Document:

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                                                                   EXHIBIT 10.28

                   AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement") is made
as of April 26, 2000 by Endo Pharmaceuticals Inc., a Delaware corporation (the
"Employer"), and Jeffrey R. Black (the "Employee").

                                   RECITALS

     WHEREAS, the Employer and the Employee entered into an employment
agreement, dated as September 21, 1997 (the "Original Employment Agreement");

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

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

     NOW THEREFORE, in consideration of the premises and agreements contained
herein, the parties agree as follows:

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

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

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

          "Basic Compensation" means Salary and Benefits.

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

          "Board of Directors" means the board of directors of the Employer.

          "Confidential Information" means any and all:

          (a) trade secrets concerning the business and affairs of the Employer,
product specifications, data, know-how, formulae, compositions, processes,
designs, sketches, photographs, graphs, drawings, samples, inventions and ideas,
past, current, and planned research and development, current and planned
manufacturing or distribution methods and processes, customer lists, current and
anticipated customer requirements, price lists, market studies, business plans,
computer software and programs (including object code and source code),
<PAGE>

computer software and database technologies, systems, structures, and
architectures (and related formulae, compositions, processes, improvements,
devices, know-how, inventions, discoveries, concepts, ideas, designs, methods
and information);

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

          (a) Salary.  The Employee will be paid an annual salary of $250,000,
              ------
subject to adjustment as provided below (the "Salary"), which will be payable in
equal periodic

                                      -3-
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installments according to the Employer's customary payroll practices, but no
less frequently than monthly. The Salary will be reviewed by the Chief Executive
Officer and the Board of Directors not less frequently than annually, and be
adjusted in the sole discretion of the Chief Executive Officer and the Board of
Directors, but in no event will the Salary be less than $250,000 per year. In
determining the amount of any adjustment to Salary, the Chief Executive Officer
and the Board of Directors shall take into account inflation, merit, changes in
responsibilities and industry salary practices for executives. Any increase in
Salary shall not serve to limit or reduce any other obligation to the Employee
under this Agreement. Salary shall not be reduced after such increase unless
such reduction is part of a reduction in salaries of specified management
personnel of the Employer undertaken in a program approved by the Employer's
Board of Directors.

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

          (c) Stock Options.  To the extent the Employer determines to award
              -------------
stock options or other similar consideration to management personnel based upon
duration of employment or achieving performance targets, or both, Employee shall
be permitted to participate in such programs, and the Employer and the Employee
shall enter into an addendum to this Agreement outlining the terms of such
participation.

          Section 3.2  Incentive Compensation.  For each Fiscal Year or part
                       ----------------------
thereof during the Employment Period the Employee shall be paid in cash as
additional compensation (the "Incentive Compensation") for the services to be
rendered by the Employee pursuant to this Agreement, an amount equal to thirty
percent (30%) of the Salary for such Fiscal Year (or such lesser (including
zero) or greater (not exceed two hundred) percent of the Salary for such Fiscal
Year as is recommended in good faith to the Board of Directors by the Chief
Executive Officer of the Employer and approved by the Board of Directors) if the
Employer meets the performance targets set by the Board of Directors (the
"Performance Targets") for such Fiscal Year.  Incentive Compensation for each
Fiscal Year or part thereof shall be paid as soon as practicable following the
receipt by the Employer of its audited financial statements for the Fiscal Year
for which the Incentive Compensation is being paid, unless the Employee shall
elect to defer the receipt of such Incentive Compensation.

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

          The Employer will furnish the Employee office space, equipment,
supplies, and such other facilities and personnel as the Employer deems
necessary or appropriate for the performance of the Employee's duties under this
Agreement.  The Employer will pay the Employee's dues in such professional
societies and organizations as are appropriate, and will pay on behalf of the
Employee (or reimburse the Employee for) reasonable expenses incurred by the
Employee at the request of, or on behalf of, the Employer in the performance of
the Employee's duties pursuant to this Agreement, and in accordance with the
Employer's employment policies,

                                      -4-
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including reasonable expenses incurred by the Employee in attending conventions,
seminars, and other business meetings, in appropriate business entertainment
activities, and for promotional expenses. The Employee must file expense reports
with respect to such expenses in accordance with the Employer's policies.

