Document:

<PAGE>

                                                                     EXHIBIT 4.4

================================================================================

                     FORM OF REGISTRATION RIGHTS AGREEMENT

                                by and between

                      ENDO PHARMACEUTICALS HOLDINGS INC.

                                      and

                                ENDO PHARMA LLC

                         Dated as of ________ __, 2000

================================================================================
<PAGE>

                               TABLE OF CONTENTS
                               -----------------

<TABLE>
<CAPTION>
                                                                                                      Page
                                                                                                      ----
<S>                                                                                                   <C>
1.  Registrations Upon Request.........................................................................  1
  1.1.  Requests by Endo LLC...........................................................................  1
  1.2.  Registration Statement Form....................................................................  2
  1.3.  Expenses.......................................................................................  2
  1.4.  Priority in Demand Registrations...............................................................  2
  1.5.  No Company Initiated Registration..............................................................  3

2.  Incidental Registrations...........................................................................  3

3.  Registration Procedures............................................................................  5

4.  Underwritten Offerings.............................................................................  9
  4.1.  Underwriting Agreement.........................................................................  9
  4.2.  Selection of Underwriters......................................................................  9

5.  Holdback Agreements................................................................................ 10

6.  Preparation; Reasonable Investigation.............................................................. 11

7.  No Grant of Future Registration Rights............................................................. 11

8.  Indemnification.................................................................................... 11
  8.1.  Indemnification by the Company................................................................. 11
  8.2.  Indemnification by the Sellers................................................................. 12
  8.3.  Notices of Claims, etc......................................................................... 13
  8.4.  Other Indemnification.......................................................................... 13
  8.5.  Indemnification Payments....................................................................... 14
  8.6.  Other Remedies................................................................................. 14

9.  Representations and Warranties..................................................................... 14

10.  Definitions....................................................................................... 15

11.  Miscellaneous..................................................................................... 16
  11.1.  Rule 144, etc................................................................................. 16
</TABLE>

                                       i

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<TABLE>
<S>                                                                                                   <C>
  11.2.  Successors, Assigns and Transferees........................................................... 16
  11.3.  Stock Splits.................................................................................. 17
  11.4.  Amendment and Modification.................................................................... 17
  11.5.  Governing Law................................................................................. 17
  11.6.  Invalidity of Provision....................................................................... 17
  11.7.  Notices....................................................................................... 17
  11.8.  Headings; Execution in Counterparts........................................................... 18
  11.9.  Injunctive Relief............................................................................. 18
  11.10.  Term......................................................................................... 19
  11.11.  Further Assurances........................................................................... 19
  11.12.  Entire Agreement............................................................................. 19
</TABLE>

                                      ii

<PAGE>

                     FORM OF REGISTRATION RIGHTS AGREEMENT

          REGISTRATION RIGHTS AGREEMENT, dated as of ________ __, 2000, by and
among Endo Pharmaceuticals Holdings Inc., a Delaware corporation (the
"Company"), and Endo Pharma LLC, a Delaware limited liability company ("Endo
 -------                                                                ----
LLC").  Capitalized terms used herein without definition are defined in Section
---
10 hereof.

          WHEREAS, Endo LLC owns shares of Common Stock;

          WHEREAS, the parties hereto wish to set forth certain rights and
obligations with respect to the registration of the shares of Common Stock under
the Securities Act.

          NOW, THEREFORE, in consideration of the mutual covenants and
obligations set forth in this Agreement, the parties hereto agree as follows:

          1.   Registrations Upon Request.
               --------------------------

          1.1  Requests by Endo LLC.  At any time, Endo LLC shall have the right
               --------------------
to make up to six (6) separate requests that the Company effect the registration
under the Securities Act of all or a portion of the Registrable Securities owned
by Endo LLC, each such request to specify the intended method or methods of
disposition thereof; provided that the Company shall not be required to effect a
                     -------- ----
registration pursuant to this Section 1.1 until a period of 180 days shall have
elapsed from the effective date of the most recent registration previously
effected pursuant to this Section 1.1.  A request made by Endo LLC shall not be
counted for purposes of the request limitations set forth above (a) if Endo LLC
                                                                 -
determines in its good faith judgment to withdraw the proposed registration of
any Registrable Securities requested to be registered pursuant to this Section
1.1 due to marketing or regulatory reasons, (b) the registration statement
                                             -
relating to any such request is not declared effective within 90 days of the
date such registration statement is first filed with the Commission, (c) if,
                                                                      -
within 180 days after the registration relating to any such request has become
effective, such registration is interfered with by any stop order, injunction or
other order or requirement of the Commission or other governmental agency or
court for any reason and the Company fails to have such stop order, injunction
or other order or requirement removed, withdrawn or resolved to Endo LLC's
reasonable satisfaction within 30 days or (d) the conditions to closing
                                           -
specified in the underwriting agreement or purchase agreement entered into in
connection with the registration relating to any such request are not satisfied
(other than as a result of a default or breach thereunder by Endo LLC).  Upon
any such request, the Company will promptly, but in any event within 15 days,
give written notice of such request to all holders of Registrable Securities and
thereupon
<PAGE>

