Document:

AMENDMENT TO REGISTRATION RIGHTS AGREEMENTS

 

Exhibit 10.1

AMENDMENT

TO

REGISTRATION RIGHTS AGREEMENT

          AMENDMENT
TO REGISTRATION RIGHTS AGREEMENT, dated as of June 30, 2003 (the
“Amendment”), by and among Endo Pharmaceuticals Holdings Inc., a Delaware
corporation (the “Company”), and Endo Pharma LLC, a Delaware limited liability
company (“Endo LLC,” and together with the Company, the “Parties”).

          WHEREAS, the Parties have entered into that certain Registration Rights
Agreement, dated July 17, 2000 (the “Registration Rights Agreement”);

          WHEREAS, the Company has filed a registration statement under the
Securities Act of 1933, as amended, in connection with a public offering of its
common stock, at the request of Endo LLC pursuant to its rights under Section
1.1 of the Registration Rights Agreement (the “Offering”);

          WHEREAS, the Parties desire to amend the Registration Rights Agreement
pursuant to Section 11.4 thereof, to clarify the scope of certain rights
granted under Section 1.4 thereof in connection with Endo Pharma LLC’s sales of
the Company’s common stock; and

          WHEREAS, all capitalized terms used in this Amendment, and not otherwise
defined herein, shall have the meanings assigned to them in the Registration
Rights Agreement.

          NOW THEREFORE, in consideration of the mutual promises and obligations of
the Parties, the Parties, by this Amendment, hereby amend the Registration
Rights Agreement as follows:

          1.
    Section 1.4 of the Registration Rights Agreement shall hereafter read
in full as follows:

“     1.4     Priority in Demand Registrations.

          (a)     If a registration pursuant to Section 1.1 hereof involves an
underwritten offering, and the managing underwriter (or, in the case of an
offering which is not underwritten, a nationally recognized investment banking
firm) shall advise the Company in writing (with a copy to Endo LLC) that, in
its opinion, the number of securities requested and otherwise proposed to be
included in such registration exceeds the number which can be sold in such
offering without materially and adversely affecting the offering price, the
Company will include in such registration the number which the Company is so
advised can be sold in such offering without such material adverse effect, in
the following order of priority:

 

               (1)     First, all of the Registrable Securities of Endo LLC;

               (2)     Second, up to the full number of shares of Common Stock requested to
be included in such registration by the Management Stockholders (as defined in
that certain Amended and Restated Stockholders Agreement, dated as of July 14,
2000, by and among the Company, Endo LLC, and the other parties named therein
(the “Stockholders Agreement”)) and by the Employee Stockholders (as defined in
that certain Amended and Restated Employee Stockholders Agreement, dated as of
June 23, 2003, by and among the Company, Endo LLC, and the other parties named
therein (the “Employee Stockholders Agreement”), which, in the good faith
opinion of such firm delivered in writing, can be sold without so materially
and adversely affecting such registration (and, if less than the full number of
such shares of Common Stock, allocated pro rata among the Management
Stockholders and the Employee Stockholders on the basis of the total number of
shares of Common Stock requested to be included therein by the Management
Stockholders and the Employee Stockholders); provided, however, that with
respect to the Management Stockholders and the Employee Stockholders, if the
managing underwriter(s) (or, in the case of an offering which is not
underwritten, a nationally recognized investment banking firm) in connection
with such registration determines that such offering would be materially and
adversely affected by the inclusion of Common Stock owned by the Management
Stockholders and the Employee Stockholders for any reason, such managing
underwriter(s) (or, in the case of an offering which is not underwritten, a
nationally recognized investment banking firm) may in its sole discretion
exclude all or, part of the Common Stock requested to be included therein by
the Management Stockholders and the Employee Stockholders on a pro rata basis,
unless the Company and the managing underwriter(s) (or, in the case of an
offering which is not underwritten, a nationally recognized investment banking
firm) shall agree to non pro rata treatment; and

               (3)     Third, the securities, if any, being sold by the Company.

          Notwithstanding the foregoing, neither the Company nor Endo LLC will be
required to give any notice to any holder of Registrable Securities or any
Employee Stockholder with respect to a given offering if such holder is to be
excluded from such offering pursuant to this Section 1.4.”

[REMAINDER OF PAGE IS INTENTIONALLY BLANK; SIGNATURE PAGE

FOLLOWS]

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

	 	 	 	 	 
	 	 	ENDO PHARMACEUTICALS HOLDINGS INC.
	 	 	 	 	 
	 	 	
By:
	 	/s/ Carol A. Ammon
	 	 	 	

	 	 	Name: Carol A. Ammon

Title: Chairman and Chief Executive

Officer
	 	 	 	 	 
	 	 	ENDO PHARMA LLC
	 	 	 	 	 
	 	 	
By:
	 	/s/ David Wahrhaftig
	 	 	 	

	 	 	Name:
David Wahrhaftig

Title: Initial ManagerAMENDED AND RESTATED EMPLOYEE STOCKHOLDERS AGRMNT

 

Exhibit 10.2

AMENDED AND RESTATED

EMPLOYEE STOCKHOLDERS AGREEMENT

ENDO PHARMACEUTICALS HOLDINGS INC.

Dated as of June 5, 2003

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page
	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	ARTICLE I
	 	 	 	 
	RESTRICTIONS ON TRANSFER OF COMMON STOCK	 	 	2	 
	 	1.1	 	 	General Restriction on Transfer by Employee Stockholders
	 	 	2	 
	 	1.2	 	 	Permitted Transferees
	 	 	2	 
	 	 	 	 	 	 	ARTICLE II
	 	 	 	 
	PURCHASES BY THE COMPANY	 	 	3	 
	 	2.1	 	 	Right to Purchase Shares from Employee Stockholders
	 	 	3	 
	 	2.2	 	 	Notice
	 	 	4	 
	 	2.3	 	 	Payment
	 	 	4	 
	 	2.4	 	 	Postponement, etc.
	 	 	5	 
	 	 	 	 	 	 	ARTICLE III
	 	 	 	 
	PURCHASE PRICE	 	 	6	 
	 	3.1	 	 	Fair Market Value
	 	 	6	 
	 	3.2	 	 	Carrying Value
	 	 	6	 
	 	3.3	 	 	Certain Defined Terms
	 	 	6	 
	 	 	 	 	 	 	ARTICLE IV
	 	 	 	 
	PROHIBITION ON PURCHASES	 	 	8	 
	 	4.1	 	 	Prohibited Purchases
	 	 	8	 
	 	 	 	 	 	 	ARTICLE V
	 	 	 	 
	SALES TO THIRD PARTIES	 	 	9	 
	 	5.1	 	 	General
	 	 	9	 
	 	5.2	 	 	Right of First Refusal
	 	 	10	 
	 	5.3	 	 	Agreements to Be Bound
	 	 	11	 
	 	5.4	 	 	Assignment
	 	 	11	 

 

 

	 	 	 	 	 	 	 	 	 	 	 
	 	5.5	 	 	Involuntary Transfers
	 	 	11	 
	 	5.6	 	 	Tag-Along, Piggyback and Drag-Along Rights
	 	 	12	 
	 	5.7	 	 	Expenses
	 	 	17	 
	 	5.8	 	 	Holdback and Other Agreements
	 	 	17	 
	 	5.9	 	 	Indemnification
	 	 	18	 
	 	 	 	 	 	 	ARTICLE VI
	 	 	 	 
	TERMINATION	 	 	19	 
	 	6.1	 	 	Sale of the Company
	 	 	19	 
	 	6.2	 	 	Cessation of Ownership of Stock
	 	 	19	 
	 	6.3	 	 	Other Termination Events
	 	 	19	 
	 	 	 	 	 	 	ARTICLE VII
	 	 	 	 
	MISCELLANEOUS PROVISIONS	 	 	20	 
	 	7.1	 	 	Stock Certificate Legend
	 	 	20	 
	 	7.2	 	 	Option Plans
	 	 	20	 
	 	7.3	 	 	New Employee Stockholders
	 	 	21	 
	 	7.4	 	 	No Other Arrangements or Agreements
	 	 	21	 
	 	7.5	 	 	Amendment and Modification
	 	 	21	 
	 	7.6	 	 	Assignment
	 	 	21	 
	 	7.7	 	 	Recapitalizations, Exchanges, etc. Affecting the Common Stock
	 	 	22	 
	 	7.8	 	 	Transfer of Common Stock
	 	 	22	 
	 	7.9	 	 	Further Assurances
	 	 	23	 
	 	7.10	 	 	Governing Law
	 	 	23	 
	 	7.11	 	 	Invalidity of Provision
	 	 	23	 
	 	7.12	 	 	Notices
	 	 	23	 
	 	7.13	 	 	Headings; Execution in Counterparts
	 	 	24	 
	 	7.14	 	 	Entire Agreement; Effect on Certain Other Agreements
	 	 	25	 
	 	7.15	 	 	Injunctive Relief
	 	 	25	 
	 	7.16	 	 	Attorneys’ Fees
	 	 	25	 

