rights and Endo
            Patent Rights. Each Party shall be responsible for the Cost of its
            own patent attorney incurred pursuant to this Clause 12.5.

      12.6  Endo may, but shall not be obliged to, at its own cost and expense,
            enforce the Vernalis Patent Rights and Vernalis Know How against
            infringers in accordance with the following:

            12.6.1 Prior to the commencement of proceedings, Endo shall notify
                   Vernalis of the infringers' activities and shall consult with
                   Vernalis concerning the same, but thereafter Endo shall have
                   sole conduct of the dispute including the right to settle.
                   Where Endo decides to commence proceedings as plaintiff it
                   shall be entitled to require Vernalis to join Endo as
                   co-plaintiff. Vernalis shall provide all necessary assistance
                   to Endo in relation to such proceeding, and Endo shall on
                   demand by Vernalis indemnify

                                      - 67 -

<PAGE>

                   Vernalis against the Costs of such activity unless Vernalis
                   elects to be separately represented (which shall be at
                   Vernalis' discretion) in which case such separate
                   representation shall be at Vernalis' own cost and expense;

            12.6.2 If Endo succeeds in any such infringement proceedings whether
                   at trial or by way of settlement, Endo shall be entitled to
                   retain such part of any award of Costs and damages made in
                   such proceedings or settlement sum as is equal to Endo's
                   Costs of taking the proceedings and shall be entitled to
                   retain the balance received by Endo less an amount equivalent
                   to the royalties which would have been due to Vernalis on the
                   balance as if they were Net Sales which amount shall be paid
                   to Vernalis; and

            12.6.3 If Endo fails to take any such proceedings, Vernalis may give
                   Endo notice requesting Endo to take such proceedings within
                   thirty (30) days of the date of notice and if Endo decides
                   not to do so, Vernalis shall be entitled to do so at its own
                   cost and expense. Endo shall provide all necessary assistance
                   to Vernalis in relation to such proceedings and Vernalis
                   shall on demand by Endo indemnify Endo against the Costs of
                   such activity, unless Endo elects to be separately
                   represented (which shall be at Endo's discretion), in which
                   case such separate representation shall be at Endo's cost and
                   expense. Vernalis shall have sole right to settle such
                   proceedings, provided that such settlement does not adversely
                   affect Endo's rights and interests hereunder and does not
                   include a license with respect to any Product in the
                   Territory. If Vernalis succeeds in any such proceedings it
                   shall be entitled to retain the whole of any award of Costs
                   and damages made or settlement sum paid.

      12.7  Each Party shall promptly take all necessary steps to facilitate the
            other's application (made either on the other's own initiative or
            upon request by

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            the first Party) for extensions to the term of Patent Rights falling
            within Vernalis Patent Rights in any country of the Territory,
            including applications for supplementary protection certificates and
            patent term extensions.

      12.8  Notwithstanding anything to the contrary herein, for Vernalis Patent
            Rights Covering the making, having made, using or Commercialisation
            of a Product, should either Party receive a certification from a
            Third Party in the US under the US "Drug Price Competition and
            Patent Term Restoration Act of 1984 (Public Law 98-417), as amended
            (21 U.S.C. Section 355(j)(2)(A)(vii)(IV) or a comparable provision),
            or its comparable law in the country other than the USA, then such
            Party shall immediately give written notice to the other Party of
            such certification. Endo shall then have twenty-eight (28) days from
            the date such Party receives such certification to initiate suit. In
            the event the twenty-eight (28) day period expires without Endo
            having initiated suit, Vernalis shall have the right to immediately
            bring suit against the Third Party that filed the certification. If
            either Party initiates a suit within a forty-five (45) day period
            from the date such Party received the certification, it will
            immediately notify the other Party.

13.   TRADE MARKS

      13.1  The Product for the indication of migraine existing at the Closing
            Date shall be promoted, advertised and sold in the Territory under
            and using the Vernalis Trade Marks and the ENDO name, mark and
            associated logo (or successor mark or logo). Endo shall use the
            symbol "(R)" in conjunction with the Registered Trade Marks within a
            reasonable time period after receiving notice from Vernalis that
            they are registered. If at any time Endo decides that it wishes to
            use a trade mark other than the Vernalis Trade Marks and the ENDO
            name, mark and associated logo (or successor thereto) in relation to
            the MAM Product in the Territory or in relation to Product for any
            indication other than the indication of

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<PAGE>

            migraine existing at the Closing Date or in relation to a
            Combination Product or a Product Enhancement, Endo shall give
            written notice to Vernalis specifying the proposed trade mark, Endo
            shall make filings for the proposed trade mark in respect of Product
            in the countries of the Territory.

      13.2  All goodwill arising from use of the Vernalis Trade Marks by Endo
            during or after the term of this Agreement shall accrue and belong
            to Vernalis or its nominated Affiliate. All goodwill arising from
            use of the Endo Trade Marks by Endo during or after the term of this
            Agreement shall accrue and belong to Endo or its nominated
            Affiliates.

      13.3  In relation to its use of the Vernalis Trade Marks hereunder, Endo
            shall:

            13.3.1 not use any of the Vernalis Trade Marks in any modified or
                   altered form or with any prefix or suffix or in any other
                   language. or as part of, or in combination or conjunction
                   with, any other name or mark, save for any mark including or
                   consisting of the name and mark "FROVA";

            13.3.2 not take, or cause to be taken, any action knowing that such
                   action is likely to damage, depreciate, tarnish, jeopardise
                   or otherwise prejudice the goodwill and reputation, image or
                   distinctiveness associated with the Vernalis Trade Marks;

            13.3.3 not knowingly do anything that may jeopardise the
                   enforceability or validity of any registration of any
                   Registered Trade Mark or lead to grounds for the revocation
                   of any such registration for any reason including, but not
                   limited to, knowing use of any Registered Trade Mark in a
                   manner which may be misleading to the public;

            13.3.4 use the Vernalis Trade Marks only in connection with Product
                   complying with the quality and other specifications of the
                   Product Registrations;

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            13.3.5 not knowingly apply to register in its own name in the
                   Territory any Vernalis Trade Mark nor any trade mark so
                   nearly resembling them or any of them as may be likely to
                   cause confusion based upon its use of the Vernalis Trade
                   Marks under this Clause 13, or otherwise at any time; and

            13.3.6 not knowingly use in connection with the Product any other
                   trade mark or trade name which is confusingly similar to any
                   of the Vernalis Trade Marks.

      13.4  The final decision on packaging, design and labelling for the
            Territory shall be Endo's.

      13.5  Vernalis or its designated Affiliate shall at its own cost and
            expense be solely responsible for the filing, prosecution and
            maintenance of the Registered Trade Marks in the Territory, and
            shall use its Commercially Reasonable Efforts to file and prosecute
            the trade mark applications forming part of Vernalis Trade Marks in
            the Territory.

      13.6  In the event that Vernalis or its designated Affiliate declines to
            file or, having filed, declines to further prosecute and maintain
            the Registered Trade Marks in the Territory, Vernalis or its
            designated Affiliate shall provide Endo with written notice thereof
            prior to the expiration of any deadline relating to such activities,
            but in any event at least thirty-five (35) days prior notice. In
            such circumstances Endo shall have the right to decide, with reason
            and with written notice at least twenty (20) days prior to the
            deadline, that Vernalis or its designated Affiliate should continue
            to file or prosecute the Vernalis Trade Marks. Vernalis or its
            designated Affiliate shall then have the option, with at least ten
            (10) days notice to Endo, to:

            13.6.1 continue to file or prosecute the Vernalis Trade Marks in
                   Vernalis or its designated Affiliate's own name and expense;
                   or

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<PAGE>

            13.6.2 allow Endo to file or prosecute the Vernalis Trade Marks in
                   Vernalis or its designated Affiliate's name and at Vernalis
                   or its designated Affiliate's expense using counsel of Endo's
                   own choice, in which instance Endo shall invoice Vernalis or
                   its designated Affiliate for such expenses within 30 days of
                   the end of each Quarter, such invoice to be payable within 30
                   days.

      13.7  Each Party shall promptly notify the other Party or its designated
            Affiliate in writing if it becomes aware of any infringement or
            unauthorized use by a Third Party of the Vernalis Trade Marks in the
            Territory.

      13.8  In the event of an infringement of the Vernalis Trade Marks by a
            Third Party in the Territory, Vernalis or its designated Affiliate
            shall have first right to bring any action or proceedings, and shall
            have sole control of the conduct of any such proceedings, including,
            the right to settle them, provided such settlement does not
            adversely affect Endo's rights and interests within the Territory.

      13.9  Without prejudice to Clause 13.8, Endo shall have the right to be
            joined as a co-plaintiff, in which case, Vernalis or its designated
            Affiliate shall at its sole discretion and cost appoint counsel to
            act on behalf of both Vernalis or its designated Affiliate and Endo.
            In such a situation, if Vernalis or its designated Affiliate and
            Endo succeed in any such proceedings in relation to an infringement
            in the Territory of the Vernalis Trade Marks, whether at trial or by
            way of settlement, in obtaining damages or any other financial
            payment to Vernalis or its designated Affiliate and/or Endo:

            13.9.1 Vernalis or its designated Affiliate shall first deduct for
                   itself all of its costs and expenses incurred in relation to
                   such proceedings; and

            13.9.2 then the Parties shall share such damages or other payment
                   50:50.

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<PAGE>

      13.10 In the circumstances of Clause 13.9, in the event that Endo elects
            not to be joined as a co-plaintiff, Endo shall, at Vernalis' or its
            designated Affiliate's reasonable request and expense, provide
            Vernalis or its designated Affiliate with reasonable assistance in
            relation to such action or proceedings in the Territory. Vernalis or
            its designated Affiliate shall have sole control of the conduct of
            any such proceedings, including the right to settle them, provided
            that such settlement does not adversely affect Endo's rights and
            interests hereunder. If Vernalis or its designated Affiliate
            succeeds in any such proceedings in relation to an infringement in
            the Territory, whether at trial or by way of settlement, in
            obtaining damages or any other financial payment Vernalis shall be
            entitled to retain all such damages or other financial payment
            awarded in such proceedings or agreed in any such settlement for its
            own account.

      13.11 In the event that Vernalis or its designated Affiliate fails to
            institute an action or proceeding in relation to an infringement of
            the Vernalis Trade Marks in the Territory for more than ninety (90)
            days from notification of the infringement pursuant to Clause 13.7,
            and if Endo wishes to do so, Endo shall, provided it has given
            written notice to Vernalis or its designated Affiliate, be entitled
            to institute action or proceeding in its own name and Vernalis or
            its designated Affiliate shall do all such acts and things at Endo's
            cost and expense as Endo shall reasonably request to assist Endo in
            such proceedings, including, lending its name to such proceedings.
            Endo shall have sole control of the conduct of any such proceedings,
            including the right to settle them, provided such settlement does
            not adversely affect Vernalis' or its designated Affiliate's rights
            and interests outside of the Territory, and shall be entitled to
            retain any financial payment awarded in such proceedings or agreed
            in any such settlement for its own account.

14.   GUARANTEE BY VERNALIS PLC

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      14.1  Vernalis plc, a public limited company incorporated under the laws
            of England and Wales (the "Guarantor"), hereby unconditionally and
            irrevocably guarantees to Endo the performance of all of the
            obligations of Vernalis under Clause 15 of this Agreement, including
            the due and prompt payment by Vernalis of any amounts payable under
            Clause 15 of this Agreement and the satisfaction of each of the
            representations, warranties and indemnities of Vernalis set forth
            therein(the "Guaranteed Obligations"). In case of the failure of
            Vernalis promptly to pay any amounts or to make whole Endo for any
            of its obligations under Clause 15 of this Agreement, the Guarantor
            hereby agrees to cause the payment of such amounts to be made
            promptly when and as such amounts become due and payable and as if
            such amounts were paid by Vernalis. The Guarantor hereby agrees that
            its obligations hereunder will be absolute and unconditional,
            irrespective of, and will be unaffected by, the validity, regularity
            or enforceability of the obligations of Vernalis under this
            Agreement, the absence of any action to enforce the same, the
            dissolution, the insolvency or bankruptcy of Vernalis or any other
            circumstance which might otherwise constitute a legal or equitable
            discharge or defense of a guarantor or surety. The Guarantor hereby
            waives the benefits of diligence, presentment, demand of payment,
            any requirement that Endo protect, secure, perfect or insure any
            security interest in or other lien on any property subject thereto
            or exhaust any right or take any action against Vernalis or any
            collateral, filing of claims with a court in the event of
            dissolution, insolvency or bankruptcy of Vernalis, any right to
            require a proceeding first against Vernalis, protect, notice and all
            demands whatsoever and covenants that its obligations hereunder will
            not be discharged except by complete payment of the amounts due by
            Vernalis under Clause 15 of this Agreement. Notwithstanding the
            foregoing, unless Vernalis has legally dissolved, Endo agrees to
            give Vernalis notice of any claim under this Agreement prior to
            making any demand under this Clause 14 in respect of the Guaranteed
            Obligations. In the event that any payment to Endo in

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<PAGE>

            respect of any amounts due by Vernalis under Clause 15 of this
            Agreement is rescinded or must otherwise be returned for any reason
            whatsoever, the Guarantor will remain liable for such amounts to the
            extent provided herein as if such amounts had not been paid. The
            aggregate amount to be paid under this Clause 14 by the Guarantor
            shall be net of any prior payment to Endo by Vernalis in respect of
            such Guaranteed Obligations.

15.   WARRANTIES AND LIABILITY

      15.1  Each Party represents and warrants to the other Party that:

            15.1.1 it has the legal power, authority and right to enter into
                   this Agreement and to perform its respective obligations in
                   this Agreement; and

            15.1.2 it is not at the Signature Date or the Closing Date a party
                   to any agreement, arrangement or understanding with any Third
                   Party which in any significant way prevents it from
                   fulfilling any of its material obligations under the terms of
                   this Agreement; and

            15.1.3 it has disclosed to the other all information and material
                   which is material to the decision of the other to enter into
                   this Agreement.

      15.2  Vernalis represents and warrants to Endo that Vernalis is the sole
            owner of the Vernalis Patent Rights set out in Schedule 8 and
            Registered Trademarks, and is the sole owner or licensee of all
            other Vernalis IP, with the right to grant to Endo the rights which
            are granted in this Agreement (including, without limitation, the
            rights in the Elan Marks granted to Vernalis pursuant to Clause
            3.8), free and clear of any Encumbrances which would prevent or
            impair the grant of such rights and that Vernalis is otherwise free
            of any duties or obligations to third parties which may conflict
            with the terms of this Agreement.

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<PAGE>

      15.3  Vernalis represents and warrants to Endo that Elan Group and
            Vernalis have terminated the Second Amended and Restated Licence
            Agreement, dated March 15, 2002, on the terms set forth in the Elan
            Asset Transfer Agreement.

      15.4  Vernalis represents and warrants to Endo that Vernalis has acquired,
            pursuant to the Elan Asset Transfer Agreement, certain rights of
            Elan Group under certain supply agreements and residual contracts
            set forth in the Elan Asset Transfer Agreement and all of Elan
            Group's other rights and assets relating to the development,
            production, marketing, distribution, sales and supply of the Product
            in the Territory.

      15.5  Vernalis represents and warrants that as at the Signature Date and
            the Closing Date, there are no actual, and, so far as Vernalis is
            aware, there are no threatened proceedings relating to infringement
            of Third Party intellectual property rights by the use of Vernalis
            IP and Vernalis has used all reasonable endeavours to ensure that
            the Vernalis IP will not infringe the rights of any Third Party and
            that the Vernalis IP is not the subject of any actual or threatened
            challenge or revocation proceedings.

      15.6  Save as is expressly stated in Clauses 15.1, 15.2, 15.3, 15.4 and
            15.5 no representation, condition or warranty whatsoever is made or
            given by or on behalf of Vernalis or Endo.

      15.7  Vernalis shall have the control of clinical trials conducted under
            the MAM & Paediatric Development Program and shall be the sponsor of
            such trials and, in such capacity, shall be responsible for the
            payment of any compensation due to any participants in such trials
            who suffer death or bodily injury pursuant to any legal rights or
            applicable industry guidelines. Vernalis shall indemnify Endo and
            its Representatives against any and all liability, loss, damage,
            cost and expense (including legal costs) incurred or suffered by
            Endo and/or its Representatives as a result of any claim brought
            against Endo and/or its Representatives arising out of or related to
            any clinical trials conducted by, or under the

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<PAGE>

            supervision of, Vernalis in connection with the Product, including
            clinical trials conducted in connection with the MAM & Paediatric
            Development Program.

      15.8  Subject always to the provisions of Clause 15.12 Endo shall be
            responsible for and shall indemnify Vernalis and its Representatives
            against any and all liability, loss, damage, cost and expense
            (including reasonable legal Costs) incurred or suffered by Vernalis
            and/or its Representatives as a result of any claim brought against
            Vernalis by a Third Party which arises as a result of:

            15.8.1 The activities of Endo or its Representatives under this
                   Agreement (except as covered by Vernalis' indemnity
                   obligations under Clause 15.9);

            15.8.2 A breach by Endo of any representation or warranty made by it
                   in this Agreement;

            15.8.3 A breach by Endo or its Affiliates of the Safety Agreement;

            15.8.4 The Product(s) manufactured, marketed, distributed, or sold
                   by or on behalf of Endo having caused death or bodily injury,
                   except to the extent covered by Vernalis' indemnity to Endo
                   under Clause 15.9;

            15.8.5 The infringement or other violation of any intellectual
                   property rights of any Third Party arising out of the
                   manufacture, use or Commercialisation of the Product in the
                   Territory, solely to the extent related to activities,
                   resulting in or within the scope of Endo IP under the terms
                   of and during the term of this Agreement;

            15.8.6 The conduct of Endo's business other than in connection with
                   this Agreement;

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<PAGE>

            except, in each case, where the claim is the result, either directly
            or indirectly, of a negligent act or omission or gross misconduct on
            the part of Vernalis or any of its employees or Affiliates.

      15.9  Subject to the provisions of Clause 15.12, Vernalis shall be
            responsible for and shall indemnify Endo and its Representatives
            against any and all liability, loss, damage, cost and expense
            (including reasonable legal Costs) incurred or suffered by Endo
            and/or its Representatives as a result of any claim brought against
            Endo or its Representatives by a Third Party which arises as a
            result of:

            15.9.1 The activities of Vernalis or its Representatives under this
                   Agreement (except as covered by Endo's indemnity obligations
                   under Clause 15.8);

            15.9.2 A breach by Vernalis of any representation or warranty made
                   by it in this Agreement;

            15.9.3 A breach by Vernalis or its Affiliates of the Safety
                   Agreement or a breach by Vernalis of Clause 3.6;

            15.9.4 Any claim relating to any Product manufactured on or before
                   the Closing Date, including Stock manufactured on or before
                   the Closing Date, including the 2.5 mg 9 Count Blister and
                   any claim that Product manufactured on or before the Closing
                   Date does not meet the Specifications set forth in the
                   Product Registrations;

            15.9.5 Any claim in relation to Product in countries outside the
                   Territory, except where the claim is the result, either
                   directly or indirectly, of any activities of Endo or any of
                   its employees or Affiliates;

            15.9.6 The return of Product which is at wholesalers at the
                   Signature Date with an expiration date on or before the first
                   Year anniversary of the Signature Date;

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            15.9.7 Any claim by Elan Group or any Affiliate of Elan Group,
                   including claims arising out of the Second Amended and
                   Restated Licence Agreement between Vernalis and Elan Pharma
                   International Limited, dated March 15, 2002, the Agreement
                   Relating to the North American Frova Assets of Elan between
                   Elan and Vernalis, dated May 18, 2004, or any other agreement
                   between a member of the Elan Group and Vernalis or its
                   Affiliates relating to the Commercialisation of the Product;

            15.9.8 Any claim that Product(s) has caused death or bodily injury
                   relating to (i) a design defect or alleged inherently
                   dangerous nature of the Product(s), to the extent such design
                   defect or alleged inherent danger is not caused by a
                   modification to the Product made by Endo, provided, that,
                   Vernalis' indemnity obligation for such design defect or
                   alleged inherent danger shall not exceed *** USD (USD***) per
                   occurrence, or (ii) testing, clinical trials (included the
                   MAM & Paediatric Development Program) or other activities
                   undertaken by or on behalf of Vernalis with respect to
                   Product approvals by a Regulatory Authority;

            15.9.9 Claims arising out of the manufacture, use, or
                   Commercialisation of the Product(s) as formulated as of the
                   Signature Date or the Closing Date and for the use approved
                   by Regulatory Authorities as of the Signature Date or the
                   Closing Date and for the MAM Product, each under the terms of
                   this Agreement relating to any infringement or other
                   violation of intellectual property rights of any Third Party.

      15.10 Subject to the provisions of Clause 15.12, in addition to Vernalis'
            indemnification obligations under Clause 15.9, Vernalis shall be
            responsible for and shall indemnify Endo and its Representatives
            against any and all liability, loss, damage, cost and expense,
            arising out of any

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            recall of the Product(s), voluntary or otherwise, or closure or
            interruption of any manufacturing facilities, where such recall,
            closure or interruption is attributable to Product(s) manufactured
            prior to the Closing Date, provided, that as soon as practicable
            following the Closing Date, Endo has assisted in the generation and
            implementation of a stratified sampling protocol to address blend
            uniformity in the manufacturing of the Product.

      15.11 Upon receipt by a Party and/or its Representatives seeking
            indemnification hereunder (an "Indemnified Party") of notice of any
            action, suit, proceeding, claim, demand or assessment against such
            Indemnified Party which might give rise to any liability, loss,
            damage, cost or expenses, the Indemnified Party shall give prompt
            written notice thereof to the Party from which indemnification is
            sought (the "Indemnifying Party") indicating the nature of claim and
            the basis therefor, provided that the failure to give such prompt
            notice shall not relieve the Indemnifying Party of its obligations
            hereunder except to the extent the Indemnifying Party or the defense
            of any such claim is materially prejudiced thereby. The Indemnifying
            Party shall have the right, at its option, to assume the defense of,
            at its own expense and by its own counsel, any such claim involving
            the asserted liability of the Indemnified Party. If any Indemnifying
            Party shall undertake to compromise or defend any such asserted
            liability, it shall promptly notify the Indemnified Party of its
            intention to do so, and the Indemnified Party shall agree to
            cooperate fully with the Indemnifying Party and its counsel in the
            compromise of, or defense against, any such asserted liability;
            provided, however, that the Indemnifying Party shall not, as part of
            any settlement or other compromise, admit to liability or agree to
            an injunction without the written consent of the Indemnified Party.
            Notwithstanding an election by the Indemnifying Party to assume the
            defense of any claim as set forth above, such Indemnified Party
            shall have the right (at its own expense if the Indemnifying Party
            has elected to assume such defense) to employ separate counsel and
            to participate in the

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            defense of any claim. In the event that the Indemnified Party has a
            reasonable basis to believe that the Indemnifying Party may not have
            sufficient funds to satisfy such indemnification obligation and the
            Indemnifying Party upon request by the Indemnified Party cannot
            provide assurances of its ability to satisfy such obligation to the
            reasonable satisfaction of the Indemnified Party, the Indemnified
            Party may deduct, defer or otherwise offset from any payment
            obligations under this Agreement (if any) amounts reasonably
            necessary to satisfy such indemnification obligation.

      15.12 Notwithstanding any other provision of this Agreement, neither Party
            shall be liable to the other in contract, tort, negligence, breach
            of statutory duty or otherwise for any loss, damage, costs or
            expenses of any nature whatsoever incurred or suffered by the other
            or its Affiliates of an indirect or consequential or punitive
            nature, including any indirect or consequential economic loss or
            other indirect or consequential loss of turnover, profits, loss of
            enterprise value, business or goodwill or otherwise.

      15.13 Each of Endo and Vernalis shall secure and maintain comprehensive
            general liability insurance including, product liability,
            contractual liability, personal injury, and insurance against claims
            regarding the development, manufacture, delivery, storage, handling
            and use of Product under this Agreement, in such amounts as it
            customarily maintains for similar products and activities in
            accordance with prudent insurance practice. Notwithstanding the
            foregoing, each of Endo and Vernalis shall be entitled to
            self-insure risks in accordance with their respective risk
            management policies.

