Document:

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                                                                    EXHIBIT 10.5

                                FOURTH AMENDMENT

          FOURTH AMENDMENT (this "Amendment"), dated as of March 1, 2000, among
TOWN SPORTS INTERNATIONAL, INC., a New York corporation (the "Borrower"), the
various lending institutions party to the Credit Agreement referred to below
(the "Banks"), and BANKERS TRUST COMPANY, as administrative agent (the
"Administrative Agent"). All capitalized terms used herein and not otherwise
defined shall have the respective meanings provided such terms in the Credit
Agreement referred to below.

                              W I T N E S S E T H :

          WHEREAS, the Borrower, the Banks and the Administrative Agent are
parties to an Amended and Restated Credit Agreement, dated as of October 16,
1997 as amended through the date hereof, (the "Credit Agreement"); and

          WHEREAS, the parties hereto wish to amend the Credit Agreement as
herein provided;

          NOW, THEREFORE, it is agreed that as of the Fourth Amendment Effective
Date (as defined below):

          1.     Section 1.01(a) of the Credit Agreement is hereby amended by
deleting Section 1.01(a) in its entirety and inserting the following new Section
1.01(a) in lieu thereof:

          "(a) Subject to and upon the terms and conditions set forth herein,
each Bank severally agrees to make, at any time and from time to time on and
after the Fourth Amendment Effective Date and prior to the Maturity Date, a loan
or loans to the Borrower, which loans (i) shall, at the option of the Borrower,
be denominated in (x) U.S. Dollars (each a "U.S. Dollar Revolving Loan" and,
collectively, the "U.S. Dollar Revolving Loans") or (y) Swiss Francs (each a
"Swiss Franc Revolving Loan" and, collectively, the "Swiss Franc Revolving
Loans" and together with the U.S. Dollar Revolving Loans, the "Revolving
Loans"), (ii) except as hereinafter provided, shall, at the option of the
Borrower, in the case of U.S. Dollar Revolving Loans, be maintained as either
Base Rate Loans or Eurodollar Loans (subject to the option to convert pursuant
to Section 1.06(a) into Loans of the other Type) or, in the case of Swiss Franc
Revolving Loans, be maintained as Swiss Franc Base Rate Loans or Eurofranc Loans
(subject to the option to convert pursuant to Section 1.06(b)), provided that
all Revolving Loans pursuant to the same Borrowing shall be of the same Type and
shall be denominated in the same currency, (iii) may be repaid and re-borrowed
in accordance with the provisions hereof and (iv) shall not exceed for any Bank
at any time that aggregate principal amount (determined for this purpose by
taking the principal amount of all U.S. Dollar Revolving Loans and the U.S.
Dollar Equivalent of all Swiss Franc Revolving Loans) which, when combined with
the aggregate outstanding principal amount of all other Revolving Loans of such
Bank and with such Bank's Adjusted Percentage, if any, of the sum of (I) the
Letter of Credit Outstandings (exclusive of Unpaid

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Drawings which are repaid with the proceeds of, and simultaneously with the
incurrence of, the respective incurrence of Revolving Loans) at such time and
(II) the outstanding principal amount of Swingline Loans (exclusive of Swingline
Loans which are repaid with the proceeds of, and simultaneously with the
incurrence of, the respective incurrence of Revolving Loans) at such time,
equals (1) if such Bank is a Non-Defaulting Bank, the Adjusted Commitment, if
any, of such Bank at such time and (2) if such Bank is a Defaulting Bank, the
Commitment, if any, of such Bank at such time. Notwithstanding anything to the
contrary contained above, no more than an aggregate principal amount of Swiss
Franc Revolving Loans with a U.S. Dollar Equivalent equal to $1,500,000 may be
incurred at any time.

          2.     Section 1.02 of the Credit Agreement is hereby amended by
deleting the last sentence contained therein and inserting the following new
sentence in lieu thereof:

          "More than one Borrowing may be incurred on any day, provided, that at
no time shall there be outstanding more than an aggregate of ten Borrowings of
Eurodollar Loans and Eurofranc Loans"

          3.     Section 1.04(a) of the Credit Agreement is hereby amended by
deleting the first two sentences contained therein and inserting the following
two sentences in lieu thereof:

          "No later than 1:00 P.M. (New York time) on the date specified in each
Notice of Borrowing, each Bank will make available its pro rata share of each
Borrowing requested to be made on such date in U.S. Dollars or Swiss Francs, as
the case may be, in the manner provided below, provided, that all Swingline
Loans shall be made available by BTCo no later than 3:00 P.M. (New York time) on
the date so requested. All such amounts shall be made available to the
Administrative Agent in U.S. Dollars or Swiss Francs, as the case may be, and
immediately available funds at the Payment Office and the Administrative Agent
promptly will make available to the Borrower by depositing to its account at the
Payment Office the aggregate of the amounts so made available in the type of
funds received."

          4.     Section 1.06 of the Credit Agreement is hereby amended by
deleting it in its entirety and inserting the following new Section 1.06 in lieu
thereof:

          "1.06 Conversions. (a) The Borrower shall have the option to convert
on any Business Day occurring on or after the Fourth Amendment Effective Date,
all or a portion at least equal to the applicable Minimum Borrowing Amount of
the outstanding principal amount of the U.S. Dollar Revolving Loans owing by the
Borrower into a Borrowing or Borrowings of another Type of Loan (other than
Swingline Loans, which at all times shall be maintained as Base Rate Loans);
provided, that (i) except as otherwise provided in Section 1.10(b), Eurodollar
Loans may be converted into Base Rate Loans only on the last day of an Interest
Period applicable thereto and no partial conversion of a Borrowing of Eurodollar
Loans shall reduce the outstanding principal amount of the Eurodollar Loans made
pursuant to such Borrowing to less than the Minimum Borrowing Amount applicable
thereto, (ii) Base Rate Loans may not be converted into Eurodollar Loans if a
violation of Sections 9.01 or 9.05 or an Event of Default is in existence on the
date of the conversion and the Administrative Agent or the Required Banks have
determined that such conversion at such time would be disadvantageous to the
Banks and (iii) Borrowings of

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Eurodollar Loans resulting from this Section 1.06(a) shall be limited in number
as provided in Section 1.02.