 

 

AMENDED AND RESTATED EMPLOYEE STOCKHOLDERS AGREEMENT

          AMENDED AND RESTATED EMPLOYEE STOCKHOLDERS AGREEMENT, dated as of June 5,
2003 (this “Agreement”), by and among Endo Pharmaceuticals Holdings Inc., a
Delaware corporation (the “Company”), Kelso Investment Associates V, L.P., a
Delaware limited partnership (together with Kelso Equity Partners V, L.P., a
Delaware limited partnership, (“Kelso”)), Endo Pharma LLC, a Delaware limited
liability company (together with its designee, “Endo LLC”), each of the
employees of the Company listed on the signature page of this Agreement, each
of the employees currently party to the 2000 Employee Stockholders Agreement
(as defined below) and the employees of the Company or its subsidiaries who
become parties to this Agreement pursuant to Sections 7.2 and 7.3 of this
Agreement and each of their respective Permitted Transferees (each an “Employee
Stockholder,” and together the “Parties”).

          WHEREAS, the Parties have entered into that certain Amended and Restated
Employee Stockholders Agreement, dated as of July 14, 2000 (the “2000 Employee
Stockholders Agreement”);

          WHEREAS, the Company has filed a registration statement under the
Securities Act of 1933, as amended, in connection with a public offering of its
common stock held by Endo LLC (the “Public Offering”);

          WHEREAS, concurrently with the execution of this Agreement, Endo LLC will
grant its consent, pursuant to Section 7.5 of this Agreement, to the sale of
certain shares of the Company’s common stock held by the Employee Stockholders
in connection with the Public Offering;

          WHEREAS, the Parties desire to amend and restated the 2000 Employee
Stockholders Agreement pursuant to Section 7.5 thereof, to clarify the scope of
certain rights granted thereunder in connection with Endo Pharma LLC’s sales of
the Company’s common stock;

          WHEREAS, the Employee Stockholders executing this Agreement on the date
hereof beneficially own, in the aggregate, a majority of the shares of the
Company’s common stock owned by all Employee Stockholders as of the date
hereof; and

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          WHEREAS, all capitalized terms used in this Agreement, and not otherwise
defined herein, shall have the meanings assigned to them in the 2000 Employee
Stockholders Agreement.

          NOW, THEREFORE, in consideration of the mutual covenants and obligations
set forth in this Agreement, the parties hereto agree that the 2000 Employee
Stockholders Agreement is hereby amended and restated in its entirety to read
as follows:

ARTICLE I

RESTRICTIONS ON TRANSFER OF COMMON STOCK

          1.1 General Restriction on Transfer by Employee Stockholders. No shares
of Common Stock owned by any Employee Stockholder or any interest therein may,
directly or indirectly, be sold, assigned, mortgaged, transferred, pledged or
hypothecated or otherwise disposed of or transferred by such Employee
Stockholder (collectively, “Transferred” and any such transaction, a
“Transfer”), except for (i) Transfers to a transferee pursuant to Section 1.2
hereof (a “Permitted Transferee”), (ii) Transfers of shares of Common Stock to
the Company, Endo LLC, Kelso or any designated affiliate or other designee of
Kelso, including pursuant to Article II hereof, or (iii) Transfers of shares of
Common Stock pursuant to, or as otherwise permitted under, Article V hereof;
provided that in the event the employment of an Employee Stockholder with the
Company or any of its Subsidiaries is terminated for any reason, such Employee
Stockholder may pledge, hypothecate, mortgage or encumber his or her shares of
Common Stock; provided further that the terms of any such pledge,
hypothecation, mortgage or encumbrance shall be approved by Endo LLC in its
discretion taking into account the financial situation of Endo LLC at the time.

          1.2 Permitted Transferees.

          (a) Subject to paragraph (b) of this Section 1.2, any Employee Stockholder
may Transfer any shares of Common Stock or any interest therein or his or her
rights to subscribe for the same, if any, (i) with the prior written consent of
Endo LLC’s Board of Managers (the “LLC Board”), which consent shall not be
unreasonably withheld (provided that reasonable grounds to withhold consent shall
include, but not be limited to, the risk of subjecting the Company to
registration or reporting requirements under federal securities laws), to a
trust or corporation the beneficiaries or stockholders of which are

2

 

such
Employee Stockholder, as the case may be, his or her spouse, parents or any
other family members, or (ii) in case of his or her death, by will or by the
laws of intestate succession to executors, administrators, testamentary
trustees, legatees or beneficiaries. In addition to the foregoing, any
transferee of an Employee Stockholder described above may Transfer shares of
Common Stock back to such Employee Stockholder or to another Permitted
Transferee of such Employee Stockholder.

          (b) Any Transfer of shares of Common Stock made pursuant to paragraph (a)
of this Section 1.2 to a Permitted Transferee shall be permitted and shall be
effective only if such Permitted Transferee shall agree in writing to be bound
by the terms and conditions of this Agreement pursuant to an instrument of
assumption reasonably satisfactory in form and substance to Endo LLC.

          (c) An “affiliate” of, or a person “affiliated” with, a specified person,
is a person that directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the person
specified (in the case of Kelso, including, without limitation, any partner of
such entity or any director or officer of Kelso & Company, any individual
retirement account of any such partner, director or officer, any family member
of any such partner, director or officer, or any trust or family partnership
for the benefit of any such partner, director or officer or family member
thereof).

ARTICLE II

PURCHASES BY THE COMPANY

          2.1 Right to Purchase Shares from Employee Stockholders.

          (a) Subject to all of the provisions of this Article II and Article IV
hereof, Endo LLC shall have the right to purchase from an Employee Stockholder,
and such Employee Stockholder shall have the obligation to sell to Endo LLC,
all, but not less than all, of the shares of Common Stock owned by such
Employee Stockholder:

		
	 	     (i) at the Fair Market Value of such shares, if such
Employee Stockholder’s employment with the Company or any
of its subsidiaries is terminated as a result of (v) the
termination by the Company or one of its subsidiaries of
such employment without Cause, (w) the resignation of such
Employee Stockholder

3

 

		
	 	for Good Reason, (x) the resignation
of such Management Stockholder without Good Reason, (y)
the Retirement of such Employee Stockholder, or (z) the
death or Disability of such Employee Stockholder; and
	 
	 	     (ii) at the lesser of the Fair Market Value and the
Carrying Value (as defined in Section 3.2 hereof) of such
shares, if such Employee Stockholder’s employment with the
Company or any of its subsidiaries is terminated by the
Company or one of its subsidiaries with Cause.

          (b) In the event that Endo LLC does not exercise such right to purchase
the shares of Common Stock from an Employee Stockholder by giving notice within
the 30-day period referred to in Section 2.2 hereof, Kelso, or a party
designated by Kelso, shall have the right to purchase, at its option, the
shares of Common Stock referred to in Section 2.1(a) hereof from such Employee
Stockholder, by giving notice not later than the end of the succeeding 10-day
period.

          2.2 Notice. If Endo LLC desires to purchase shares of Common Stock from
an Employee Stockholder pursuant to Section 2.1 hereof, it shall notify such
Employee Stockholder not more than 30 days after the occurrence of the event
giving rise to Endo LLC’s right to acquire such Employee Stockholder’s shares
of Common Stock (or in the case of the Employee Stockholder’s death, it shall
notify such Employee Stockholder’s estate within 30 days of notice to Endo LLC
of the Employee Stockholder’s death). If Endo LLC does not deliver such notice
within such 30-day period and Kelso (or its designee) desires to purchase such
shares, then Kelso (or its designee) shall notify such Employee Stockholder not
later than the end of the succeeding 10-day period.