the Company will, subject to Section 1.4 hereof, use its best efforts to effect
the prompt registration under the Securities Act of:

     (i)  the Registrable Securities which the Company has been so requested to
     register by Endo LLC, and

     (ii) all other Registrable Securities which the Company has been
     requested to register by the holders thereof by written request given to
     the Company by such holders within 15 days after the giving of such written
     notice by the Company to such holders,

all to the extent required to permit the disposition of the Registrable
Securities so to be registered in accordance with the intended method or methods
of disposition of each seller of such Registrable Securities.

          1.2  Registration Statement Form.  A registration requested pursuant
               ---------------------------
to Section 1.1 hereof shall be effected by the filing of a registration
statement on a form agreed to by Endo LLC.

          1.3  Expenses.  The Company will pay all Registration Expenses in
               --------
connection with any registration requested under Section 1.1 hereof and any
other actions that may be taken in connection with any such registration as
contemplated by this Article I; provided, however, that the Company will not be
                                --------  -------
obligated to pay underwriting discounts or commissions or transfer taxes, if
any, relating to the sale or disposition of shares sold pursuant to any such
registration.

          1.4  Priority in Demand Registrations.  If a registration pursuant to
               --------------------------------
Section 1.1 hereof involves an underwritten offering, and the managing
underwriter (or, in the case of an offering which is not underwritten, a
nationally recognized investment banking firm) shall advise the Company in
writing (with a copy to Endo LLC) that, in its opinion, the number of securities
requested and otherwise proposed to be included in such registration exceeds the
number which can be sold in such offering without materially and adversely
affecting the offering price, the Company will include in such registration the
number which the Company is so advised can be sold in such offering without such
material adverse effect, first, the Registrable Securities of Endo LLC and up to
                         -----
the full number of shares of Common Stock requested to be included in such
registration by the Management Stockholders (as defined in that certain amended
and restated stockholders agreement, dated as of ______ __, 2000, by and among
the Company, Endo LLC, and the other parties named therein (the "Stockholders
                                                                 ------------
Agreement"), allocated pro rata among Endo LLC and the Management Stockholders
---------
on the basis of the number of shares of Common Stock requested to be included
there  in by Endo LLC and the Management Stockholders and second, the
                                                          ------
securities, if any, being sold by the Company.  Notwithstanding the foregoing,
the Management

                                       2
<PAGE>

Stockholders (and any successor managers of the Company and its subsidiaries)
will not be entitled to participate in any such registration requested by Endo
LLC to the extent that the managing underwriter (or, in the case of an offering
that is not underwritten, a nationally recognized investment banking firm) shall
determine in good faith and in writing, that the participation of management
would adversely affect the marketability or offering price of the securities
being sold in such registration, it being understood that the Company will
include in such registration that number of shares of the Management
Stockholders which can be sold in such offering without adversely affecting the
marketability or offering price of the other securities to be sold in such
registration. Neither the Company nor Endo LLC will be required to give any
notice to any holder of Registrable Securities with respect to a given offering
if such holder is to be excluded from such offering pursuant to this Section
1.4.

          1.5  No Company Initiated Registration.  After receipt of notice of a
               ---------------------------------
requested registration pursuant to Section 1.1 hereof, the Company shall not
initiate, without the consent of Endo LLC, a registration of any of its
securities for its own account until 90 days after such registration has been
terminated or declared effective (unless advised by the managing underwriter
that a longer period, not to exceed 180 days, is required, or such shorter
period as the managing underwriter for any underwritten offering may agree),
except as provided in Section 5(b) hereof.