          (b)    The Borrower shall have the option to convert on any Business
Day occurring on or after the Fourth Amendment Effective Date, all or a portion
at least equal to the applicable Minimum Borrowing Amount of the outstanding
principal amount of the Swiss Franc Revolving Loans, owing by the Borrower into
a Borrowing or Borrowings of another Type of Loan; provided, that (i) except as
otherwise provided in Section 1.10(b), Eurofranc Loans may be converted into
Swiss Franc Base Rate Loans only on the last day of an Interest Period
applicable thereto and no partial conversion of a Borrowing of Eurofranc Loans
shall reduce the outstanding principal amount of the Eurofranc Loans made
pursuant to such Borrowing to less than the Minimum Borrowing Amount applicable
thereto, (ii) Swiss Franc Base Rate Loans may not be converted into Eurofranc
Loans if a violation of Sections 9.01 or 9.05 or an Event of Default is in
existence on the date of the conversion and the Administrative Agent or the
Required Banks have determined that such conversion at such time would be
disadvantageous to the Banks and (iii) Borrowings of Eurofranc Loans resulting
from this Section 1.06(b) shall be limited in number as provided in Section
1.02.

          (c)    Each conversion pursuant to this Section 1.06 shall be effected
by the Borrower giving the Administrative Agent at its Notice Office, prior to
11:00 A.M. (New York time), at least three Business Days' (or two Business
Days', in the case of a conversion into Base Rate Loans or Swiss Franc Base Rate
Loans, as the case may be) prior written notice (or telephonic notice promptly
confirmed in writing) (each a "Notice of Conversion") specifying the Loans to be
so converted, the Type of Loans to be converted into and, if to be converted
into a Borrowing of Eurodollar Loans or Eurofranc Loans, as the case may be, the
Interest Period to be initially applicable thereto. The Administrative Agent
shall give each Bank prompt notice of any such proposed conversion affecting any
of its Loans.

          5.     Section 1.08 of the Credit Agreement is hereby amended by (i)
deleting each reference to "Base Rate Loan" and inserting "Base Rate Loan or
Swiss Franc Base Rate Loan, as the case may be," in lieu thereof and (ii)
deleting each reference to "Eurodollar Loan" and inserting "Eurodollar Loan or
Eurofranc Loan, as the case may be," in lieu thereof.

          6.     Section 1.09 of the Credit Agreement is hereby amended by (i)
deleting each reference to "Base Rate Loan" and inserting "Base Rate Loan or
Swiss Franc Base Rate Loan, as the case may be," in lieu thereof and (ii)
deleting each reference to "Eurodollar Loan" and inserting "Eurodollar Loan or
Eurofranc Loan, as the case may be," in lieu thereof.

          7.     Section 1.10 (a) of the Credit Agreement is hereby amended by
(i) deleting clause (x) contained in the first sentence of such Section and
inserting "(x) in the case of clauses (i) and (iv) below, the Administrative
Agent or" in lieu thereof and (ii) deleting the paragraph immediately following
Section 1.10(a) (iii) appearing therein and inserting the following new Section
(iv) and additional text in lieu thereof:

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                 "(iv) at any time that Swiss Francs are not available in
    sufficient amounts, as determined in good faith by the Administrative Agent,
    to fund any Borrowing of Swiss Franc Revolving Loans requested pursuant to
    Section 1.01;

then, and in any such event, such Bank (or the Administrative Agent, in the case
of clauses (i) or (iv) above) shall (x) on such date and (y) as promptly as
practicable (and in any event within ten Business Days) after the date on which
such event no longer exists give notice (by telephone confirmed in writing) to
the Borrower and to the Administrative Agent of such determination (which notice
the Administrative Agent shall promptly transmit to each of the other Banks).
Thereafter (w) in the case of clause (i) above, in the event Eurodollar Loans
are so affected, Eurodollar Loans shall no longer be available until such time
as the Administrative Agent notifies the Borrower and the Banks that the
circumstances giving rise to such notice by the Administrative Agent no longer
exist, and any Notice of Borrowing or Notice of Conversion given by the Borrower
with respect to Eurodollar Loans which have not yet been incurred (including by
way of conversion) shall be deemed rescinded by the Borrower, (x) in the case of
clause (ii) above, the Borrower shall pay to such Bank, upon written demand
therefor, such additional amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Bank shall
reasonably determine) as shall be required to compensate such Bank for such
increased costs or reductions in amounts received or receivable hereunder (a
written notice as to the additional amounts owed to such Bank, showing the basis
for the calculation thereof, submitted to the Borrower by such Bank in good
faith shall, absent demonstrable error, be final and conclusive and binding on
all the parties hereto, although the failure to give any such notice shall not
release or diminish any of the Borrower's obligations to pay additional amounts
pursuant to this Section 1.10(a) upon the subsequent receipt of such notice),
(y) in the case of clause (iii) above, the Borrower shall take one of the
actions specified in Section 1.10(b) as promptly as possible and, in any event,
within the time period required by law and (z) in the case of clause (iv) above,
Swiss Franc Revolving Loans (exclusive of any such Swiss Franc Revolving Loans
which have theretofore been funded) shall no longer be available until such time
as the Administrative Agent notifies the Borrower and the Banks that the
circumstances giving rise to such notice by the Administrative Agent no longer
exist, and any Notice of Borrowing or Notice of Conversion given by the Borrower
with respect to such Swiss Franc Revolving Loans which have not been incurred
(including by way of conversion) shall be deemed rescinded by the Borrower. Each
of the Administrative Agent and each Bank agrees that if it gives notice to the
Borrower of any of the events described in clause (i), (ii), (iii) or (iv)
above, it shall promptly notify the Borrower and, in the case of any such Bank,
the Administrative Agent, if such event ceases to exist. If any such event
described in clause (iii) above ceases to exist as to a Bank, the obligations of
such Bank to make Eurodollar Loans and/or Eurofranc Loans and to convert Base
Rate Loans into Eurodollar Loans or Swiss Franc Base Rate Loans into Eurofranc
Loans, as the case may be, on the terms and conditions contained herein shall be
reinstated immediately upon such cessation."