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

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

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

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

          (a)  upon the death of the Employee;

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

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

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

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

          Section 6.3  Definition of "For Cause."  For purposes of Section 6.1,
                       -------------------------
the phrase "for cause" means: (a) the continued failure, after written demand is
delivered to the Employee which specifically identifies the failure, by the
Employee substantially to perform the Employee's duties under this Agreement
(other than any such failure resulting from "disability"),

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

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

          Section 6.5  Termination Pay.  Effective upon the termination of this
                       ---------------
Agreement, the Employer will be obligated to pay the Employee (or, in the event
of Employee's death, Employee's designated beneficiary as defined below) only
such compensation as is provided in this Section 6.5 or Section 6.6. For
purposes of this Section 6.5, the Employee's designated beneficiary will be such
individual beneficiary or trust, located at such address, as the Employee may
designate by notice to the Employer from time to time or, if the Employee fails
to give notice to the Employer of such a beneficiary, the Employee's estate.
Notwithstanding the preceding sentence, the Employer will have no duty, in any
circumstances, to attempt to open an estate on behalf of the Employee, to
determine whether any beneficiary designated by the Employee is alive or to
ascertain the address of any such beneficiary, to determine the existence of any
trust, to determine whether any person or entity purporting to act as the
Employee's personal representative (or the trustee of a trust established by the
Employee) is duly authorized to act in that capacity, or to locate or attempt to
locate any beneficiary, personal representative, or trustee.

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

                                      -6-
<PAGE>

Benefits for the remainder of the Employment Period or eighteen (18) months,
whichever is longer.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                      -8-
<PAGE>

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

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

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

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

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

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

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

          Section 9.4  Representations and Warranties by the Employee.  The
                       ----------------------------------------------
Employee represents and warrants to the Employer that the execution and delivery
by the Employee of this Agreement do not, and the performance by the Employee of
the Employee's obligations hereunder will not, with or without the giving of
notice or the passage of time, or

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both: (a) violate any judgment, writ, injunction, or order of any court,
arbitrator, or governmental agency applicable to the Employee; or (b) conflict
with, result in the breach of any provisions of or the termination of, or
constitute a default under, any agreement to which the Employee is a party or by
which the Employee is or may be bound.

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

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

          Section 9.7  Notices.  All notices, consents, waivers, and other
                       -------
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by hand (with written confirmation of
receipt), (b) sent by telecopier (with written confirmation of receipt),
provided that a copy is mailed by registered mail, return receipt requested, or
(c) when received by the addressee, if sent by a nationally recognized overnight
delivery service (receipt requested), in each case to the appropriate addresses
and telecopier numbers set forth below (or to such other addresses and
telecopier numbers as a party may designate by notice to the other parties):

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

          If to the Employee:       223 Wilmington West Chester Pike
          ------------------
                                    Chadds Ford, PA 19317

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

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

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

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

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

                              [SIGNATURES FOLLOW]

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<PAGE>

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

                                   ENDO PHARMACEUTICALS INC.

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

                                   /s/ Jeffrey R. Black
                                   ------------------------------------------
                                   JEFFREY R. BLACK

                                      -12-<PAGE>

                                                                   EXHIBIT 10.29

                   AMENDED AND RESTATED EMPLOYMENT AGREEMENT

          THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement") is
made as of April 26, 2000 by Endo Pharmaceuticals Inc., a Delaware corporation
(the "Employer"), and David Allen Harvey Lee, MD, Ph.D. (the "Employee").

                                   RECITALS

     WHEREAS, the Employer and the Employee entered into an employment
agreement, dated as December 15, 1997 (the "Original Employment Agreement");

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

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

     NOW THEREFORE, in consideration of the premises and agreements contained
herein, the parties agree as follows:

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

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

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

          "Basic Compensation" means Salary and Benefits.

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

          "Board of Directors" means the board of directors of the Employer.

          "Confidential Information" means any and all:
<PAGE>

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

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

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

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

          "disability" shall have the meaning set forth in Section 6.1

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

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

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

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

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

                                       2
<PAGE>

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

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

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

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

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

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

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

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

          Section 2.3  Duties.  The Employee will have such duties as are
                       ------
assigned or delegated to the Employee by the Chief Executive Officer, and will
initially serve as Senior Vice President of Research and Development of the
Employer. The Employee will devote the Employee's business, time, attention,
skill, and energy to the business of the Employer, will promote the success of
the Employer's business, and will cooperate with the Chief Executive Officer and
the Board of Directors in the advancement of the best interests of the Employer.
Nothing in this Section 2.3, however, will prevent the Employee from engaging in
additional activities in connection with personal investments and community
affairs that are not inconsistent with the Employee's duties under this
Agreement. It is expressly understood and agreed that to the extent any such
activities have been conducted by

                                       3
<PAGE>

the Employee prior to the Effective Date, the continued conduct of such
activities (or the conduct of activities similar in nature and scope thereto)
subsequent to the Effective Date shall not thereafter be deemed to be
inconsistent with the Employee's duties under this Agreement. The Employee
shall, from time to time, inform the Board of Directors of those additional
activities in which the Employee is engaged. If the Employee is elected as a
director of the Employer or as a director or officer of any of Employer's
subsidiaries, the Employee will fulfill the Employee's duties as such director
or officer without additional compensation.