          2.   Incidental Registrations.  If the Company proposes to register
               ------------------------
any of its Common Stock or any other of its common equity securities
(collectively, "Other Securities") under the Securities Act (other than a
                ----------------
registration on Form S-4 or S-8 or a successor form), whether or not for sale
for its own account, in a manner which would permit registration of shares of
Common Stock owned by Endo LLC or any of its Permitted Transferees (as defined
in Section 13.2 hereof) (each, a "Holder") for sale for cash to the public under
                                  ------
the Securities Act, it will at such time give prompt written notice to each
Holder of its intention to do so and of the rights of such Holder under this
Section 2, at least 20 days prior to the anticipated filing date of the
registration statement relating to such registration. Such notice shall offer
each such Holder the opportunity to include in such registration statement such
number of shares of Common Stock as such Holder may request, in accordance with
this Section 2. Upon the written request of a Holder made within 10 days after
the receipt of the Company's notice (which request shall specify the number of
shares of Common Stock intended to be disposed of and the intended method of
disposition thereof), the Company will use its best efforts to effect, in
connection with the registration of the Other Securities, the registration under
the Securities Act of all shares of Common Stock which the Company has been so
requested to register, to the extent required to permit the disposition (in
accordance with such intended methods of disposition) of such shares of Common
Stock so requested to be registered; provided that:
                                     -------- ----

                                       3
<PAGE>

          (a)  if, at any time after giving such written notice of its intention
to register any Other Securities and prior to the effective date of the
registration statement filed in connection with such registration, the Company
shall determine for any reason not to register the Other Securities, the Company
may, at its election, give written notice of such determination to the Holders,
and thereupon the Company shall be relieved of its obligation to register the
shares of Common Stock requested to be registered in connection with the
registration of such Other Securities;

          (b)  if the registration referred to in the first sentence of Section
2(a) hereof is to be an underwritten registration on behalf of the Company, and
the managing underwriter(s) advises the Company in writing that, in such firm's
opinion, such offering would be materially and adversely affected by the
inclusion therein of any of the Common Stock requested to be included therein,
the Company shall include in such registration:  (i) first, all securities the
Company proposes to sell for its own account ("Company Securities"), (ii)
                                               ------------------
second, up to the full number of shares of Common Stock requested to be included
in such registration by Endo LLC, which, in the good faith opinion of such firm,
can be so sold without so materially and adversely af  fecting such offering and
(iii) third, an amount of other securities, if any, requested to be included
therein in excess of the number or dollar amount of Company Securi  ties and
Common Stock of the Holders which, in the opinion of such firm, can be so sold
without materially and adversely affecting such offering (allocated among the
holders of such other securities in such proportions as such holders and the
Company may agree);

          (c)  the Company shall not be required to effect any registration of
Common Stock under this Section 2 incidental to the registration of any of its
securities in connection with mergers, acquisitions, exchange offers,
subscription offers, dividend reinvestment plans or stock option or other
executive or employee benefit or compensation plans; and

          (d)  no registration of Common Stock effected under this Section 2
shall relieve the Company of its obligation to effect a registration of shares
of Common Stock pursuant to Section 1.1 hereof and pursuant to the Stockholders
Agreement.

          Notwithstanding the foregoing, a Holder will not be entitled to
participate in any registration pursuant to this Section 2 to the extent that
the managing underwriter (or, in the case of an offering that is not
underwritten, a nationally recognized investment banker) shall determine in good
faith and in writing (with a copy to each affected Person requesting
registration of Registrable Securities) that the participation of any such
Holder would adversely affect the offering or the marketability or offering
price of the securities being sold by the Company in such registration.

          The Company will pay all Registration Expenses in connection with any
registration requested under this Section 2 and any other actions that may be
taken in

                                       4
<PAGE>

connection with any such registration as contemplated by this Section 2;
provided, however, that the Company will not be obligated to pay underwriting
--------  -------
discounts or commissions or transfer taxes, if any, relating to the sale or
disposition of shares sold pursuant to any such registration.