          8.     Section 1.10 of the Credit Agreement is hereby further amended
by inserting the following new Section 1.10 (d) immediately following Section
1.10 (c):

          "(d) In the event that any Bank shall in good faith determine (which
determination shall, absent manifest error, be final and conclusive and binding
on all parties hereto) at any time

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that such Bank is required to maintain reserves (including, without limitation,
any marginal, emergency, supplemental, special or other reserves required by
applicable law) which have been established by any federal, state, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body with jurisdiction over such Bank (including any branch, Affiliate or
funding office thereof) in respect of any Swiss Franc Revolving Loans or any
category of liabilities which includes deposits by reference to which the
interest rate on any Swiss Franc Revolving Loan is determined or any category of
extensions of credit or other assets which includes loans by a non-United States
office of any Bank to non-United States residents, then, unless such reserves
are included in the calculation of the interest rate applicable to such Swiss
Franc Revolving Loans or in Section 1.10(a)(ii), such Bank shall promptly notify
the Borrower and the Administrative Agent in writing specifying the additional
amounts required to indemnify such Bank against the cost of maintaining such
reserves (such written notice to provide in reasonable detail a computation of
such additional amounts) and the Borrower shall pay to such Bank such specified
amounts as additional interest at the time that the Borrower is otherwise
required to pay interest in respect of such Swiss Franc Revolving Loan or, if
later, on written demand therefor by such Bank."

          9.     Section 4.01 of the Credit Agreement is hereby amended by
inserting the following parenthetical immediately following (i) the number
$500,000, and (ii) the number $50,000 appearing therein:

          "(or the Swiss Franc Equivalent thereof in the case of the Eurofranc
Loans)"

          10.    Section 4.03 of the Credit Agreement is hereby amended by
deleting such section in its entirety and inserting the following new section
4.03 as follows:

          "4.03 Method and Place of Payment. (a) Except as otherwise
specifically provided herein, all payments under this Agreement or any Note
shall be made to the Administrative Agent for the account of the Bank or Banks
entitled thereto not later than 1:00 P.M. (local time in the city in which the
Payment Office for the respective payments is located) on the date when due and
shall be made in (x) Dollars in immediately available funds at the appropriate
Payment Office of the Administrative Agent in respect of any obligation of the
Borrower under this Agreement except as otherwise provided in the immediately
following clause (y) and (y) Swiss Francs in immediately available funds at the
appropriate Payment Office of the Administrative Agent, if such payment is made
in respect of (i) principal of or interest on Swiss Franc Revolving Loans, or
(ii) any increased costs, indemnities or other amounts owing with respect to
Swiss Franc Revolving Loans (or Commitments relating thereto). The
Administrative Agent will thereafter cause to be distributed on the same day (if
payment was actually received by the Administrative Agent prior to 1:00 P.M.
(local time in the city in which such payments are to be made) like funds
relating to the payment of principal, interest or Fees ratably to the Banks
entitled thereto. Any payments under this Agreement which are made later than
1:00 P.M. (local time in the city in which such payments are to be made) shall
be deemed to have been made on the next succeeding Business Day. Whenever any
payment to be made hereunder or under any Note shall be stated to be due on a
day which is not a Business Day, the due date thereof shall be extended to the
next succeeding Business Day and, with respect to payments of principal,
interest shall be payable at the applicable rate during such extension."

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          11.    Section 10 of the Credit Agreement is hereby amended to insert
the following new definitions in appropriate alphabetical order:

          "Applicable Currency" shall mean with respect to any Loan, the
currency in which such Loan was incurred.

          "Eurofranc Loan" shall mean each Swiss Franc Revolving Loan bearing
interest at the rates provided in Section 1.08(b).

          "Fourth Amendment" shall mean the Fourth Amendment, dated as of
February __, 2000, to this Agreement.

          "Fourth Amendment Effective Date" shall have the meaning provided in
the Fourth Amendment.

          "Judgment Currency Conversion Date" shall have the meaning provided in
Section 12.17(a).

          "Judgment Currency Conversion Date" shall have the meaning provided in
Section 12.17(a).

          "Obligation Currency" shall have the meaning provided in Section
12.17(a).

          "Swiss Franc Base Rate Loan" shall mean each Swiss Franc Revolving
Loan bearing interest at the rates provided in Section 1.08(a).

          "Swiss Franc Equivalent" shall mean, at any time for the determination
thereof, the amount of Swiss Francs which could be purchased with the amount of
Dollars involved in such computation at the spot rate of exchange therefor as
quoted by the Administrative Agent as of 11:00 A.M. (Zurich time) on the date
two Business Days prior to the date of any determination thereof for purchase on
such date.

          "Swiss Franc Revolving Loans" shall have the meaning provided in
Section 1.01(a).

          "Swiss Francs" shall mean shall each mean the freely transferable
lawful money of the Swiss Confederation.

          "U.S. Dollar Equivalent" shall mean, at any time for the computation
thereof, the amount of U.S. Dollars which could be purchased with the amount of
Swiss Francs involved in such computation at the spot exchange rate therefor as
quoted by the Administrative Agent as of 12:00 P.M. (New York time) on the date
one Business Day prior to the date of any determination thereof for purchase on
such date. If for any reason the U.S. Dollar Equivalent cannot be calculated as
provided above, the Administrative Agent shall calculate the U.S. Dollar
Equivalent on such basis as it deems fair and equitable.

          "U.S. Dollar Revolving Loan" shall have the meaning provided in
Section 1.01.

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          12.    Section 10 of the Credit Agreement is hereby further amended by
deleting the definitions of "Base Rate Loan", "Eurodollar Loan", "Interest
Period" and "Minimum Borrowing Amount" contained therein and inserting the
following new definitions of "Base Rate Loan", "Eurodollar Loan", "Interest
Period" and "Minimum Borrowing Amount" in lieu thereof:

          "Base Rate Loan" shall mean each U.S. Dollar Revolving Loan bearing
interest at the rates provided in Section 1.08(a).

          "Eurodollar Loan" shall mean each U.S. Dollar Revolving Loan bearing
interest at the rates provided in Section 1.08(b).

          "Interest Period" with respect to any Eurodollar Loan or Eurofranc
Loan shall mean the interest period applicable thereto, as determined pursuant
to Section 1.09.

          "Minimum Borrowing Amount" shall mean (i) for U.S. Dollar Revolving
Loans maintained as Base Rate Loans, $250,000, (ii) for U.S. Dollar Revolving
Loans maintained as Eurodollar Loans, $500,000, (iii) for Swiss Franc Revolving
Loans maintained as Swiss Franc Base Rate Loans, the Swiss Franc Equivalent of
$250,000 and (iv) for Swiss Franc Revolving Loans maintained as Eurofranc Loans,
the Swiss Franc Equivalent of $500,000.