          2.3 Payment.

          (a) Subject to Article IV and Section 2.4 hereof, payment for shares of
Common Stock purchased pursuant to Section 2.1(a) and (b) hereof shall be made
on the date that is (i) in any case in which the price to be paid for such
shares may only be the Carrying Value thereof, the 30th business day following
the date on
which notice is given pursuant to Section 2.2 hereof, or (ii) in all other
cases, the 15th business day following the date of the determination of Fair
Market Value pursuant to Section 3.1(a) hereof.

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          (b) If the termination of employment of such Employee Stockholder is as a
result of his or her resignation without Good Reason, and:

		
	 	     (i) if the date of termination of employment
occurs prior to December 1, 2002, then the purchase price of
the purchased shares shall be paid within 15 days following
the surrender of the certificates representing the purchased
shares, and
	 
	 	     (ii) if the date of termination of employment occurs on or after
December 1, 2002, then the portion of the purchase price of the
purchased shares equal to the Carrying Value of such shares on
the date of termination of employment shall be paid by the 15th
day following the surrender of the certificates representing the
purchased shares and the remainder shall be paid on the last day
of the 18th month following the date of termination of
employment.

          (c) Any payments based on Fair Market Value required to be made by Endo
LLC under this Section 2.3 shall accrue interest at 6% simple interest per
annum on the amounts not paid from the date of termination of employment (or
the date of deemed termination) to the date Endo LLC makes such payments.

          2.4 Postponement, etc.

          (a) No party shall be required to consummate any purchase and sale under
this Article II until such time as such transaction would not violate
applicable law, other than violations which would not have a direct or indirect
material adverse effect on such party.

          (b) Notwithstanding anything to the contrary in this Article II, in no
event shall any sale of Common Stock that was received by an Employee
Stockholder upon the exercise of an employee stock option occur prior to the
six-month anniversary of such exercise.

5

 

ARTICLE III

PURCHASE PRICE

          3.1 Fair Market Value.

          (a) Fair Market Value. For the purposes of this Agreement, the “Fair
Market Value” of any share of Common Stock being purchased by or sold to Endo
LLC or Kelso (or its designees) pursuant to this Agreement shall be the average
for the ten consecutive trading days prior to such transaction of the last
sales price for a share of Common Stock on the principal securities exchange on
which the Common Stock is then listed or, if the Common Stock is not so listed,
on the National Association of Securities Dealers Automated Quotation System
or, if not so quoted, on the principal market on which the Common Stock is then
traded.

          (b) Notice to Employee Stockholders. After notice has been given
pursuant to Section 2.2 or 5.5 hereof, Endo LLC shall promptly deliver a letter
setting forth the Fair Market Value to Kelso and to each Employee Stockholder
whose Common Stock is to be purchased pursuant to Section 2.1 or 5.5 hereof.

          3.2 Carrying Value. For the purposes of Sections 2.1 and 5.5 hereof,
“Carrying Value” of any share of Common Stock being purchased by Endo LLC shall
be equal to the price paid by the selling Employee Stockholder for any such
share.

          3.3 Certain Defined Terms. As used in this Agreement, the following
terms shall have the meanings ascribed to them below, except with respect to
such Employee Stockholders as determined, from time to time, by resolution of
the LLC Board, with employment agreements with the Company which define such
terms differently, in which case such terms shall have the meanings ascribed to
them in such employment agreements of such Employee Stockholders as determined,
from time to time, by resolution of the LLC Board:

          (a) Cause. The term “Cause” used in connection with a termination of
employment of an Employee Stockholder shall mean a termination of such Employee
Stockholder’s employment by the Company or any of its subsidiaries due to (i)
the continued failure, after written notice, by such Employee Stockholder
substantially to perform his or her duties with the Company or any of its
subsidiaries (other than any such

6

 

failure resulting from incapacity due to
reasonably documented physical illness or injury or mental illness), (ii) the
engagement by such Employee Stockholder in serious misconduct that causes, or
in the good faith judgment of the Board may cause, harm (financial or
otherwise) to the Company or any of its subsidiaries including, without
limitation, (A) the disclosure of material secret or confidential information
of the Company or any of its subsidiaries, (B) the potential debarment of the
Company or any of its subsidiaries by the U.S. Food and Drug Administration or
any successor agency (the “FDA”), or (C) the possibility that the registration
of the Company or any of its subsidiaries with the U.S. Drug Enforcement
Administration or any successor agency (the “DEA”) could be revoked or an
application with the DEA could be denied, (iii) the potential debarment of such
Employee Stockholder by the FDA, or (iv) the material breach by the Employee
Stockholder of this Agreement or any other agreement between such Employee
Stockholder, on the one hand, and the Company or Kelso, on the other hand.

          (b) Good Reason. A termination of an Employee Stockholder’s employment
with the Company or any of its subsidiaries shall be for “Good Reason” if such
Employee Stockholder voluntarily terminates his or her employment with the
Company or any of its subsidiaries as a result of any of the following:

		
	 	     (i) without the Employee Stockholder’s prior written consent, a
material reduction by the Company or any of its subsidiaries in his
or her current salary, other than any such reduction which is part of
a general salary reduction or other concessionary arrangement
affecting all employees or affecting the group of employees of which
the Employee Stockholder is a member; or

		
	 	     (ii) the taking of any action by the Company or any of its
subsidiaries that would substantially diminish the aggregate value of
the benefits provided him or her under the Company’s or any such
subsidiary’s medical, health, accident, disability, life insurance,
thrift and retirement plans in which he or she was participating on
the date of his or her execution of this Agreement, other than any
such reduction that is (A) required by law, (B) implemented in
connection with a general concessionary arrangement affecting all employees or affecting the group of employees of which
the Employee Stockholder is a member or (C) generally applicable to
all beneficiaries of such plans.

7

 

          (c) Disability. The termination of the employment of any Employee
Stockholder by the Company or any of its subsidiaries shall be deemed to be by
reason of a “Disability” if, as a result of such Employee Stockholder’s
incapacity due to reasonably documented physical illness or injury or mental
illness, such Employee Stockholder shall have been unable for more than six
months within any 12-month period to perform his or her duties with the Company
or any of its subsidiaries on a full time basis and within 30 days after
written notice of termination has been given to such Employee Stockholder, such
Employee Stockholder shall not have returned to the full time performance of
his or her duties. The date of termination in the case of a termination for
“Disability” shall be the last day of the aforementioned 30-day period.

ARTICLE IV

PROHIBITION ON PURCHASES

          4.1 Prohibited Purchases. Notwithstanding anything to the contrary
herein, Endo LLC shall not be permitted to purchase any shares of Common Stock
from an Employee Stockholder (or make any payment for any purchased shares of

Common Stock) pursuant to Section 2.1 hereof to the extent (i) Endo LLC or the
Company (if the Company were to be the sole source of the funds necessary to
make any such payment or purchase) is prohibited from purchasing such shares
(or incurring debt to finance the purchase of such shares or making payment for
such purchased shares) by any debt instruments or other agreements (the
“Agreements”) entered into by Endo LLC, the Company or any of their respective
subsidiaries, or by applicable law, (ii) an event of default under any
Agreement has occurred and is continuing or a condition exists which would,
with notice or lapse of time or both, result in an event of default under any
Agreement or (iii) the purchase of such shares by Endo LLC or the Company (if
the Company were to be the sole source of the funds necessary to make any such
payment or purchase)(including the incurrence of any debt which in the judgment
of the LLC Board is necessary to finance such purchase or the payment for such
purchased shares) (A) could, in the judgment of the LLC Board, result in the
occurrence of an event of default under any Agreement or create a condition
which would or might, with
notice or lapse of time or both, result in an event of default under any
Agreement, (B) would, in the judgment of the LLC Board, be imprudent in view of
the financial condition (present or projected) of Endo LLC and its
subsidiaries, if any, taken as a whole, or the Company and its subsidiaries,
taken as a whole, or the anticipated impact of the purchase of (or payment for)
such shares on Endo LLC’s, the Company’s (if the Company were to be the sole
source of the funds necessary to make

8

 

any such payment or purchase) or any of
their respective subsidiaries’ ability to meet their respective obligations,
including under any Agreement or (C) could, in the judgment of the LLC Board,
constitute a fraudulent conveyance or transfer or render Endo LLC or the
Company (if the Company were to be the sole source of the funds necessary to
make any such payment or purchase) insolvent under applicable law or violate
limitations in the Delaware General Corporation Law on repurchases of stock.
If shares of Common Stock which Endo LLC has the right to purchase (or make
payment for) on any date exceed the total amount permitted to be purchased on
such date pursuant to the preceding sentence, Endo LLC shall purchase (or pay
for) on such date only up to that number of shares of Common Stock in the
manner that the LLC Board determines in its sole discretion.