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16.   CONFIDENTIALITY

      16.1  Each of the Parties undertakes and agrees to:

            16.1.1  keep the Confidential Information secret and confidential
                    and shall not disclose it to any Third Party without the
                    other Party's prior written consent save as expressly or
                    impliedly permitted under this Agreement;

            16.1.2  only use the Confidential Information for the purposes
                    envisaged under this Agreement and not to use the same for
                    any other purpose whatsoever; and

            16.1.3  ensure that only those of its officers, consultants,
                    employees (including without limitation directors),
                    licensees, sub-licensees, Affiliates and such third parties
                    who are directly concerned with the carrying out of this
                    Agreement have access to the Confidential Information on a
                    reasonably applied "need to know" basis and are informed of
                    the secret and confidential nature of such Confidential
                    Information.

      16.2  The obligations of confidentiality referred to in Clause 16.1 shall
            not extend to any Confidential Information which:

            16.2.1  is or becomes generally available to the public otherwise
                    than by reason of breach by a Recipient Party of the
                    provisions of that Clause; or

            16.2.2  is known to the Recipient Party and is at its free disposal
                    at the time of its disclosure to the Recipient Party (having
                    been generated independently by the Recipient Party or a
                    Third Party in circumstances where it can be shown that it
                    has not been derived from access to the Disclosing Party's
                    Confidential Information);
                    or

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            16.2.3  is subsequently disclosed to the Recipient Party without
                    obligations of confidentiality by a Third Party owing no
                    such obligations to the Disclosing Party in respect of that
                    Confidential Information; or

            16.2.4  is required by law to be disclosed (including as part of any
                    regulatory submission or approval process) and then only
                    (subject to Clause 16.3) when prompt written notice of this
                    requirement has been given to the Disclosing Party so that
                    it may, if so advised, seek appropriate relief to prevent
                    such disclosure provided always that in such circumstances
                    such disclosure shall be only to the extent so required and
                    shall be subject to prior consultation with the Disclosing
                    Party with a view to agreeing to the timing and content of
                    such disclosure.

      16.3  The requirement under Clause 16.2.4 to notify the Disclosing Party
            when Confidential Information is required to be disclosed by law
            shall not apply when such disclosure is required as part of any
            regulatory submission or approval process or for the purposes of
            marketing.

      16.4  In the event that a court or Competent Authority assumes partial or
            complete control over the assets of a Recipient Party based on an
            Insolvency Event of that Party, the Recipient Party shall:

            16.4.1  promptly notify such court or Competent Authority:

                    (a)   that Confidential Information received from the
                          Disclosing Party is in the ownership or co-ownership
                          of the Disclosing Party; and

                    (b)   of the confidentiality obligations under this
                          Agreement; and

            16.4.2  to the extent permitted by law, take all steps necessary or
                    desirable to maintain the confidentiality and security of
                    the

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                    Disclosing Party's Confidential Information and to ensure
                    that the court or Competent Authority maintains that
                    Confidential Information in confidence in accordance with
                    this Agreement.

      16.5  The Parties understand that remedies in damages may be inadequate to
            protect against any breach of any of the provisions of this Clause
            16 by either Party or their employees, officers or any other person
            acting in concert with it or on its behalf. Accordingly, each Party
            shall be entitled to seek the granting of interim and final
            injunctive relief by a court of competent jurisdiction in the
            discretion of that court against any action that constitutes any
            breach of this Clause 16.

      16.6  The Parties agree that the obligations of confidentiality set out in
            this Clause 16 shall continue to apply following the termination of
            this Agreement for whatever reason.

17.   TERM AND TERMINATION

      17.1  Subject to the other provisions of this Clause 17, this Agreement
            shall expire on a country by country basis in the Territory when no
            further payment is due from one Party to the other hereunder in
            relation to sales of Product in that country, and in such
            circumstances (or upon other cessation of a royalty obligation
            hereunder for a Product in a country in the Territory), Endo shall
            have a sub-licensable, fully paid-up, royalty free license to
            develop, make, have made, use, Commercialise and have Commercialised
            Product in the Territory under the Vernalis Know How.

      17.2  Each of the Parties (the "Terminating Party") shall have the right
            to terminate this Agreement for cause with immediate effect upon
            giving written notice of termination to the other (the "Defaulting
            Party") upon the occurrence of any of the following events at any
            time during this Agreement:

            17.2.1  the Defaulting Party commits a material breach of this
                    Agreement which shall not have been remedied (i) within
                    thirty (30) days of

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                    the receipt by it of a written notice from the other Party
                    identifying the breach and requiring its remedy, with
                    respect to any failure to pay amounts due pursuant to Clause
                    11 (except in the case of failure to pay amounts that are
                    subject to good faith dispute) and (ii) within ninety (90)
                    days of the receipt by it of a written notice from the other
                    Party identifying the breach and requiring its remedy, with
                    respect to any other material breaches; and

            17.2.2  if an Insolvency Event occurs in relation to the Defaulting
                    Party. In any event when a Party first becomes aware of the
                    likely occurrence of any Insolvency Event in regard to that
                    Party, it shall promptly so notify the other Party in
                    sufficient time to give the other Party sufficient notice to
                    protect its interests under this Agreement

      17.3  Endo shall have the right at any time to give twelve (12) months'
            notice of termination in writing to Vernalis if in Endo's sole
            opinion Endo decides not to proceed with this entire Agreement for
            whatever reason. including but not limited to safety, efficacy or
            other scientific or technical or strategic commercial or legal
            reasons. This Agreement shall terminate upon expiration of such
            twelve (12) month notice period. For the avoidance of doubt it is
            declared and agreed that any payments due and owing during such
            notice period shall continue to be due and payable.

      17.4  During any period during which notice has been given by Vernalis
            under Clause 17.2 or by Endo under Clause 17.3, Endo and its
            Affiliates shall do all such acts and things that Vernalis may
            reasonably require to prepare for the transition of the Product back
            to Vernalis as envisioned in Clause 18.1.

18.   CONSEQUENCES OF TERMINATION

                                     - 85 -
<PAGE>

      18.1  Upon a termination of this Agreement by Endo pursuant to Clause 17.3
            or by Vernalis pursuant to Clause 17.2 (for cause) (which the
            Parties agree shall not terminate the provisions of this Agreement
            expressed to survive its termination), Endo shall:

            18.1.1  have no further licenses under this Agreement and shall not
                    after the date of termination itself develop, manufacture,
                    have manufactured, use or Commercialise Product or otherwise
                    use the Vernalis IP, except that in the case of termination
                    by Vernalis under Clause 17.2 Endo shall have the right to
                    sell that part of its inventory of Product on hand as of the
                    date of termination which is the subject of orders for
                    Product accepted prior to the date of termination for a
                    period of six (6) months after the date of termination, and,
                    within thirty (30) days after disposition of such inventory
                    pursuant to the fulfilment of such orders, Endo will forward
                    to Vernalis a final report and pay all royalties due
                    hereunder for Net Sales of Product during such period;

            18.1.2  grant to Vernalis, to the extent Endo has rights to license
                    the same, an exclusive fully paid up royalty free
                    sub-licensable licence under any Endo IP (excluding the Endo
                    name, mark and associated logo) and Endo Copyright used
                    previously by Endo hereunder, solely to develop, have
                    developed, make, have made, use, have used and Commercialise
                    the Product in the Territory (including, for the avoidance
                    of doubt, all and any Product Enhancements made by Endo, its
                    Affiliates, distributors or contractors, but on such terms
                    to be agreed by the Parties negotiating in good faith) and
                    to use such Endo IP as necessary for this purpose. For the
                    avoidance of doubt it is declared and agreed that the
                    provisions of this Clause 18.1.2 shall not vary any previous
                    license granted by Endo under the provision of Clause 8.15;

                                     - 86 -
<PAGE>

            18.1.3  deliver up to Vernalis any Documents and Know How comprised
                    in such Endo IP and also any and all Vernalis IP;

            18.1.4  deliver up to Vernalis any and all stocks of Product in its
                    possession, power, custody or control subject always to
                    Endo's right to sell Product which is the subject of
                    pre-termination date orders pursuant to Clause 18.1.1;

            18.1.5  commensurate with legislative and regulatory requirements,
                    transfer to Vernalis or its nominee all Marketing
                    Authorisations, INDs, NDAs and other regulatory filings and
                    approvals for the Product. In the event that in any country
                    such a transfer is not possible, Endo shall use reasonable
                    endeavours to ensure that Vernalis has the benefit of the
                    relevant Marketing Authorisations, INDs, NDAs and other
                    regulatory filings and approvals and, to this end, consents
                    to any Regulatory Authority cross-referencing to the data
                    and information on file with any Regulatory Authority as may
                    be necessary to facilitate the granting of second Marketing
                    Authorisations, INDs, NDAs, regulatory filings and approvals
                    to Vernalis, and Endo agrees to complete whatever other
                    procedures are reasonably necessary in relation to the same
                    to enable Vernalis (either itself or in conjunction with a
                    Third Party) freely to develop and sell the Product in
                    substitution for Endo at Vernalis' expense;

            18.1.6  use its reasonable endeavours to assign to Vernalis the
                    benefit and burden of any agreement made between Endo and
                    any clinical researcher, contract manufacturer, managed care
                    provider or sub-licensee in relation to Product;

            18.1.7  transfer to Vernalis the Domain Name registrations;

            18.1.8  provide Vernalis with all reasonable assistance in relation
                    to Vernalis' appointment of a Third Party manufacturer of
                    Product;

                                     - 87 -
<PAGE>

            18.1.9  if Endo has itself been manufacturing Product, supply or
                    procure the supply to Vernalis with Product pursuant to the
                    terms of a manufacture and supply agreement to be agreed in
                    good faith between the Parties but at a cost of goods no
                    higher to Vernalis than Endo's fully absorbed costs
                    (calculated in accordance with GAAP) plus *** which
                    agreement shall contain an obligation on Endo to supply
                    Vernalis with its requirements of Product subject to the
                    capacity of manufacturing plant for at least two (2) years
                    following termination; and

            18.1.10 the provisions of Clauses 10, 11 (with respect to Endo's
                    sale of Product pursuant to Clause 18.1.1), 14, 15, 16 and
                    19 to 30 shall continue to apply.

      18.2  Upon the termination of this Agreement by Endo pursuant to Clause
            17.2 (termination for cause), the licenses granted to Endo
            hereunder, at Endo's sole option, shall continue to apply and:

            18.2.1  in the case of termination under Clause 17.2.1, such
                    licenses shall continue on the terms of this Agreement save
                    that Endo shall have a right to set off against the
                    royalties due under Clauses 11.9 and 11.12 any damages which
                    it establishes are due to it under the procedures set out in
                    Clause 22; and

            18.2.2  in the case of termination under Clause 17.2.2, such
                    licences shall continue on the terms of this Agreement.

19.   ASSIGNMENT/CHANGE OF CONTROL

      19.1  Neither this Agreement nor any interest hereunder (and in the case
            of Endo, the Endo IP or the Endo Copyright, the Product
            Registrations or any other Marketing Authorisations, INDs or NDAs
            relating to the Product) shall be assignable or transferable by
            either Party without the written consent of the other, such consent
            not to be unreasonably withheld or delayed, provided, however, that
            (i) Endo may assign this

                                     - 88 -
<PAGE>

            Agreement or any part of its rights and obligations hereunder, to
            any Affiliate, and (ii) Vernalis may assign this Agreement or any
            part of its rights and obligations hereunder, to any UK Affiliate,
            provided, however that in no event shall Vernalis transfer any
            right, title or interest in the Vernalis IP to an Affiliate that is
            not a UK Affiliate, and provided further that Endo shall have no
            increased liability under this Agreement which would not have arisen
            if such assignment had not occurred.

      19.2  Subject to the provisions of Clause 19.1 hereof, either Party may
            merge or consolidate with any corporation, or transfer all or
            substantially all of its assets to which this Agreement relates,
            without obtaining the consent of the other Party.

      19.3  Vernalis shall not, without the prior written consent of Endo, which
            shall not be unreasonably withheld, intentionally or otherwise and
            whether or not by reason of its own actions or omissions or those of
            others, change its "Centre of Main Interests" (that term having the
            meaning ascribed to it in the EC Regulation on Insolvency
            Proceedings 2000 (No. 1346/2000 of 29 May 2000) from England & Wales
            to elsewhere. It is hereby agreed that any Change of Control of
            Vernalis or Vernalis plc by a Person with a "Centre of Main
            Interests" outside England and Wales shall not be deemed a change in
            Vernalis' "Centre of Main Interests", provided that such Person
            continues Vernalis' business operations in connection with this
            Agreement in England and Wales.

20.   FORCE MAJEURE

      20.1  If a Party (the "Affected Party") is unable to carry out any of its
            obligations under this Agreement due to Force Majeure, this
            Agreement shall remain in effect but the Affected Party's relevant
            obligations under this Agreement and the corresponding obligations
            of the other Party ("Non-Affected Party") under this Agreement,
            shall be suspended for a period equal to the circumstance of Force
            Majeure provided that:

                                     - 89 -
<PAGE>

            20.1.1  the suspension of performance is of no greater scope than is
                    required by the Force Majeure;

            20.1.2  the Affected Party immediately gives the Non-Affected Party
                    prompt written notice describing the circumstance of Force
                    Majeure, including the nature of the occurrence and its
                    expected duration, and continues to furnish regular reports
                    during the period of Force Majeure and notifies the
                    Non-Affected Party immediately of the cessation of the Force
                    Majeure;

            20.1.3  the Affected Party uses all reasonable efforts to remedy its
                    inability to perform and to mitigate the effects of the
                    circumstance of Force Majeure; and

            20.1.4  as soon as practicable after the event which constitutes
                    Force Majeure the Parties discuss how best to continue their
                    operations as far as possible in accordance with this
                    Agreement.

      20.2  If the circumstance of Force Majeure prevail for a continuous period
            in excess of six (6) months, the Non-Affected Party may without
            prejudice to any other rights or remedies which may be available to
            it, terminate this Agreement with immediate effect by giving written
            notice of termination to the other Party. In the event of
            termination under this Clause 20.2 by Vernalis, the provisions of
            Clause 18.1 shall apply.

21.   GOVERNING LAW

      21.1  The validity, construction and interpretation of this Agreement and
            any determination of the performance which it requires shall be
            governed by the laws of the State of New York (without reference to
            New York choice of law rules).

22.   JURISDICTION AND DISPUTE RESOLUTION

      22.1  In the event of any material dispute concerning rights or
            obligations under this Agreement or in material breach of this
            Agreement then the

                                     - 90 -
<PAGE>

            Parties shall comply with the following procedure: the Chief
            Executive Officer of Vernalis and the Chief Executive Officer of
            Endo or their nominee shall be notified in writing of the dispute by
            either Party. They or their nominees shall meet to resolve the
            dispute in good faith. If such resolution is not reached within
            sixty (60) days of such written notice, then the provision of Clause
            22.2 shall apply.

      22.2  All disputes between the Parties arising under, out of or relating
            to this Agreement including its formation, validity, binding effect,
            interpretation, performance breach or termination as well as
            non-contractual claims and including disputes relating to
            pre-contractual representations shall, save as specified in Clauses
            11.16, 16.5 and 22.1 and Schedule 2, paragraphs 5 to 7, be
            exclusively settled by arbitration as follows:

            22.2.1  The arbitration shall be in accordance with the
                    International Arbitration Rules of the American Arbitration
                    Association ("AAA") in effect on the date of the filing of
                    the arbitration (the "Rules"). The seat of arbitration shall
                    be New York, NY;

            22.2.2  The number of arbitrators shall be three, chosen in
                    accordance with the procedures set out in Clauses 22.2.3 to
                    22.2.4 inclusive. The award of the arbitrators shall be
                    final and binding on the Parties;

            22.2.3  Each Party shall appoint one arbitrator. If within 30 days
                    after receipt of the claimant's notification of the
                    appointment of an arbitrator the respondent has not notified
                    the claimant of the arbitrator he appoints, the second
                    arbitrator shall be appointed by AAA;

            22.2.4  The two arbitrators so appointed shall choose a further
                    arbitrator who will act as the presiding arbitrator of the
                    tribunal. If within thirty (30) days of the appointment of
                    the second arbitrator the

                                     - 91 -
<PAGE>

                    two Party-appointed arbitrators have not agreed upon a
                    presiding arbitrator then the presiding arbitrator shall be
                    appointed by the AAA;

            22.2.5  During the course of the arbitration, each Party shall
                    provide to the other copies of Relevant Material. Relevant
                    Material is defined as all documents or other material
                    relevant to the matters at issue in the arbitration with the
                    exception of (i) communications to and from lawyers admitted
                    to practice law or practicing law (whether or not employed
                    by a Party) for the purpose of obtaining and giving legal
                    advice; (ii) communications between the Parties and/or their
                    respective advisers in relation to the terms of a settlement
                    of the particular dispute or disputes which is or are the
                    subject of the arbitration proceedings;

            22.2.6  The arbitrators may, if requested by one of the Parties,
                    order the preparation of lists of the Relevant Material for
                    initial evaluation by the requesting Party prior to
                    disclosure and/or inspection of the Relevant Material. The
                    arbitrators shall also have the power to order production of
                    the Relevant Material on whatever terms the arbitrators deem
                    fit including the need for production to take place on an
                    urgent basis and the reimbursement of all reasonable Costs
                    of production by the requesting Party to the furnishing
                    Party. Any dispute as to whether a particular document or
                    other material should be classified as Relevant Material or
                    otherwise disclosed in the course of the arbitration shall
                    be determined in the sole discretion of the arbitrators. The
                    classification of a document or other material as Relevant
                    Material shall not determine whether such material shall be
                    admissible in evidence in the arbitration. Questions of
                    admissibility shall be decided by the arbitrators in their
                    sole discretion. In the event that the parties seek to take
                    deposition discovery in the course of a proceeding, each
                    Party agrees that it will limit the number of depositions
                    that

                                     - 92 -
<PAGE>

                    it will take to 10 depositions, unless the arbitrators
                    determine that additional depositions are warranted;

            22.2.7  The arbitration shall be confidential. No Party shall use or
                    disclose any Relevant Material obtained under this paragraph
                    for any purpose except in the course of the conduct of the
                    arbitration and (as far as applicable) proceedings before
                    any court, and then only to the extent necessary for the
                    implementation and enforcement of any award of the
                    arbitrators;

            22.2.8  The seat of arbitration shall be New York, NY, although
                    hearings may take place in any other venue as the Parties
                    may agree. In rendering an award the arbitrators shall
                    follow the laws of the State of New York. The arbitrators
                    are not empowered to award punitive or exemplary damages,
                    and the Parties hereby waive any rights to any such damages;
                    and

            22.2.9  The arbitration award shall be final and binding on the
                    Parties and may be entered and enforced in any court having
                    jurisdiction over any Party or any of its assets.

      22.3  All submissions and awards in relation to arbitration hereunder
            shall be made in English and all arbitration proceedings shall be
            conducted in English.

23.   WAIVER

      23.1  Save as expressly provided in this Agreement, neither Party shall be
            deemed to have waived any of its rights or remedies whatsoever,
            unless the waiver is made in writing, signed by a duly authorised
            representative of that Party and may be given subject to any
            conditions thought fit by the grantor. Unless otherwise expressly
            stated, any waiver shall be effective only in the instance and for
            the purpose for which it is given.

24.   SEVERANCE OF TERMS

                                     - 93 -
<PAGE>

      24.1  If any provision(s) of this Agreement are or become invalid, are
            ruled illegal by any Court of competent jurisdiction or are deemed
            unenforceable under then current applicable law, it is the intention
            of the Parties that the remainder of this Agreement shall not be
            affected thereby, provided that a Party's rights are not materially
            affected. The Parties hereto covenant and agree to re-negotiate any
            such provision in good faith in order to provide a reasonably
            acceptable alternative to the provision that is invalid, illegal, or
            unenforceable, it being the intent of the Parties that the basic
            purposes of this Agreement are to be effectuated.

      24.2  If the whole or any part of this Agreement is or becomes or is
            declared illegal, invalid or unenforceable in any jurisdiction for
            any reason (including both by reason of the provisions of any
            legislation and also by reason of any decision of any court or
            Competent Authority which either has jurisdiction over this
            Agreement or has jurisdiction over any of the Parties):

            24.2.1  in the case of the illegality, invalidity or
                    un-enforceability of the whole of this Agreement, it shall
                    terminate in relation to the jurisdiction in question; or

            24.2.2  in the case of the illegality, invalidity or
                    un-enforceability of part of this Agreement, that part shall
                    be severed from this Agreement in the jurisdiction in
                    question and that illegality, invalidity or
                    un-enforceability shall not in any way whatsoever prejudice
                    or affect the remaining parts of this Agreement which shall
                    continue in full force and effect provided that the said
                    remaining parts continue to satisfy the commercial
                    intentions of the Parties and provided that the remaining
                    parts do constitute a substantial part of this Agreement and
                    provided that the provision of Clause 24.1 shall then apply.

25.   ENTIRE AGREEMENT/VARIATIONS

                                     - 94 -
<PAGE>

      25.1  This Agreement, together with the Loan Agreement ,the Security
            Agreement and the Safety Agreement, constitutes the entire agreement
            and understanding between the Parties and supersedes all prior oral
            or written understandings, arrangements, representations or
            agreements between them relating to the subject matter of this
            Agreement. The Parties acknowledge that no claims shall arise in
            respect of any understandings, arrangements, representations or
            agreements so superseded. No director, employee or agent of any
            Party is authorised to make any representation or warranty to
            another Party not contained in this Agreement, and each Party
            acknowledges that it has not relied on any such oral or written
            representations or warranties. Nothing in this Agreement removes or
            overrides any right of action by any Party in respect of any
            fraudulent misrepresentation, fraudulent concealment or other
            fraudulent action.

      25.2  Neither Party or its Affiliates shall represent itself as an agent
            of the other Party or its Affiliates for any purpose, nor pledge the
            other Party or its Affiliates' credit, or give any condition or
            warranty or make any representation on behalf of the other Party or
            its Affiliates, other than representations consistent with the
            Marketing Authorisations, or commit the other Party or its
            Affiliates to any contracts.

      25.3  No variation, amendments, modification or supplement to this
            Agreement shall be valid unless agreed in writing in the English
            language and signed by a duly authorised representative of each
            Party.

      25.4  All rights and licenses granted pursuant to this Agreement are, and
            shall otherwise be deemed to be, for purposes of 11 U.S.C. 365 (n)
            of the Bankruptcy Laws, licenses of rights to "intellectual
            property" as defined under 11 U.S.C. 101(35A) of the Bankruptcy
            Laws. The Parties agree that Endo, as a licensee of such rights
            under this Agreement, shall retain and may fully exercise all of its
            rights, including any right to enforce any exclusivity provision of
            this Agreement, remedies, and elections enforce

                                     - 95 -
<PAGE>

            any exclusivity provision of this Agreement, remedies, and elections
            under the Bankruptcy Laws. To the fullest extent permitted by law,
            the Parties further agree that, in the event of the commencement of
            a bankruptcy proceeding by or against Vernalis under the Bankruptcy
            Laws, Endo shall be entitled to all applicable rights under 11
            U.S.C. 365 (n) of the Bankruptcy Laws, including copies and access
            to, as appropriate, any such intellectual property and all
            embodiments of such intellectual property upon written request
            therefor by Endo, and such, if not already in its possession, shall
            be promptly delivered to Endo.

26.   NOTICES

      26.1  Any notice or other communication given pursuant to or made under or
            in connection with the matters contemplated by this Agreement shall
            be in writing in the English language and shall be delivered by
            courier, sent by post or sent by facsimile to the address or
            facsimile number of the recipient set out in Schedule 11 or as
            specified by the recipient from time to time in accordance with
            Clause 26.3. Notices sent by E-Mail shall not be valid of themselves
            and must be confirmed in hard copy form by courier, by post or
            facsimile.

      26.2  Any notice given pursuant to this Clause 26 shall be deemed to have
            been received:-

            26.2.1  if delivered by courier, at the time of delivery; or

            26.2.2  if sent by post:

                    (a)   where posted in the country of the addressee, on the
                          second working day following the day of posting, and

                    (b)   where posted in any other country, on the fifth
                          working day following the day of posting; or

            26.2.3  if sent by facsimile, on acknowledgement by the recipient
                    facsimile receiving equipment on a Business Day if the

                                     - 96 -
<PAGE>

                    acknowledgement occurs before 1700 hours local time on a
                    Business Day of the recipient and in any other case on the
                    following the Business Day.

      26.3  A Party may notify the other Parties to this Agreement of a change
            of its name, relevant addressee, address or facsimile number for the
            purposes of Schedule 11 provided that such notification shall only
            be effective on:

            26.3.1  the date specified in the notification as the date on which
                    the change is to take place; or

            26.3.2  if no date is specified or the date specified is less than
                    (five) clear Business Days after the date on which the
                    notice is given, the date falling five clear Business Days
                    after notice of any such change has been given.