          13.    Section 12 of the Credit Agreement is hereby amended by
inserting the following new Section 12.17 immediately following Section 12.16
appearing therein:

          12.17  Judgment Currency. (a) The Borrower's obligations hereunder and
under the other Credit Documents to make payments in the respective Applicable
Currency (the "Obligation Currency") shall not be discharged or satisfied by any
tender or recovery pursuant to any judgment expressed in or converted into any
currency other than the Obligation Currency, except to the extent that such
tender or recovery results in the effective receipt by the Administrative Agent,
the Collateral Agent or the respective Lender of the full amount of the
Obligation Currency expressed to be payable to the Administrative Agent, the
Collateral Agent or such Lender under this Agreement or the other Credit
Documents. If for the purpose of obtaining or enforcing judgment against any
Credit Party in any court or in any jurisdiction, it becomes necessary to
convert into or from any currency other than the Obligation Currency (such other
currency being hereinafter referred to as the "Judgment Currency") an amount due
in the Obligation Currency, the conversion shall be made, at the U.S. Dollar
Equivalent thereof, as the case may be, and, in the case of other currencies,
the rate of exchange (as quoted by the Administrative Agent or if the
Administrative Agent does not quote a rate of exchange on such currency, by a
known dealer in such currency designated by the Administrative Agent)
determined, in each case, as of the day on which the judgment is given (such
Business Day being hereinafter referred to as the "Judgment Currency Conversion
Date").

          (b) If there is a change in the rate of exchange prevailing between
the Judgment Currency Conversion Date and the date of actual payment of the
amount due, the Borrower covenants and agrees to pay, or cause to be paid, such
additional amounts, if any (but in any event not a lesser amount), as may be
necessary to ensure that the amount paid in the Judgment Currency, when
converted at the rate of exchange prevailing on the date of payment, will
produce

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the amount of the Obligation Currency which could have been purchased with the
amount of Judgment Currency stipulated in the judgment or judicial award at the
rate or exchange prevailing on the Judgment Currency Conversion Date.

          (c) For purposes of determining the U.S. Dollar Equivalent or any
other rate of exchange for this Section, such amounts shall include any premium
and costs payable in connection with the purchase of the Obligation Currency.

          14.    Notwithstanding anything to the contrary contained in this
Amendment or in the Credit Agreement, the parties hereto hereby agree that
wherever the context requires (such determination to be made by the
Administrative Agent in its reasonable judgment), (i) references to "Eurodollar
Loan" in the Credit Agreement shall be interpreted to mean "Eurodollar Loan or
Eurofranc Loan, as the case may be" and (ii) references to "Base Rate Loan" in
the Credit Agreement shall be interpreted to mean "Base Rate Loan or Swiss Franc
Base Rate Loan, as the case may be".

          15.    In order to induce the Banks to enter into this Amendment, the
Borrower hereby represents and warrants that on the Fourth Amendment Effective
Date, both before and after giving effect to this Amendment, (i) no Default or
Event of Default shall exist and (ii) all of the representations and warranties
contained in the Credit Documents shall be true and correct in all material
respects, with the same effect as though such representations and warranties had
been made on and as of the Fourth Amendment Effective Date (it being understood
that any representation or warranty made as of a specific date shall be true and
correct in all material respects as of such specific date).

          16.    This Amendment is limited as specified and shall not constitute
a modification, acceptance or waiver of any other provision of the Credit
Agreement or any other Credit Document.

          17.    This Amendment may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts shall be lodged with the Borrower and the Administrative Agent.

          18.    THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK.

          19.    This Amendment shall become effective as of the date hereof
(the "Fourth Amendment Effective Date") when the Borrower, the Required Banks
(including each Bank whose Commitment is increased pursuant hereto) and the
Administrative Agent shall have signed a copy hereof (whether the same or
different copies) and shall have delivered (including by way of telecopier) the
same to the Administrative Agent.

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<PAGE>   9

          IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amendment to be duly executed and delivered as of the date
first above written.

                                            TOWN SPORTS INTERNATIONAL, INC.

                                            By:        /S/ R. G. Pyle
                                                --------------------------------
                                                Name:  R. G. Pyle
                                                Title: CFO

                                            BANKERS TRUST COMPANY, Individually
                                                and as Administrative Agent

                                            By:        /S/ Gregory Schefrin
                                                --------------------------------
                                                Name:  Gregory Schefrin
                                                Title: Vice President

                                            BANK OF SCOTLAND

                                            By:        /S/ Adrian Knowles
                                                --------------------------------
                                                Name:  Adrian Knowles
                                                Title: Vice President<PAGE>   1
                              EMPLOYMENT AGREEMENT

                  THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of June
15, 1999, between WARNER CHILCOTT PUBLIC LIMITED COMPANY., a public limited
company organized under the laws of Ireland (the "Company"), and Diane Cady
("Executive").

                                    RECITALS

                  WHEREAS the Company and Executive desire and agree to enter
into an employment relationship by means of this employment agreement.

                  NOW THEREFORE in consideration of the promises and mutual
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

                  1. EMPLOYMENT.

                  (a) The Company hereby agrees to hire Executive as its Senior
Vice President, Investor Relations and Corporate Communications to render
full-time services to the Company and to perform such other duties commensurate
with such office.

                  (b) Executive hereby accepts such employment and agrees to
render the services described above to the best of her abilities in a diligent,
trustworthy, businesslike and efficient manner.

                  (c) The duties to be performed by Executive hereunder shall be
performed primarily at the U.S. office of the Company at Rockaway Corporate
Center, 100 Enterprise Drive, Suite 280, Rockaway, New Jersey 07866, subject to
reasonable travel requirements on behalf of the Company.

                  2. TERM OF EMPLOYMENT. The employment period of Executive by
the Company shall commence on or before September 7, 1999 and end on December
31, 2002 (the "Initial Term") unless further extended or sooner terminated as
hereinafter provided. Executive may terminate her employment during the Initial
Term with sixty (60) days written notice to the Company. Commencing on December
31, 2002, and each December 31 thereafter, the term of Executive's employment
shall automatically be extended for one additional year to, respectively,
December 31, 2003, and each December 31 thereafter, unless, not later than sixty
(60) days prior to the end of any renewal term, either party hereunder shall
have given notice to the other party that it does not wish to extend this
Agreement. If the Company gives Executive notice that it does not wish to extend
this Agreement during the Initial Term or any renewal term, Executive shall be
entitled to the severance payments provided in Section 4(d) hereof. As used
herein the

                                        1
<PAGE>   2
"Employment Period" shall refer to the Initial Term and any renewal term of
Executive's employment with the Company.