          3.   Registration Procedures.  If and whenever the Company is required
               -----------------------
to use its best efforts to effect the registration of any Registrable Securities
under the Securities Act as provided in Sections 1.1 and 2 hereof, the Company
will promptly:

          (a)  prepare, and as soon as practicable, but in any event within 60
     days thereafter, file with the Commission, a registration statement with
     respect to such Registrable Securities, make all required filings with the
     NASD and use its best efforts to cause such registration statement to
     become effective as soon as practicable;

          (b)  prepare and promptly file with the Commission such amendments and
     post-effective amendments and supplements to such registration statement
     and the prospectus used in connection therewith as may be necessary to keep
     such registration statement effective for so long as is required to comply
     with the provisions of the Securities Act and to complete the disposition
     of all securities covered by such registration statement in accordance with
     the intended method or methods of disposition thereof, but in no event for
     a period of more than six months after such registration statement becomes
     effective;

          (c)  furnish copies of all documents proposed to be filed with the
     Commission in connection with such registration to (i) counsel selected by
                                                         -
     Endo LLC and (ii) each seller of Registrable Securities (or in the case of
                   --
     the initial filing of a registration statement, within five business days
     of such initial filing) and such documents shall be subject to the review
     of such counsel and the Company shall not file any registration statement
     or any amendment or post-effective amendment or supplement to such
     registration statement or the prospectus used in connection therewith to
     which either such counsel or Endo LLC shall have reasonably objected in
     writing on the grounds that such amendment or supplement does not comply
     (explaining why) in all material respects with the requirements of the
     Securities Act or of the rules or regulations thereunder;

          (d)  furnish to each seller of Registrable Securities, without charge,
     such number of conformed copies of such registration statement and of each
     such amendment and supplement thereto (in each case including all exhibits
     and documents filed therewith) and such number of copies of the prospectus
     included in such registration statement (including each preliminary
     prospectus and any summary prospectus) and any other prospectus filed under
     Rule 424 under the Securities Act, in conformity with the requirements of
     the Securities Act, and such other documents, as such seller may reasonably
     request in order to fa-

                                       5
<PAGE>

     cilitate the disposition of the Registrable Securities owned by such seller
     in accordance with the intended method or methods of disposition thereof;

          (e)  use its best efforts to register or qualify such Registrable
     Securities covered by such registration statement under the securities or
     blue sky laws of such jurisdictions as each seller shall reasonably
     request, and do any and all other acts and things which may be necessary or
     advisable to enable such seller to consummate the disposition of such
     Registrable Securities in such jurisdictions in accordance with the
     intended method or methods of disposition thereof; provided that the
                                                        -------- ----
     Company shall not for any such purpose be required to qualify generally to
     do business as a foreign corporation in any jurisdiction wherein it is not
     so qualified, subject itself to taxation in any jurisdiction wherein it is
     not so subject, or take any action which would subject it to general
     service of process in any jurisdiction wherein it is not so subject;

          (f)  use its best efforts to cause all Registrable Securities covered
     by such registration statement to be registered with or approved by such
     other governmental agencies, authorities or self-regulatory bodies as may
     be necessary by virtue of the business and operations of the Company to
     enable the seller or sellers thereof to consummate the disposition of such
     Registrable Securities in accordance with the intended method or methods of
     disposition thereof;

          (g)  furnish to Endo LLC:

               (i)  an opinion of counsel for the Company experienced in
          securities law matters, dated the effective date of the registration
          statement (and, if such registration includes an underwriter
          agreement), and

               (ii) a "comfort" letter (unless the registration is pursuant to
          Section 2 and such a letter is not otherwise being furnished to the
          Company), dated the effective date of such registration statement (and
          if such registration includes an underwritten public offering, dated
          the date of the closing under the underwriting agreement), signed by
          the independent public accountants who have issued an audit report on
          the Company's financial statements included in the registration
          statement; provided that such comfort letter shall be delivered only
                     -------- ----
          to Endo LLC which represents to such accountants in a form
          satisfactory to such accountants that Endo LLC is an underwriter or
          has performed the due diligence customarily performed by an
          underwriter,

     covering such matters as are customarily covered in opinions of issuer's
     counsel and in accountants' letters delivered to the underwriters in
     underwritten public

                                       6
<PAGE>

     offerings of securities and such other matters as Endo LLC may reasonably
     request;

          (h)  notify each seller of any Registrable Securities covered by such
     registration statement at any time when a prospectus relating thereto is
     required to be delivered under the Securities Act of the happening of any
     event or existence of any fact as a result of which the prospectus included
     in such registration statement, as then in effect, includes an untrue
     statement of a material fact or omits to state any material fact required
     to be stated therein or necessary to make the statements therein not
     misleading in light of the circumstances then existing, and, as promptly
     as is practicable, prepare and furnish to such seller a reasonable number
     of copies of a supplement to or an amendment of such prospectus as may be
     necessary so that, as thereafter delivered to the purchasers of such
     securities, such prospectus shall not include an untrue statement of a
     material fact or omit to state a material fact required to be stated
     therein or necessary to make the statements therein not misleading in light
     of the circumstances then existing;