      26.4  For the avoidance of doubt, the Parties agree that the provisions of
            this Clause 26 shall not apply in relation to the service of Service
            Documents (as defined in Clause 26.5).

      26.5  "Service Document" means a writ, summons, order, judgement or other
            document related to or in connection with any Court proceeding,
            cause, matter or action arising out of or connected in any way with
            this Agreement.

27.   COUNTERPARTS

      27.1  This Agreement may be executed in any number of counterparts and by
            the Parties on separate counterparts, each of which when so
            executed shall be an original of this Agreement, and all of which
            shall together constitute one and the same instrument. Complete
            sets of counterparts shall be lodged with each Party.

      27.2  Nothing in this Agreement and no action taken by the Parties
            pursuant to this Agreement shall constitute or be deemed to
            constitute a partnership, association, joint venture or other
            co-operative entity between the Parties

                                     - 97 -
<PAGE>

            and neither Party shall have any authority to bind the other in any
            way except as provided in this Agreement.

28.   COSTS

      28.1  Each Party shall bear its own costs, legal fees and other expenses
            incurred in the negotiation, preparation, execution and
            implementation of this Agreement and the documents referred to
            herein.

29.   ANNOUNCEMENTS

      29.1  No public announcements or other disclosure to third parties
            concerning the financial or other terms of this Agreement or
            financial or business information with respect to the other Party
            (including projections) shall be made, whether directly or
            indirectly, by either Party to this Agreement, except as may be
            legally required or as may be required for recording purposes,
            without first obtaining the approval of the other Party and
            agreement upon the nature and text of such announcement or
            disclosure, with the exception that:

            29.1.1 a Party may disclose the full terms of this Agreement to its
                   investment bankers, lawyers, accountants and other
                   professional advisors or a Third Party seeking to invest in,
                   lend funds to acquire or merge with or be acquired by such
                   Party without the other Party's prior approval provided that
                   such disclosure is made under terms of confidentiality
                   whether express or implied; and

            29.1.2 a Party may disclose the terms of this Agreement to any
                   securities exchange or regulatory authority or government
                   body to which either Party is subject or submits, wherever
                   situated, including (without limitation) the US Securities
                   Exchange Commission, the UK Stock Exchange or the Panel on
                   Take-overs and Mergers, whether or not the requirement has
                   the force of law provided that it takes advantage of all
                   provisions to keep confidential as many terms of this
                   Agreement as possible.

                                      - 98 -

<PAGE>

            29.2  In respect of those public announcements and disclosures not
                  permitted by Clause 29.1 and with the exception of
                  publications covered by Clause 6.2.3 and the agreed press
                  releases announcing this transaction, the Party desiring to
                  make any such public announcements or other disclosure shall
                  inform the other Party of the proposed announcements or
                  disclosure in reasonably sufficient time prior to public
                  release, and shall provide the other Party with a written copy
                  thereof, in order to allow such Party to comment upon such
                  announcement or disclosure, which comments shall be provided
                  by such other Party within *** Business Days. The Parties
                  shall jointly develop press releases and information materials
                  that can be used by either Party for presentations to
                  financial advisers and similar recipients.

            29.3  No Party shall make any public statement or communication in
                  derogation of the other Party, its officers, directors,
                  shareholders and Affiliates at any time.

                                      - 99 -

<PAGE>

IN WITNESS WHEREOF the Parties have executed this agreement the day and year
first above written.

SIGNED by Simon Sturge, Chief Executive Officer    )

for and on behalf of                               )     /s/  SIMON STURGE

VERNALIS DEVELOPMENT LIMITED                       )

SIGNED by Simon Sturge, Chief Executive Officer    )

for and on behalf of                               )     /s/  SIMON STURGE

VERNALIS PLC                                       )
(As Guarantor under Clause 14 hereof)

SIGNED by Carol A. Ammon, Chairman                 )
          and Chief Executive Officer

for and on behalf of                               )     /s/  CAROL AMMON

ENDO PHARMACEUTICALS INC.                          )

                                     - 100 -

<PAGE>

                                   SCHEDULE 1

                            INITIAL MARKETING BUDGET

<TABLE>
<CAPTION>
                                               ESTIMATED COMMITMENT
                                                (IN USD MILLIONS)
                           -------------------------------------------------------
Pre-MAM                    No-MAM APPROVAL             ***             ***     ***
-------                    ---------------             ---             ---     ---
<S>                        <C>                         <C>             <C>     <C>
Year 1
(2005)                           ***                   ***             ***     ***

Year 2
(2006)                           ***                   ***             ***     ***

Post-MAM

Year 1                           ***                   ***             ***     ***
(estimated ***)

Year 2                           ***                   ***             ***     ***
(estimated ***)
</TABLE>

***

***

***

                                     - 101 -

<PAGE>

                                   SCHEDULE 2

                               INVENTORY STATEMENT

1.    Immediately following the Closing Date Vernalis shall (at its cost) ensure
      that Vernalis' accountants prepare a statement (in the form of paragraph
      2) (the "INITIAL STATEMENT") specifying the amount of the Stock and the
      actual stock value valued in accordance with paragraph 2 which Vernalis
      owns on the proposed Closing Date. Vernalis shall supply a copy of the
      Initial Statement to Endo and Endo's accountants respectively and at the
      same time shall give them access to those assets, documents and records
      within Vernalis' possession or control which they may reasonably require
      for the purpose of agreeing the Initial Statement.

2.    The form of the Initial Statement (incorporating the values for different
      types of Stock) is as follows:

<TABLE>
<CAPTION>
                                                                             Expiration
                                   Units         Cost/Unit      Lot No.         Date
                                   -----         ---------      -------      ----------
<S>                                <C>           <C>            <C>          <C>
Frova 2.5mg 9 Count Blister        -----         ---------      -------      ----------
                                   -----         ---------      -------      ----------
Frova 2.5 mg Tab 2 count           -----         ---------      -------      ----------
                                   -----         ---------      -------      ----------
***                                -----         ---------      -------      ----------
                                   -----         ---------      -------      ----------
***                                -----         ---------      -------      ----------
                                   -----         ---------      -------      ----------
***                                -----         ---------      -------      ----------
                                   -----         ---------      -------      ----------
</TABLE>

3.    Within ten (10) days of receipt of the Initial Statement Endo shall notify
      Vernalis whether or not it agrees with the Initial Statement.

4     If Endo notifies its agreement with the Initial Statement within the ten
      (10) day period referred to in paragraph 3 or fails to give any
      notification within that period, the Initial Statement shall constitute
      the Inventory Statement. If Endo notifies Vernalis within the ten (10) day
      period referred to in paragraph 3 that it disagrees with the Initial
      Statement, paragraphs 5, 6 and 7 apply.

5.    If within ten (10) days starting on the day after receipt of the
      notification referred to in paragraph 4, Endo and Vernalis have not agreed
      the items in dispute in relation to the Initial Statement, either Party
      may refer the items in dispute to a

                                     - 102 -

<PAGE>

      partner of at least 10 years qualified experience at an internationally
      recognized independent accounting firm agreed by the Parties in writing,
      or failing agreement on the identity of the internationally recognized in
      depending accounting firm within fifteen (15) days starting on the day
      after receipt of the notification referred to in paragraph 4, an
      internationally recognized independent accounting firm appointed on the
      application of either Party by the President for the time being of the
      Institute of Chartered Accountants in England and Wales (the "EXPERT").

6.    The Expert shall act on the following basis:

      (a)   the Expert shall act as an expert and not as an arbitrator;

      (b)   the Expert's terms of reference shall be to determine the matters in
            dispute within 20 days of his appointment;

      (c)   the Parties shall each provide the Expert with all information
            relating to the items in dispute which the Expert reasonably
            requires and the Expert shall be entitled (to the extent he
            considers appropriate) to base his determination on such
            information;

      (d)   the decision of the Expert is, in the absence of fraud or manifest
            error, final and binding on the Parties; and

      (e)   the Expert's costs shall be paid by Endo and Vernalis as the Expert
            may determine.

7.    The Initial Statement, adjusted in accordance with the agreement, if any,
      between Endo and Vernalis pursuant to paragraph 5 and the decision of the
      Expert in accordance with paragraph 6 shall constitute the Inventory
      Statement and be final and binding on the Parties.

8.    For the avoidance of doubt, the Initial Statement shall not include, and
      Endo shall not acquire, any Stock of Frova 2.5 mg 9 Count Blister with an
      expiration date on or before the *** anniversary of the Signature Date.
      Vernalis shall destroy any such stock with an expiration date on or before
      the *** anniversary of the Signature Date promptly after the Closing Date.

9.    For the avoidance of doubt, the Initial Statement shall not include, and
      Endo shall not acquire, any stock of Frova 2.5 mg Tab 2 Count Blisters
      with an expiration date before the ***. Vernalis shall destroy any such
      stock with an expiration date before *** promptly after the Closing Date.
      Endo shall not acquire more than *** Frova 2.5 mg Tab 2 Count Blisters.

10.   Endo will retest any Stock set forth in Clauses 1.1.94(c), 1.1.94(d) and
      1.1.94(e) on or about the expiration date of such Stock. In the event that
      any re-tested Stock fails the re-test, Vernalis shall pay to Endo the Cost
      of such Stock within 30 days of notification of such failed retest.

                                     - 103 -

<PAGE>

                                   SCHEDULE 3

                      MAM & PAEDIATRIC DEVELOPMENT PROGRAM

Vernalis will complete the long-term safety trial in menstrual migraine
prophylaxis [PROTOCOL NUMBER: VML 251-3MAM03] entitled: "An open label study to
assess the safety, tolerability and efficacy of frovatriptan in the prevention
of menstrually-associated migraine (MAM) headaches"

Subject to agreement with FDA Vernalis will undertake the single efficacy trial
in menstrual migraine prophylaxis [PROTOCOL NUMBER: VML 251-3MAM02] as amended
following discussion with the FDA, entitled: "A double-blind,
placebo-controlled, parallel group study, with an open-label extension phase, to
assess the efficacy, tolerability and safety of oral frovatriptan in the
prevention of menstrually-associated migraine (MAM) headaches in a 'difficult to
treat' population"

Vernalis will undertake a single safety and a single efficacy trial of
frovatriptan as abortive therapy in paediatrics in accordance with FDA
requirements.

                                     - 104 -
<PAGE>

                                   SCHEDULE 4

                 MANAGED CARE AGREEMENTS AND ASSIGNED CONTRACTS

                             MANAGED CARE AGREEMENTS

<TABLE>
<S>                          <C>   <C>                        <C>
Elan Pharmaceuticals, Inc.   ***   Amended Formulary
                                   Reimbursement Agreement    ***
Elan Pharmaceuticals, Inc.   ***   Rebate Agreement           ***
Elan Pharmaceuticals, Inc.   ***   Rebate Agreement           ***
Elan Pharmaceuticals, Inc.   ***   Amended Rebate Agreement   ***
Elan Pharmaceuticals, Inc.   ***   Rebate Agreement           ***
Elan Pharmaceuticals, Inc.   ***   Rebate Agreement           ***
Elan Pharmaceuticals, Inc.   ***   Rebate Agreement           ***
Elan Pharmaceuticals, Inc.   ***   Rebate Agreement           ***
Vernalis                     ***   Rebate Agreement for
                                   Medicare Endorsed
                                   Discount Card Programs
Vernalis                     ***   Medicare Endorsed
                                   Prescription Drug
                                   Discount Card Agreement
Vernalis                     ***   Rebate Agreement for
                                   Medicare Endorsed
                                   Discount Card Program
</TABLE>

                                      - 105 -

<PAGE>

                                      - 106 -

<PAGE>

                 PHASE IV COMMITMENTS IN RELATION TO THE PRODUCT

Research Grant between Elan Pharmaceuticals, Inc. and New England Center for
Headache, effective December 30, 2003

Research Grant, between Elan Pharmaceuticals, Inc. and Diamond Headache Center,
effective December 30, 2003

                                     - 107 -

<PAGE>

                                   SCHEDULE 5
                       ESTIMATED DETAILING EFFORT(1)(2)(3)

<TABLE>
<CAPTION>
                          PRIMARY   SECONDARY
       PRE-MAM            DETAILS    DETAILS    TOTAL DETAILS   ANNUAL DETAILS
------------------        -------   ---------   -------------   --------------
                                                 (000S)
<S>                       <C>       <C>         <C>             <C>
         SPECIALTY          ***        ***           ***
YEAR ***                                                              ***
         PHARMA 1           ***        ***           ***

         SPECIALTY          ***        ***           ***
YEAR ***                                                              ***
         PHARMA 1           ***        ***           ***
</TABLE>

<TABLE>
<CAPTION>
                          PRIMARY   SECONDARY
      POST-MAM            DETAILS    DETAILS    TOTAL DETAILS   ANNUAL DETAILS
--------------------      -------   ---------   -------------   --------------
                                                 (000S)
<S>                       <C>       <C>         <C>             <C>
           SPECIALTY        ***        ***           ***
 YEAR ***
(ESTIMATED)                                                           ***
           PHARMA 1         ***        ***           ***

           PHARMA 2         ***        ***           ***

           SPECIALTY        ***        ***           ***
 YEAR ***
(ESTIMATED)                                                           ***
           PHARMA 1         ***        ***           ***

           PHARMA 2         ***        ***           ***
</TABLE>

(1)   Assumes full field force complement. To be adjusted for ***.

(2)   Includes total field force complement (including Vernalis field force
representatives for which Vernalis is reimbursed by Endo pursuant to Clause
9.1).

(3)   Table assumes *** (see Schedule 1 for definitions).

                                     - 108 -

<PAGE>

                                   SCHEDULE 6

                         SUPPLY AND TECHNICAL AGREEMENTS

1.    Supply Agreement between Elan Pharma International Limited and Oxford
      Asymmetry International PLC dated December 28 2000

2.    First Amendment to the Supply Agreement between Elan Pharma International
      Ltd and Evotec OIA Ltd, dated 1 January 2004

3.    Technical Agreement between Evotec OAI Ltd and Elan, dated 12 October 2003

4.    Frovatriptan Supply Agreement by and between Elan Pharma International
      Limited and Galen Limited dated as of January 1 2002

5.    Technical Agreement between Elan Pharmaceuticals, Inc. and Galen Limited
      dated July 2 2003

6.    Novation agreement dated 18th May, 2004 between Elan Pharma International
      Limited, Evotec OAI Limited and Vernalis Development Limited in respect of
      the supply agreement between Elan Pharma International Limited and Evotec
      OAI Limited (formerly Oxford Asymmetry International plc) dated 28th
      December, 2000.

7.    Novation agreement dated 18th May, 2004 between Elan Pharma International
      Limited, Galen Limited and Vernalis Development Limited in respect of the
      frovatriptan supply agreement between Elan Pharma International Limited
      and Galen Limited dated 1st January, 2002

                                     - 109 -

<PAGE>

                                   SCHEDULE 7

                                   FROVA LOGO

                                  [FROVA LOGO]

                                     - 110 -

<PAGE>

                                   SCHEDULE 8

                             VERNALIS PATENT RIGHTS

        US, CANADIAN (CA) AND MEXICAN (MX) PATENTS & PATENT APPLICATIONS

<TABLE>
<CAPTION>
Application No.   Application Date   Patent No.   Publication Date   Status
<S>               <C>                <C>          <C>                <C>
US167846             23.12.1993      US5464864       07.11.1995      Granted
US442719             15.05.1995      US5637611       10.06.1997      Granted
US442720             17.05.1995      US5827871       27.10.1998      Granted
US770926             23.12.1996      US5962501       05.10.1999      Granted
US781990             06.01.1997      US5917054       29.06.1999      Granted
US451898             26.05.1995      US5616603       01.04.1997      Granted
US446655             16.12.1993      US5618947       08.04.1997      Granted
US451846             26.05.1995      US5618948       08.04.1997      Granted
US689661             13.10.2000      US6359146       19.03.2002      Granted

CA2113726            17.06.1992      N/A             N/A             Pending
CA2152630            16.12.1993      N/A             N/A             Pending
CA2328345            16.04.1999      N/A             N/A             Pending

MX923444             26.06.1992      MX193793        22.10.1999      Granted
MX940035             03.01.1994      N/A             N/A             Pending
MX010127             16.04.1999      N/A             N/A             Pending
</TABLE>

                                     - 111 -

<PAGE>

                                   SCHEDULE 9

                         INFORMATION FOR MARKETING PLAN

(a)   Market analysis

(b)   Promotional activities to be carried out including:

      (i)   marketing effort in the form of conferences

      (ii)  advertising and promotional materials to be run and published

(c)   Sales forecasts: ***

                                     - 112 -

<PAGE>

                                   SCHEDULE 10

                               CO-PROMOTION TERMS

1.    Endo and Vernalis will form a Joint Co-Promotion team to co-ordinate the
      Parties' Co-promote activities ("Joint Co-Promotion Team"). Any disputes
      on the Joint Co-Promotion Team shall be promptly referred to the
      representative Heads of Marketing of the Parties for resolution. The Heads
      of Marketing shall use their best endeavours to resolve the dispute within
      thirty (30) days of the reference of the dispute to them, failing which
      Endo's decision shall be final. The Joint Co-Promotion Team shall be a
      channel for organising communication of Endo's sales and marketing plans
      to Vernalis and sales force liaison, including organising training on the
      promotion messages, marketing materials and training aids.

2.    Endo will determine, in consultation with the Joint Co-Promotion Team, the
      number of field sales force representatives necessary to carry out its
      Detailing effort. Endo shall notify Vernalis prior to *** of each year of
      any planned increase in the number of field sales force representatives
      dedicated to the Product for the following Year. Within 30 days of such
      notification, Vernalis shall notify Endo as to the number of Vernalis
      employees Vernalis desires to be included in the Specialty Sales Force for
      that Year.

3.    Endo may at its option and on terms to be agreed with Vernalis make
      available to Vernalis Endo's human resource group to assist Vernalis to
      hire the Vernalis Specialty Sales Personnel. Vernalis shall be the
      employer of all Vernalis Specialty Sales Personnel and shall be entirely
      responsible for the payment of all such Vernalis Specialty Sales Personnel
      salary, bonus and benefits, pension, insurance, social security and any
      other related obligations. Vernalis shall indemnify Endo in respect of any
      claim against Endo by any member of Vernalis Specialty Sales Personnel and
      in respect of any exposure of Endo for any tax or social security
      obligation in respect of Vernalis Specialty Sales Personnel. The
      geographic deployment of the Vernalis Specialty Sales Personnel shall be
      determined by Endo, subject to paragraph 4 below.

4.    The Joint Co-Promotion Team will devise a call plan for the Specialty
      Sales Force, which will allocate calls equitably, including in relation to
      decile, geographic location and key opinion leaders..

5.    In circumstances where Endo is required to preimburse Vernalis for the
      cost of Vernalis Specialty Sales Personnel, Endo shall pay Vernalis the
      Cost per Detail for each Detail made by Vernalis sales force
      representatives within 45 days of the end of each Quarter upon receipt of
      an invoice from Vernalis and a report specifying the number of Details
      carried out by it or upon its behalf during such Quarter. Such report
      shall be auditable by Endo on the terms of Clause 11.16 of the Agreement.

                                      - 113 -

<PAGE>

6.    All sales of the Product or MAM Product generated as a result of any of
      Vernalis co-promotion activities shall be booked by Endo and the
      appropriate royalty under the Agreement paid to Vernalis by Endo.

7.    Vernalis shall have the right to Co-promote for so long as Endo is
      Commercialising the Product in USA.

8.    Vernalis shall have the right to terminate its involvement in co-promotion
      on three (3) months notice to Endo.

9.    During the period in which Endo is required to reimburse Vernalis in
      respect of Vernalis Specialty Sales Personnel pursuant to Clause 9, in the
      event Vernalis fails to achieve the number of Details it has elected to
      undertake in any Year in any two consecutive Quarters or in any two of
      four Quarters, Endo may terminate Vernalis' right to Co-promote hereunder.

10.   The Co-Promotion arrangement described above shall be subject in all
      respects to Clause 9. All the terms of Clauses 15, 16, 20, 21, 22, 23, 24,
      25, 26, 28 and 29 shall apply to the co-promotion arrangement between the
      Parties.

                                     - 114 -

<PAGE>

                                   SCHEDULE 11

                              ADDRESSES FOR NOTICES

If to Endo:

       Endo Pharmaceuticals Inc.
       100 Painters Dr.
       Chadds Ford, PA 19317
       Attention: Chief Legal Officer
       Telecopy: 610-558-9684

With a copy to:

       Skadden, Arps, Slate, Meagher & Flom LLP
       Four Times Square
       New York, NY  10036
       Attention: Eileen Nugent and Bruce Goldner
       Telecopy: 212-735-2000

If to Vernalis:

       Vernalis Development Limited
       Oakdene Court
       613 Reading Road
       Winnersh
       Wokingham
       RG41 5UA
       United Kingdom
       Attention: Head of Legal Affairs

                                      - 115 -<PAGE>

                                                                  EXHIBIT 4.5(e)

                               DATED JULY 14, 2004

                                  US$50,000,000

                                 LOAN AGREEMENT

                                     BETWEEN

                                  VERNALIS PLC

                                    AS PARENT

                          VERNALIS DEVELOPMENT LIMITED

                                   AS BORROWER

                                       AND

                            ENDO PHARMACEUTICALS INC.

                                    AS LENDER

                    SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
                                 4 TIMES SQUARE
                               NEW YORK, NY 10036

<PAGE>

THIS AGREEMENT (this "AGREEMENT") is made the 14th day of July, 2004.

BETWEEN:

(1)   VERNALIS PLC a limited liability company incorporated in England and Wales
      with its registered office at Oakdene Court, 613 Reading Road, Winnersh,
      Wokingham, Berkshire RG41 5UA, United Kingdom (the "PARENT");

(2)   VERNALIS DEVELOPMENT LIMITED a limited liability company incorporated in
      England and Wales with its registered office at Oakdene Court, 613 Reading
      Road, Winnersh, Wokingham, Berkshire RG41 5UA, United Kingdom ("VDL"); and

(3)   ENDO PHARMACEUTICALS INC. whose principal place of business is at 100
      Painters Drive, Chadds Ford, PA 19317, USA ("ENDO").

WHEREAS Endo has agreed to make available to VDL a loan (the "LOAN") in
accordance with the terms hereof. VDL agrees, inter alia, to grant Endo security
over the Secured Assets in accordance with the terms of the Security Agreement
as a condition precedent to Endo agreeing to advance the Loan.

IT IS AGREED AS FOLLOWS:

1.    DEFINITIONS AND INTERPRETATION

1.1   DEFINITIONS

      In this Agreement:

      "ACT" means the Companies Act 1985, a United Kingdom statute.

      "ADVANCE" means the single drawing under this Agreement or (as the context
      requires) the aggregate of (i) the principal amount outstanding under this
      Agreement; and (ii) the aggregate of all Deemed Advances made available
      under this Agreement and then outstanding.

      "AVAILABILITY PERIOD" means the period from the date hereof, and ending on
      the earlier of (i) 30 days after the Closing Date (as that expression is
      defined in the License Agreement) and (ii) the date on which the License
      Agreement is terminated pursuant to clause 2.2 of the License Agreement.

      "BUSINESS DAY" means a day (other than a Saturday, Sunday or public
      holiday) on which banks are customarily open for business in London and
      New York.

      "CAPITAL STOCK" means any and all shares, interests, participations,
      rights or other equivalents (however designated) of corporate stock,
      including, without limitation, partnership interests.

      "CERTIFIED COPY" means a copy, certified to be a true, complete and
      up-to-date copy by or on behalf of the Parent and/or VDL (as the case may
      be) and the term "CERTIFIED COPIES" shall be construed accordingly.

      "CHANGE OF CONTROL" means a situation where any person or group of persons
      acting in concert obtains control of the Parent where:

                                       -1-
<PAGE>

      (a)   "acting in concert" has the meaning given to it in the City Code on
            Takeovers and Mergers; and

      (b)   "control" has the meaning given to it in section 416 of the Income
            and Corporations Taxes Act of 1988, a United Kingdom statute.

      "DEFAULT" means an Event of Default or a Potential Event of Default.

      "DEEMED ADVANCE" means, on any Interest Payment Date (as defined in Clause
      5.1.1) an amount equal to the interest accrued on the Advance but unpaid
      on that Interest Payment Date.

      "DRAWDOWN DATE" has the meaning given to that term in Clause 4(a).