                  3. BASE SALARY AND BENEFITS.

                  (a) During the Employment Period, Executive's base salary
shall be $175,000 per annum (the "Base Salary"). The Base Salary shall be
subject to adjustment from time to time in accordance with the compensation
policies and practices of the Company; however, in no case shall Executive's
salary be reduced below $175,000 per annum. The Base Salary shall be payable in
regular installments in accordance with the Company's general payroll practices
and shall be subject to customary withholding.

                  (b) The Company shall reimburse Executive for all reasonable
expenses incurred by her in the course of performing her duties under this
Agreement which are consistent with the Company's policies in effect from time
to time with respect to travel, entertainment and other business expenses. The
parties agree that such expenses shall include, by way of example and not
limitation, cellular telephone service and home fax machine and telephone line.

                  (c) Executive shall be entitled to participate, on a basis
comparable to other key executives of the Company, in any benefit plan,
incentive compensation plan, or program of the Company for which key executives
are or shall become eligible, including, without limitation, pension, 401(k),
life and disability insurance and stock benefits and/or plans.

                  (d) In addition to the Base Salary, Executive shall be
eligible to receive an annual cash bonus in a target amount equal to 50% of her
then current Base Salary. Such bonus shall be provided on such terms and in such
amounts, if any, as the Company may deem appropriate in its sole discretion. For
1999, such bonus, if any, shall be prorated to reflect the amount of time
actually worked in such calendar year.

                  (e) Executive will receive options to purchase 60,000 ordinary
shares represented by ADSs and evidenced by ADRs of Warner Chilcott Public
Limited Company. Twelve thousand of said options shall be immediately
exercisable after Executive's first day of employment, with the remaining 48,000
of such shares vesting quarterly over four years. Other terms of the stock
options shall be as set forth in the Warner Chilcott Incentive Share Option
Program (the "Plan"). Executive may also be awarded, from time to time,
additional compensation (such as warrants, stock options, stock appreciation
rights, performance shares, restricted stock or unrestricted stock) pursuant to
the Plan or any additional or replacement incentive compensation program
established for the key employees of the Company. Any awards under such programs
shall be at such levels or in such amounts as the Board of Directors deems, in
its sole discretion, appropriate for the position occupied by Executive and her
performance therein. Executive will be considered for an additional grant under
the Plan beginning in Spring 2000.

                  (f) Within thirty days after execution of this Agreement, the
Company shall pay Executive a signing bonus in the amount of $25,000.

                                       2
<PAGE>   3
                  (g) Executive shall be entitled to vacation time with
compensation of 20 days per annum. Executive shall also be entitled to all paid
holidays given by the Company to its key officers.

                  (h) There shall be no material reduction or diminution of the
benefits provided in this Section 3, (i) unless Executive shall have given her
prior written consent to such reduction or diminution and an equitable
arrangement (embodied in an ongoing substitute or alternative benefit or plan)
has been made with respect to such benefit or plan or (ii) except, in the case
of Section 3(c), for across the board benefit reductions similarly affecting all
senior management personnel of the Company.

                  4. TERMINATION AND CHANGE OF CONTROL

                  (a) If the Executive shall die during the Employment Period,
this Agreement shall terminate effective as of the date of Executive's death.

                  (b) At the sole discretion of the Board of Directors,
Executive may be terminated if the Executive is disabled (as defined below) and
shall have been absent from her duties with the Company on a full time basis for
one hundred and eighty (180) consecutive days, and, within thirty (30) days
after written notice by the Company to do so, the Executive shall not have
returned to the performance of her duties hereunder on a full time basis. As
used herein, the term "disabled" shall (i) mean that Executive is unable, as a
result of a medically determinable physical or mental impairment, to perform the
duties and services of her position, or (ii) have the meaning specified in any
disability insurance policy maintained by the Company, whichever is more
favorable to the Executive.

                  (c) The Company may, by notice to Executive, terminate
Executive's employment hereunder for cause. As used herein, "cause" shall mean
(i) the conviction of Executive of a felony or conviction of a misdemeanor if
such misdemeanor involves moral turpitude; or (ii) Executive's voluntary
engagement in conduct constituting larceny, embezzlement, conversion or any
other act involving the misappropriation of Company funds in the course of her
employment; or (iii) the willful refusal to carry out specific directions of her
supervisor and/or the Board of Directors, which directions shall be consistent
with the provisions hereof; or (iv) Executive's committing any act of gross
negligence or intentional misconduct in the performance or non-performance of
her duties as an employee of the Company; or (v) any material breach by the
Executive of any material provision of this Agreement (other than for reasons
related only to the business performance of the Company or business results
achieved by Executive). For purposes of this Section 4(c), no act or failure to
act on Executive's part shall be considered to be reason for termination for
cause if done, or omitted to be done, by Executive in good faith and with the
reasonable belief that the action or omission was in the best interests of the
Company. Upon the termination of Executive's employment for cause, the Company
shall pay to Executive (x) her Base Salary accrued through the effective date

                                        3
<PAGE>   4
of termination, payable at the time such payment is otherwise due and payable
hereunder, and (y) all other amounts and benefits to which Executive is
entitled, including, without limitation, vacation pay and expense reimbursement
amounts accrued to the effective date of termination and amounts and benefits
owing under the terms of any benefit plan of the Company in which Executive
participates.

                  (d) Executive's employment may be terminated at any time by
the Company without cause; provided, however, that in such event Executive shall
be entitled to receive (so long as she executes and delivers the Company's
standard form of release) an amount equal to Executive's then current Base
Salary for a period of eighteen months plus all other amounts and benefits to
which Executive is entitled, including without limitation, expense reimbursement
amounts accrued to the effective date of termination and amounts and benefits
owing under the terms of any benefit plan of the Company in which Executive
participates. The foregoing amounts shall be payable in one lump sum payment
within ten (10) days after Executive's last day of active employment. In
addition, Executive shall be entitled to continue participation in the Company's
health and other welfare benefit plans, at the Company's expense, for a period
of up to eighteen months or until Executive is covered by a successor employer's
benefit plans, whichever is sooner.