          Subject to Section 2.3(c) hereof, notwithstanding anything to the contrary
contained in this Agreement, if Endo LLC is unable to purchase any Employee
Stockholder’s shares pursuant to Section 2.1 of this Agreement by reason of
this Article IV (or make any payment for any purchased shares), Endo LLC may
nonetheless in the case of Section 2.1 hereof exercise its option to purchase
such shares and shall purchase (or make payment for) such shares at the
earliest practicable date permitted under this Article IV and any payment
therefor shall accrue simple interest (or if such payment is accruing interest
at such time, shall continue to accrue interest) at 6% per annum from the date
such payment would have been made but for this Article IV to the date such
payment is actually made. All payments of interest accrued hereunder shall be
paid only at the date of payment by Endo LLC for the shares of Common Stock
being purchased. Any shares as to which Endo LLC has exercised its right to
purchase pursuant to Section 2.1 hereof may not otherwise be sold by the
Employee Stockholder notwithstanding non-payment therefor pursuant to this
Article IV.

ARTICLE V

SALES TO THIRD PARTIES

          5.1 General. Prior to the end of the Restricted Period (as defined
below), no Employee Stockholder shall sell any of his or her shares of Common
Stock to a third party. Except as otherwise permitted under Section 5.6
hereof, after the termination of the Restricted Period, Employee Stockholders
may sell their shares of Common Stock they then own to a third party only in
compliance with the provisions of Sections 5.2 and 5.3 hereof. The foregoing
provisions of this Section 5.1 do not apply to any sale or other transaction
described in clause (i) or (ii) of Section 1.1 hereof or to any sale pursuant
to a

9

 

registration under the Act. The period of time from the date of this
Agreement until December 1, 2002 shall hereinafter be referred to as the
“Restricted Period.”

          5.2 Right of First Refusal.

          (a) Subject to Section 5.1 hereof, if an Employee Stockholder shall have
received a bona fide offer or offers from a third party or parties to purchase
for cash any shares of Common Stock whether now or hereafter owned by such
Employee Stockholder, then prior to selling such shares of Common Stock to such
third party or parties, the Employee Stockholder shall deliver to Endo LLC a
letter signed by such Employee Stockholder setting forth:

		
	 	     (i) the name or names of the third party or parties;
	 
	 	     (ii) the prospective purchase price per share of Common Stock;
	 
	 	     (iii) all material terms and conditions contained in the offer of the
third party or parties;
	 
	 	     (iv) the Employee Stockholder’s offer (which shall be irrevocable by its
terms for 30 days following receipt) to sell to Endo LLC all, but not
less than all, of the shares of Common Stock covered by the offer of the
third party or parties, for a purchase price per share of Common Stock,
and on other terms and conditions, not less favorable to Endo LLC than
those contained in the offer of the third party or parties (an “Offer”);
and
	 
	 	     (v) closing arrangements and a closing date (not less than 45 nor more
than 60 days following the date of such letter) for any purchase and
sale that may be effected by Endo LLC or any of its assignees pursuant
to this Section 5.

Endo LLC shall, within 10 days following receipt of such letter, have the right
to elect to purchase such shares of Common Stock or the obligation to assign
its right to
purchase such shares to Kelso, in the event Kelso elects to exercise its right
to require Endo LLC to assign its right to Kelso prior to 5 days after the
expiration of such 10-day period pursuant to Section 5.4 hereof. If Endo LLC
shall be required to assign such right to purchase such shares of Common Stock
to Kelso, pursuant to Section 5.4 hereof, it shall deliver written notice of
such assignment, on the first day following the end of such 10-day period, to

10

 

Kelso. Within 15 days after receipt of such notice from Endo LLC, Kelso shall
have the right to exercise its right of first refusal.

          (b) If, upon the expiration of 30 days following receipt by Endo LLC of
the letter described in Section 5.2(a) hereof, neither Endo LLC nor Kelso shall
have accepted the Offer in full, the Employee Stockholder may sell only to such
third party or parties all (but not less than all) of the shares of Common
Stock covered by the Offer, for the purchase price and on the other terms and
conditions contained in the Offer. If Endo LLC or its assignee or assignees
shall accept such Offer, the closing of the purchase and sale pursuant to such
acceptance shall take place as set forth in the letter of such Employee
Stockholder to Endo LLC pursuant to subparagraph (v) of Section 5.2(a) hereof.

          5.3 Agreements to Be Bound. Notwithstanding anything contained in this
Article 5, any sale to a third party or any Involuntary Transfer (as defined in
Section 5.5 hereof) to an Involuntary Transferee (as defined in Section 5.5
hereof) shall be permitted under the terms of this Agreement only if such third
party or Involuntary Transferee, as the case may be, shall agree in writing to
be bound by the terms and conditions of this Agreement pursuant to an
instrument of assumption reasonably satisfactory in form and substance to Endo
LLC.

          5.4 Assignment. Kelso shall have the right to require Endo LLC to assign
to Kelso (or any affiliates or designees of Kelso) Endo LLC’s right of first
refusal with respect to an Offer in accordance with Section 5.2(a) hereof.

          5.5 Involuntary Transfers. In the case of any transfer of title or
beneficial ownership of shares of Common Stock upon default, foreclosure,
forfeit, divorce, court order, or otherwise than by a voluntary decision on the
part of an Employee Stockholder (an “Involuntary Transfer”), Endo LLC shall
have the right to purchase such shares pursuant to this Section 5.5. Upon the
Involuntary Transfer of any shares of Common Stock, such Employee Stockholder
shall promptly (but in no event later than two days after such Involuntary
Transfer) furnish written notice (the “Notice”) to Endo LLC indicating
that the Involuntary Transfer has occurred, specifying the name of the
person to whom such shares have been transferred (the “Involuntary Transferee”)
and giving a detailed description of the circumstances giving rise to, and
stating the legal basis for, the Involuntary Transfer. Upon the receipt of the
Notice, and for 30 days thereafter, Endo LLC shall have the right to purchase,
and the Involuntary Transferee shall have the obligation to sell, all, but not
less than all, of the shares of Common Stock acquired by the Involuntary
Transferee for a purchase price equal to the lesser of (i) the Fair Market
Value

11

 

of such shares of Common Stock on the date of transfer to the Involuntary
Transferee and (ii) the amount of the indebtedness or other liability that gave
rise to the Involuntary Transfer plus the excess, if any, of the Carrying Value
of such shares of Common Stock over the amount of such indebtedness or other
liability that gave rise to the Involuntary Transfer.

          Notwithstanding the foregoing, the LLC Board may, for good cause shown by
the Employee Stockholder who made the Involuntary Transfer, determine that
payment of a purchase price equal to the Fair Market Value of such shares of
Common Stock on the date of transfer to the Involuntary Transferee would be
appropriate under the circumstances, and direct that payment be made in such
amount.

          Endo LLC’s right to purchase pursuant to this Section 5.5 shall be
assignable in accordance with Section 5.4 as if such right to purchase were a
“right of first refusal”.

          5.6 Tag-Along, Piggyback and Drag-Along Rights.

          (a) Tag-Along Rights. Endo LLC shall not, in any one transaction
or any series of similar transactions not effected through a broker or over a
national securities exchange, Transfer more than 25% of the shares of Common
Stock it owns as of the date of the Merger, except pursuant to Section 5.6(c)
hereof, or except in connection with a registered public offering of the
Company’s securities or any other capital markets transaction, to any third
party or parties unaffiliated with Endo LLC (a “Third Party”), unless the
Employee Stockholders (collectively, the “Offerees”), are offered the right, at
the option of each Offeree, to include in such Transfer to the Third Party such
number of shares of Common Stock then owned by each such Offeree, as determined
in accordance with this Section 5.6(a). If Endo LLC receives from a Third
Party a bona fide offer or offers to Transfer which it intends to accept, or
proposes to Transfer to a Third Party, shares of its Common Stock, Endo LLC
shall provide written notice (the “Tag-Along Notice”) to each of the Offerees,
setting forth the consideration per share to be paid
by such Third Party and the other material terms and conditions of such
transaction. The Tag-Along Notice shall offer the Offerees the opportunity to
participate in the proposed Transfer of shares to the Third Party according to
the terms and conditions of this Section 5.6(a) and for the same type of
consideration and for an amount of consideration per share not less than that
offered to Endo LLC by the Third Party. At any time within 20 days after its
receipt of the Tag-Along Notice, each of the Offerees may irrevocably accept
the offer included in the Tag-Along Notice for up to such number of shares of
Common Stock as is determined in accordance with the provisions of this Section
5.6(a) by furnishing

12

 

written notice of such acceptance to Endo LLC. Promptly
following such acceptance by an Offeree, each such Offeree shall deliver to
Endo LLC the certificate or certificates representing the shares of Common
Stock to be Transferred pursuant to such offer by such Offeree, together with a
limited power-of-attorney authorizing Endo LLC to sell or otherwise dispose of
such shares of Common Stock pursuant to the proposed Transfer to the Third
Party.