          Section 2.4  Director's and Officer's Liability Coverage.  The
                       -------------------------------------------
Employer shall cause the Employee to be (a) indemnified as an officer and
director of the Employer or any of its affiliates, to the extent applicable, to
the maximum extent permitted by applicable law, and (b) covered by director's
and officer's liability insurance in connection with the Employee serving as an
officer and director of Employer or any of its affiliates. The provisions of
this Section 2.14 shall survive termination of this Agreement for any reason.

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

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

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

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

                                       4
<PAGE>

time, to the extent the Employee is eligible under the terms of those plans
(collectively, the "Benefits").

          (c)  Stock Options. To the extent the Employer determines to award
               -------------
stock options or other similar consideration to management personnel based upon
duration of employment or achieving performance targets, or both, Employee shall
be permitted to participate in such programs, and the Employer and the Employee
shall enter into an addendum to this Agreement outlining the terms of such
participation.

          Section 3.2  Incentive Compensation.  For each Fiscal Year or part
                       ----------------------
thereof during the Employment Period the Employee shall be paid in cash as
additional compensation (the "Incentive Compensation") for the services to be
rendered by the Employee pursuant to this Agreement, an amount equal to thirty
percent (30%) of the Salary for such Fiscal Year (or such lesser (including
zero) or greater (not exceed two hundred) percent of the Salary for such Fiscal
Year as is recommended in good faith to the Board of Directors by the Chief
Executive Officer of the Employer and approved by the Board of Directors) if the
Employer meets the performance targets set by the Board of Directors (the
"Performance Targets") for such Fiscal Year, provided, however, that for the
Fiscal Year 1998 only, Employer hereby guarantees to pay Employee his full
Incentive Compensation in accordance with this Paragraph. Incentive Compensation
for each Fiscal Year or part thereof shall be paid as soon as practicable
following the receipt by the Employer of its audited financial statements for
the Fiscal Year for which the Incentive Compensation is being paid, unless the
Employee shall elect to defer the receipt of such Incentive Compensation.

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

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

                                       5
<PAGE>

promotional expenses. The Employee must file expense reports with respect to
such expenses in accordance with the Employer's policies.

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

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

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

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

          (a)  upon the death of the Employee;

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

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

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

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

                                       6
<PAGE>

date of termination in the case of a termination for "disability" shall be the
last day of the aforementioned 30-day period.

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

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

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

                                       7
<PAGE>

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

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

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

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

          (d)  Termination upon Death. If this Agreement is terminated because
               ----------------------
of the Employee's death, the Employee will be entitled to receive the Employee's
Salary though the end of the calendar month in which the Employee's death
occurs, and incentive Compensation (if the applicable Performance Targets are
met)

                                       8
<PAGE>

for the Fiscal Year during which the Employee's death occurs, prorated through
the date of the Employee's death.

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

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

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

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

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

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

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

                                       9
<PAGE>

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

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

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

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

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

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

                                       10
<PAGE>

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

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

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

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

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

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

                                       11
<PAGE>

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

          Section 9.4  Representations and Warranties by the Employee.  The
                       ----------------------------------------------
Employee represents and warrants to the Employer that the execution and delivery
by the Employee of this Agreement do not, and the performance by the Employee of
the Employee's obligations hereunder will not, with or without the giving of
notice or the passage of time, or both: (a) violate any judgment, writ,
injunction, or order of any court, arbitrator, or governmental agency applicable
to the Employee, or

(b) conflict with, result in the breach of any provisions of or the termination
of or constitute a default under, any agreement to which the Employee is a party
or by which the Employee is or may be bound.

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

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

                                       12
<PAGE>

          Section 9.7  Notices.  All notices, consents, waivers, and other
                       -------
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by hand (with written confirmation of
receipt), (b) sent by telecopier (with written confirmation of receipt),
provided that a copy is mailed by registered mail, return receipt requested, or
(c) when received by the addressee, if sent by a nationally recognized overnight
delivery service (receipt requested), in each case to the appropriate addresses
and telecopier numbers set forth below (or to such other addresses and
telecopier numbers as a party may designate by notice to the other parties):

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

          If to the Employee:      David Allen Harvey Lee, MD, Ph D.
          ------------------
                                   3209 Swarthmore Road
                                   Wilmington, DE  19807
                                   Facsimile No.: 302-778-3835

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

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

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

                                       13
<PAGE>

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

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

                                       14
<PAGE>

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

ENDO PHARMACEUTICALS INC.

By: /s/ Carol A. Ammon                  /s/ David Allen Harvey Lee, MD, Ph.D.
    -------------------------           ------------------------------------
Name:  Carol A. Ammon                   David Allen Harvey Lee, MD, Ph.D.
Title: President

                                       15

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