          (i)  otherwise comply with all applicable rules and regulations of the
     Commission, and make available to its security holders, as soon as
     reasonably practicable, an earnings statement of the Company (in form
     complying with the provisions of Rule 158 under the Securities Act)
     covering the period of at least 12 months, but not more than 18 months,
     beginning with the first month after the effective date of such
     registration statement;

          (j)  notify each seller of any Registrable Securities covered by such
     registration statement (i) when the prospectus or any prospectus supplement
                             -
     or post-effective amendment has been filed, and, with respect to such
     registration statement or any post-effective amendment, when the same has
     become effective, (ii) of any request by the Commission for amendments or
                        --
     supplements to such registration statement or to amend or to supplement
     such prospectus or for additional information, (iii) of the issuance by the
                                                     ---
     Commission of any stop order suspending the effectiveness of such
     registration statement or the initiation of any proceedings for that
     purpose and (iv) of the suspension of the qualification of such securities
                  --
     for offering or sale in any jurisdiction, or of the institution of any
     proceedings for any of such purposes;

          (k)  use every reasonable effort to obtain the lifting of any stop
     order that might be issued suspending the effectiveness of such
     registration state  ment at the earliest possible moment;

          (l)  use its best efforts (i) (A) to list such Registrable Securities
                                     -   -
     on any securities exchange on which the equity securities of the Company
     are then listed or, if no such equity securities are then listed, on an
     exchange selected by

                                       7
<PAGE>

     the Company, if such listing is then permitted under the rules of such
     exchange, or (B) if such listing is not practicable, to secure designation
                   -
     of such securities as a NASDAQ "national market system security" within the
     meaning of Rule 11Aa2-1 under the Exchange Act or, failing that, to secure
     NASDAQ authorization for such Registrable Securities, and, without limiting
     the foregoing, to arrange for at least two market makers to register as
     such with respect to such Registrable Securities with the NASD, and (ii) to
                                                                          --
     provide a transfer agent and registrar for such Registrable Securities not
     later than the effective date of such registration statement and to
     instruct such transfer agent (A) to release any stop transfer order with
                                   -
     respect to the certificates with respect to the Registrable Securities
     being sold and (B) to furnish certificates without restrictive legends
                     -
     representing ownership of the shares being sold, in such denominations
     requested by the sellers of the Registrable Securities or the lead
     underwriter;

          (m)  enter into such agreements and take such other actions as the
     sellers of Registrable Securities or the underwriters reasonably request in
     order to expedite or facilitate the disposition of such Registrable
     Securities, including, without limitation, preparing for, and participating
     in, such number of "road shows" and all such other customary selling
     efforts as the underwriters reasonably request in order to expedite or
     facilitate such disposition;

          (n)  furnish to any holder of such Registrable Securities such
     information and assistance as such holder may reasonably request in
     connection with any "due diligence" effort which such seller deems
     appropriate; and

          (o)  use its best efforts to take all other steps necessary to effect
     the registration of such Registrable Securities contemplated hereby.

          As a condition to its registration of Registrable Securities of any
prospective seller, the Company may require such seller of any Registrable
Securities as to which any registration is being effected to execute powers-of-
attorney, custody arrangements and other customary agreements appropriate to
facilitate the offering and to furnish to the Company such information regarding
such seller, its ownership of Registrable Securities and the disposition of such
Registrable Securities as the Company may from time to time reasonably request
in writing and as shall be required by law in connection therewith.  Each such
holder agrees to furnish promptly to the Company all information required to be
disclosed in order to make the information previously furnished to the Company
by such holder not materially misleading.

          The Company agrees not to file or make any amendment to any
registration statement with respect to any Registrable Securities, or any
amendment of or supplement to the prospectus used in connection therewith, which
refers to (in a capacity as a selling stockholder) any seller of any Registrable
Securities covered

                                       8
<PAGE>

thereby by name, or otherwise identifies such seller as the holder of any
Registrable Securities, to which counsel to the sellers may reasonably object.