     Each Offeree shall have the right to participate in the proposed Transfer
to the Third Party by Transferring in connection therewith shares of Common
Stock equal to the product of (x) the total number of shares to be acquired by
the Third Party, times (y) a fraction, the numerator of which shall be the
total number of shares of Common Stock then owned by such Offeree, and the
denominator of which shall be the number of shares of Common Stock then owned
by Endo LLC plus the total number of shares of Common Stock then owned by the
Offerees (plus offerees of tag-along rights under that certain Amended and
Restated Stockholders Agreement, dated as of July 14, 2000 (the “Principal
Stockholders Agreement”), among the Company, Endo LLC and certain other
stockholders of the Company with respect to the Common Stock), subject to the
allocations under the Principal Stockholders Agreement. The maximum number of
shares of Common Stock that may be Transferred by each Offeree to the Third
Party in accordance with this Section 5.6(a) shall be the total number of
shares of Common Stock then owned by such Offeree.

     If within 20 days after the receipt of the Tag-Along Notice, any Offeree
has not accepted the offer contained in the Tag-Along Notice, such Offeree will
be deemed to have waived any and all rights with respect to, or to participate
in, the Transfer of Common Stock described in the Tag-Along Notice and Endo LLC
shall have 45 days in which to Transfer not more than the amount of Common
Stock described in the Tag-Along Notice, for an amount and type of
consideration per share not materially more favorable to Endo LLC than was set
forth in the Tag-Along Notice. If, at the end of 65 days following the receipt
of the Tag-Along Notice, Endo LLC has not completed the Transfer of Common
Stock of Endo LLC and Common Stock of any Offeree, Endo LLC shall return to
such Offeree all
certificates representing shares of Common Stock which such Offeree delivered
for Transfer pursuant to this Section 5.6(a), and all the restrictions on sale
or other disposition contained in this Agreement with respect to Common Stock
then or thereafter owned by the Offeree shall again be in effect.

     As promptly as practicable (but in no event later than 5 days) after the
consummation of the Transfer of Common Stock of Endo LLC and Common Stock of
the Offerees

13

 

to the Third Party in accordance with this Section 5.6(a), Endo
LLC shall notify the Offerees thereof, shall remit to each of the Offerees the
total consideration in respect of the shares of Common Stock of such Offeree
which were so Transferred, and shall furnish such other evidence of the
completion and time of completion of such Transfer and the terms thereof as may
be reasonably requested by the Offerees.

          (b) Piggyback Rights. If Endo LLC, pursuant to that certain
Registration Rights agreement, dated as of July 17, 2000, by and between the
Company and Endo LLC, demands that the Company register any of its shares of
Common Stock or any other of its common equity securities under the Act for
sale for cash to the public under the Act (a “Demand Registration”), then Endo
LLC will at such time make reasonable efforts to give prompt written notice to
each Offeree of its intention to do so (the Piggyback Notice”) and of the
rights of such Offeree under this Section 5.6(b), 5 business days after the
Company’s filing of the registration statement relating to the Demand
Registration. In such Piggyback Notice, Endo LLC shall waive any transfer
restrictions under Section 1.1 hereof with respect to the Offerees’ shares of
Common Stock solely in connection with the Demand Registration. Furthermore,
such Piggyback Notice shall offer each such Offeree the opportunity to include
in such registration statement such number of shares of Common Stock as such
Offeree may request, in accordance with this Section 5.6(b). Upon the written
request of an Offeree made within 10 days after the receipt of a Piggyback
Notice (which request shall specify the number of shares of Common Stock
intended to be disposed of and the intended method of disposition thereof),
Endo LLC will use its best efforts to cause the Company to effect, in
connection with the registration of the securities held by Endo LLC (the “LLC
Shares”), the registration of all of the Shares requested to be included by all
of the Offerees (collectively, the “Offeree Shares”), to the extent required to
permit the disposition (in accordance with such intended methods of
disposition) of such shares of Common Stock so requested to be registered,
provided that:

               (A) if, at any time after Endo LLC has given a Piggyback Notice and prior
to the effectiveness of the registration statement filed in connection
with the proposed Demand Registration, Endo LLC shall determine for any reason
not to demand such registration of the LLC Shares, Endo LLC shall give written
notice of such determination to the Offerees, and thereupon the Company and
Endo LLC shall each be relieved of their obligations to effect the registration
of the Offeree Shares;

               (B) if the Demand Registration is to be an underwritten registration on
behalf of Endo LLC, and the managing underwriter(s) advises the Company, in
writing

14

 

that, in such firm’s opinion, the Demand Registration would be materially and
adversely affected by the inclusion therein of any of the Common Stock
requested to be included therein, the Company shall include in such Demand
Registration:

                    (1) First, all of the LLC Shares;

                    (2) Second, up to the full number of shares of Common Stock requested to
be included in such Demand Registration by the “Management Stockholders” (as
such term is defined in the Principal Stockholders Agreement) and by the
Offerees, which, in the good faith opinion of the managing underwriter(s),
delivered in writing, can be sold without so materially and adversely affecting
such Demand Registration (and, if less than the full number of such shares of
Common Stock, allocated pro rata among the Management Stockholders and the
Offerees on the basis of the total number of shares of Common Stock requested
to be included therein by the Management Stockholders and the Offerees);
provided, however that with respect to the Management Stockholders and the
Offerees, if the managing underwriter(s) in connection with such Demand
Registration determines that such Demand Registration would be materially and
adversely affected by the inclusion of Common Stock owned by the Management
Stockholders and the Offerees for any reason, such managing underwriter(s) may
in its sole discretion exclude all or, part of the Common Stock requested to be
included therein by the Management Stockholders and the Offerees on a pro rata
basis, unless the Company and the managing underwriter(s) shall agree to non
pro rata treatment; and

                    (3) Third, other securities requested to be included in the Demand
Registration.

               (C) No registration of Common Stock effected under this Section 5.6(b)
shall relieve the Company of its obligation to effect a registration of shares
of Common Stock pursuant to the Endo LLC Registration Rights Agreement.

               (D) Promptly following its acceptance of the offer in the Piggyback
Notice, each Offeree shall deliver to Endo LLC the certificate or certificates
representing the shares of Common Stock to be Transferred pursuant to such
offer by such Offeree, together with a limited power-of-attorney and other
customary custodial agreements authorizing Endo LLC to sell or otherwise
dispose of such Offeree Shares pursuant to the proposed Demand Registration.

15

 

          (c) Drag-Along Rights. If Endo LLC shall propose to Transfer at
least 60% of all shares of Common Stock then owned by Endo LLC to a Third
Party, then (in addition to the rights of the Employee Stockholders to
participate in such
Transfer pursuant to Sections 5.6(a) and 5.6(b) hereof) Endo LLC may, at its
option, require the Employee Stockholders (collectively, the “Remaining
Holders”) to include in such Transfer to the Third Party such number of shares
of Common Stock then owned by such Remaining Holder, as determined in
accordance with this Section 5.6(c).

     Endo LLC shall send written notice (the “Drag-Along Notice”) of the
exercise of their rights pursuant to this Section 5.6(c) to each of the
Remaining Holders, setting forth the consideration per share to be paid by the
Third Party and the other material terms and conditions of such transaction.
The Drag-Along Notice shall state that the Remaining Holders shall be required
to participate in the proposed Transfer of shares of Common Stock to the Third
Party according to the terms and conditions of this Section 5.6(c) and for the
same type of consideration and for an amount of consideration per share not
less than that offered to Endo LLC by the Third Party. Within 15 days
following the receipt of the Drag-Along Notice, each of the Remaining Holders
shall deliver to a representative of Endo LLC designated in the Drag-Along
Notice certificates representing all shares of Common Stock held by such
Remaining Holder, duly endorsed, together with all other documents required to
be executed in connection with such transaction. In the event that any
Remaining Holder should fail to deliver such certificates to Endo LLC, the
Company shall cause the books and records of the Company to show that such
shares are bound by the provisions of this Section 5.6(c) and that such shares
may be Transferred only to the Third Party.