      "DRAWDOWN NOTICE" means a drawdown notice in the form set out in
      Schedule 1.

      "ELAN OUTSTANDING LIABILITY" means the aggregate of all amounts owing
      (whether or not then due) to Elan Pharma International Limited by either
      or both of the Parent and VDL at the Drawdown Date.

      "ENDO" has the meaning given to that term in the preamble.

      "ENDO GROUP" means Endo, any person that holds 20% or more of the equity
      share capital of Endo and any direct or any indirect subsidiary of Endo
      (as such terms are defined in the Act).

      "EVENT OF DEFAULT" means any of the events specified in Clause 10.1.

      "EXISTING FLOATING CHARGE" means the floating charge dated 18 May 2004 and
      entered into between Elan Pharma International Limited and VDL.

      "FACILITY AMOUNT" has the meaning given to it in Clause 3.1.

      "FINAL REPAYMENT DATE" means the fifth anniversary of the date hereof;
      provided, that if prior to the fifth anniversary of the date hereof the
      License Agreement is terminated either (i) by VDL, exercising its rights
      as a Terminating Party under (and as that expression is defined in) Clause
      17.2 of the License Agreement or (ii) by Endo on expiry of twelve (12)
      months' notice given under Clause 17.3 of the License Agreement, the Final
      Repayment Date shall mean the fifth anniversary of the date hereof or, if
      later, the earlier of (x) the date falling five (5) years and six (6)
      months after the date hereof and (y) the date falling twelve (12) months
      after the date on which the License Agreement is terminated.

      "FINANCE DOCUMENTS" means each of this Agreement, the Security Agreement,
      a Drawdown Notice, any document executed by VDL pursuant to Clause 7(r),
      any notice or other document given under the Security Agreement and any
      other document designated as a "Finance Document" by Endo and VDL.

      "GROUP" means the Parent, VDL and each of its other subsidiaries from time
      to time.

      "INSOLVENCY EVENT" means in relation to any person, each of the following:

      (a)   Such person is unable or admits inability to pay its debts as they
            fall due or is deemed to or declared to be unable to pay its debts
            under applicable law, suspends or threatens to suspend making
            payments on any of its debts or, by reason of actual or

                                       -2-
<PAGE>

            anticipated financial difficulties, commences negotiations with one
            or more of its creditors with a view to rescheduling any of its
            indebtedness.

      (b)   The value of the assets of that person is less than its liabilities
            (taking into account contingent and prospective liabilities).

      (c)   A moratorium is declared in respect of any indebtedness of that
            person. If a moratorium occurs, the ending of the moratorium will
            not remedy any Event of Default caused by that moratorium.

      (d)   Any corporate action, legal proceedings or other procedure or step
            is taken in relation to:

            (i)   the suspension of payments, a moratorium of any indebtedness,
                  winding-up, dissolution, administration or reorganisation (by
                  way of voluntary arrangement, scheme of arrangement or
                  otherwise) of that person other than a solvent liquidation or
                  reorganisation of any person which is not an Obligor;

            (ii)  a composition, compromise, assignment or arrangement with any
                  creditor of that person;

            (iii) the appointment of a liquidator (other than in respect of a
                  solvent liquidation of a person which is not an Obligor),
                  receiver, administrative receiver, administrator, compulsory
                  manager or other similar officer in respect of that person or
                  any of its assets; or

            (iv)  enforcement of any security over any assets of that person,

            or any analogous procedure or step is taken in any jurisdiction.

      (e)   Paragraph (d) shall not apply to any winding-up petition which is
            frivolous or vexatious and is discharged, stayed or dismissed within
            14 days of commencement or, if earlier, the date on which it is
            advertised; or

      (f)   Any expropriation, attachment, sequestration, distress or execution
            or any analogous process in any jurisdiction affects any asset or
            assets of that person having an aggregate value of $500,000 and is
            not discharged within 7 days.

      "INTEREST RATE" means five percent (5%) per annum.

      "LICENSE AGREEMENT" means the License Agreement entered into between VDL
      and Endo on the date hereof in the agreed form.

      "LISTING RULES" means the listing rules of the UK Listing Authority.

      "MAM APPROVAL DATE" means the date of receipt of the Marketing
      Authorization in the USA of the Product for MAM (each term as defined in
      the License Agreement).

      "MAM APPROVAL DATE PREPAYMENT AMOUNT" has the meaning given to that term
      in Clause 3.3(b).

      "MATERIAL ADVERSE EFFECT" means, subject to the provisions of Clause 3.6,
      a material adverse effect on:

      (a)   the business, operations, property or financial condition of the
            Obligors taken as a whole (after taking into account the status of
            the Obligors as biotechnology

                                      -3-
<PAGE>

            companies having regard to their earnings since the first date of
            the period covered by the most recently published audited annual
            accounts of an Obligor and the ability to access capital markets
            they have at the time this definition is applied); or

      (b)   the ability of an Obligor to perform its obligations under the
            Finance Documents; or

      (c)   the validity or enforceability of, or the effectiveness or ranking
            of any security granted or purporting to be granted pursuant to any
            of the Finance Documents or the rights or remedies of Endo under any
            of the Finance Documents.

      "MILESTONE PAYMENTS" means the payment pursuant to Section 11.5.1 of the
      License Agreement.

      "NET DISPOSAL PROCEEDS" has the meaning given to that term in Clause
      3.3(c).

      "OBLIGATIONS" means all present and future obligations (whether actual or
      contingent) of VDL to Endo under the Finance Documents.

      "OBLIGORS" means the Parent and/or VDL, and "OBLIGOR" shall be construed
      accordingly.

      "PAYMENT DATE" has the meaning given to that term in Clause 3.3(a).

      "PERMITTED LIEN" means:

      (a)   liens for Taxes provided such Taxes are not overdue;

      (b)   liens arising by operation of law in the ordinary course of trading
            or day to day business in whatever jurisdiction and statutory liens
            of landlords and liens of carriers, warehousemen, mechanics,
            materialmen and other similar liens, in each case, incurred in the
            ordinary course of business, provided such liens are not securing
            any amount more than 30 days overdue;

      (c)   any security arising under the Security Agreement;

      (d)   any right of a bank to set-off deposits against debts owed to such
            bank existing as a matter of law or arising pursuant to any
            agreement customarily entered into by such bank and its depositors
            in connection with a cash management scheme;

      (e)   any title transfer or retention of title arrangement entered into by
            VDL in the normal course of its trading activities on the
            counterparty's standard or usual terms;

      (f)   any security created or subsisting with the prior consent of Endo;

      (g)   up to and including the Drawdown Date, the Existing Floating Charge;
            and

      (h)   the mortgage on VDL's property at Watlington Road, Oxford OX4 6LY
            England (the "MORTGAGED REAL ESTATE") in favour of Canada Life
            Assurance Company, provided that the amount secured thereby does not
            exceed (pound)2 million at any time, recourse in respect of such
            debt is just to the Mortgaged Real Estate and such mortgage is
            discharged and released and the debt which it secures is repaid in
            full out of (i) the proceeds of the disposal of the Oxford Property
            plus (ii) not more than (pound)500,000 from other resources.

      "POTENTIAL EVENT OF DEFAULT" means any event or circumstance which, with
      the giving of notice, lapse of time or making of any determination, would
      become an Event of Default.

                                       -4-
<PAGE>

      "QUALIFYING LENDER" means a company which at the time the payment is made
      is beneficially entitled to the interest payable to it under the Finance
      Documents and is entitled under a double taxation agreement in force at
      that date (subject only to the completion of any necessary formalities or
      administrative procedures, (including, without limitation, the matters
      referred to in Clause 12.3(c)) to receive any payments of interest under
      the Finance Documents without a Tax Deduction.

      "RELEVANT ASSETS" means the Vernalis IP (as defined in the License
      Agreement) and the payments to be made by Endo to VDL pursuant to Clause
      11 of the License Agreement.

      "ROYALTY PAYMENT" has the meaning given to that term in Clause 3.3(a).

      "SATISFACTORY PURCHASER" has the meaning given to that term in Clause
      3.3(e).

      "SECURITY AGREEMENT" means the security deed to be entered into between
      VDL and Endo in the form set out in Schedule 2 as a condition precedent to
      Endo making the Advance.

      "SECURED ASSETS" means the assets subject to the security constituted by
      the Security Agreement.

      "TAX" means any tax, levy, impost, duty, or other fee, charge or
      withholding of a similar nature (including any penalty or interest payable
      in connection with any failure to pay or any delay in paying the same),
      and "Taxes" and "Taxing" shall be construed accordingly.

      "TAX DEDUCTION" means a withholding or deduction for or on account of Tax.

      "TERM" means the period beginning on the date hereof and ending on the
      date on which all amounts outstanding under the Finance Documents are
      repaid.

      "TRANSACTION DOCUMENTS" means each of the Finance Documents and the
      License Agreement.

      "UK LISTING AUTHORITY" means the Financial Services Authority acting in
      its capacity as the competent authority for the purposes of Part VI of the
      Financial Services and Markets Act 2000, a United Kingdom statute.

      "VDL" has the meaning given to that term in the preamble.

1.2   HEADINGS

      In this Agreement, the headings shall not affect its interpretation and
      are for ease of reference only.

1.3   INTERPRETATION

      In this Agreement (unless otherwise provided):

      (a)   words importing the singular shall include the plural and vice
            versa;

      (b)   words importing one gender shall include all genders;

      (c)   references to Clauses and Schedules are to be construed as
            references to the Clauses of, and Schedules to, this Agreement
            unless otherwise specifically provided;

                                       -5-
<PAGE>

      (d)   references to this Agreement or any other document shall be
            construed as references to this Agreement or that other document, as
            amended, varied, novated or supplemented from time to time;

      (e)   references to any statute or statutory provision include any statute
            or statutory provision which amends, extends, consolidates or
            replaces the same, or which has been amended, extended, consolidated
            or replaced by the same, and shall include any orders, regulations,
            instruments or other subordinate legislation made under the relevant
            statute;

      (f)   the words "INCLUDING" and "IN PARTICULAR" shall be construed as
            being by way of illustration or emphasis only and shall not be
            construed as, nor shall they take effect as, limiting the generality
            of any preceding words;

      (g)   the words "OTHER" and "OTHERWISE" shall not be construed ejusdem
            generis with any foregoing words where a wider construction is
            possible;

      (h)   references to a person shall be construed so as to include that
            person's assigns, transferees or successors in title and shall be
            construed as including references to an individual, firm,
            partnership, joint venture, company, corporation, body corporate,
            unincorporated body of persons or any state or any agency of a
            state;

      (i)   references to a "DRAWING" are to the drawing of the Advance under
            this Agreement;

      (j)   references to a document in "AGREED FORM" are to the form of the
            relevant document which has been initialled for the purposes of
            identification by or on behalf of Endo and VDL on or prior to the
            date of this Agreement;

      (k)   the terms "SUBSIDIARY" and "HOLDING COMPANY" have the meaning
            ascribed thereto in the Act;

      (l)   "INDEBTEDNESS" means any indebtedness for or in respect of:

            (i)   moneys borrowed;

            (ii)  any amount raised by acceptance under any acceptance credit
                  facility;

            (iii) any amount raised pursuant to any note purchase facility or
                  the issue of bonds, notes, debentures, loan stock, preferred
                  stock, redeemable stock or any similar instrument;

            (iv)  the amount of any liability in respect of any lease or hire
                  purchase contract which would, in accordance with generally
                  accepted accounting principles in England, be treated as a
                  finance or capital lease;

            (v)   receivables sold or discounted (other than any receivables to
                  the extent they are sold on a non-recourse basis);

            (vi)  any amount raised under any other transaction (including any
                  forward sale or purchase agreement) having the commercial
                  effect of a borrowing;

            (vii) for the purposes of Clause 10.1(g) only, any derivative
                  transaction entered into in connection with protection against
                  or benefit from fluctuation in any rate or price (and, when
                  calculating the value of any derivative transaction, only the

                                      -6-
<PAGE>

                  marked to market value shall be taken into account);

            (viii) any counter-indemnity obligation in respect of a guarantee,
                   indemnity, bond, standby or documentary letter of credit or
                   any other instrument issued by a bank or financial
                   institution; and

            (ix)   the amount of any liability in respect of any guarantee or
                   indemnity for any of the items referred to in paragraphs (i)
                   to (viii) inclusive above.

      (m)   "LIEN" shall have the meaning given to that expression by English
            law.

      (n)   "SECURITY" means mortgage, charge, pledge, lien or other security
            interest securing any obligation of any person or any other
            agreement or arrangement having a similar effect;

      (o)   "ASSETS" includes present and future properties, revenues and rights
            of every description; and

      (p)   "US$" and "DOLLARS" shall mean the lawful currency of the United
            States of America ("USA").

2.    CONDITIONS PRECEDENT

2.1   CONDITIONS PRECEDENT - GENERAL

      The obligations of Endo with respect to the making of the Advance
      hereunder are subject to the conditions precedent that Endo shall have
      received the following in form and substance reasonably satisfactory to
      it:

      (a)   an original copy of this Agreement duly signed by VDL and the
            Parent;

      (b)   Certified Copies of each of the Parent's and VDL's certificate of
            incorporation, certificate of incorporation on change of name (if
            any) and Memorandum and Articles of Association;

      (c)   Certified Copies of the resolutions of each of the Parent's and
            VDL's board of directors authorising the execution and delivery of
            the Transaction Documents to which it is a party and the performance
            of the transactions contemplated thereby;

      (d)   written confirmation from Elan Pharma International Limited dated no
            earlier than the Drawdown Date of the amount of the Elan Outstanding
            Liability (being an amount less than the Facility Amount), of the
            account details to which such payment should be made, and that upon
            payment of such amount the Existing Floating Charge shall be
            immediately discharged and released;

      (e)   a deed of discharge and release in respect of the Existing Floating
            Charge executed by Elan Pharma International Limited held to its
            order on terms that are reasonably satisfactory to Endo but which in
            any event are irrevocable and provide for the automatic and
            immediate release and delivery of the deed of discharge to VDL upon
            payment of the amount referred to in paragraph 2.1(d);

      (f)   two originals of the Security Agreement, duly executed and delivered
            by VDL, and the security constituted by the Security Agreement being
            in full force and effect and perfected in accordance with its terms;

                                       -7-
<PAGE>

      (g)   two originals of the License Agreement, duly executed by VDL;

      (h)   a certificate from an officer of VDL confirming that the Closing
            Date under and as defined in the License Agreement has occurred;

      (i)   evidence that, VDL will discharge all Elan Outstanding Liability out
            of the Advance (which evidence may take the form of an appropriately
            completed Drawdown Notice);

      (j)   a Certified Copy of the most recently prepared consolidated monthly
            management accounts of, the Parent (comprising at least a balance
            sheet, income statement and cash flow statement for such month and
            the year to date);

      (k)   legal opinions from Morrison & Foerster MNP and Morrison & Foerster
            LLP, (respectively) counsel to VDL and the Parent, in respect of the
            Finance Documents; and

      (l)   an ordinary resolution of the shareholders of VDL authorizing the
            Advance.

2.2   FURTHER CONDITIONS PRECEDENT TO THE ADVANCE

      The obligations of Endo with respect to the making of the Advance under
      this Agreement are subject to the further conditions precedent that:

      (a)   Endo shall have received a duly completed Drawdown Notice; and

      (b)   both at the date of the relevant Drawdown Notice and the Drawdown
            Date:

            (i)   the matters represented and warranted by each Obligor in
                  Clause 6 are true and correct at that time as if made at that
                  time and will be true and correct immediately after the
                  drawing has been made;

            (ii)  no Default has occurred and is continuing; and

            (iii) the principal amount of the proposed drawing, does not exceed
                  the Facility Amount.

3.    AMOUNT, REPAYMENT, CANCELLATION AND PURPOSE

3.1   FACILITY AMOUNT

      The aggregate principal amount available to be drawn under this Agreement
      is US$50,000,000 (fifty million Dollars) (the "FACILITY AMOUNT"). In
      addition to the Facility Amount, Endo shall also make the Deemed Advances
      available to VDL but only on the basis set out in Clause 5.

3.2   REPAYMENT

      The Advance shall be repaid in full on or before the Final Repayment Date.
      Voluntary repayments are permitted in whole or in part without premium,
      make-whole or penalty.

                                       -8-
<PAGE>

3.3   MANDATORY PREPAYMENT AND SET-OFF

      (a)   Endo may, by written notice to VDL at least five (5) Business Days
            prior to any payment pursuant to clause 11.9 of the License
            Agreement (a "ROYALTY PAYMENT") require VDL to make a mandatory
            prepayment of all or any part of the Advance on the date such
            Royalty Payment is due under the License Agreement (each a "PAYMENT
            DATE"), in an amount (the "MANDATORY PREPAYMENT AMOUNT") not greater
            than fifty percent (50%) (or, following the occurrence of a Material
            Adverse Effect, not greater than seventy five percent (75%)) of the
            Royalty Payment then due on that date. VDL and Endo agree that any
            Mandatory Prepayment Amount then due on such Payment Date from VDL
            shall be set-off against and reduce the Royalty Payment then due by
            Endo to VDL, the balance of which Royalty Payment shall be paid to
            VDL or otherwise dealt with in accordance with the terms of the
            License Agreement or as those parties shall have otherwise agreed.

      (b)   On the MAM Approval Date, if Endo so requires by giving not less
            than five (5) Business Days written notice to VDL, VDL shall be
            required to make a mandatory prepayment of an amount not greater
            than fifty percent (50%) (or, following the occurrence of a Material
            Adverse Effect, not greater than seventy five percent (75%)) of the
            Milestone Payment due on such date pursuant to Clause 11.5 of the
            License Agreement (the "MAM APPROVAL DATE PREPAYMENT AMOUNT"). VDL
            and Endo agree that the MAM Approval Date Prepayment Amount then due
            to Endo from VDL shall be set-off against and reduce the amounts
            then due by Endo to VDL as the Milestone Payment due on the MAM
            Approval Date and the balance of any such moneys then due and
            payable by Endo to VDL shall be paid to VDL or otherwise dealt with
            in accordance with the terms of the License Agreement or as those
            parties shall have otherwise agreed.

      (c)   Without prejudice to any other provisions of the Finance Documents,
            VDL and the Parent shall apply fifty percent (50%) of all Net
            Disposal Proceeds in mandatory prepayment of the Advance and all
            other sums outstanding under the Finance Documents immediately upon
            receipt of the same by any member of the Group. For these purposes:

            "NET DISPOSAL PROCEEDS" means all cash and other consideration (and
            in respect of non-cash consideration, the market value thereof shall
            be taken into account) including the assumption or repayment of debt
            paid to or to the order of any member of the Group in connection
            with an MP Disposal by it less any costs, expenses and taxes
            incurred to persons other than members of the Group in connection
            with such MP Disposal which are documented and reasonably and
            properly incurred and which are customary in nature and amount for
            such type of disposal; and

            "MP DISPOSAL" means any voluntary or involuntary sale, lease,
            transfer or other disposal of any asset of any member of the Group
            save for (i) the granting of intellectual property licenses in the
            ordinary course of business, (ii) a disposal of the type permitted
            by Clause 7(l), (iii) the disposal of VDL's property at Watlington
            Road, Oxford OX4 6LY England, (iv) MP Disposals not referred to in
            paragraphs (i)-(iii) where the aggregate Net Disposal Proceeds of
            all such MP Disposals in any financial year does not exceed $1
            million provided that, for the avoidance of doubt, only such excess
            shall be taken into account for the purposes of this Clause 3.3(c),
            and (v) any disposition where the provisions of Clause 3.3(e) apply.

                                       -9-
<PAGE>

      (d)   If VDL defaults in the payment of any amount of principal or
            interest or otherwise on the due date for such payment, Endo may,
            without prejudice to any other remedy which may be available to it,
            reduce any amounts owing or due to be made by Endo under the License
            Agreement by an amount equal to the amount in default, and, so long
            as no Event of Default is outstanding, Endo agrees to notify VDL in
            writing promptly upon so doing.

      (e)   Immediately upon the occurrence of the sale of the whole or
            substantially the whole of the Group's or VDL's business and assets
            other than to a single Satisfactory Purchaser (in which event the
            terms of Clause 3.3(c) shall not apply and no payment otherwise
            required thereby shall be due), Endo's commitment hereunder shall be
            cancelled in full and VDL shall repay the Advance in full together
            with interest thereon and all other amounts accrued and owing by the
            Obligors under the Finance Documents.

            A "SATISFACTORY PURCHASER" shall mean a company which:

            (i)   having regard to all the circumstances, including its assets
                  and liabilities (actual and contingent), has, and provides,
                  Endo with evidence that such company has a credit worthiness
                  such that its ability to meet the payment obligations under
                  the Finance Documents is at least equal to that of VDL and the
                  Parent, and

            (ii)  (x) acquires all rights and obligations in respect of the
                  Relevant Assets and acquires all VDL's rights and obligations
                  under the License Agreement, this Agreement and the other
                  Finance Documents, (y) expressly confirms (and executes such
                  documents as Endo reasonably requires to evidence) (1) the
                  continuation or novation of all the terms of such Transaction
                  Documents (including any principles of set-off), and (2) that
                  the security over the Secured Assets survives and remains
                  unaffected by the acquisition or is replaced with
                  substantially equivalent security over the Secured Assets with
                  the Satisfactory Purchaser as grantor of such replacement
                  security (or with such variations as Endo reasonably agrees)
                  (and with Endo being satisfied that any such new security will
                  not be subject to any "hardening" or "suspect" periods (as
                  those expressions are generally understood by United Kingdom
                  insolvency practitioners)), and (z) provides Endo with such
                  opinion of outside counsel as Endo reasonably requires (in
                  form and content reasonably satisfactory to Endo) confirming
                  the corporate status of such acquiring company, the legality,
                  validity, binding effect and enforceability of the Transaction
                  Documents (or replacements thereof) on the acquiring company,
                  and that the continuation of the security remains unaffected
                  by the acquisition or (in the case of the replacement of such
                  security) that the new security provides substantially
                  equivalent security over the Secured Assets; and Endo has
                  received satisfactory legal advice that its rights to set-off
                  are not adversely affected by such acquisition;

            provided that if there is any dispute as to whether a person meets
            the test in paragraph (i) of the definition of a "Satisfactory
            Purchaser", such matter shall be referred to a "Panel" (as defined
            in Clause 3.6 below) and a person shall only be regarded as
            satisfying the test in paragraph (i) above once the Panel has so
            determined and for

                                      -10-
<PAGE>

            these purposes, the procedures specified in Clause 3.6 for
            determining a Material Adverse Effect shall apply mutatis mutandis
            (with the procedure being capable of being started by either VDL or
            Endo) save that under all circumstances the fees and expenses shall
            be paid by VDL;

      (f)   No Advance prepaid may be re-drawn. Notice of prepayment is
            irrevocable.

3.4   CANCELLATION

      For the avoidance of doubt, VDL shall not be permitted to draw down any
      undrawn portion of the Facility Amount following the expiry of the
      Availability Period, and thereafter, Endo shall have no obligation to make
      any further advances hereunder.

3.5   PURPOSE

      VDL shall use the proceeds of the Advance first to discharge all Elan
      Outstanding Liability and thereby effect a release and discharge of the
      Existing Floating Charge and, thereafter, the balance for general
      corporate purposes.

3.6   PANEL

      As used herein, the term "EXPERT" means the London branch or office of an
      independent investment bank regulated in both the United States and the
      United Kingdom with specific expertise in both the United States and
      United Kingdom capital markets for biotechnology and pharmaceutical
      companies.

      If Endo believes that events constituting a Material Adverse Effect have
      occurred and are continuing, or if there is a dispute as to whether a
      person is a "Satisfactory Purchaser", Endo shall promptly notify VDL
      making express reference to this Clause 3.6, and provide a written
      explanation in reasonable detail of the basis therefor to VDL. Unless VDL
      acknowledges that it agrees with Endo, both VDL and Endo shall arrange for
      an in-person meeting or a telephone conference call between their
      respective presidents or chief executive officers or officers of similar
      status within five (5) Business Days after VDL's receipt of such notice.
      If following such meeting or call, the parties continue to disagree, each
      of Endo and VDL shall, within five (5) Business Days after such meeting,
      by giving written notice to the other party, propose a party as an
      "Expert". The Endo Expert and the VDL Expert shall together choose a third
      Expert and all decisions shall be made by a majority of the three Experts
      so chosen (the three Experts, are hereinafter referred to as the "PANEL").
      The Panel shall be provided with such information as it shall reasonably
      request, subject to applicable confidentiality restrictions. The Panel
      shall be instructed to make a decision as to whether a Material Adverse
      Effect shall have occurred as soon as reasonably practicable after
      receiving all relevant data and information, but in any event not more
      than fourteen (14) days after its engagement. The Panel shall be
      instructed to give a full written explanation of its decision. All
      communications between the parties hereto and the Panel shall be made in
      writing and a copy thereof provided simultaneously to the other parties
      hereto. No meeting between the Panel and the parties hereto shall take
      place unless all the parties have a reasonable opportunity to attend such
      meeting. Except as set forth in Clause 3.3(e), all fees and expenses of
      the Panel shall be paid by Endo, provided that if the Panel determines
      that a Material Adverse Effect has occurred, all such fees and expenses
      shall be paid by VDL.