          By acquisition of Registrable Securities, each holder of such
Registrable Securities shall be deemed to have agreed that upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 3(h) hereof, such holder will promptly discontinue such holder's
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such holder's receipt of the copies
of the supplemented or amended prospectus contemplated by Section 3(h) hereof.
If so directed by the Company, each holder of Registrable Securities will
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies, in such holder's possession of the prospectus covering
such Registrable Securities at the time of receipt of such notice.  In the event
that the Company shall give any such notice, the period mentioned in Section
3(b) hereof shall be extended by the number of days during the period from and
including the date of the giving of such notice to and including the date when
each seller of any Registrable Securities covered by such registration statement
shall have received the copies of the supplemented or amended prospectus
contemplated by Section 3(h) hereof.

           4.  Underwritten Offerings.
               ----------------------

           4.1 Underwriting Agreement.  If requested by the underwriters for any
               ----------------------
underwritten offering pursuant to a registration requested under Sections 1.1 or
2 hereof, the Company shall enter into an underwriting agreement with the under
writers for such offering, such agreement to be reasonably satisfactory in
substance and form to the underwriters and to Endo LLC.  Any such underwriting
agreement shall contain such representations and warranties by the Company and
such other terms and provisions as are customarily contained in agreements of
this type, in  cluding, without limitation, indemnities to the effect and to the
extent provided in Section 9 hereof.  The holders of a majority of the
Registrable Securities to be distributed by such underwriter shall be parties
to such underwriting agreement and may, at their option, require that any or all
of the representations and warranties by, and the agreements on the part of, the
Company to and for the benefit of such underwriters be made to and for the
benefit of such holders of Registrable Securities and that any or all of the
conditions precedent to the obligations of such underwriters under such
underwriting agreement shall also be conditions precedent to the obligations of
such holders of Registrable Securities.  No underwriting agree  ment (or other
agreement in connection with such offering) shall require Endo LLC , in their
respective capacities as stockholders and/or controlling persons, to make any
representations or warranties to or agreements with the Company or the under
writers other than representations, warranties or agreements regarding such
holder, the ownership of such holder's Registrable Securities and such holder's
in  tended method or methods of disposition and any other representation
required by law or to furnish any indemnity to any Person which is broader than
the indemnity furnished by such holder pursuant to Section 9.2 hereof.

                                       9
<PAGE>

          4.2  Selection of Underwriters.  If the Company at any time proposes
               -------------------------
to register any of its securities under the Securities Act for sale for its own
account pursuant to an underwritten offering, the Company will have the right to
select the managing underwriter (which shall be of nationally recognized
standing) to administer the offering, but if Endo LLC at such time own at least
[___]% of the number of shares of Common Stock they own on the date hereof, only
with the approval of Endo LLC, such approval not to be unreasonably withheld.
Notwithstanding the foregoing sentence, whenever a registration requested
pursuant to Section 1.1 hereof is for an underwritten offering, Endo LLC will
have the right to select the managing underwriter (which shall be of nationally
recognized standing) to administer the offering, but only with the approval of
the Company, such approval not to be unreasonably withheld.

          5.   Holdback Agreements.  (a) If and whenever the Company proposes to
               -------------------
register any of its equity securities under the Securities Act for its own
account (other than on Form S-4 or S-8 or any successor form) or is required to
use its best efforts to effect the registration of any Registrable Securities
under the Securities Act pursuant to Sections 1.1 or 2, each holder of
Registrable Securities agrees by acquisition of such Registrable Securities
not to effect any sale or distribution, including any sale pursuant to Rule 144
under the Securities Act, or to request registration under Section 1.1 of any
Registrable Securities within seven days prior to and 90 days (unless advised by
the managing underwriter that a longer period, not to exceed 180 days, is
required, or such shorter period as the managing underwriter for any under
written offering may agree) after the effective date of the registration
statement relating to such registration, except as part of such registration or
unless, in the case of a private sale of distribution, the transferee agrees in
writing to be subject to this Section 5.  If requested by such managing
underwriter, each holder of Registrable Securities agrees to execute a holdback
agreement, in customary form, consistent with the terms of this Section 5(a).