     Each Remaining Holder shall be required to participate in the proposed
Transfer to the Third Party by Transferring in connection therewith shares of
Common Stock equal to the product of (x) the total number of shares to be
acquired by the Third Party, times (y) a fraction, the numerator of which shall
be the total number of shares of Common Stock then owned by such Remaining
Holder, and the denominator of which shall be the total number of shares of
Common Stock then owned by Endo LLC plus the total number of shares of Common
Stock then owned by the Remaining Holders. The maximum number of shares of
Common Stock that may be transferred by each Remaining Holder to the Third
Party in accordance with this Section 5.6(c) shall be the total number of
shares of Common Stock then owned by such Remaining Holder.

     If, within 120 days after Endo LLC gave the Drag-Along Notice, it shall
not have completed the Transfer of all the shares of Common Stock of the
Remaining Holders in

16

 

accordance with this Section 5.6(c), Endo LLC shall return
to each of the Remaining Holders all certificates representing shares of Common
Stock that such
Remaining Holder delivered for Transfer pursuant hereto and that were not
purchased pursuant to this Section 5.6(c).

     Promptly (but in no event later than 5 days) after the consummation of the
Transfer of Common Stock of Endo LLC and Remaining Holders pursuant to this
Section 5.6(c), Endo LLC shall give notice thereof to the Remaining Holders,
shall remit to each of the Remaining Holders the total consideration in respect
of the shares of Common Stock of such Remaining Holder which were so
transferred, and shall furnish such other evidence of the completion and time
of completion of such Transfer and the terms thereof as may be reasonably
requested by such Remaining Holders.

          5.7 Expenses. The Company will pay all expenses in connection with any
registration pursuant to Section 5.6(b) (including any registration not
consummated as contemplated by Section 5.6(b) hereof) and any other actions
that may be taken in connection with any such registration as contemplated by
Section 5.6(b); provided, however, that the Company will not be obligated to
pay underwriting discounts or commissions or transfer taxes, if any, relating
to the sale or disposition of shares sold pursuant to any such registration.

          5.8 Holdback and Other Agreements.

          (a) If and whenever the Company proposes to register any of its equity
securities under the Securities Act for its own account (other than on Form S-4
or S-8 or any successor form) or is required to use its best efforts to effect
the registration of any shares of Common Stock under the Securities Act
pursuant to Section 5.6(b) hereof, each Holder agrees by acquisition of such
shares of Common Stock not to effect any sale or distribution, including any
sale pursuant to Rule 144 under the Securities Act, or to request registration
under Section 5.6(b) hereof of any shares of Common Stock within seven days
prior to and 90 days (unless advised by the managing underwriting that a longer
period, not to exceed 180 days, is required, or such shorter period as the
managing underwriter for any underwritten offering may agree) after the
effective date of the registration statement relating to such registration,
except as part of such registration or unless, in the case of a private sale of
distribution, the transferee agrees in writing to be subject to this Section
5.8. If requested by such managing underwriter, each holder of shares of
Common Stock agrees to execute a holdback agreement, in customary form,
consistent with the terms of this Section 5.8(a).

17

 

          (b) The Company agrees not to effect any public sale or distribution of
its equity securities or securities convertible into or exchangeable or
exercisable for any of such securities within seven days prior to and 90 days
(unless advised in writing by the managing underwriter that a longer period,
not to exceed 180 days, is required, or such shorter period as the managing
underwriter for any underwritten offering may agree) after the effective date
of any registration statement filed pursuant to Section 5.6(b) hereof (except
(i) as part of such registration, (ii) as permitted by the related
underwriting, (iii) pursuant to an employee equity compensation plan, (iv)
pursuant to an acquisition or strategic relationship, bank or equipment
financing or similar transaction or (v) pursuant to a registration on Form S-4
or S-8 or any successor form). In addition, upon the request of the managing
underwriter, the Company shall use its best efforts to cause each holder of its
equity securities or any securities convertible into or exchangeable or
exercisable for any of such securities, whether outstanding on the date of this
Agreement or issued at any time after the date of this Agreement (other than
any such securities acquired in a public offering), to agree not to effect any
such public sale or distribution or such securities during such period, except
as part of any such registration if permitted, and to cause each such holder to
enter into a similar agreement to such effect with the Company.

          5.9 Indemnification. The Company may require as a condition to including
any Common Stock in any registration statement filed pursuant to Section 5.6(b)
hereof that the Company shall have received an undertaking from the
prospective seller of Common Stock to indemnify directors, officers and other
persons, if any, who may control the Company within the meaning of the Act with
respect to any statement or alleged statement in or omission or alleged
omission from such registration statement, prospectus contained therein, or any
amendment or supplement thereto, if such statement or alleged statement or such
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company through an instrument duly
executed by such prospective seller of Common Stock specifically stating that
it is for use in the preparation of such registration statement, prospectus
contained therein, or amendment or supplement thereto. The parties hereto
hereby acknowledge and agree that, unless otherwise expressly agreed to in
writing by such prospective seller to the contrary, for all purposes of this
agreement the only information furnished or to be furnished by such prospective
seller, in its capacity as such, to the Company for use in any registration
statement, prospectus contained therein, or any amendment or supplement thereto
are statements specifically relating to (i) transactions between the
prospective seller and its affiliates, on the one hand, and the Company, on the
other hand, (ii) the beneficial ownership of
shares of Common Stock by the prospective seller and its affiliates and (iii)
the name and address of the prospective seller and its affiliates.

18

 

ARTICLE VI

TERMINATION

          6.1 Sale of the Company. This Agreement shall terminate (a) in the event
of a sale of the Company or all or substantially all of its assets to a party
(whether by merger, stock sale or otherwise) other than Endo LLC or one of its
affiliates, or (b) in the event that all parties to this Agreement cease to own
any shares of Common Stock or any interest therein. In the event that Endo LLC
shall come to own less than five percent of the outstanding Common Stock, this
Agreement shall also terminate.

          6.2 Cessation of Ownership of Stock. Any party to, or person or entity
who is subject to, this Agreement (other than the Company and Kelso) which
ceases to own shares of Common Stock or any interest therein shall cease to be
a party to, or person or entity who is subject to, this Agreement and
thereafter shall have no rights or obligations hereunder.

          6.3 Other Termination Events.

          (a) This Agreement may be terminated by the affirmative vote of the
members of Endo LLC owning a majority of the issued and outstanding membership
interests in Endo LLC.

          (b) Notwithstanding anything to the contrary contained herein, every
provision of this Agreement, other than the provisions contained in Section
5.5, shall terminate on the fifteenth anniversary of this Agreement.

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ARTICLE VII

MISCELLANEOUS PROVISIONS

          7.1 Stock Certificate Legend. A copy of this Agreement shall be filed
with the Secretary of the Company and kept with the records of the Company.
Each certificate representing shares of Common Stock owned by the Employee
Stockholders shall bear upon its face the following legend:

	 
	“THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 (THE “ACT”), AND MAY NOT BE OFFERED, SOLD, ASSIGNED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS AND UNTIL
REGISTERED UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES
LAWS OR UNLESS, IN THE OPINION OF COUNSEL TO THE HOLDER, WHICH
COUNSEL MUST BE, AND THE FORM AND SUBSTANCE OF WHICH OPINION
ARE, SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, ASSIGNMENT,
PLEDGE, HYPOTHECATION, TRANSFER OR OTHER DISPOSITION IS EXEMPT
FROM REGISTRATION OR IS OTHERWISE IN COMPLIANCE WITH THE ACT,
SUCH LAWS AND THE AMENDED AND RESTATED EMPLOYEE STOCKHOLDERS
AGREEMENT, DATED AS OF JULY 14, 2000.”

          All Employee Stockholders shall be bound by the requirements of such
legends to the extent that such legends are applicable. Upon a registration
under the Act of any shares of Common Stock, the certificate representing such
shares shall be replaced, at the expense of the Company, with certificates not
bearing the legend required by this Section 7.1.