                  (e) If a "Change in Control" of the Company (as defined in
Section 4(f) below) occurs, all stock options, restricted stock, deferred
compensation and similar benefits which have not yet become vested on the date
of a Change in Control will become vested upon such event, and Executive shall
be permitted to exercise all such rights whether or not Executive remains
employed with the Company or terminates her employment in accordance with this
subsection (e). If a Change in Control event involves a tender offer for all or
part of the Company's shares, the vesting date for stock options and restricted
stock pursuant to this subsection (e) shall be a date which permits Executive to
participate in such tender offer with such stock options or restricted shares.
In addition, if a Change in Control occurs, Executive may, after such Change in
Control, terminate her employment with the Company for any reason after the
expiry of sixty (60) days immediately following the effective date of such
Change in Control, in which event Executive shall be entitled to the payments
specified in Section 4(d) above.

                  (f) For purposes of this Agreement, a "Change in Control" of
the Company shall be deemed to have occurred if: (i) any person (as such term is
used in Sections 13(d) and 14(d)(2) of the Securities and Exchange Act of 1934)
becomes the beneficial owner, directly or indirectly, of Company securities
representing 30% or more of the capital stock of the Company; or (ii)
individuals who constitute the Company's Board of Directors as of the date of
this Agreement (the "Incumbent Board") cease for any reason to constitute at
least a majority thereof, provided, however, that any person becoming a director
subsequent to the date of this Agreement whose election, or nomination for
election by the Company's stockholders, was approved by a vote of at least 51%
of the directors comprising the Incumbent Board (either by a specific vote or by
approval of the proxy statement of the Company in which such person is named as
a nominee for director, without objection to such nomination) shall be, for the
purpose of this clause (ii), considered as though such

                                       4
<PAGE>   5
person were a member of the Incumbent Board; or (iii) the Company's shareholders
approve a merger or consolidation (where in either case the Company is not the
survivor thereof) in which shareholders of the Company cease to own at least 51%
of the surviving entity's voting power, or a sale or disposition of all or
substantially all of the Company's assets or a plan of partial or complete
liquidation of the Company. Notwithstanding the foregoing, a "Change in Control"
shall not include events whereby any of Elan Corporation plc, Dominion Income
Management Corp., Halisol S.A., AIG Global Investment Corp., Goldman Sachs &
Co., Paribas Sante SA, Perrigo Company or Warner-Lambert Company becomes the
beneficial owner of Company securities representing 30% or more of the capital
stock of the Company.

                  (g) Executive's employment may be terminated by the Executive,

                  (A) For Good Reason. For purposes of this Agreement, "Good
                      Reason" shall mean: (x) the assignment to Executive of any
                      duties inconsistent in any respect with Executive's
                      position (including status, offices, and titles),
                      authority, duties or responsibilities as contemplated by
                      Section 1(a) hereof, or any other action by the Company
                      which results in a diminution in such position, authority,
                      duties or responsibilities, excluding for this purpose an
                      isolated, insubstantial and inadvertent action not taken
                      in bad faith and which is remedied by the Company promptly
                      after receipt of notice thereof given by Executive; (y)
                      any failure by the Company to comply with any of the
                      provisions of Section 3 hereof, other than an isolated,
                      insubstantial and inadvertent failure not occurring in bad
                      faith and which is remedied by the Company promptly after
                      receipt of notice thereof given by Executive; (z) the
                      Company's requiring Executive to be based at any office or
                      location other than as provided in Section 1(c) hereof;
                      (xx) any purported termination by the Company of
                      Executive's employment otherwise than as expressly
                      permitted by this Agreement; or (yy) any failure by the
                      Company to obtain an express assumption of this Agreement
                      by a successor as required pursuant to Section 15 hereof.
                      Upon any termination pursuant to this subsection (g)(A),
                      Executive shall be entitled to the payment specified in
                      Section 4(d).

                  (B) By resignation or retirement. If Executive resigns or
                      retires, this Agreement shall terminate as of the
                      effective date of Executive's retirement or resignation
                      and thereupon Executive shall be entitled solely to the
                      payments and benefits set forth in Sections 4(c) and (l)
                      hereof.

                  (h) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution by the Company to or for the benefit of Executive (whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise, but determined without regard to any additional payments required
under this subsection (h)) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code"), or any interest or penalties are

                                       5
<PAGE>   6
incurred by Executive with respect to such excise tax (such excise tax, together
with any such interest and penalties are hereinafter collectively referred to as
the "Excise Tax"), the Company shall pay to Executive at the time specified in
subparagraph (k) below an additional amount (a "Gross-Up Payment") such that the
net amount of the Gross-Up Payment retained by Executive, after deduction of all
federal, state and local income tax (and any interest and penalties imposed with
respect thereto), employment tax and Excise Tax on the Gross-Up Payment, shall
be equal to the amount of the Excise Tax imposed on such Payment.

                  (i) For purposes of the foregoing subparagraph (h), the proper
amounts, if any, of the Excise Tax and the Gross-Up Payment shall be determined
in the first instance by the Company. Such determination by the Company shall be
communicated in writing by the Company to Executive at least fourteen (14) days
prior to the occurrence of a Change of Control. Within ten (10) days of being
provided with written notice of any such determination, Executive may provide
written notice to the Chairperson of the Compensation Committee of the Board of
Directors of the Company of any disagreement, in which event the amounts, if
any, of the Excise Tax and the Gross-Up Payment shall be determined by tax
counsel mutually selected by the Company and Executive. The determination of the
Company (or in the event of disagreement, the tax counsel selected) shall be
final and nonreviewable.

                  (j) For purposes of determining whether any of the Payments
will be subject to the Excise Tax and the amount of such Excise Tax under
subparagraph (h), the following principles will be applicable:

                  (A) Any payments or benefits received or to be received by
                      Executive in connection with a termination of employment
                      shall be treated as "parachute payments" within the
                      meaning of Section 280G(b)(2) of the Code, and all "excess
                      parachute payments" within the meaning of Section
                      280G(b)(1) of the Code shall be treated as subject to the
                      Excise Tax unless in the opinion of tax counsel mutually
                      selected by the parties pursuant to subsection (i) above,
                      such other payments or benefits (in whole or in part) do
                      not constitute parachute payments, or such excess
                      parachute payments (in whole or in part) represents
                      reasonable compensation for services actually rendered
                      within the meaning of Section 280G(b)(4) of the Code in
                      excess of the base amount within the meaning of Section
                      280G(b)(3) of the Code; and

                  (B) The value of any non-cash benefits or any deferred payment
                      or benefit shall be determined in accordance with Section
                      280G(d)(3) and (4) of the Code. For purposes of
                      determining the amount of the Gross-Up Payment, Executive
                      shall be deemed to pay federal income taxes at the highest
                      marginal rate of tax in the calendar year in which the
                      Gross-Up Payment is to be made and state and local income
                      taxes at the highest marginal rate of tax in the state and
                      locality of Executive's residence on the date of
                      termination, net of the maximum reduction

                                       6
<PAGE>   7
                      in federal income taxes which could be obtained from
                      deduction of such state and local taxes.