          (b)  The Company agrees not to effect any public sale or distribution
of its equity securities or securities convertible into or exchangeable or
exercisable for any of such securities within seven days prior to and 90 days
(unless advised in writing by the managing underwriter that a longer period, not
to exceed 180 days, is required, or such shorter period as the managing
underwriter for any underwritten offering may agree) after the effective date of
any registration statement filed pursuant to Section 1.1 (except (i) as part of
                                                                  -
such registration, (ii) as permitted by the related underwriting, (iii) pursuant
                    --                                             ---
to an employee equity compensation plan, (iv) pursuant to an acquisition or
                                          --
strategic relationship, bank or equipment financing or similar transaction or

(v) pursuant to a registration on Form S-4 or S-8 or any successor form).  In
 -
addition, upon the request of the managing underwriter, the Company shall use
its best efforts to cause each holder of its equity securities or any securities
convertible into or exchangeable or exercisable for any of such securities,
whether outstanding on the date of this Agreement or issued at any time after
the date of this Agreement (other than any such securities acquired in a public
offering), to agree not to effect any such public sale or distribution of such
securities during such period, except as part of any such regis-

                                      10
<PAGE>

tration if permitted, and to cause each such holder to enter into a similar
agreement to such effect with the Company.

          6.   Preparation; Reasonable Investigation.  In connection with the
               -------------------------------------
preparation and filing of each registration statement registering Registrable
Securities under the Securities Act, the Company will give counsel to the
holders of such Registrable Securities so to be registered the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment thereof or
supplement thereto, and will give each of them such access to the financial and
other records, pertinent corporate documents and properties of the Company and
its subsidiaries and such opportunities to discuss the business of the Company
with its officers and the inde  pendent public accountants who have issued audit
reports on its financial statements as shall be reasonably requested by such
holders in connection with such registration statement.

          7.   No Grant of Future Registration Rights.  The Company shall not
               --------------------------------------
grant any other demand or incidental registration rights to any other Person
without the prior written consent of Endo LLC, so long as Endo LLC continues to
own at least 15% of the number of shares of Common Stock that Endo LLC owns on
the date hereof. During the term of this Agreement, the Company shall not grant
to any third party incidental registration rights that are of a higher priority
to the rights granted to the holders of Registrable Securities under Section 2
hereof.

          8.   Indemnification.
               ---------------

          8.1  Indemnification by the Company.  In the event of any registration
               ------------------------------
of any Registrable Securities pursuant to this Agreement, the Company will
indemnify, defend and hold harmless (a) each seller of such Registrable
                                     -
Securities, (b) the di rectors, members, stockholders, officers, partners,
             -
employees, agents and Affiliates of such seller, (c) each Person who
                                                  -
participates as an underwriter in the offering or sale of such securities and

(d) each person, if any, who controls (within the meaning of Section 15 of the
 -
Securities Act or Section 20 of the Exchange Act) any of the foregoing against
any and all losses, claims, damages or liabilities (or actions or proceedings in
respect thereof), jointly or severally, directly or indirectly, based upon or
arising out of (i) any untrue statement or alleged untrue statement of a fact
                -
contained in any registration statement under which such Registrable Securities
were registered under the Securities Act, any preliminary prospectus, final
prospectus or summary prospectus contained therein or used in connection with
the offering of securities covered thereby, or any amendment or supplement
thereto, or (ii) any omission or alleged omission to state a fact required to
             --
be stated therein or necessary to make the statements therein not misleading;
and the Company will reimburse each such indemnified party for any legal or any
other expenses reasonably incurred by them in connection with enforcing its
rights hereunder or under the underwriting agreement entered into in connection
with such offering or investigating, preparing, pursuing or defending any such
loss, claim,

                                      11
<PAGE>

damage, liability, action or proceeding, except insofar as any such loss, claim,
damage, liability, action, proceeding or expense arises out of or is based upon
an untrue statement or omission made in such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company by such seller expressly for use in the preparation thereof. Such
indemnity shall remain in full force and effect, regardless of any investigation
made by such indemnified party and shall survive the transfer of such
Registrable Securities by such seller. If the Company is entitled to, and does,
assume the defense of the related action or proceedings provided herein, then
the indemnity agreement contained in this Section 8.1 shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability, action or
proceeding if such settlement is effected without the consent of the Company
(which consent shall not be unreasonably withheld or delayed).