          7.2 Option Plans. Pursuant to the Option Plans, the Company has required
that participants thereunder must become parties to this Agreement upon
exercise of the options and that they will be “Employee Stockholders” hereunder
with respect to such shares. In addition, Endo LLC, notwithstanding any
requirement set forth in Section 7.5 hereof, can determine that any
options granted pursuant to the Option Plans and outstanding and vested as
of the option holder’s termination of employment with the Company and its
subsidiaries shall be deemed to be Common Stock for purposes of Section 2

20

 

hereof; provided, however, that appropriate adjustments shall be made to
reflect the existence of an exercise price for such options.

          7.3 New Employee Stockholders. Each of the Employee Stockholders hereby
agrees that the Company may require that any employee of the Company or any of
its subsidiaries who after the date of this Agreement is offered shares of
Common Stock shall, as a condition precedent to the acquisition of such shares
of Common Stock, become a party to this Agreement by executing the same and
delivering it to the Company at its address specified in Section 7.12 hereof.
Upon such execution and delivery, such employee shall be an “Employee
Stockholder” for all purposes of this Agreement.

          7.4 No Other Arrangements or Agreements. Each Employee Stockholder
hereby represents, warrants and covenants to Endo LLC and to each other
Employee Stockholder that, except for, if applicable, the exchange agreement
entered into on December 1, 1997, by and between the Company and each Employee
Stockholder (collectively, the “Exchange Agreements”), he or she has not
entered into or agreed to be bound by, and will not enter into or agree to be
bound by, any other arrangements or agreements of any kind with any other party
with respect to the shares of Common Stock, including, but not limited to,
arrangements or agreements with respect to the acquisition, disposition or
voting of shares of Common Stock (whether or not such agreements and
arrangements are with the Company, other Employee Stockholders or holders of
Common Stock that are not parties to this Agreement).

          7.5 Amendment and Modification. This Agreement may be amended, modified
or supplemented only with the written consent of (i) Kelso and (ii) Employee
Stockholders owning a majority of the outstanding Common Stock then owned by
all Employee Stockholders. Promptly after any amendment, modification or
supplement shall take effect, Endo LLC shall notify all Employee Stockholders
of such amendment, modifications or supplement; provided that Endo LLC may, at
any time and from time to time, in its sole discretion, release all or a
portion of any Employee Stockholder’s shares of Common Stock from this
Agreement, and upon such release, such Employee Stockholder will no longer be
entitled to the benefits under this Agreement with respect to such shares of
Common Stock.

          7.6 Assignment. The provisions of this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
legal representatives, successors and assigns; provided, however, that none of
Endo LLC, the Company and any Employee Stockholder shall assign any of its
rights or obligations pursuant to this

21

 

Agreement without the prior written
consent of Kelso. Endo LLC, with the prior written consent of Kelso, shall
have the right, but not the obligation, to assign any of its rights, and
delegate any of its obligations, to purchase any shares of Common Stock of any
Employee Stockholder pursuant to Section 2 hereof to any affiliate of Endo LLC,
any one or more persons or entities who are or become parties to this Agreement
or any employee stock ownership plan that the Company may have (or any
combination of the foregoing). In the case of Permitted Transferees, third
parties and Involuntary Transferees, such Permitted Transferees, third parties
or Involuntary Transferees, as the case may be, shall be deemed the Employee
Stockholder hereunder for purposes of obtaining the benefits or enforcing the
rights of such Employee Stockholder hereunder; provided, however, that no
Permitted Transferee, third party or Involuntary Transferee, as the case may
be, shall derive any rights under this Agreement unless and until such
Permitted Transferee, third party or Involuntary Transferee, as the case may
be, has delivered to Endo LLC a valid undertaking to become, and becomes, bound
by the terms of this Agreement to which the transferring Employee Stockholder
is subject.

          7.7 Recapitalizations, Exchanges, etc. Affecting the Common Stock.
Except as otherwise provided herein, the provisions of this Agreement shall
apply to the full extent set forth herein with respect to (i) the shares of
Common Stock and (ii) any and all shares of capital stock of the Company or any
successor or assign of the Company (whether by merger, consolidation, exchange,
sale of assets or otherwise), which may be issued in respect of, in exchange
for, or in substitution for the shares of Common Stock, by reason of any stock
dividend, split, reverse split, combination, recapitalization,
reclassification, merger, consolidation or otherwise. References to the
“Company” set forth herein shall be deemed to refer to any such successor or
assign and such entity shall execute an appropriate instrument of assumption
agreeing to be bound by the terms hereof. Except as otherwise provided herein,
this Agreement is not intended to confer upon any person, except for the
parties hereto, any rights or remedies hereunder.

          7.8 Transfer of Common Stock. If at any time Endo LLC purchases any
shares of Common Stock pursuant to this Agreement, Endo LLC may pay the
purchase price determined under this Agreement for the shares of Common Stock
it purchases by wire transfer of funds or Endo LLC check in the amount of the
purchase price, and upon receipt of payment of such
purchase price or, pursuant to Section 2.3 or Article IV hereof, any
portion thereof, the selling Employee Stockholder shall deliver to Endo LLC the
certificates representing the number of shares of Common Stock being purchased
in a form suitable for transfer, duly endorsed in blank, and free and clear of
any lien, claim or encumbrance. In the event that any Employee Stockholder
refuses or otherwise fails to deliver,

22

 

in accordance with the preceding
sentence, certificates representing the number of shares of Common Stock being
purchased, the shares of Common Stock purchased from such Employee Stockholder
shall (notwithstanding such refusal or failure) be deemed, upon receipt by such
Employee Stockholder of the purchase price therefor, to not be outstanding for
any purposes. Notwithstanding anything in this Agreement to the contrary, Endo
LLC shall not be required to make any payment for shares of Common Stock
purchased hereunder until delivery to it of the certificates representing such
shares. If Endo LLC is purchasing less than all the shares of Common Stock
represented by a single certificate, Endo LLC, after making such purchase,
shall deliver to the selling Employee Stockholder a certificate for any
unpurchased shares of Common Stock.

          7.9 Further Assurances. Each party hereto or person or entity subject
hereto shall do and perform or cause to be done and performed all such further
acts and things and shall execute and deliver all such other agreements,
certificates, instruments and documents as any other party hereto or person or
entity subject hereto may reasonably request in order to carry out the intent
and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

          7.10 Governing Law. This Agreement and the rights and obligations of the
parties hereunder and the persons subject hereto shall be governed by, and
construed and interpreted in accordance with, the law of the State of Delaware,
without giving effect to the choice of law principles thereof.

          7.11 Invalidity of Provision. The invalidity or unenforceability of any
provision of this Agreement in any jurisdiction shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or
the validity or enforceability of this Agreement, including that provision, in
any other jurisdiction.

          7.12 Notices. All notices and other communications hereunder shall be in
writing and, unless otherwise provided herein, shall be deemed duly given if
delivered personally, telecopied (which is confirmed) or sent by registered or
certified mail (postage prepaid, return receipt requested) or by FedEx or other
similar courier service to the parties at the following addresses (or at
such other address as the person or entity to whom notice is given may
have previously furnished to the others in writing as set forth in this Section
7.12 (provided that any change of address shall be effective only upon receipt
thereof)):

23

 

	 	 	 	 
	(a)	 	
If to the Company, to it at:
	 	 	 
	 	 	
Endo Pharmaceuticals Holdings Inc.
	 	 	
100 Painters Drive
	 	 	
Chadds Ford, Pennsylvania 19317
	 	 	
Attn: Carol A. Ammon
	 	 	 
	 	 	
with a copy to:
	 	 	 
	 	 	
Kelso & Company
	 	 	
320 Park Avenue, 24th Floor
	 	 	
New York, New York 10022
	 	 	
Attention: James J. Connors, II
	 	 	
Telecopy No.: (212) 223-2379
	 	 	 
	(b)	 	
if to an Employee Stockholder, as listed on the signature
page hereto, or, if not so listed, to it at his or her address as
reflected in the stock records of the Company, or as such Employee
Stockholder shall designate to the Company in writing, with a copy
to Endo LLC at its address indicated below (provided that any such
designation shall be effective only upon receipt thereof).
	 	 	 