4.    DRAWING

      Subject to Clause 2:

                                      -11-
<PAGE>

      (a)   VDL may make a drawing under this Agreement on one Business Day
            during the Availability Period, provided that VDL shall inform Endo
            of such proposed date of drawing (the "DRAWDOWN DATE"), by delivery
            to Endo of a Drawdown Notice by no later than 11.00 a.m. on the
            fifth Business Day prior to the Drawdown Date. Once notice has been
            given it may not be revoked and shall oblige VDL to borrow the
            stated amount on the Drawdown Date specified in the Drawdown Notice;

      (b)   the drawing shall be in a single amount not exceeding US$50,000,000
            (fifty million Dollars); and

      (c)   only one drawing may be made.

5.    INTEREST AND COMMITMENT FEES

5.1   INTEREST RATE

      5.1.1 Interest shall accrue at the Interest Rate on the principal amount
            drawn down plus the aggregate amount of Deemed Advances made
            available under Clause 5.1.2 below. Interest will be paid
            semi-annually in arrear on each 31 July and 31 January throughout
            the Term (each an "INTEREST PAYMENT DATE"), provided that accrued
            interest on the Advance shall be paid on the Final Repayment Date or
            the date on which the Advance is prepaid in full, if earlier, in
            respect of the period from the most recent Interest Payment Date to
            the date of such repayment or prepayment. Interest shall accrue from
            day to day and shall be calculated on the basis of a year of 365
            days and for the actual number of days elapsed.

      5.1.2 Subject as provided elsewhere in this Agreement, provided VDL has
            given Endo written notice (the "DEEMED ADVANCE NOTICE") of its
            intention to exercise its option under this Clause 5.1.2 at least
            five (5) Business Days before the relevant Interest Payment Date,
            Endo shall (subject always to the provisions of Clauses 5.1.3 and
            5.1.4) make to VDL on the relevant Interest Payment Date a Deemed
            Advance in an amount equal to the amount of interest accrued under
            Clause 5.1.1 above but unpaid on that Interest Payment Date (such
            interest being "ACCRUED INTEREST").

      5.1.3 Each Deemed Advance is made available on its relevant Interest
            Payment Date subject to satisfaction of each of the following
            conditions:

            (a)   the Deemed Advance shall be applied only by way of set-off
                  against the Accrued Interest due on that Interest Payment Date
                  (which application is irrevocably authorized by VDL); and

            (b)   notwithstanding anything else contained in the Finance
                  Documents, Endo shall not be required to make any part of any
                  Deemed Advance available by the disbursement of money or
                  otherwise than by set-off as referred to in 5.1.3(a); and

            (c)   no Event of Default has occurred and is outstanding on the
                  relevant Interest Payment Date.

      5.1.4 If any of the conditions in Clause 5.1.3 are not met in respect of a
            Deemed Advance on an Interest Payment Date (including, for the
            avoidance of doubt, if for any reason the set-off arrangements
            described therein are not effective), the provisions of Clause 5.1.2
            shall not apply and the Deemed Advance shall not be made available.

                                      -12-
<PAGE>

5.2   DEFAULT INTEREST

      5.2.1 If VDL fails to pay any amount payable by it under this Agreement,
            VDL shall pay default interest on an Advance to Endo from the due
            date to the date of actual payment (but exclusive of such dates) in
            full before, as well as after, judgment at the rate per annum of the
            Interest Rate plus one percent (1%).

      5.2.2 So long as the default set out in Clause 5.2.1 continues, unpaid
            interest then payable but unpaid under this Clause shall be
            compounded quarterly but shall remain payable on demand.

6.    REPRESENTATIONS AND WARRANTIES

6.1   REPRESENTATIONS AND WARRANTIES

      Each Obligor represents and warrants on the date of this Agreement and
      (other than in respect of 6.1(h), which representation shall be repeated
      in respect of those accounts delivered pursuant to Clauses 2.1(k) and 7
      only on the date of delivery of such accounts) on each Interest Payment
      Date throughout the period of the Term in relation to which a Deemed
      Advance Notice has been given that:

      (a)   it is and will remain a company duly incorporated under the laws of
            England and Wales, validly existing and having full corporate
            capacity to carry on its business as conducted at any time, to own
            its assets, to enter into and perform its obligations under each of
            the Transaction Documents to which it is a party which constitute
            and will constitute its legal, valid and binding obligations, and to
            incur the indebtedness contemplated by this Agreement;

      (b)   it has obtained and shall maintain in effect all necessary
            corporate, shareholder and other authorisations and all other
            necessary consents, licenses, exemptions and authorisations in
            connection with the Transaction Documents to which it is a party;

      (c)   execution of this Agreement, execution and delivery of the Security
            Agreement and the utilisation of the Facility Amount and the
            performance of its obligations under the Transaction Documents to
            which it is a party does not and shall not constitute a default
            (howsoever described) or a breach of any law or regulation or of its
            memorandum and articles of association or of any limitation on the
            powers of its directors or of the terms of any charge, agreement,
            undertaking or restriction to which it is a party or which is
            binding on it;

      (d)   no Default has occurred and is continuing;

      (e)   it is not in default under any agreement to which it is a party or
            which is binding upon it or any of its assets which is reasonably
            likely to have a material and adverse effect on its business,
            financial condition, assets or its ability to perform its
            obligations under this Agreement;

      (f)   no litigation, arbitration or proceeding is taking place, pending,
            or to the best of the its knowledge and belief, threatened in
            writing against it or any of its assets which is reasonably likely
            to be adversely determined against it and which if adversely
            determined would have a material and adverse effect on its ability
            to perform its obligations under the Transaction Documents or its
            assets, financial condition or prospects; provided, that when
            repeated, this representation and warranty shall be repeated as if
            the words "or prospects" were deleted;

                                      -13-

<PAGE>

      (g)   it has taken no action, and no steps have been taken or legal
            proceedings started or (to the actual knowledge of any of its
            directors) threatened against it, for an administration or
            winding-up order to be made against it or for its dissolution or
            reorganisation or for the appointment of a receiver, administrative
            receiver, administrator, liquidator, supervisor, trustee or similar
            officer over, or for the taking into possession or enforcement of
            security by any person, mortgagee or chargee in respect of, all or
            any part of its assets, undertaking or revenues nor has any
            analogous event occurred in any jurisdiction nor (to the actual
            knowledge of any of its directors) are there any circumstances which
            would entitle any person or the court to take any such action nor
            has any event occurred causing or which may cause any floating
            charge created by it to crystallise over any of its assets or any
            charge created by it to become enforceable over any of its assets
            nor has any such crystallisation occurred nor is any such
            enforcement in process;

      (h)   the annual accounts most recently published prior to the date of
            this Agreement and the accounts delivered to Endo pursuant to
            Clauses 2.1(k) and 7 present a true and fair view of (in the case of
            audited accounts) or disclose with reasonable accuracy (in other
            cases) its financial condition during the period for which such
            accounts were prepared and have been prepared in accordance with
            accounting practices and principles generally accepted in the United
            Kingdom and consistently applied;

      (i)   for the purposes of The Council of the European Union Regulation No.
            1346/2000 on Insolvency Proceedings (the "REGULATION"), its centre
            of main interest (as that term is used in Article 3(1) of the
            Regulation) is and will remain situated in England and Wales; and

      (j)   the amount of the Elan Outstanding Liability is less than the
            Facility Amount and upon payment of such amount to Elan Pharma
            International Limited, neither Obligor shall have any outstanding
            actual liability to Elan Pharma International Limited.

7.    UNDERTAKINGS AND COVENANTS

      Each Obligor agrees, throughout the duration of the Term:

      (a)   to give Endo notice in writing immediately upon becoming aware of
            the occurrence of any event or circumstance, which constitutes or
            which, with the giving of notice, lapse of time or making of any
            determination, is reasonably likely to lead to the occurrence of an
            Event of Default together with reasonable details of what steps it
            is taking to avoid or cure such event or circumstance;

      (b)   as soon as they become available but in any event within 180 days
            after the end of each financial year to provide Endo with a copy of
            its published annual audited accounts and (in the case of the Parent
            or a Satisfactory Purchaser only) as soon as they become available
            but in any event within 120 days of the end of the first six months
            of each financial year to provide Endo with a copy of its half
            yearly accounts for the half year then ended as presented to its
            board of directors,

      (c)   as soon as they become available but in any event within 30 days of
            the end of each month the Parent and any Satisfactory Purchaser
            shall provide Endo with a copy of its monthly management accounts
            for the month then ended;

      (d)   (i) (in the case of the Parent and any Satisfactory Purchaser only)
            to procure that each set of its annual audited accounts provided
            pursuant to Clause 7(a) and each set of its half yearly accounts
            provided pursuant to Clause 7(b) are consolidated and comply in

                                      -14-

<PAGE>

            form, substance and content with the requirements of (A) in the case
            of a Satisfactory Purchaser which is a UK listed and incorporated
            corporate entity, the Act and the Listing Rules or (B) in the case
            of any other Satisfactory Purchaser, the laws and generally accepted
            accounting principles in its jurisdiction of incorporation
            consistently applied; and that each set of its monthly management
            accounts provided pursuant to Clause 7(c) are consolidated and
            contain a balance sheet, income statement and cashflow statement and
            related notes to such financial statements and are otherwise in the
            same form and have the same content as is provided to its board of
            directors and; (ii) to procure that each set of the annual audited
            accounts of VDL comply in form, substance and content with the
            requirements of the Act;

      (e)   prior to the beginning of each financial year, to deliver to Endo a
            copy of its annual budget;

      (f)   to provide Endo promptly with such other financial information
            relating to it as Endo may from time to time require to comply (i)
            with any regulatory requests or requirements or (ii) with any
            reasonable requests or requirements from financial institutions
            making financial facilities available to Endo provided that (A)
            those institutions have agreed with Endo to keep such information
            confidential (save for customary exceptions such as requirement of
            law or regulatory requirements) and (B) such Obligor would not
            thereby be in breach of any restrictions contained in (i) any
            confidentiality obligation binding on it at the date of this
            Agreement or (ii) any law or governmental or quasi-governmental
            regulation then binding on it or (iii) the Listing Rules to the
            extent then applicable to it but provided further that, at Endo's
            request, such Obligor shall use reasonable endeavors to seek a
            waiver of such restrictions;

      (g)   prior to the MAM Approval Date, it will not and will ensure that
            each of its subsidiaries will not incur or permit to remain
            outstanding any indebtedness whatsoever save for:

            (i)   indebtedness owing by a subsidiary acquired after the date of
                  this Agreement provided that (a) such indebtedness was not
                  created in contemplation of that acquisition, (b) such
                  indebtedness is not increased after the date of that
                  acquisition and (c) neither the Parent nor VDL nor any of the
                  Parent's other subsidiaries assumes any obligation or
                  liability (whether by guarantee or otherwise) for such
                  indebtedness;

            (ii)  indebtedness incurred pursuant to the Transaction Documents;

            (iii) trade indebtedness incurred in the ordinary course of its
                  business; and

            (iv)  indebtedness not otherwise excluded by paragraphs (i)-(iii)
                  above incurred or outstanding to the Parent, VDL and each of
                  the Parent's other subsidiaries which in aggregate does not
                  exceed $10 million at any time;

      (h)   save with respect to Permitted Liens, it will not, without the prior
            written consent of Endo, create, or permit to subsist any security
            over:

            (i)   prior to the MAM Approval Date, any of its assets or any of
                  the assets of its subsidiaries;

                                      -15-

<PAGE>

            (ii)  on and after the MAM Approval Date, (A) any of the Secured
                  Assets or other Relevant Assets; or (B) any book and other
                  debts and monetary claims relating to the Secured Assets or
                  other Relevant Assets and any proceeds of such debts and
                  claims (including without limitation, any claims or sums of
                  money deriving from or in relation to the Secured Assets or
                  other Relevant Assets, any court order or judgment, any
                  contract or agreement to which VDL is party and any other
                  assets, property rights or undertaking of the Company in each
                  case in or relating to the Secured Assets or other Relevant
                  Assets);

      (i)   prior to the MAM Approval Date, it will not pay dividends or make
            any distributions on its Capital Stock (other than distributions in
            the nature of the allotment of new Capital Stock) and will not
            purchase, redeem or otherwise acquire for value any of its Capital
            Stock;

      (j)   (in respect of the Parent only) it will at all times throughout the
            Term own directly or indirectly one hundred percent (100%) of the
            issued share capital in VDL and at least 51% of the Capital Stock of
            each other company which has been a subsidiary at any time since the
            date of this Agreement;

      (k)   it will not, and will not permit any subsidiary to, make any
            payments, distributions or disposals or incur any liabilities or
            grant any security, loans, collateral, guarantee or indemnity to or
            for the benefit of any related party other than the other Obligor
            and save for (i) payments and liabilities to related parties who are
            individuals acting on their own account and not representing any
            third party (and who do not account for such payments or liabilities
            to any third party) on arm's length contracts of employment or
            consultancy agreements and (ii) dividends and distributions on its
            Capital Stock permitted by this Agreement and for the purposes of
            this Clause 7(k), "related party" shall have the meaning given in
            Chapter 11 of the Listing Rules but as if the percentage referred to
            in the definition of "substantial shareholder" therein was (i) prior
            to any Change of Control, 5 percent and (ii) following a Change of
            Control, to any shareholding;

      (l)   save in the circumstances described in Clause 3.3(e), it will not
            enter into any single transaction or series of transactions (whether
            related or not) and whether voluntary or involuntary to sell, lease,
            transfer or otherwise dispose of any interest in the Secured Assets
            or other Relevant Assets save as part of the sale of the whole or
            substantially the whole of the Group's or VDL's business and assets
            to be a single Satisfactory Purchaser;

      (m)   (in respect of VDL only) immediately on discharge of the Secured
            Obligations (under and as defined in the Existing Floating Charge)
            it will procure that the Existing Floating Charge is released and
            will file a form 403a in respect of that release of the Companies
            Registry no later than the Business Day following such release;

      (n)   (in respect of VDL only) it will use the proceeds of an Advance in
            accordance with the terms of this Agreement only;

      (o)   not to substantially change the general nature of its business;

      (p)   obtain, comply with and do all that is necessary to maintain in full
            force and effect any authorisation required under any law or
            regulation of its jurisdiction of incorporation to enable it to
            perform its obligations under the Finance Documents and

                                      -16-

<PAGE>

            to ensure the legality, validity, enforceability or admissibility in
            evidence in its jurisdiction of incorporation of any Finance
            Document;

      (q)   shall comply in all respects with all laws to which it may be
            subject, if failure to so comply would impair its ability to perform
            its obligations under the Finance Documents;

      (r)   (in respect of VDL only):

            (i)   promptly do all such acts or execute all such documents
                  (including assignments, transfers, mortgages, charges, notices
                  and instructions) as Endo may reasonably specify (and in such
                  form as Endo may reasonably specify) to perfect the security
                  created or intended to be created under or evidenced by the
                  Security Agreement (which may include the execution of a
                  mortgage, charge, assignment or other security over all or any
                  of the assets which are, or are intended to be, the subject of
                  the Security Agreement) or for the exercise of any rights,
                  powers and remedies of Endo provided by or pursuant to the
                  Finance Documents or by law;

            (ii)  subject to the terms hereof and of the Security Agreement, and
                  following an Event of Default and during the continuance
                  thereof to facilitate the realisation of the assets which are,
                  or are intended to be, the subject of the Security Agreement;

            (iii) take all such action as is available to it (including making
                  all filings and registrations) as may be necessary for the
                  purpose of the creation, perfection, protection or maintenance
                  of any security conferred or intended to be conferred on Endo
                  by or pursuant to the Finance Documents;

      (s)   shall ensure that at all times any unsecured and unsubordinated
            claims of Endo against it under the Finance Documents rank at least
            pari passu with the claims of all its other unsecured and
            unsubordinated creditors except those creditors whose claims are
            mandatorily preferred by laws of general application to companies;

      (t)   it will not default under any agreement to which it is a party or
            which is binding on it or any of its assets where the nature and
            consequences of such default are reasonably likely to have a
            material adverse effect on its business, financial condition, assets
            or its ability to perform its obligations under the Finance
            Documents;

      (u)   promptly upon becoming aware of the same, it shall notify Endo of
            all litigation, arbitration or proceedings taking place, pending or
            threatened in writing against it or any of its assets which is
            reasonably likely to be adversely determined against it and which if
            so adversely determined would have a material adverse effect on its
            ability to perform its obligations under the Transaction Documents
            or its assets, financial condition or prospects;

      (v)   it will not dispose of any asset or make any acquisition on terms
            which are not arm's length or better for it except with respect to
            one or more such transactions which taken as a whole are not
            material in the context of the Parent or VDL (as applicable);

      (w)   it will not enter into any derivative transaction except for the
            purposes of hedging interest rate and currency rate exposures
            incurred under the Finance Documents or its

                                      -17-

<PAGE>

            ordinary course of trading and in any event will not enter into any
            derivative transaction for speculative purposes.

8.    GUARANTEE

      (a)   The Parent irrevocably and unconditionally:

            (i)   guarantees as primary obligor and not as surety, to Endo
                  performance by VDL of all of the Obligations;

            (ii)  undertakes with Endo, that whenever VDL does not pay any
                  amount when due under or in connection with any Finance
                  Document, VDL shall immediately on demand pay that amount as
                  if it was the principal obligor; and

            (iii) indemnifies Endo immediately on demand against any cost, loss
                  or liability suffered by it if any obligation guaranteed by it
                  hereunder is or becomes unenforceable, invalid or illegal. The
                  amount of the cost, loss or liability shall be equal to the
                  amount which Endo would otherwise have been entitled to
                  recover.

      (b)   The guarantee contained in this Clause 8 is a continuing guarantee
            and will extend to the ultimate balance of sums payable by any
            Obligor under the Finance Documents, regardless of any intermediate
            payment or discharge in whole or in part.

      (c)   If any payment by an Obligor or any discharge given by Endo (whether
            in respect of the obligations of any Obligor or any security for
            those obligations or otherwise) is avoided or reduced as a result of
            insolvency or any similar event:

            (i)   the liability of each Obligor shall continue as if the
                  payment, discharge, avoidance or reduction had not occurred;
                  and

            (ii)  Endo shall be entitled to recover the value or amount of that
                  security or payment from each Obligor, as if the payment,
                  discharge, avoidance or reduction had not occurred.

      (d)   The obligations of the Parent under this Clause 8 will not be
            affected by an act, omission, matter or thing which, but for this
            Clause, would reduce, release or prejudice any of its obligations
            under this Clause 8 (without limitation and whether or not known to
            it) including:

            (i)   any time, waiver or consent granted to, or composition with,
                  any Obligor or other person;

            (ii)  the release of any other Obligor or any other person under the
                  terms of any composition or arrangement with any creditor of
                  any Obligor;

            (iii) the taking, variation, compromise, exchange, renewal or
                  release of, or refusal or neglect to perfect, take up or
                  enforce, any rights against, or security over assets of, any
                  Obligor or other person or any non-presentation or
                  non-observance of any formality or other requirement in
                  respect of any instrument or any failure to realise the full
                  value of any security;

                                      -18-

<PAGE>

            (iv)  any incapacity or lack of power, authority or legal
                  personality of or dissolution or change in the members or
                  status of an Obligor or any other person;

            (v)   any amendment (however fundamental) or replacement of a
                  Finance Document or any other document or security;

            (vi)  any unenforceability, illegality or invalidity of any
                  obligation of any person under any Finance Document or any
                  other document or security; or

            (vii) any insolvency or similar proceedings.

      (e)   The Parent waives any right it may have of first requiring Endo to
            proceed against or enforce any other rights or security or claim
            payment from any person prior to Endo claiming from the Parent under
            this Clause 8. This waiver applies irrespective of any law or any
            provision of a Finance Document to the contrary.

      (f)   Until all amounts which may be or become payable by the Obligors
            under or in connection with the Finance Documents have been
            irrevocably paid in full, Endo may:

            (i)   refrain from applying or enforcing any other moneys, security
                  or rights held or received by it (or any trustee or agent on
                  its behalf) in respect of those amounts, or apply and enforce
                  the same in such manner and order as it sees fit (whether
                  against those amounts or otherwise) and the Parent shall not
                  be entitled to the benefit of the same; and

            (ii)  hold in an interest-bearing suspense account any moneys
                  received from the Parent or on account of the Parent's
                  liability under this Clause 8.

      (g)   Until all amounts which may be or become payable by the Obligors
            under or in connection with the Finance Documents have been
            irrevocably paid in full and unless Endo otherwise directs, the
            Parent will not exercise any rights which it may have by reason of
            performance by it of its obligations under the Finance Documents:

            (i)   to be indemnified by VDL; and/or

            (ii)  to take the benefit (in whole or in part and whether by way of
                  subrogation or otherwise) of any rights of Endo under the
                  Finance Documents or of any other guarantee or security taken
                  pursuant to, or in connection with, the Finance Documents by
                  Endo.

      (h)   The guarantee in this Clause 8 is in addition to and is not in any
            way prejudiced by any other guarantee or security now or
            subsequently held by Endo.

9.    STANDSTILL

9.1   Without prejudice to any obligation Endo may have under applicable law and
      regulation, under other provisions of this Agreement, pursuant to the
      requirements of any government, governmental agency or regulatory or other
      authority or body, under The City Code on Takeovers and Mergers (the
      "CODE") or otherwise, Endo undertakes that so long as the

                                      -19-

<PAGE>

      Obligors are in compliance with Clauses 7(b)-(e) inclusive it shall not,
      and shall (so far as it is legally able) procure that no member of the
      Endo Group shall, directly or indirectly, or in concert (as the same would
      be construed for the purposes of and in accordance with the Code) with or
      in conjunction with any third party, before the earliest to occur of (i)
      the expiry of the Term, (ii) the Final Repayment Date, and (iii) the
      exercise of any remedy under Clause 10.2 (Acceleration) without the prior
      written approval of the board of the Parent:

      (a)   acquire, or procure or induce any other person to acquire, any
            interest in the shares comprised in the relevant share capital of
            the Parent (within the meaning of sections 198 to 210 of the Act) or
            enter into any agreement or arrangement (whether legally binding or
            not) having a similar affect; or

      (b)   make, or procure or induce any other person to make, any offer for
            all or any of the shares of the Parent or enter into any agreement
            or arrangement (whether legally binding or not) having a similar
            affect; or

      (c)   announce, or procure or induce any other person to announce, any
            offer for all or any of the shares of the Parent or enter into any
            agreement or arrangement (whether legally binding or not) having a
            similar affect,

      unless, the acquisition, offer or the announcement, as the case may be, is
      recommended by a majority of the directors of the Parent at the time when
      the acquisition, offer or announcement is made.

9.2   In Clauses 9.1 and 9.3 "OFFER" means any general, partial, tender or other
      type of offer including, without limitation, any takeover or merger
      transaction (however effected), reverse takeover, scheme of arrangement or
      other court scheme, offer by a parent company for shares in its
      subsidiary, share exchange or similar transaction.

9.3   Notwithstanding Clauses 9.1 and 9.2, nothing shall restrict Endo or any
      member of its group or any other person from discussing (on a confidential
      basis, without any intent to require the public disclosure thereof) with
      members of the Parent's board the possibility of any such persons
      acquiring any interest in any shares in the Parent and the basis upon
      which the directors of the Parent would recommend such offer or
      announcement or acquisition.