                  (k) The Payments provided for in subparagraph (h) shall be
made in a cash, lump-sum payment, net of any required tax withholdings, upon the
later of (i) the fifth business day following the effective date of termination,
or (ii) the calculation of the amount of the Gross-Up Payment under subparagraph
(i). Any Payment required hereunder that is not made in a timely manner shall
bear interest at a rate equal to the prime rate quoted on the date the payment
is first overdue by Citibank N.A., New York, New York plus two percent until
paid.

                  (l) Amounts which are vested benefits or which Executive is
otherwise entitled to receive under any plan, policy, practice or program of or
in any contract or agreement with the Company or any of its affiliated companies
at or subsequent to the date of termination of Executive's employment for any
reason shall be payable in accordance with such plan, policy, practice or
program or contract or agreement except as explicitly modified by this
Agreement.

                  5. CONFIDENTIAL INFORMATION.

                  (a) Executive acknowledges and agrees that the information,
observations and data obtained by her while employed by the Company and its
subsidiaries concerning the business or affairs of the Company or any other
subsidiary ("Confidential Information") are the property of the Company or such
subsidiary. Therefore, Executive agrees to keep secret and retain in the
strictest confidence all Confidential Information, including without limitation,
trade "know-how" secrets, customer lists, pricing policies, operational methods,
technical processes, formulae, inventions and research projects and other
business affairs of the Company, learned by her prior to or after the date of
this Agreement, and not to disclose them to anyone outside the Company, either
during or after her employment with the Company, except (i) in the course of
performing her duties hereunder; (ii) with the Company's express written
consent; (iii) to the extent that the Confidential Information becomes generally
known to and available for use by the public other than as a result of
Executive's acts or omissions; or (iv) where required to be disclosed by court
order, subpoena or other government process. If Executive shall be required to
make disclosure pursuant to the provisions of clause (iv) of the preceding
sentence, Executive promptly, but in no event more than 48 hours after learning
of such subpoena, court order or other governmental process, shall notify the
Company, by personal delivery or fax (pursuant to Section 10 hereof), and, at
the Company's expense, shall take all reasonably necessary steps requested by
the Company to defend against the enforcement of such subpoena, court order or
other governmental process and permit the Company to intervene and participate
with counsel of its own choice in any related proceeding.

                  (b) Executive shall deliver to the Company at the termination
of her employment, or at any other time the Company may request, all memoranda,
notes, plans, records, reports, computer tapes, printouts and software and other
documents and data (and copies thereof) relating

                                       7
<PAGE>   8
to the Confidential Information, Work Product (as defined below) or the business
of the Company or any subsidiary which she may then possess or have under his
control.

                  6. INVENTIONS AND PATENTS. Executive acknowledges that all
inventions, innovations, improvements, developments, methods, designs, analyses,
drawings, reports and all similar or related information (whether or not
patentable) which relate to the Company's or any of its subsidiaries' actual or
anticipated business, research and development or existing or future products or
services and which are conceived, developed or made by Executive while employed
by the Company or its predecessor and its subsidiaries ("Work Product") belong
to the Company or such subsidiary. Executive shall promptly disclose such Work
Product to the Board and perform all actions reasonably requested by the Board
(whether during or after her employment) to establish and confirm such ownership
(including, without limitation, assignments, consents, powers of attorney and
other instruments).

                  7. INDEMNIFICATION. The Company will indemnify Executive and
her legal representatives, to the fullest extent permitted by the laws of the
State of New Jersey and the existing by-laws of the Company or any other
applicable laws or the provisions of any other corporate document of the
Company, and Executive shall be entitled to the protection of any insurance
policies the Company may elect to obtain generally for the benefit of its
directors and officers, against all costs, charges and expenses whatsoever
incurred or sustained by her or her legal representatives in connection with any
action, suit or proceeding to which she or her legal representatives may be made
a party by reason of her being or having been a director or officer of the
Company or of any of its subsidiaries or affiliates or actions taken purportedly
on behalf of the Company or of any of its subsidiaries or affiliates. The
Company shall advance to Executive the amount of her expenses incurred in
connection with any proceeding relating to such service or function to the
fullest extent legally permissible under New Jersey law. The indemnification and
expense reimbursement obligations of the Company in this Section 7 will continue
as to Executive after she ceases to be an officer of the Company and shall inure
to the benefit of her heirs, executors and administrators. The Company shall
not, without Executive's written consent, cause or permit any amendment of the
Company's governing documents which would affect Executive's rights to
indemnification and expense reimbursement thereunder.

                  8. NON-COMPETE, NON-SOLICITATION. Subject to Section 1(b)
hereof, Executive covenants and agrees that, during the Employment Period and
for a period of six months thereafter;

                  (a) Executive shall not, directly or indirectly, as an
                  employee, director, officer, shareholder, partner, advisor,
                  consultant or otherwise, engage in any commercial activity or
                  participate in any venture of any kind that directly competes
                  with the Company with respect to the development, marketing,
                  testing, manufacture or delivery of substantially similar
                  pharmaceutical products within the United States. Nothing
                  herein shall prohibit Executive from holding less than 5% of
                  the outstanding stock of any corporation required to file
                  periodic reports with the SEC

                                       8
<PAGE>   9
                  under Section 13 or 15(d) of the Securities Exchange Act of
                  1934, as amended, and the securities of which are listed on
                  any securities exchange or quoted on the NASDAQ National
                  Market or traded on the over-the-counter market.

                  (c) Executive shall not, directly or indirectly, through
                  another entity (i) induce or attempt to induce any employee or
                  director of the Company or any subsidiary to leave the employ
                  or board of the Company or such subsidiary, or in any way
                  interfere with the relationship between the Company or any
                  subsidiary and any employee or director thereof (except that
                  Executive shall not be prohibited from soliciting or hiring
                  Linda Menzel) (ii) induce or attempt to induce any customer,
                  supplier, licensee, licensor, franchisee or other business
                  relation of the Company or any subsidiary to cease doing
                  business with the Company or such subsidiary, or in any way
                  interfere with the relationship between any such customer,
                  supplier, licensee or business relation and the Company or any
                  subsidiary (including, without limitation, making any negative
                  statements or communications about the Company or its
                  subsidiaries).