	(c)	 	
If to Endo LLC, to it at:
	 	 	 
	 	 	
Endo Pharma LLC
	 	 	
c/o Kelso & Company
	 	 	
320 Park Avenue, 24th Floor
	 	 	
New York, New York 10022
	 	 	
Attention: James J. Connors, II
	 	 	
Telecopy No.: (212) 223-2379

          7.13 Headings; Execution in Counterparts. The headings and captions
contained herein are for convenience and shall not control or affect the
meaning or construction of any provision hereof. This Agreement may be
executed in any number of counterparts, each of
which shall be deemed to be an original and which together shall
constitute one and the same instrument.

24

 

          7.14 Entire Agreement; Effect on Certain Other Agreements. This
Agreement and the Exchange Agreements embody the entire agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. There are no restrictions, promises, representations, warranties,
covenants or undertakings relating to the shares of Common Stock, other than
those expressly set forth or referred to herein or in the Exchange Agreements.
This Agreement and the Exchange Agreements supersede all prior agreements and
understandings among the parties with respect to such subject matter.

          7.15 Injunctive Relief. The Company, Endo LLC and the Employee
Stockholders hereby acknowledge that they each shall be irreparably damaged in
the event this Agreement is not specifically enforced. Each of the parties
therefore agrees that in the event of a breach of any provision of this
Agreement, the aggrieved party may elect to institute and prosecute proceedings
in any court of competent jurisdiction to enforce specific performance or to
enjoin the continuing breach of this Agreement. Such remedies shall, however,
be cumulative and not exclusive, and shall be in addition to any other remedy
which the Company, Endo LLC or the Employee Stockholders may have. Each
Employee Stockholder hereby irrevocably submits to the non-exclusive
jurisdiction of the state and federal courts in New York and Delaware for the
purposes of any suit, action or other proceeding arising out of or based upon
this Agreement or the subject matter hereof. Each Employee Stockholder hereby
consents to service of process by mail made in accordance with Section 7.12
hereof.

          7.16 Attorneys’ Fees. If any legal action or any arbitration or other
proceeding is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach, default or misrepresentation in connection with any of
the provisions of this Agreement, the successful or prevailing party or parties
shall be entitled to recover such reasonable attorneys’ fees and other costs
incurred in that action or proceeding, in addition to any other relief to which
it or they may be entitled, as may be ordered in connection with such
proceeding.

25

 

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

	 	 	 	 	 
	 	 	ENDO PHARMACEUTICALS HOLDINGS INC.
	 	 	 	 	 
	 	 	
By:
	/s/ Carol A. Ammon
	 	 	 	

	 	 	
Name:
	Carol A. Ammon
	 	 	
Title:
	Chief Executive Officer

	 	 	 	 	 
	 	 	
KELSO INVESTMENT ASSOCIATES V, L.P.
	 	 	 
	 	 	
By: Kelso Partners V, L.P., General Partner

	 	 	 	 	 
	 	 	By:	/s/ David Wahrhaftig
	 	 	 	

	 	 	
Name:
	David Wahrhaftig
	 	 	
Title:
	General Partner

	 	 	 	 	 
	 	 	ENDO PHARMA LLC
	 	 	 	 	 
	 	 	
By:
	/s/ Carol A. Ammon
	 	 	 	

	 	 	
Name:
	Carol A. Ammon
	 	 	
Title:
	Initial Manager

	 	 	 	 	 
	 	 	EMPLOYEE STOCKHOLDER
	 	 	 	 	 
	 	 	
By:
	/s/ Robert D. Ammon
	 	 	 	

	 	 	
Name:
	Robert D. Ammon

	 	 	 	 	 
	 	 	By:	
/s/ Deborah Bann
	 	 	 	

	 	 	Name:	
Deborah Bann

	 	 	By:	/s/ Eric E. Bloom
	 	 	 	

	 	 	
Name:
	Eric E. Bloom

 

 

	 	 	 	 	 
	 	 	By:	
/s/ Sou-Chan Chang
	 	 	 	

	 	 	Name:	
Sou-Chan Chang
	 
	 	 	By:	
/s/ Sudhendu DasGupta
	 	 	 	

	 	 	Name:	
Sudhendu DasGupta
	 
	 	 	By:	
/s/ Dipankar Datta
	 	 	 	

	 	 	Name:	
Dipankar Datta
	 
	 	 	By:	
/s/ Edith R. Dawson
	 	 	 	

	 	 	Name:	 	Edith R. Dawson
	 
	 	 	By:	
/s/ Jeanmarie Dunk
	 	 	 	

	 	 	Name:	
Jeanmarie Dunk
	 
	 	 	By:	
/s/ Douglas Felton
	 	 	 	

	 	 	Name:	
Douglas Felton
	 
	 	 	By:	
/s/ William A. Hein, II
	 	 	 	

	 	 	Name:	
William A. Hein, II
	 
	 	 	By:	
/s/ Sterling H. Ivison, III
	 	 	 	

	 	 	Name:	
Sterling H. Ivison, III
	 
	 	 	By:	
/s/ Wannell Jennings
	 	 	 	

	 	 	Name:	
Wannell Jennings
	 
	 	 	By:	
/s/ Melanie F. Johnson
	 	 	 	

	 	 	Name:	
Melanie F. Johnson
	 
	 	 	By:	
/s/ Adelheid Jurasits
	 	 	 	

	 	 	Name:	
Adelheid Jurasits
	 
	 	 	By:	
/s/ Huaihung Kao
	 	 	 	

	 	 	Name:	
Huaihung Kao

 

 

	 	 	 	 	 
	 	 	By:	
/s/ Arlene K. Keenan
	 	 	 	

	 	 	Name:	
Arlene K. Keenan
	 
	 	 	By:	
/s/ Linda Kitlinski
	 	 	 	

	 	 	Name:	
Linda Kitlinski
	 
	 	 	By:	
/s/ Jeffrey S. Kornfeld
	 	 	 	

	 	 	Name:	
Jeffrey S. Kornfeld
	 
	 	 	By:	
/s/ Kathy S. Lamborn
	 	 	 	

	 	 	Name:	
Kathy S. Lamborn
	 
	 	 	By:	
/s/ Charles Laudadio
	 	 	 	

	 	 	Name:	
Charles Laudadio
	 
	 	 	By:	
/s/ Debra McArdle
	 	 	 	

	 	 	Name:	
Debra McArdle
	 
	 	 	By:	
/s/ Kevin M. McCaughan
	 	 	 	

	 	 	Name:	
Kevin M. McCaughan
	 
	 	 	By:	
/s/ Donna M. Papa
	 	 	 	

	 	 	Name:	
Donna M. Papa
	 
	 	 	By:	
/s/ Carol Patterson
	 	 	 	

	 	 	Name:	
Carol Patterson
	 
	 	 	By:	
/s/ Thomas M. Sammler
	 	 	 	

	 	 	Name:	
Thomas M. Sammler
	 
	 	 	By:	
/s/ John Segura
	 	 	 	

	 	 	Name:	
John Segura
	 
	 	 	By:	
/s/ Gary C. Stalski
	 	 	 	

	 	 	Name:	
Gary C. Stalski
	 
	 	 	By:	
/s/ Jeanne Stetler
	 	 	 	

	 	 	Name:	
Jeanne Stetler
	 
	 	 	By:	
/s/ Dharmishta Trivedi
	 	 	 	

 

 

	 	 	 	 	 
	 	 	Name:	
Dharmishta Trivedi
	 
	 	 	By:	
/s/ Kenneth Utecht
	 	 	 	

	 	 	Name:	
Kenneth Utecht
	 
	 	 	By:	
/s/ Yadi Zeng
	 	 	 	

	 	 	Name:	
Yadi Zeng
	 
	 	 	By:	
/s/ Lynn Zheng
	 	 	 	

	 	 	Name:	
Lynn Zheng

 

 

          The undersigned, by its signature below hereby becomes a party to the
Amended and Restated Employee Stockholders Agreement, dated as of June 5, 2003,
by and among Endo Pharmaceuticals Holdings Inc. and certain of its stockholders
(the “Employee Stockholders Agreement”) pursuant to Section 7.3 thereof and
agrees to be bound by the terms of the Employee Stockholders Agreement and, for
all purposes thereof, to be an “Employee Stockholder”.

          IN WITNESS WHEREOF, the undersigned has executed this instrument as of the      
day of      , 20    .

	 	 	 
	 	 	

	 	 	        
Signature
	 	 	 
	 	 	

	 	 	         
Print Name
	 	 	 
	 	 	
Address (please print)

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