10.   EVENTS OF DEFAULT

10.1  DEFAULTS

      There shall be an Event of Default if any of the following occurs:

      (a)   an Obligor does not pay on the due date any amount payable by it
            under the Finance Documents unless:

            (i)   its failure to pay is caused by administrative or technical
                  error by a third party which is not a member of the Group; and

            (ii)  payment is made within 3 Business Days of its due date;

      (b)   an Obligor is in breach of any of its other obligations under any of
            the Finance Documents unless:

            (i)   such breach is not a breach of an Immediate Default Clause;
                  and

                                      -20-

<PAGE>

            (ii)  such breach is capable of remedy; and

            (iii) such breach is remedied within 14 days of Endo giving notice
                  to an Obligor or an Obligor becoming actually aware of the
                  failure to comply,

            For these purposes an "IMMEDIATE DEFAULT CLAUSE" is each of Clauses
            3.3 (Mandatory Prepayment and Set-off), 7(g) (indebtedness), 7(h)
            (negative pledge), 7(i) (dividends) to 7(m) (release of Existing
            Floating Charge) inclusive and 8 (Guarantee);

      (c)   an Insolvency Event occurs with respect to an Obligor, a
            Satisfactory Purchaser or a parent undertaking of any such person as
            defined in the Act;

      (d)   it is or becomes unlawful for an Obligor to perform any of its
            obligations under the Transaction Documents or any security created
            or expressed to be created or evidenced by the Security Agreement
            cease to be effective, or any obligation of any Obligor under any
            Transaction Document is not or ceases to be legal, valid, binding or
            enforceable.

      (e)   VDL is the Defaulting Party as defined in and for the purposes of
            Clause 17.2 of the License Agreement;

      (f)   an Obligor suspends or ceases or threatens to suspend or cease to
            carry on its business or all or any substantial part of its assets
            are seized or appropriated by or on behalf of any governmental or
            other authority or are compulsorily acquired (provided that any such
            action is not discharged, stayed or withdrawn within 10 days of its
            occurrence);

      (g)   any indebtedness (whether in respect of capital or interest) of an
            Obligor in excess of US$1,000,000 in aggregate is not paid when due
            or is declared to be or otherwise becomes due and payable prior to
            its specified maturity;

      (h)   any consent or exemption required which is material to enabling an
            Obligor to perform its obligations under the Finance Documents to
            which it is a party is withdrawn or modified or for any reason it
            becomes unlawful for VDL to perform any of its obligations under the
            Finance Documents; or

      (i)   any representation or warranty made to Endo by an Obligor in any of
            the Finance Documents proves to have been incorrect in any respect
            when made, deemed made or repeated.

10.2  ACCELERATION

      Without prejudice to the provisions of Clause 3.3(d), at any time when any
      Event of Default remains unremedied Endo may by notice to VDL:

      (a)   require VDL immediately to repay the Advance and all other sums
            payable under the Finance Documents, whereupon the same shall become
            immediately due and payable;

      (b)   place the Advance on demand, whereupon the Advance and all other
            sums payable under the Finance Documents shall become repayable on
            demand;

      (c)   declare that some or all of the commitment hereunder shall be
            cancelled forthwith, whereupon the same shall be so cancelled;
            and/or

                                      -21-

<PAGE>

      (d)   exercise any of its rights as a secured creditor under the Security
            Agreement provided that prior to the occurrence of any Insolvency
            Event (as defined in the License Agreement) or any analogous event
            in any jurisdiction, Endo may not sell or assign or otherwise
            dispose of (reserving at all times Endo's right to receive and apply
            to the Obligations the proceeds thereof) the Secured Assets (except
            in connection with any assignment or transfer of its rights under
            and as permitted by this Agreement) unless an Event of Default has
            occurred under either Clause 10.1(d) or Clause 10.1(f).

      Upon the service of any such notice Endo's obligations under this
      Agreement shall be terminated.

11.   SECURITY AND CONFIDENTIALITY

      (a)   Any security or guarantee granted to Endo pursuant to any of the
            Finance Documents shall be in addition to and without prejudice to
            any other security or guarantee which Endo now holds or may in the
            future hold as security for the Facility Amount.

      (b)   The provisions of Clause 29 and 16 of the License Agreement shall
            apply mutatis mutandis to this Agreement, save that disclosure may
            also be made by Endo to any person to whom it is permitted to assign
            or transfer its rights under this Agreement.

12.   PAYMENTS

12.1  PLACE

      All payments to be made by an Obligor pursuant to this Agreement shall be
      made in Dollars in immediately available funds to Endo into a bank
      account, details of which shall be notified to an Obligor by Endo not less
      than five (5) Business Days before payment is due.

12.2  NO WITHHOLDINGS

      All payments by an Obligor under the Finance Documents are to be made (a)
      free and clear of and without any Tax Deduction unless the Tax Deduction
      is required by law; and (b) without any set-off or counter-claim
      whatsoever.

12.3  GROSSING-UP

      (a)   Subject to Clause 12.3(b) below, if a Tax Deduction is required by
            law in respect of any sum payable by an Obligor to Endo under the
            Finance Documents, that Obligor shall increase such sum so that the
            amount received by Endo after the Tax Deduction shall be equal to
            the amount which Endo would have been entitled to receive in the
            absence of any requirement to make that Tax Deduction.

      (b)   An Obligor is not required to make an increased payment to Endo
            under Clause 12.3(a) above for a Tax Deduction if on the date on
            which the payment is made:

            (i)   the payment could have been made to Endo without a Tax
                  Deduction but for the sole fact that, on that date, Endo is
                  not or has ceased to be a Qualifying Lender other than as a
                  result of any change after the date of this Agreement in (or
                  in the published interpretation, administration or application
                  of) any law, directive, treaty or regulation or any published
                  practice or concession of any relevant Taxing authority; or

                                      -22-

<PAGE>

            (ii)  the relevant Obligor could have made the payment to Endo
                  without a Tax Deduction had Endo complied with its obligations
                  under Clause 12.3(c) below, provided that, pending receipt of
                  the authorisation referred to in Clause 12.3(c) below, this
                  Clause 12.3(b)(ii) shall not apply (and the relevant Obligor
                  shall be required to make an increased payment to Endo under
                  Clause 12.3(a) above for a Tax Deduction) if Endo has
                  reasonably promptly taken all such steps as are reasonably
                  practicable to comply with its obligations under Clause
                  12.3(c) following the date of this Agreement or the relevant
                  request from the Obligor (as applicable).

      (c)   Endo and the Obligors shall co-operate in completing, as soon as
            reasonably practicable after the date of this Agreement, any
            procedural formalities necessary for the Obligors to obtain
            authorisation to make a payment under this Agreement without a Tax
            Deduction (including, for the avoidance of doubt, the completion and
            submission to the Taxing authority in Endo's country of
            incorporation (or, if different, its country of residence for the
            purposes of the relevant double taxation agreement) of appropriate
            forms and documents that are provided to it by the Obligors).

      (d)   If an Obligor makes a payment to Endo without a Tax Deduction in
            circumstances where Endo has not notified that Obligor that it has
            ceased to be a Qualifying Lender (other than as a result of any
            change after the date of this Agreement in, or in the published
            interpretation, administration or application of, any law or treaty,
            or any published practice or concession of any relevant Taxing
            authority):

            (i)   where any liability in respect of an amount which should have
                  been deducted or withheld is imposed, levied or assessed
                  against an Obligor, Endo shall, within three (3) Business Days
                  of demand by the relevant Obligor, indemnify that Obligor
                  against such liability or payment together with any interest,
                  penalties and expenses payable or incurred in connection with
                  the same; and

            (ii)  Endo authorises the Obligors to withhold amounts equivalent to
                  the Tax Deduction which should have been made from subsequent
                  payments to Endo under this Agreement and to pay such amounts
                  to the relevant Taxing authority

            provided that any amounts withheld in accordance with Clause
            12.3(d)(ii) shall not also be recoverable under Clause 12.3(d)(i)
            above.

      (e)   If an Obligor makes a payment under Clause 12.3(a) above (a "TAX
            PAYMENT") and Endo determines in its sole discretion that:

            (i)   a Tax Credit is attributable to that Tax Payment; and

            (ii)  Endo has obtained, utilised and retained that Tax Credit,

            Endo shall, to the extent that it can do so without prejudice to the
            retention of the Tax Credit, pay such amount to the relevant Obligor
            as Endo determines in its absolute discretion to be attributable to
            the Tax Payment and will leave it (after that payment to the
            Obligor) in the same after-Tax position as it would have been in had
            the Tax Payment not been required to be made by that Obligor.
            Nothing herein contained shall interfere with the right of Endo to
            arrange its Tax affairs in whatever manner it

                                      -23-

<PAGE>

            thinks fit nor oblige it to disclose any information relating to its
            Tax affairs or any computations in respect thereof.

      (f)   If an Obligor makes any Tax Deduction, it shall pay the full amount
            of that Tax Deduction to the relevant Tax authority within the time
            allowed for such payment under applicable law and shall deliver to
            Endo, as soon as reasonably practicable after such payment falls due
            to the applicable authority, any original receipt (or a certified
            copy thereof) issued by such authority evidencing such payment.

12.4  NON-BUSINESS DAYS

      Any payments which, but for this Clause 12.4, would fall due under this
      Agreement on a day other than a Business Day shall be made on the next
      succeeding Business Day.

12.5  SET-OFF

      Endo may set off any matured obligation due from an Obligor under the
      Finance Documents against any matured obligation owed by Endo to that
      Obligor, regardless of the place of payment or currency of either
      obligation. If the obligations are in different currencies, Endo may
      convert either obligation at a market rate of exchange for the purpose of
      the set-off.

13.   LAW AND JURISDICTION

13.1  APPLICABLE LAW.

      THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
      SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
      WITH, THE LAWS OF THE STATE OF NEW YORK INCLUDING GENERAL OBLIGATION LAW
      5-1401.

13.2  CONSENT TO JURISDICTION AND SERVICE OF PROCESS.

      (a)   ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY OBLIGOR ARISING OUT OF
            OR RELATING HERETO OR ANY OTHER FINANCE DOCUMENT, OR ANY OF THE
            OBLIGATIONS, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
            COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY
            EXECUTING AND DELIVERING THIS AGREEMENT, EACH OBLIGOR, FOR ITSELF
            AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (i) ACCEPTS
            GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND
            VENUE OF SUCH COURTS; (ii) WAIVES ANY DEFENSE OF FORUM NON
            CONVENIENS; (iii) AGREES THAT, NOTWITHSTANDING CLAUSE 13.2 (b),
            SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY
            BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED,
            TO THE APPLICABLE OBLIGOR AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH
            CLAUSE 18; (iv) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (iii) IS
            SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE APPLICABLE
            OBLIGOR IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE
            CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (v)
            AGREES ENDO RETAINS THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER
            PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST ANY OBLIGOR IN THE
            COURTS OR ANY OTHER JURISDICTION; and

                                      -24-

<PAGE>

      (b)   EACH OBLIGOR HEREBY IRREVOCABLY AND UNCONDITIONALLY APPOINTS CT
            CORPORATION, 111 EIGHTH AVENUE, TEAM 6, NEW YORK, NEW YORK 10011,
            USA (FAX: 001-212-894-8690) ("THE PROCESS AGENT"), AS ITS AGENT TO
            RECEIVE ON BEHALF OF SUCH OBLIGOR AND ITS PROPERTY SERVICE OF COPIES
            OF THE SUMMONS AND COMPLAINTS AND ANY OTHER PROCESS WHICH MAY BE
            SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY COURT
            SPECIFIED IN CLAUSE 13.2(a), SUCH SERVICE MAY BE MADE BY MAILING OR
            DELIVERING A COPY OF SUCH PROCESS TO AN OBLIGOR IN CARE OF THE
            PROCESS AGENT AT THE ADDRESS SPECIFIED ABOVE FOR THE PROCESS AGENT,
            AND EACH OBLIGOR HEREBY IRREVOCABLY AUTHORIZES AND DIRECTS THE
            PROCESS AGENT TO ACCEPT SUCH SERVICE ON ITS BEHALF. EACH OBLIGOR
            FURTHER CONSENTS TO MAILING COPIES THEREOF BY REGISTERED OR
            CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH OBLIGOR AT ITS ADDRESSES
            FOR NOTICE HEREUNDER, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER
            MAILING. FAILURE OF THE PROCESS AGENT TO GIVE NOTICE TO ANY OBLIGOR
            OR FAILURE OF AN OBLIGOR TO RECEIVE NOTICE OF SUCH SERVICES OF
            PROCESS SHALL NOT AFFECT IN ANY WAY THE VALIDITY OF SUCH SERVICE ON
            THE PROCESS AGENT OR SUCH OBLIGOR. EACH OBLIGOR COVENANTS AND AGREES
            THAT IT SHALL TAKE ANY AND ALL REASONABLE ACTION, INCLUDING THE
            EXECUTION AND FILING OF ANY AND ALL DOCUMENTS, THAT MAY BE NECESSARY
            FOR THE PROCESS AGENT TO ACT AS SUCH. IN THE EVENT THAT AT ANY TIME
            SUCH PROCESS AGENT SHALL FOR ANY REASON CEASE TO MAINTAIN AN OFFICE
            IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY, OR CEASE TO ACT AS
            PROCESS AGENT, THEN SUCH OBLIGOR IRREVOCABLY CONSENTS TO THE SERVICE
            OF ANY AND ALL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
            ACCORDANCE WITH THE TERMS CLAUSE (iii) OF CLAUSE 13.2(a). EACH
            OBLIGOR ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS CLAUSE 13.2(b)
            SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER
            MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER
            JURISDICTION.

13.3  WAIVER OF JURY TRIAL

      EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO
      A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
      HEREUNDER OR UNDER ANY OF THE OTHER FINANCE DOCUMENTS OR ANY DEALINGS
      BETWEEN THEM RELATING THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
      LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF THIS
      WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY
      BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS
      TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS
      AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO
      ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A
      BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN
      ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS
      WAIVER IN ITS RELATED FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS
      AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL

                                      -25-

<PAGE>

      AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
      FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE,
      MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER
      THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS CLAUSE 13.3
      AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY
      TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
      HERETO OR ANY OF THE OTHER FINANCE DOCUMENTS OF TO ANY OTHER DOCUMENTS OR
      AGREEMENTS RELATING TO THE ADVANCE MADE HEREUNDER. IN THE EVENT OF
      LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY
      THE COURT.

14.   SEVERANCE

      If at any time any provision of this Agreement is or becomes invalid,
      illegal or unenforceable in any respect under any law of any jurisdiction,
      the validity, legality and enforceability of the remaining provisions of
      this Agreement and the validity, legality and enforceability of those
      provisions under the law of other jurisdictions shall not in any way be
      affected or impaired thereby.

15.   FEES, COSTS AND INDEMNITY

15.1  COSTS AND EXPENSES

      Each party shall be liable for its own costs, charges and expenses arising
      at any time in connection with the preparation, negotiation and execution
      of the Finance Documents and the transactions contemplated thereby.

15.2  INDEMNITY

      Each Obligor shall indemnify Endo on an after tax basis from and against
      all losses, costs, expenses, claims, proceedings and damages suffered or
      incurred by Endo in consequence of any Event of Default (other than to the
      extent the same arise solely under the License Agreement) and/or any
      failure to borrow in accordance with any notice given under Clause 4.

16.   NON-WAIVER

      No failure by Endo to exercise and no delay by Endo in exercising any
      right, power or privilege under this Agreement shall operate as a waiver
      thereof nor shall any single or partial exercise of any right, power or
      privilege preclude any other or further exercise thereof or the exercise
      of any other right, power or privilege. The rights and remedies provided
      in this Agreement are cumulative and not exclusive of any rights or
      remedies provided by law.

17.   SUCCESSORS

      The agreement evidenced by this Agreement shall enure to the benefit of
      Endo and its successors and assigns from time to time. No Obligor may
      assign or transfer any of its rights, benefits or obligations under this
      Agreement. Endo may assign or transfer its rights and obligations under
      this Agreement to any of its subsidiaries, to any holding company of Endo,
      to any subsidiary of any such holding company or to any holders of Endo
      secured senior debt. Endo or its successor or assignee or transferee shall
      pay any stamp duty, transfer registration or similar Taxes payable on such
      assignment.

                                      -26-

<PAGE>

18.   NOTICE

18.1  METHOD

      Each notice or other communication to be given under this Agreement shall
      be given in writing and, unless otherwise provided, shall be made by fax
      or letter.

18.2  DELIVERY

      Any notice or other communication to be given by Endo or an Obligor to the
      other under this Agreement shall (unless one party has by fifteen (15)
      days' notice to the other party specified another address) be given to
      that other party at the respective addresses given in Clause 18.3.

18.3  ADDRESSES

      The address and fax number of each Obligor and Endo are:

            (A) Endo:

                  Endo Pharmaceuticals Inc.
                  100 Painters Dr.
                  Chadds Ford, PA 19317
                  Attention: Chief Legal Officer
                  Telecopy: 610-558-9684

                  With a copy to:

                  Skadden, Arps, Slate, Meagher & Flom LLP
                  Four Times Square
                  New York, NY 10036
                  Attention: Eileen Nugent and Bruce Goldner
                  Telecopy: 212-735-2000

            (B) the Parent:

                  Vernalis PLC
                  Oakdene Court
                  613 Reading Road
                  Winnersh
                  Wokingham
                  RG41 5UA
                  United Kingdom
                  Attention: Chief Financial Officer
                  Telecopy: 011-44-118-989-9300

                                      -27-

<PAGE>

            (C) VDL:

                  Vernalis Development Limited
                  Oakdene Court
                  613 Reading Road
                  Winnersh
                  Wokingham
                  RG41 5UA
                  United Kingdom
                  Attention: Chief Financial Officer
                  Telecopy: 011-44-118-989-9300

18.4  DEEMED RECEIPT

      Any notice or other communication given by an Obligor or Endo shall be
      deemed to have been received:

      (a)   if sent by fax, with a confirmed receipt of transmission from the
            receiving machine, on the day on which transmitted;

      (b)   in the case of a written notice given by hand, on the day of actual
            delivery; and

      (c)   if posted, on the second Business Day following the day on which it
            was despatched by first class mail postage prepaid

      provided that a notice given in accordance with the above but received on
      a day which is not a Business Day or after normal business hours in the
      place of receipt shall only be deemed to have been received on the next
      Business Day.

19.   COUNTERPARTS

      This Agreement may be executed in any number of counterparts, and this has
      the same effect as if the signatures on the counterparts were on a single
      copy of this Agreement.

20.   THIRD PARTY BENEFICIARIES

20.1  The terms and provisions of this Agreement are for the purpose of defining
      the relative rights and obligations of each party hereto with respect to
      the transactions contemplated hereby and no Person shall be a third party
      beneficiary of any of the terms and provisions of this Agreement.

                                      -28-

<PAGE>

IN WITNESS WHEREOF the parties have executed this agreement as of the day and
year first above written.

VERNALIS PLC

By: /s/ A J Weir

Name: AJ Weir, CFO

VERNALIS DEVELOPMENT LIMITED

By: /s/ AJ Weir

Name: AJ Weir, Director

ENDO PHARMACEUTICALS INC

By: /s/ Carol A Ammon

Name: Carol A Ammon

                                      -29-

<PAGE>

                                   SCHEDULE 1

                                 DRAWDOWN NOTICE

To: [       ]

From: Vernalis Development Limited

Dear Sirs,

LOAN AGREEMENT DATED [       ] (THE "AGREEMENT")

Terms defined in the Agreement have the same meaning in this notice.

We request a drawing under the Agreement as follows:

1. Amount of Advance: US$50,000,000

2. Drawdown Date: [       ]

3. Payment Details:

The Advance should be disbursed on the Drawdown Date to the following persons
and accounts:

3.1 Amount: [sufficient to discharge the Elan Outstanding Liability]
    Payee: Elan Pharma International Limited
    Payee Account
    Details: [       ]

3.2 Amount: [The balance of $50M]
    Payee: Vernalis Development Limited
    Payee Account
    Details: [       ]

We confirm that today and on the Drawdown Date:

(a)   the representations and warranties in Clause 6.1 of the Agreement are and
      will be correct;

(b)   no Event of Default or Potential Event of Default has occurred and is
      continuing or will occur on the making of the drawing.

SIGNED

For and on behalf of

VERNALIS DEVELOPMENT LIMITED

                                      -30-

<PAGE>

                                   SCHEDULE 2

                                 SECURITY DEED

                                 [See Attached]

                                      -1-
<PAGE>

                                  SECURITY DEED

                            DATED AS OF JULY __, 2004

                                     BETWEEN

                          VERNALIS DEVELOPMENT LIMITED,

                                 AS THE GRANTOR

                                       AND

                           ENDO PHARMACEUTICALS INC.,

                              AS THE SECURED PARTY

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                              PAGE
<S>                                                                           <C>
SECTION 1. DEFINITIONS; GRANT OF SECURITY...................................    1
1.1  GENERAL DEFINITIONS....................................................    1
1.2  DEFINITIONS; INTERPRETATION............................................    3
1.3  THIRD PARTY RIGHTS.....................................................    4
SECTION 2. GRANT OF SECURITY................................................    4
2.1  GRANT OF SECURITY......................................................    4
2.2  CERTAIN LIMITED EXCLUSIONS.............................................    4
SECTION 3. SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE.................    4
3.1  SECURITY FOR OBLIGATIONS...............................................    4
3.2  CONTINUING LIABILITY UNDER COLLATERAL..................................    5
3.3  IMMEDIATE RECOURSE.....................................................    6
3.4  ADDITIONAL SECURITY....................................................    6
SECTION 4. REPRESENTATIONS AND WARRANTIES AND COVENANTS.....................    6
4.1  GENERALLY..............................................................    6
4.2  RECEIVABLES............................................................    8
SECTION 5. ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES...............    9
5.1  ACCESS; RIGHT OF INSPECTION............................................    9
5.2  FURTHER ASSURANCES.....................................................    9
SECTION 6. SECURED PARTY APPOINTED ATTORNEY-IN-FACT.........................   10
6.1  POWER OF ATTORNEY......................................................   10
6.2  NO DUTY ON THE PART OF SECURED PARTY...................................   10
SECTION 7. REMEDIES, GENERALLY..............................................   10
7.1  GENERALLY..............................................................   10
7.2  APPLICATION OF PROCEEDS................................................   12
7.3  SALES ON CREDIT........................................................   12
7.4  CASH PROCEEDS..........................................................   12
SECTION 8. REMEDIES, UK. ...................................................   13
8.1  UK ENFORCEMENT OF SECURITY, GENERALLY..................................   13
8.2  RECEIVER...............................................................   13
SECTION 9. SECURED PARTY....................................................   14
SECTION 10. CONTINUING SECURITY INTEREST; TRANSFER OF THE ADVANCE...........   14
SECTION 11. STANDARD OF CARE; SECURED PARTY MAY PERFORM.....................   15
SECTION 12. MISCELLANEOUS...................................................   15
</TABLE>

                                       i
<PAGE>

EXHIBITS:

Exhibit A - Form of Pledge Supplement
Exhibit B - Form of Notice
Exhibit C - Powers of Receiver

SCHEDULES:

Schedule 4.1(a)(ii) - Organizational Information
Schedule 4.1(a)(iii) - Other Names of Grantor
Schedule 4.1(a)(iv) - Changes in Organizational Information and Structure
Schedule 4.1(a)(v) - Filing Offices

                                       ii
<PAGE>

                  This SECURITY DEED, dated as of July __, 2004 (this "SECURITY
DEED"), between VERNALIS DEVELOPMENT LIMITED, a limited liability company
incorporated under the laws of England and Wales with company number 2600483 and
with a registered address at Oakdene Court, 613 Reading Road, Winnersh,
Workingham, Berkshire, RG41 5UA, as the grantor (the "GRANTOR"), and ENDO
PHARMACEUTICALS INC., a Delaware corporation, as the secured party (the "SECURED
PARTY").

                                    RECITALS:

            WHEREAS, reference is made to that certain Loan Agreement, dated as
of the date hereof (as it may be amended, restated, supplemented or otherwise
modified from time to time, the "LOAN AGREEMENT"), by and among Vernalis
Development Limited, as borrower, Vernalis PLC, as parent, and Endo
Pharmaceuticals Inc. ("ENDO");

            WHEREAS, in consideration of the extensions of credit and other
accommodations of Endo as set forth in the Loan Agreement, the Grantor has
agreed to secure its obligations under the Finance Documents as set forth
herein; and

            NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the Grantor and the Secured Party
agree as follows:

SECTION 1.DEFINITIONS; GRANT OF SECURITY.

      1.1   GENERAL DEFINITIONS. In this Security Deed, the following terms
shall have the meanings provided below:

            "ACCOUNT DEBTOR" shall mean each Person who is obligated on a
Receivable or any Supporting Obligation related thereto.

            "ACCOUNTS" shall mean all "accounts" as defined in Article 9 of the
UCC.

            "ACT" shall have the meaning assigned in Section 8.1.