                   (d) If, at the time of enforcement of this Section 8, a court
                  shall hold that the duration, scope or area restrictions
                  stated herein are unreasonable under circumstances then
                  existing, the parties agree that the maximum duration, scope
                  or area reasonable under such circumstances shall be
                  substituted for the stated duration, scope or area and that
                  the court shall be allowed to revise the restrictions
                  contained herein to cover the maximum period, scope and area
                  permitted by law. Executive agrees that the restrictions
                  contained in this Section 8 are reasonable.

                   (e) In the event of the breach or a threatened breach by
                  Executive of any of the provisions of this Section 8, the
                  Company, in addition and supplementary to other rights and
                  remedies existing in its favor, may apply to any court of law
                  or equity of competent jurisdiction for specific performance
                  and/or injunctive or other relief in order to enforce or
                  prevent any violations of the provisions hereof (without
                  posting

                  9. EXECUTIVE'S REPRESENTATIONS. Executive hereby represents
and warrants to the Company that (i) the execution, delivery and performance of
this Agreement by Executive do not and shall not conflict with, breach, violate
or cause a default under any contract, agreement, instrument, order, judgment or
decree to which Executive is a party or by which she is bound, and (ii) upon the
execution and delivery of this Agreement by the parties, this Agreement shall be
the valid and binding obligation of Executive, enforceable in accordance with
its terms. Executive hereby acknowledges and represents that she has consulted
with independent legal counsel regarding his rights and obligations under this
Agreement and that she fully understands the terms and conditions contained
herein.

                                       9
<PAGE>   10
                  10. NOTICES. Any notice provided for in this Agreement shall
be in writing and shall be deemed to have been duly given if delivered
personally with receipt acknowledged or sent by registered or certified mail or
equivalent, if available, postage prepaid, or by fax (which shall be confirmed
by a writing sent by registered or certified mail or equivalent on the same day
that such fax was sent), addressed to the parties at the following addresses or
to such other address as such party shall hereafter specify by notice to the
other:

                  Notices to Executive:     Diane Cady
                                            212 Pascack Road
                                            Park Ridge, NJ 07656
                                            (201) 391-5913 (Phone)

                  Notices to the Company:   Warner Chilcott plc
                                            Rockaway 80 Corporate Center
                                            100 Enterprise Drive
                                            Rockaway, NJ 07866
                                            (973) 442-3200 (Phone)
                                            (973) 442-3316 (Fax)
                                            Attention: General Counsel

                  11. SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.

                  12. COMPLETE AGREEMENT. This Agreement constitutes the
complete agreement and understanding among the parties and supersedes and
preempts any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.

                  13. NO STRICT CONSTRUCTION. The language used in this
Agreement shall be deemed to be the language chosen by the parties hereto to
express their mutual intent, and no rule of strict construction shall be applied
against any party.

                  14. COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.

                                       10
<PAGE>   11
                  15. SUCCESSORS AND ASSIGNS. This Agreement is intended to bind
and inure to the benefit of and be enforceable by Executive, the Company and
their respective heirs, successors and assigns, except that Executive may not
assign her rights or delegate her obligations hereunder without the prior
written consent of the Company. The Company will require any successor to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place.

                  16. CHOICE OF LAW. All issues and questions concerning the
construction, validity, enforcement and interpretation of this Agreement and the
exhibits and schedules hereto shall be governed by, and construed in accordance
with, the laws of the State of New Jersey without giving effect to any choice of
law or conflict of law rules or provisions that would cause the application of
the laws of any jurisdiction other than the State of New Jersey.

                  17. AMENDMENT AND WAIVER. The provisions of this Agreement may
be amended or waived only with the prior written consent of the Company and
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement.

                  18. ARBITRATION. Any controversy or claim arising out of or
relating to this Agreement, the making, interpretation or the breach thereof,
other than (a) a claim solely for injunctive relief for any alleged breach of
the provisions of Sections 5 and/or 8 as to which the parties shall have the
right to apply for specific performance to any court having equity jurisdiction;
and (b) the determination of Excise Tax and Gross-Up Payment pursuant to Section
4 herein; shall be settled by arbitration in New York City by one arbitrator in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association and judgement upon the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof and any party to the
arbitration may, if he elects, institute proceedings in any court having
jurisdiction for the specific performance of any such award. The powers of the
arbitrator shall include, but not be limited to, the awarding of injunctive
relief.

                  19. LEGAL FEES AND EXPENSES. The Company agrees to pay, as
incurred, to the full extent permitted by law, all reasonable legal fees and
expenses which Executive may reasonably incur as a result of (a) review and/or
any claims made regarding the Company's determination of Excise Tax and Gross-Up
Amount pursuant to Section 4 herein, or (b) any contest brought in good faith
(regardless of the outcome thereof) by the Company, the Executive or others of
the validity, or enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a result of any
contest by Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the applicable
Federal rate provided for in Section 7872(f)(2)(A) of the Code.

                  20. NO MITIGATION OR SET-OFF. The provisions of this Agreement
are not intended to, nor shall they be construed to require that Executive
mitigate the amount of any payment

                                       11
<PAGE>   12
provided for in this Agreement by seeking or accepting other employment, nor
shall the amount of any payment provided for in this Agreement be reduced by any
compensation earned by Executive as a result of her employment by another
employer or otherwise. The Company's obligations to make the payments to
Executive required under this Agreement, and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action that the Company may have
against Executive.

                  21. TAX WITHHOLDING. The parties agree to treat all amounts
paid to Executive hereunder as compensation for services. Accordingly, the
Company may withhold from any amount payable under this Agreement such Federal,
state or local taxes as shall be required to be withheld pursuant to any
applicable law or regulation.

                                       12
<PAGE>   13
                                                                  Execution Copy

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

                                   WARNER CHILCOTT PLC

                                   /s/ PAUL S. HERENDEEN
                                   ----------------------------
                                   NAME: PAUL S. HERENDEEN
                                   TITLE: EVP & CFO

                                   /s/ DIANE CADY
                                   -----------------------------
                                   DIANE CADY

                                       13

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