            "BANKRUPTCY CODE" shall mean Title 11 of the United States Code
entitled "Bankruptcy", as now and hereafter in effect, or any successor statute.

            "CASH PROCEEDS" shall have the meaning assigned in Section 7.4.

            "CHATTEL PAPER" shall mean all "chattel paper" as defined in Article
9 of the UCC, including, without limitation, "electronic chattel paper" or
"tangible chattel paper", as each term is defined in Article 9 of the UCC.

            "CLOSING DATE" means July __, 2004.

            "COLLATERAL" shall have the meaning assigned in Section 2.1.

            "COLLATERAL ACCOUNT" shall mean any account established by the
Secured Party and details of which have been noticed to the Grantor.

            "COLLATERAL SUPPORT" shall mean all property (real or personal)
collaterally assigned, hypothecated or otherwise securing any Account included
in the Collateral (including

<PAGE>

the royalty stream payable to the Grantor under the License Agreement) and shall
include any security agreement or other agreement granting a lien or security
interest in such real or personal property.

            "ENDO" shall have the meaning assigned in the recitals.

            "GOVERNMENTAL AUTHORITY" shall mean any nation or government, any
state or other political subdivision thereof, and any agency, authority,
instrumentality, regulatory body, court, administrative tribunal, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to government.

            "GRANTOR" shall have the meaning assigned in the preamble.

            "INSTRUMENTS" shall mean all "instruments" as defined in Article 9
of the UCC.

            "LICENSE AGREEMENT" shall have the meaning assigned in Section 2.1.

            "LIEN" shall mean any lien, mortgage, pledge, collateral assignment,
security interest, charge or encumbrance of any kind (including any agreement to
give any of the foregoing, any conditional sale or other title retention
agreement, and any lease in the nature thereof) and any other agreement, option,
trust or other arrangement having the practical effect of any of the foregoing.

            "LOAN AGREEMENT" shall have the meaning assigned in the recitals.

            "OBLIGATIONS" shall mean all obligations of every nature of the
Grantor from time to time owed to the Secured Party under any Finance Document,
whether for principal, interest (including interest which, but for the filing of
a petition in bankruptcy with respect to the Grantor, would have accrued on any
obligation, whether or not a claim is allowed against the Grantor for such
interest in the related bankruptcy proceeding), fees, expenses, indemnification
or otherwise.

            "PERMITTED SALES" shall mean those sales, assignments or other
dispositions permitted by the Loan Agreement.

            "PERSON" shall mean and include natural persons, corporations,
limited partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and Governmental Authorities.

            "PLEDGE SUPPLEMENT" shall mean any supplement to this Security Deed
in substantially the form of Exhibit A attached hereto, together with all
supplements and schedules thereto.

            "PROCEEDS" shall mean: (i) all "proceeds" as defined in Article 9 of
the UCC, and (ii) whatever is receivable or received when Collateral or proceeds
are sold, exchanged, collected or otherwise disposed of, whether such
disposition is voluntary or involuntary.

                                       2
<PAGE>

            "RECEIVABLES" shall mean all Accounts, including all rights to
payment, whether or not earned by performance, for property licensed or
otherwise disposed of and all Collateral Support and Supporting Obligations
related thereto and all Receivables Records.

            "RECEIVABLES RECORDS" shall mean (i) all original copies of all
documents, instruments or other writings or electronic records or other Records
evidencing the Receivables, (ii) all books, correspondence or other files,
Records, ledger sheets or cards, invoices, and other papers relating to
Receivables, including, without limitation, all tapes, cards, computer tapes,
computer discs, computer runs, record keeping systems and other papers and
documents relating to the Receivables, whether in the possession or under the
control of Grantor or any computer bureau or agent from time to time acting for
Grantor or otherwise, and (iii) any other written or nonwritten forms of
information related in any way to the foregoing or any Receivable.

            "RECEIVER" shall have the meaning assigned in Section 8.2(a)(i).

            "RECORD" shall have the meaning specified in Article 9 of the UCC.

            "RELEVANT ASSETS" means the Vernalis IP (as defined in the License
Agreement) and the Collateral.

            "SECURITY DEED" shall have the meaning assigned in the preamble.

            "SECURED OBLIGATIONS" shall have the meaning assigned in Section
3.1.

            "SUPPORTING OBLIGATION" shall mean all "supporting obligations" as
defined in Article 9 of the UCC.

            "SECURED PARTY" shall have the meaning assigned in the preamble.

            "UCC" shall mean the Uniform Commercial Code as in effect from time
to time in the State of New York or, when the context implies, the Uniform
Commercial Code as in effect from time to time in any other applicable
jurisdiction.

            "UK" shall mean the United Kingdom.

            "UNITED STATES" shall mean the United States of America.

      1.2   DEFINITIONS; INTERPRETATION. All capitalized terms used herein
(including the preamble and recitals hereto) and not otherwise defined herein
shall have the meanings ascribed thereto in the Loan Agreement or, if not
defined therein, in the UCC. References to "Sections," "Exhibits" and
"Schedules" shall be to Sections, Exhibits and Schedules, as the case may be, of
this Security Deed unless otherwise specifically provided. Section headings in
this Security Deed are included herein for convenience of reference only and
shall not constitute a part of this Security Deed for any other purpose or be
given any substantive effect. Any of the terms defined herein may, unless the
context otherwise requires, be used in the singular or the plural, depending on
the reference. The use herein of the word "include" or "including", when
following any general statement, term or matter, shall not be construed to limit
such statement, term or matter to the specific items or matters set forth
immediately following such word or to similar items or matters, whether or not
nonlimiting language (such as "without limitation" or "but not limited to" or
words of similar import) is used with reference thereto, but rather shall be
deemed to refer to all other items or matters that fall within the broadest
possible scope of such general statement,

                                       3
<PAGE>

term or matter. If any conflict or inconsistency exists between this Security
Deed and the Loan Agreement, the Loan Agreement shall govern. All references
herein to provisions of the UCC shall include all successor provisions under any
subsequent version or amendment to any Article of the UCC.

      1.3   THIRD PARTY RIGHTS.

            (a)   Any security granted to the Secured Party pursuant to this
Security Deed shall be in addition to and without prejudice to any other
security which the Secured Party now holds or may in the future hold as security
for the Secured Obligations.

            (b)   The terms and provisions of this Security Deed are for the
purpose of defining the relative rights and obligations of each party hereto
with respect to the transactions contemplated hereby and no Person shall be a
third party beneficiary of any of the terms and provisions of this Security
Deed.

SECTION 2.GRANT OF SECURITY.

      2.1   GRANT OF SECURITY. To secure the Secured Obligations, the Grantor
hereby grants to the Secured Party a security interest in and continuing lien on
all of the Grantor's right, title and interest in, to and under those portions
of the License Agreement, dated as of a date on or about the date hereof,
between Vernalis Development Limited and Endo Pharmaceuticals Inc. (as may be
amended, supplemented or modified from time to time, the "LICENSE AGREEMENT")
related to the payments due to the Grantor thereunder, including, without
limitation, the royalty stream payable to the Grantor pursuant to, and any
Receivables and Accounts related to, the License Agreement, and all Proceeds,
products, accessions, rents and profits of or in respect of the License
Agreement (all of which being hereinafter collectively referred to as the
"COLLATERAL").

      2.2   CERTAIN LIMITED EXCLUSIONS. Notwithstanding anything herein to the
contrary, in no event shall the security interest granted under Section 2.1
hereof attach to any lease, license, contract, property rights or agreement to
which the Grantor is a party or any of its rights or interests thereunder if and
for so long as the grant of such security interest shall constitute or result in
(a) the abandonment, invalidation or unenforceability of any right, title or
interest of the Grantor therein or (b) in a breach or termination pursuant to
the terms of, or a default under, any such lease, license, contract property
rights or agreement (other than to the extent that any such term would be
rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the
UCC (or any successor provision or provisions) of any relevant jurisdiction or
any other applicable law (including the Bankruptcy Code) or principles of
equity), provided, however, that such security interest shall attach immediately
at such time as the condition causing such abandonment, invalidation or
unenforceability shall be remedied and to the extent severable, shall attach
immediately to any portion of such Lease, license, contract, property rights or
agreement that does not result in any of the consequences specified in (a) or
(b) above.

SECTION 3.SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE.

      3.1   SECURITY FOR OBLIGATIONS (a) Generally. This Security Deed secures,
and the Collateral is collateral security for, the prompt payment or performance
in full when due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise (including the payment of amounts
that would become due but for the operation of the automatic

                                       4
<PAGE>

stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a) (and
any successor provision thereof), of all Obligations (the "SECURED
OBLIGATIONS").

            (b)   Creation of Floating Charge. The Grantor, with full title
guarantee and as further continuing security for the payment and discharge of
the Secured Obligations, charges the Collateral in favor of the Secured Party by
way of first floating charge.

            (c)   Conversion of Floating Charge

                  (i)   The Secured Party may, by notice to the Grantor, convert
      the floating charge created by this Security Deed, with immediate effect,
      into a fixed charge over all or any of the Grantor's assets specified in
      the notice if:

      (1)   an Event of Default has occurred and is continuing; or

      (2)   the Secured Party reasonably considers those assets to be in danger
            of being seized or sold under any form of distress, attachment,
            execution or other legal process or to be otherwise in jeopardy.

                  (ii)  Upon notice being given by the Secured Party under
      paragraph 3.1(c)(i) above, the Grantor will not exercise any rights it has
      over the Collateral, other than as provided in this Security Deed.

                  (iii) The giving by the Secured Party of a notice pursuant to
      paragraph (i) above in relation to the Collateral shall not be construed
      as a waiver or abandonment of the Secured Party's rights to give other
      similar notices in respect of the Collateral.

            (d)   Miscellaneous. Upon the occurrence and during continuation of
an Event of Default, if the charge of Collateral referred to in Clause 3.1(c)
(Creation of Floating Charge) is found to be ineffective or any sums payable in
respect of such Collateral are received by the Grantor, the Grantor shall hold
the benefit of such Collateral and any such sums received by it in trust for the
Secured Party and shall account to the Secured Party for or otherwise apply all
such sums as the Secured Party may direct and shall otherwise, at its own cost,
take such action and execute such documents as the Secured Party may, in its
sole discretion, require.

      3.2   CONTINUING LIABILITY UNDER COLLATERAL. Notwithstanding anything
herein to the contrary, (a) the Grantor shall remain liable for all obligations
under the Collateral and nothing contained herein is intended or shall be a
delegation of duties to the Secured Party, (b) the Grantor shall remain liable
under each of the agreements now or hereafter included in the Collateral to
perform all of the obligations undertaken by it thereunder all in accordance
with and pursuant to the terms and provisions thereof and the Secured Party
shall not have any obligation or liability under any of such agreements by
reason of or arising out of this Security Deed or any other document related
thereto nor shall the Secured Party have any obligation to make any inquiry as
to the nature or sufficiency of any payment received by it or have any
obligation to take any action to collect or enforce any rights under any
agreement now or hereafter included in the Collateral and (c) the exercise by
the Secured Party of any of its rights hereunder shall not release the Grantor
from any of its duties or obligations under the contracts and agreements now or
hereafter included in the Collateral.

                                       5
<PAGE>

      3.3   IMMEDIATE RECOURSE. The Grantor waives any right it may have of
first requiring the Secured Party to proceed against or enforce any other rights
or security before enforcing the security constituted hereby.

      3.4   ADDITIONAL SECURITY. The security constituted by this Security Deed
is in addition to, and not in any way prejudiced by, any other security now or
hereafter held by the Secured Party.

SECTION 4. REPRESENTATIONS AND WARRANTIES AND COVENANTS.

      4.1   GENERALLY

            (a)   Representations and Warranties of the Grantor. The Grantor
hereby represents and warrants, on the Closing Date and on each Interest Payment
Date throughout the period of the Term in relation to which a Deemed Advance
Notice has been given is made available, that:

                  (i)   it is the sole and exclusive owner of the entire right,
      title, and interest in the Collateral, as to all Collateral whether now
      existing or hereafter acquired, will continue to have such rights in the
      Collateral (except with respect to Proceeds), in each case free and clear
      of any and all Liens, rights or claims of all other Persons to the extent
      not otherwise included above, including, without limitation, liens arising
      as a result of the Grantor becoming bound (as a result of merger of
      otherwise) as a debtor under a security agreement entered into by another
      Person, other than Permitted Liens;

                  (ii)  as indicated on Schedule 4.1(a)(ii), it is a limited
      liability company incorporated solely under the laws of England and Wales
      and remains duly existing as such. The Grantor has not filed any
      certificates of domestication, transfer or continuance in any other
      jurisdiction. The Grantor has also indicated on Schedule 4.1(a)(ii) (as
      such schedule may be amended or supplemented from time to time): (w) the
      full legal name of the Grantor, (x) its organizational identification
      number (as applicable), (y) the jurisdiction where the chief executive
      office is located, and for the one-year period preceding the date hereof
      has been located, and (z) its notice address.

                  (iii) it has not done in the last five (5) years, and does not
      do, business under any other name (including any trade-name or fictitious
      business name) except for those names set forth on Schedule 4.1(a)(iii)
      (as such schedule may be amended or supplemented from time to time);

                  (iv)  except as provided on Schedule 4.1(a)(iv) (as such
      schedule may be amended or supplemented from time to time), it has not
      changed its name, jurisdiction of organization, or chief executive office
      within the past five (5) years;

                  (v)   upon the filing of (x) all UCC financing statements
      naming the Grantor as "debtor" and the Secured Party as "secured party",
      and (y) all relevant filings in the UK, describing the Collateral in the
      filing office set forth on Schedule 4.1(a)(v) hereof (as such schedule may
      be amended or supplemented from time to time), the security interest
      granted to the Secured Party hereunder constitutes a valid, legal,
      enforceable and perfected first priority Lien (subject in the case of
      priority only to Permitted Liens);

                                       6
<PAGE>

                  (vi)  all actions and consents, including all filings,
      notices, registrations and recordings necessary or desirable for the
      exercise by the Secured Party of the rights provided for in this Security
      Deed or the exercise of remedies in respect of the Collateral have been
      made or obtained;

                  (vii) other than the financing statements filed in favor of
      the Secured Party, no effective UCC financing statement or other
      instrument similar in effect under any applicable law covering all or any
      part of the Collateral is on file in any filing or recording office except
      for (y) financing statements for which proper termination statements have
      been delivered to the Secured Party for filing and (z) financing
      statements filed in connection with Permitted Liens;

                  (viii) no authorization, approval or other action by, and no
      notice to or filing with, any Governmental Authority or regulatory body is
      required for either (y) the grant by the Grantor of the Lien purported to
      be created in favor of the Secured Party hereunder or (z) the exercise by
      the Secured Party of any rights or remedies in respect of the Collateral
      (whether specifically granted or created hereunder or created or provided
      for by applicable law), except for the filings contemplated by clause (v)
      above;

                  (ix)  as of the Closing Date, it has delivered notice,
      substantially in the form of Exhibit C attached hereto, of the Lien
      created by this Security Deed to Endo.

            (b)   Covenants and Agreements of the Grantor. The Grantor hereby
covenants and agrees that:

                  (i)   save with respect to Permitted Liens, it will not,
      without the prior written consent of Secured Party, create, or permit to
      subsist any security over:

                        (1) prior to the MAM Approval Date, any of its assets or
      any of the assets of its subsidiaries; and

                        (2) on and after the MAM Approval Date: (A) any of the
      Collateral or other Relevant Assets; or (B) any book and other debts and
      monetary claims relating to the Collateral or other Relevant Assets and
      any proceeds of such debts and claims (including without limitation, any
      claims or sums of money deriving from or in relation to the Collateral or
      other Relevant Assets, any court order or judgment, any contract or
      agreement to which the Grantor is party and any other assets, property
      rights or undertaking of the Grantor in each case in or relating to the
      Collateral or other Relevant Assets);

                  (ii)  except with the prior consent of the Secured Party or as
      permitted under the Loan Agreement the Grantor shall not execute, and
      there will not be on file in any public office, any financing statement or
      other documents or instruments, except financing statements or other
      documents or instruments filed or to be filed in favor of the Secured
      Party and the Grantor shall not (except as permitted by the Loan
      Agreement) sell, assign, transfer, license, grant any option, or create or
      suffer to exist any Lien upon or with respect to, or otherwise dispose of
      (by operation of law or otherwise) the Collateral, except Permitted Liens
      and the Lien created by and under this Security Deed and other Finance
      Documents, and the Grantor shall defend the Collateral against all Persons
      at any time claiming any interest therein;

                                       7
<PAGE>

                  (iii) it shall not change the Grantor's name, chief executive
      office, type of organization or jurisdiction of organization unless it
      shall have (y) notified the Secured Party in writing, by executing and
      delivering to the Secured Party a completed Pledge Supplement, at least
      thirty (30) days prior to any such change or establishment, identifying
      such new proposed name, chief executive office or jurisdiction of
      organization and providing such other information in connection therewith
      as the Secured Party may reasonably request and (z) taken all actions
      necessary or advisable in the reasonable opinion of the Secured Party to
      maintain the continuous validity, perfection and the same or better
      priority of the Secured Party's security interest in the Collateral
      intended to be granted and agreed to hereby;

                  (iv)  it shall pay promptly when due all property and other
      taxes, assessments and governmental charges or levies imposed upon, and
      all claims against, the Collateral, except to the extent the validity
      thereof is being contested in good faith; provided, the Grantor shall in
      any event pay such taxes, assessments, charges, levies or claims not later
      than five (5) days prior to the date of any proposed sale under any
      judgment, writ or warrant of attachment entered or filed against the
      Grantor or any of the Collateral as a result of the failure to make such
      payment;

                  (v)   upon the Grantor obtaining actual knowledge thereof, it
      shall promptly notify the Secured Party in writing of any event that is
      reasonably likely to have a material and adverse effect on the ability of
      the Grantor or the Secured Party to dispose of the Collateral or any
      portion thereof following an Event of Default, including, without
      limitation, the levy of any legal process against the Collateral or any
      portion thereof; and

                  (vi)  it shall not take or permit any action which is
      reasonably likely to impair the Secured Party's rights in the Collateral.

      4.2   RECEIVABLES.

            (a)   Representations and Warranties. The Grantor represents and
warrants, on the Closing Date and on each Interest Payment Date throughout the
period of the Term in relation to which a Deemed Advance Notice has been given
is made available, that no Receivable requires the consent of the Account Debtor
in respect thereof in connection with the pledge hereunder, except any consent
which has been obtained.

            (b)   Covenants and Agreements. The Grantor hereby covenants and
agrees that:

                  (i)   it shall keep and maintain at its own cost and expense
      satisfactory and complete records of the Receivables, including, but not
      limited to, the originals of all documentation with respect to all
      Receivables and records of all payments received and all credits granted
      on the Receivables;

                  (ii)  it shall not evidence Receivables as Chattel Paper or
      Instruments except with the prior consent of the Secured Party, and it
      shall mark conspicuously, in form and manner reasonably satisfactory to
      the Secured Party, all Chattel Paper and Instruments hereafter created
      with an appropriate reference to the fact that the Secured Party has a
      security interest therein;

                                       8
<PAGE>

                  (iii) except as otherwise provided in this subsection, the
      Grantor shall continue to collect all amounts due or to become due to the
      Grantor under the Receivables and any Supporting Obligation.
      Notwithstanding anything in the foregoing, at any time following the
      occurrence and during the continuation of an Event of Default, the Secured
      Party may: (y) direct the Account Debtors under any Receivables to make
      payment of all amounts due or to become due to the Grantor thereunder
      directly to the Secured Party; and (z) notify, or require the Grantor to
      notify, each Person (if any) maintaining a lockbox or similar arrangement
      to which Account Debtors under any Receivables have been directed to make
      payment to remit all amounts representing collections on checks and other
      payment items from time to time sent to or deposited in such lockbox or
      other arrangement directly to the Secured Party. If following the
      occurrence and continuance of an Event of Default the Secured Party
      notifies the Grantor that it has elected to collect the Receivables in
      accordance with the preceding sentence, any payments of Receivables
      received by the Grantor shall be forthwith (and in any event within two
      (2) Business Days) deposited by the Grantor thereafter in the exact form
      received, duly indorsed by the Grantor to the Secured Party if required,
      in the Collateral Account maintained under the sole dominion and control
      of the Secured Party, and until so turned over, all amounts and proceeds
      (including checks and other instruments) received by the Grantor in
      respect of the Receivables, any Supporting Obligation or Collateral
      Support shall be received in trust for the benefit of the Secured Party
      hereunder and shall be segregated from other funds of the Grantor and the
      Grantor shall not adjust, settle or compromise the amount or payment of
      any Receivable, or release wholly or partly any Account Debtor or obligor
      thereof, or allow any credit or discount thereon.

            (c)   Delivery and Control of Receivables. With respect to any
Receivables that are evidenced by, or constitute, Chattel Paper or Instruments,
the Grantor shall cause each originally executed copy thereof to be delivered to
the Secured Party (or its agent or designee) appropriately indorsed to the
Secured Party or indorsed in blank within ten (10) days of the Grantor acquiring
rights therein. With respect to any Receivables which at anytime hereafter would
constitute "electronic chattel paper" under Article 9 of the UCC, the Grantor
shall take all steps necessary to give the Secured Party control over such
Receivables (within the meaning of Section 9-105 of the UCC) within ten (10)
days of the Grantor acquiring rights therein.

SECTION 5. ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES.

      5.1   ACCESS; RIGHT OF INSPECTION. The Secured Party and its
representatives shall at all times following the occurrence and during the
continuation of an Event of Default, have full and free access during normal
business hours to all the books, correspondence and records of the Grantor that
are related to the Collateral, and the Secured Party and its representatives may
examine the same, take extracts therefrom and make photocopies thereof, and the
Grantor agrees to render to the Secured Party, at the Grantor's cost and
expense, such clerical and other assistance as may be reasonably requested with
regard thereto.

      5.2   FURTHER ASSURANCES (a) The Grantor agrees that from time to time, at
its expense, that it shall promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or that the
Secured Party may reasonably request, in order to create and/or maintain the
validity, perfection or priority of and protect any security interest granted
hereby or, upon the occurrence and during the continuance of an Event of
Default, to enable the Secured Party to exercise and enforce its rights and
remedies hereunder with respect to the Collateral. Without limiting the
generality of the foregoing, the Grantor shall:

                                       9
<PAGE>

                  (i)   file (x) such financing or continuation statements (or
      similar documents) or (y) such other agreements, instruments,
      endorsements, powers of attorney or notices as may be necessary under UK
      law, or as the Secured Party may reasonably request, in order to perfect
      and preserve the security interests granted or purported to be granted
      hereby;

                  (ii)  at the Secured Party's request, appear in and defend any
      action or proceeding that is reasonably likely to affect such Grantor's
      title to or the Secured Party's security interest in all or any part of
      the Collateral.

            (b)   The Grantor hereby authorizes the Secured Party to file a
Record, including, without limitation, financing or continuation statements, and
amendments thereto, in any jurisdictions and with any filing offices as the
Secured Party may determine, in its reasonable discretion, are necessary or
advisable to perfect the security interest granted to the Secured Party herein.
Such financing statements may describe the Collateral in the same manner as
described herein or may contain an indication or description of collateral that
describes such property in any other manner as the Secured Party may determine,
in its reasonable discretion, is necessary, advisable or prudent to ensure the
perfection of the security interest in the Collateral granted to the Secured
Party herein. The Grantor shall furnish to the Secured Party from time to time
statements and schedules further identifying and describing the Collateral as
the Secured Party may reasonably request, all in reasonable detail.

SECTION 6. SECURED PARTY APPOINTED ATTORNEY-IN-FACT.

      6.1   POWER OF ATTORNEY. The Grantor, by way of security, irrevocably
appoints the Secured Party and any of its delegates and sub-delegates to be its
attorney to take, at any time after the security constituted by this Security
Deed has become enforceable, any action which the Grantor is obliged to take
under this Security Deed. The Grantor ratifies and confirms whatever any
attorney does or purports to do pursuant to its appointment under this Clause.

      6.2   NO DUTY ON THE PART OF SECURED PARTY. The powers conferred on the
Secured Party hereunder are solely to protect its interests in the Collateral
and shall not impose any duty upon the Secured Party to exercise any such
powers. The Secured Party shall be accountable only for amounts that it actually
receive as a result of the exercise of such powers, and neither the Secured
Party nor any of its officers, directors, employees or agents shall be
responsible to the Grantor for any act or failure to act hereunder, except for
the own gross negligence or willful misconduct.

SECTION 7. REMEDIES, GENERALLY.

      7.1   GENERALLY.

            (a)   If any Event of Default shall have occurred and be continuing,
the Secured Party may exercise in respect of the Collateral, in addition to all
other rights and remedies provided for herein or otherwise available to it at
law or in equity, all the rights and remedies of the Secured Party on default
under the UCC (whether or not the UCC applies to the affected Collateral) to
collect, enforce or satisfy any Secured Obligations then owing, whether by
acceleration or otherwise, and also may pursue any of the following separately,
successively or simultaneously:

                                       10
<PAGE>

                  (i)   require the Grantor to, and the Grantor hereby agrees
      that it shall at its expense and promptly upon request of the Secured
      Party forthwith, assemble all or part of the Collateral as directed by the
      Secured Party and make it available to the Secured Party at a place to be
      designated by the Secured Party that is reasonably convenient to both
      parties;

                  (ii)  take possession of the Collateral with or without
      judicial process;

                  (iii) prior to the disposition of the Collateral, prepare the
      Collateral for disposition in any manner to the extent the Secured Party
      deems appropriate; and

                  (iv)  subject to the terms of Section 10.2 of the Loan
      Agreement, without notice except as specified below or under the UCC,
      sell, assign, lease, license (on an exclusive or nonexclusive basis) or
      otherwise dispose of the Collateral or any part thereof in one or more
      parcels at public or private sale, at any of the Secured Party's offices
      or elsewhere, for cash, on credit or for future delivery, at such time or
      times and at such price or prices and upon such other terms as the Secured
      Party may deem commercially reasonable.

            (b)   The Secured Party may be the purchaser of any or all of the
Collateral at any public or private (to the extent to the portion of the
Collateral being privately sold is of a kind that is customarily sold on a
recognized market or the subject of widely distributed standard price
quotations) sale in accordance with the UCC and the Secured Party shall be
entitled, for the purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Collateral sold at any such sale
made in accordance with the UCC, to use and apply any of the Secured Obligations
as a credit on account of the purchase price for any Collateral payable by the
Secured Party at such sale. Each purchaser at any such sale shall hold the
property sold absolutely free from any claim or right on the part of the
Grantor, and the Grantor hereby waives (to the extent permitted by applicable
law) all rights of redemption, stay and/or appraisal which it now has or may at
any time in the future have under any rule of law or statute now existing or
hereafter enacted. The Grantor agrees that, to the extent notice of sale shall
be required by law, at least ten (10) days notice to the Grantor of the time and
place of any public sale or the time after which any private sale is to be made
shall constitute reasonable notification. The Secured Party shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. The Secured Party may adjourn any public or private sale from time
to time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned. The Grantor hereby waives any claims against the Secured Party
arising by reason of the fact that the price at which any Collateral may have
been sold at such a private sale was less than the price which might have been
obtained at a public sale, even if the Secured Party accepts the first offer
received and does not offer such Collateral to more than one offeree. If the
proceeds of any sale or other disposition of the Collateral are insufficient to
pay all the Secured Obligations, the Grantor shall be liable for the deficiency
and the fees of any attorneys employed by the Secured Party to collect such
deficiency. The Grantor further agrees that a breach of any of the covenants
contained in this Section will cause irreparable injury to the Secured Party,
that the Secured Party has no adequate remedy at law in respect of such breach
and, as a consequence, that each and every covenant contained in this Section
shall be specifically enforceable against the Grantor, and the Grantor hereby
waives and agrees not to assert any defenses against an action for specific
performance of such covenants except for a defense that no default has occurred
giving rise to the Secured

                                       11
<PAGE>

Obligations becoming due and payable prior to their stated maturities. Nothing
in this Section shall in any way alter the rights of the Secured Party
hereunder.

            (c)   The Secured Party may sell the Collateral without giving any
warranties as to the Collateral. The Secured Party may specifically disclaim or
modify any warranties of title or the like. This procedure will not be
considered to adversely affect the commercial reasonableness of any sale of the
Collateral.

            (d)   The Secured Party shall have no obligation to marshal any of
the Collateral.

      7.2   APPLICATION OF PROCEEDS. Except as expressly provided elsewhere in
this Security Deed, all proceeds received by the Secured Party in respect of any
sale, any collection from, or other realization upon all or any part of the
Collateral shall be applied in full or in part by the Secured Party against, the
Secured Obligations in the following order of priority:

            (a)   first, to the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to the
Secured Party's agents and counsel, and all other expenses, liabilities and
advances made or incurred by the Secured Party in connection therewith, and all
amounts for which the Secured Party is entitled to indemnification hereunder and
all advances made by the Secured Party hereunder for the account of the Grantor;

            (b)   second, to the payment of all other costs and expenses paid or
incurred by the Secured Party in connection with the exercise of any right or
remedy hereunder or under the Loan Agreement, all in accordance with the terms
hereof or thereof;

            (c)   third, to the extent of any excess of such proceeds, to the
payment of all other Secured Obligations; and

            (d)   fourth, to the extent of any excess of such proceeds, to the
payment to or upon the order of the Grantor or to whosoever may be lawfully
entitled to receive the same or as a court of competent jurisdiction may direct.

      7.3   SALES ON CREDIT. If Secured Party sells any of the Collateral upon
credit, the Grantor will be credited only with payments actually made by
purchaser and received by Secured Party and applied to indebtedness of the
purchaser. In the event the purchaser fails to pay for the Collateral, the
Secured Party may resell the Collateral and the Grantor shall be credited with
proceeds of the sale.

      7.4   CASH PROCEEDS.

            In addition to the rights of the Secured Party specified in Section
4.2 with respect to payments of Receivables, all proceeds of any Collateral
received by the Grantor after the occurrence and during the continuation of an
Event of Default consisting of cash, checks and other non-cash items
(collectively, "CASH PROCEEDS") shall be held by the Grantor in trust for the
Secured Party, segregated from other funds of the Grantor, and shall, forthwith
upon receipt by the Grantor, be turned over to the Secured Party in the exact
form received by the Grantor (duly indorsed by the Grantor to the Secured Party,
if required) and held by the Secured Party. Any Cash Proceeds received by the
Secured Party (whether from the Grantor or otherwise), if an Event of Default
shall have occurred and be continuing, may, in the sole discretion of the
Secured Party, (a) be held by the Secured Party for the benefit as collateral
security for the Secured

                                       12
<PAGE>

Obligations (whether matured or unmatured) or (b) then or at any time thereafter
may be applied by the Secured Party against the Secured Obligations then due and
owing.

            For the avoidance of doubt, so long as no Event of Default has
occurred and is continuing, nothing contained herein shall limit the rights of
the Grantor to use and apply Cash Proceeds as it sees fit.

SECTION 8. REMEDIES, UK.

      8.1   UK ENFORCEMENT OF SECURITY, GENERALLY

            Without limiting anything contained in this Security Deed, for the
purposes of all powers implied by UK statute, the Secured Obligations are deemed
to have become due and payable on the date of this Security Deed and Section 103
of the Law of Property Act (Eng.) (the "ACT") (restricting the power of sale)
and Section 93 of the Act (restricting the right of consolidation) do not apply
to the security constituted by this Security Deed. The statutory powers of
leasing conferred on the Secured Party are extended so as to authorize the
Secured Party to lease, make agreements for leases, accept surrenders of leases
and grant options as the Secured Party may think fit and without the need to
comply with any provision of Sections 99 or 100 of the Act; and further

            (a)   Contingencies. If the Secured Party enforces the security
constituted by this Security Deed at a time when no amounts are due under any
Finance Document but at a time when amounts may or will become so due, the
Secured Party (or the Receiver) may pay the proceeds of any recoveries effected
by it into any account established for such purpose upon documentary terms and
conditions satisfactory to the Secured Party;

            (b)   No Liability as Mortgagee in Possession. Neither the Secured
Party nor any Receiver will be liable, by reason of entering into possession of
all or any of the Collateral, to account as mortgagee in possession or for any
loss on realization or for any default or omission for which a mortgagee in
possession might be liable;

            (c)   Agent of the Grantor. Each Receiver is deemed to be the agent
of the Grantor for all purposes and accordingly is deemed to be in the same
position as a Receiver duly appointed by a mortgagee under the Act. The Grantor
alone shall be responsible for his contracts, engagements, acts, omissions,
defaults and losses and for liabilities incurred by him and the Secured Party
shall not incur any liability (either to the Grantor or to any other Person) by
reason of the Secured Party making his appointment as a Receiver or for any
other reason; and

            (d)   Privileges. Each Receiver and the Secured Party is entitled to
all the rights, powers, privileges and immunities conferred by the Act on
mortgagees and receivers when such receivers have been duly appointed under the
Act, except that Section 103 of the Act does not apply.

      8.2   RECEIVER

            (a)   Appointment of Receiver.

                  (i)   Subject to paragraph (iii) below at any time after the
      occurrence and during the continuation of an Event of Default and after
      the security constituted by this Security Deed becomes enforceable or the
      Secured Party may without

                                       13
<PAGE>

      further notice appoint by deed, under seal or in writing, under its hand
      any one or more persons to be a receiver (a "RECEIVER") of all or any part
      of the Collateral in like manner in every respect as if the Secured Party
      had become entitled under the Act to exercise the power of sale conferred
      under the Act (subject to Clause 10.2 of the Loan Agreement);

                  (ii)  Section 109(1) of the Act shall not apply to this
      Security Deed; and

                  (iii) the Secured Party shall be entitled to appoint a
      Receiver save to the extent prohibited by Section 72A of the Insolvency
      Act 1986 (Eng.); and

                  (iv)  any duly appointed Receiver has, until removed, the
      powers set forth on Exhibit D attached hereto.

            (b)   Removal. The Secured Party may by notice remove from time to
time any Receiver appointed by it (subject to the provisions of Section 45 of
the Insolvency Act 1986 (Eng.) in the case of any administrative receivership if
applicable) and, whenever it may deem appropriate, appoint a new Receiver in the
place of any Receiver whose appointment has terminated for whatever reason;

            (c)   Remuneration. The Secured Party may fix the remuneration of
any Receiver appointed by it and the maximum rate specified in Section 109(6) of
the Act shall not apply; and

            (d)   Relationship with the Secured Party. To the fullest extent
permitted by law, any right, power or discretion conferred by this Security Deed
(either expressly or impliedly) upon a Receiver of the Collateral may after the
continuation and during the continuation of an Event of Default and after the
security created by this Security Deed becomes enforceable, be exercised by the
Secured Party in relation to any of the Collateral without first appointing a
Receiver or notwithstanding the appointment of a Receiver.

SECTION 9. SECURED PARTY.

            The Secured Party has the right hereunder, to make demands, to give
notices, to exercise or refrain from exercising any rights, and to take or
refrain from taking any action (including, without limitation, the release or
substitution of Collateral), solely in accordance with the Finance Documents and
any statutory provisions related therewith.

SECTION 10. CONTINUING SECURITY INTEREST; TRANSFER OF THE ADVANCE.

            This Security Deed shall create a continuing security interest in
the Collateral and shall remain in full force and effect until the payment in
full of all Secured Obligations and the cancellation or termination of the Loan
Agreement, be binding upon the Grantor, its successors and assigns, and inure,
together with the rights and remedies of the Secured Party hereunder, to the
benefit of the Secured Party and its successors, transferees and assigns (to the
extent permitted by the Loan Agreement). Without limiting the generality of the
foregoing, but subject to the terms of the Loan Agreement, the Secured Party may
assign or otherwise transfer the Advance held by it to any other Person, and
such other Person shall thereupon become vested with all the benefits in respect
thereof granted to the Secured Party herein or otherwise. Upon the payment in
full of all Secured Obligations and the cancellation or termination of the Loan
Agreement, the

                                       14
<PAGE>

security interest granted hereby shall terminate hereunder and of record and all
rights to the Collateral shall revert to the Grantor. Upon any such termination
the Secured Party shall, at the Grantor's expense, execute and deliver to the
Grantor such documents as it shall reasonably request to evidence such
termination.

SECTION 11. STANDARD OF CARE; SECURED PARTY MAY PERFORM.

            The powers conferred on the Secured Party hereunder are solely to
protect its interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the exercise of reasonable care in the
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Secured Party shall have no duty as to
any Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral. The
Secured Party shall be deemed to have exercised reasonable care in the custody
and preservation of Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which the Secured Party accords its own
property. Neither the Secured Party nor any of its directors, officers,
employees or agents shall be liable for failure to demand, collect or realize
upon all or any part of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of the Grantor or otherwise. If the Grantor fails to perform any
agreement contained herein, the Secured Party may itself perform, or cause
performance of, such agreement, and the reasonable expenses of the Secured Party
incurred in connection therewith shall be immediately due and payable by the
Grantor.

SECTION 12. MISCELLANEOUS.

            Any notice required or permitted to be given under this Security
Deed shall be given in accordance with Section 18 of the Loan Agreement. No
failure or delay on the part of the Secured Party in the exercise of any power,
right or privilege hereunder or under any other Finance Document shall impair
such power, right or privilege or be construed to be a waiver of any default or
acquiescence therein, nor shall any single or partial exercise of any such
power, right or privilege preclude other or further exercise thereof or of any
other power, right or privilege. All rights and remedies existing under this
Security Deed and the other Finance Documents are cumulative to, and not
exclusive of, any rights or remedies otherwise available. In case any provision
in or obligation under this Security Deed shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be within
the limitations of, another covenant shall not avoid the occurrence of a
Potential Event of Default or an Event of Default if such action is taken or
condition exists. This Security Deed shall be binding upon and inure to the
benefit of the Secured Party and the Grantor and their respective successors and
assigns. The Grantor shall not, without the prior written consent of the Secured
Party given in accordance with the Loan Agreement, assign any right, duty or
obligation hereunder, except as contemplated by the Loan Agreement. This
Security Deed and the other Finance Documents embody the entire agreement and
understanding between the Grantor and the Secured Party and supersede all prior
agreements and understandings between such parties relating to the subject
matter hereof and thereof. Accordingly, the Finance Documents may not be
contradicted by evidence of prior, contemporaneous or subsequent oral agreements
of the parties. There are no unwritten oral agreements between the parties. This
Security Deed may be executed in one or more counterparts and by different
parties hereto in separate counterparts, each of which when so

                                       15
<PAGE>

executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.

            THIS SECURITY DEED AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS
CONFLICTS OF LAW PROVISIONS (OTHER THAN SECTION 5-1401 AND SECTION 5-1402 OF THE
NEW YORK GENERAL OBLIGATION LAWS).

                                       16
<PAGE>

      IN WITNESS WHEREOF, the Grantor and the Secured Party have caused this
Security Deed to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.

                                         Executed as a Deed, by:

                                         VERNALIS DEVELOPMENT LIMITED,
                                         as the Grantor

                                         By: ___________________________________
                                                Name:
                                                Title: Director

                                         By: ___________________________________
                                                Name:
                                                Title: Director/Secretary

                                         ENDO PHARMACEUTICALS INC.,
                                         as the Secured Party

                                         By: ___________________________________
                                                Name:
                                                Title:

                                       17
<PAGE>

                            EXHIBITS TO SECURITY DEED

                                    EXHIBIT A
                            FORM OF PLEDGE SUPPLEMENT

            This PLEDGE SUPPLEMENT, dated [MM/DD/YY], is delivered by VERNALIS
DEVELOPMENT LIMITED a limited liability company incorporated in England and
Wales (the "GRANTOR") pursuant to the Security Deed, dated as of July __, 2004
(as it may be from time to time amended, restated, modified or supplemented, the
"SECURITY DEED"), among the Grantor, and ENDO PHARMACEUTICALS INC., as the
Secured Party. Capitalized terms used herein not otherwise defined herein shall
have the meanings ascribed thereto in the Security Deed.

            Grantor hereby confirms the grant to the Secured Party of, and does
hereby grant to the Secured Party, a security interest in all of Grantor's
right, title and interest in and to all Collateral to secure the Secured
Obligations, in each case whether now or hereafter existing or in which Grantor
now has or hereafter acquires an interest and wherever the same may be located.
Grantor represents and warrants that the attached supplements to schedules
accurately and completely set forth all additional information required pursuant
to the Security Deed and hereby agrees that such supplements to schedules shall
constitute part of the schedules to the Security Deed.

            IN WITNESS WHEREOF, Grantor has caused this Pledge Supplement to be
duly executed and delivered by its duly authorized officer as of the date first
written above.

                                         VERNALIS DEVELOPMENT LIMITED

                                         By:____________________________________
                                         Name:
                                         Title:

<PAGE>

                            EXHIBITS TO SECURITY DEED

                                    EXHIBIT B
                                 FORM OF NOTICE

                                NOTICE OF CHARGE

To:   Endo Pharmaceuticals Inc.
      100 Painters Drive
      Chadds Ford, PA 19317
      United States of America
      (as licensee under the License Agreement (as defined below))

Dear Sir or Madam,

We hereby give you notice that pursuant to a security deed dated as of July __,
2004 (the "SECURITY DEED") we have charged to Endo Pharmaceuticals Inc. (as
secured party under the Security Deed) (the "SECURED PARTY") all our right,
title and interest in, to and in respect of all payments made by the licensee
under the license agreement (the "LICENSE AGREEMENT"), dated as of July __,
2004, between Vernalis Development Limited and Endo Pharmaceuticals Inc.

With effect from your receipt of this notice we hereby give you notice that we
have agreed that upon the occurrence and during the continuation of an Event of
Default, the Secured Party shall have certain rights and remedies under the
Security Deed, including, without limitation:

      (a)   all payments to be made to us under or arising from the License
            Agreement should be made to the Secured Party or to its order as it
            may specify from time to time;

      (b)   all remedies provided for in the License Agreement or available at
            law or in equity shall be exercisable by the Secured Party;

      (c)   all rights to compel performance of the License Agreement shall be
            exercisable by the Secured Party (although we shall remain liable to
            perform all the obligations assumed by us under the License
            Agreement); and

      (d)   all rights, interests and benefits whatsoever accruing to or for the
            benefit of ourselves arising from the License Agreement belong to
            the Secured Party and no changes may be made to the terms of the
            License Agreement, nor may the License Agreement be terminated,
            without the Secured Party's prior written consent.

You are hereby authorized and instructed, without requiring further approval
from us, to provide the Secured Party with such information related to the
License Agreement as it may from time to time request and to send it copies of
all notices issued by you under the License Agreement to the Secured Party, as
well as to us.

These instructions may not be revoked, nor may the terms of the License
Agreement be amended, varied or waived without the prior written consent of the
Secured Party.

Yours faithfully,

For and on behalf of
VERNALIS DEVELOPMENT LIMITED

<PAGE>

                            EXHIBITS TO SECURITY DEED

                                    EXHIBIT C
                               POWERS OF RECEIVER

1.1   GENERAL.

      (a)   Each Receiver has, and is entitled to exercise, all of the rights,
            powers and discretions set out below in this Exhibit D in addition
            to those conferred by the Act on any receiver appointed under the
            Act;

      (b)   If there is more than one Receiver holding office at the same time,
            each Receiver may (unless the document appointing him states
            otherwise) exercise all of the powers conferred on a Receiver under
            this Security Deed individually and to the exclusion of any other
            Receivers;

      (c)   Each Receiver has all the rights, powers and discretions set out in
            schedule 1 to the Insolvency Act 1986 (Eng.); and

      (d)   A Receiver who is an administrative receiver of the Grantor has all
            the rights, powers and discretions of an administrative receiver
            under the Insolvency Act 1986 (Eng.).

1.2   POSSESSION. Receiver may take immediate possession of, get in and collect
      any of the Collateral.

1.3   PROTECTION OF ASSETS. A Receiver may do all acts which the Grantor might
      do in the ordinary conduct of its business as well for the protection as
      for the improvement of the Collateral, in each case as he may think fit.

1.4   EMPLOYEES. A Receiver may appoint and discharge managers, the officers,
      the Secured Party, accountants, servants, workmen and others for the
      purposes of this Security Deed upon such terms as to remuneration or
      otherwise as he may think proper and discharge any such persons appointed
      by the Grantor.

1.5   BORROW MONEY. A Receiver may raise and borrow money either unsecured or on
      the securing of any of the Collateral either in priority to the security
      constituted by this Security Deed or otherwise and generally on any terms
      and for whatever purpose he thinks fit. No person lending that money shall
      be concerned to enquire as to the propriety or purpose of the exercise of
      that power or to check the application of any money so raised or borrowed.

1.6   SALE OF ASSETS. Subject to the provisions of Clause 10.2 of the Loan
      Agreement, a Receiver may sell, exchange, convert into money and realise
      any of the Collateral by public auction or private contract and generally
      in any manner and on any terms that he thinks proper. The consideration
      for any such transaction may consist of cash, debentures or other
      obligations, shares, stock or other valuable consideration and any such
      consideration may be payable in a lump sum or by instalments spread over
      such period as he thinks fit.

<PAGE>

1.7   COMPROMISE. A Receiver may settle, adjust, refer to arbitration,
      compromise and arrange any claims, accounts, disputes, questions and
      demands with or by any person who is or claims to be a creditor of the
      Grantor or relating in any way to any of the Collateral.

1.8   LEGAL ACTIONS. A Receiver may bring, prosecute, enforce, defend and
      abandon all actions, suits and proceedings in relation to any of the
      Collateral that may seem to him to be expedient.

1.9   RECEIPTS. A Receiver may give valid receipts for all moneys and execute
      all assurances and things that may be proper or desirable for realising
      any of the Collateral.

1.10  OTHER POWERS

      Any Receiver may:

      (a)   do all other acts and things which he may consider desirable or
            necessary for realising any of the Collateral or incidental or
            conducive to any of the rights, powers or discretions conferred on a
            Receiver under or by virtue of this Security Deed;

      (b)   exercise in relation to any of the Collateral all the powers,
            authorities and things which he would be capable of exercising if he
            were the absolute beneficial owner of the same, and

      (c)   and may use the name of the Grantor for any of the above purposes.
<PAGE>

                           SCHEDULES TO SECURITY DEED

                               SCHEDULE 4.1(a)(ii)
                           ORGANIZATIONAL INFORMATION

<TABLE>
<CAPTION>
                                                                                            CHIEF
                                                               ORGANIZATION             EXECUTIVE OFFICE
     GRANTOR'S            TYPE OF         JURISDICTION OF     IDENTIFICATION                  AND
  FULL LEGAL NAME       ORGANIZATION       ORGANIZATION           NUMBER                NOTICE ADDRESS
-------------------     ------------     -----------------    --------------    -------------------------------
<S>                     <C>              <C>                  <C>               <C>
VERNALIS DEVELOPMENT    Limited          England and Wales    2600483           CHIEF EXECUTIVE OFFICE:
LIMITED                 Liability
                        Company

                                                                                NOTICE ADDRESS:
                                                                                Vernalis Development Limited
                                                                                Oakdene Court
                                                                                613 Reading Road
                                                                                Winnersh
                                                                                Wokingham
                                                                                RG41 5UA
                                                                                United Kingdom
                                                                                Attention: Head of Legal
                                                                                Affairs/Chief Financial Officer
                                                                                Telecopy: 0118-989-98300
</TABLE>

<PAGE>

                           SCHEDULES TO SECURITY DEED

                              SCHEDULE 4.1(a)(iii)
                             OTHER NAMES OF GRANTOR

<PAGE>

                           SCHEDULES TO SECURITY DEED

                               SCHEDULE 4.1(a)(iv)
               CHANGES IN ORGANIZATIONAL INFORMATION AND STRUCTURE

CHANGES IN NAME:

<TABLE>
<CAPTION>
  DATE OF CHANGE                               DESCRIPTION OF CHANGE
  --------------                               ---------------------
<S>                                         <C>
-------------------                         ----------------------------

-------------------                         ----------------------------
</TABLE>

CHANGES IN JURISDICTION OF ORGANIZATION:

<TABLE>
<CAPTION>
  DATE OF CHANGE                               DESCRIPTION OF CHANGE
  --------------                               ---------------------
<S>                                         <C>
-------------------                         ----------------------------

-------------------                         ----------------------------
</TABLE>

CHANGES IN CHIEF EXECUTIVE OFFICE:

<TABLE>
<CAPTION>
  DATE OF CHANGE                               DESCRIPTION OF CHANGE
  --------------                               ---------------------
<S>                                         <C>
-------------------                         ----------------------------

-------------------                         ----------------------------
</TABLE>

<PAGE>

                           SCHEDULES TO SECURITY DEED

                               SCHEDULE 4.1(a)(v)
                                 FILING OFFICES

Recorder of Deeds, District of Columbia

Companies House, London, England

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00084-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00084-of-00352.parquet"}]]