          8.2  Indemnification by the Sellers.  The Company may require, as a
               ------------------------------
condition to including any Registrable Securities in any registration statement
filed pursuant to Sections 1.1 or 2 that the Company shall have received an
undertaking satisfactory to it from each of the prospective sellers of such
Registrable Securities to indemnify and hold harmless, severally, not jointly,
in the same manner and to the same extent as set forth in Section 8.1 hereof,
the Company, its directors, officers, employees, agents and each person, if any,
who controls (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) the Company with re  spect to any statement or alleged
statement in or omission or alleged omission from such registration statement,
any preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, if such statement or alleged
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such seller
expressly for use in the preparation of such registration statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement.
(The Company and the holders of the Registrable Securities hereby acknowledge
and agree that, unless otherwise expressly agreed to in writing by such holders,
the only information furnished or to be furnished to the Company for use in any
registration statement or prospectus relating to the Registrable Securities or
in any amendment, supplement or preliminary materials associated therewith are
statements specifically relating to (a) transactions between such holder and its
                                     -
Affiliates, on the one hand, and the Company, on the other hand, (b) the
                                                                  -
beneficial ownership of shares of Common Stock by such holder and its Affiliates
and (c) the name and address of such holder.  If any additional information
     -
about such holder or the plan of distribution (other than for an underwritten
offering) is required by law to be disclosed in any such document, then such
holder shall not unreasonably withhold its agreement referred to in the
immediately preceding sentence of this Section 8.2.)  Such indemnity shall
remain in full force and effect, regardless of any investigation made by or on
behalf of the Company or any such director, officer or controlling Person and
shall survive the transfer of such Registrable

                                      12
<PAGE>

Securities by such seller. The indemnity agreement contained in this Section 8.2
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability, action or proceeding if such settlement is effected without the
consent of such seller (which consent shall not be unreason ably withheld or
delayed). The indemnity provided by each seller of Registrable Securities under
this Section 8.2 shall be limited in amount to the net amount of proceeds
actually received by such seller from the sale of Registrable Securities
pursuant to such registration statement.

          8.3  Notices of Claims, etc.  Promptly after receipt by an indemnified
               ----------------------
party of notice of the commencement of any action or proceeding involving a
claim re  ferred to in the preceding paragraphs of this Section 8, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the indemnifying party of the
commencement of such action or proceeding; provided that the failure of any
                                           -------- ----
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding paragraphs of this
Section 8, except to the extent that the indemnifying party is materially
prejudiced by such failure to give notice.  In case any such action is brought
against an indemnified party, the indemnifying party will be entitled to
participate therein and to assume the defense thereof, jointly with any other
indemnifying party similarly notified, to the extent that it may wish, with
counsel reason  ably satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof except for the reasonable fees and
expenses of any counsel retained by such indemnified party to monitor such
action or proceeding.  Notwithstanding the foregoing, if such indemnified party
reasonably determines, based upon advice of independent counsel, that a conflict
of interest may exist between the indemnified party and the indemnifying party
with respect to such action and that it is advisable for such indemnified party
to be represented by separate counsel, such indemnified party may retain other
counsel, reasonably satisfactory to the indemnifying party, to represent such
indemnified party, and the indemnifying party shall pay all reasonable fees and
expenses of such counsel.  No indemnifying party, in the defense of any such
claim or litigation, shall, except with the consent of such indemnified party,
which consent shall not be unreasonably withheld, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect of such claim or litigation.

          8.4  Other Indemnification.  Indemnification similar to that specified
               ---------------------
in the preceding paragraphs of this Section 8 (with appropriate modifications)
shall be given by the Company and each seller of Registrable Securities with
respect to any required registration (other than under the Securities Act) or
other qualification of such

                                      13
<PAGE>

Registrable Securities under any federal or state law or regulation of any
governmental authority.

          8.5. Indemnification Payments. Any indemnification required to be made
               ------------------------
by an indemnifying party pursuant to this Section 8 shall be made by periodic
payments to the indemnified party during the course of the action or proceeding,
as and when bills are received by such indemnifying party with respect to an
indemnifiable loss, claim, damage, liability or expense incurred by such
indemnified party.

          8.6. Other Remedies. If for any reason the foregoing indemnity is
               --------------
unavailable, or is insufficient to hold harmless an indemnified party, other
than by reason of the exceptions provided therein, then the indemnifying party
shall contribute to the amount paid or payable by the indemnified party as a
result of such losses, claims, damages, liabilities, actions, proceedings or
expenses in such proportion as is appropriate to reflect the relative benefits
to and faults of the indemnifying party on the one hand and the indemnified
party on the other in connection with the offering of Registrable Securities
(taking into account the portion of the proceeds of the offering realized by
each such party) and the statements or omissions or alleged statements or
omissions which resulted in such loss, claim, damage, liability, action,
proceeding or expense, as well as any other relevant equitable considerations.
The relative fault of the indemnifying party and of the indemnified party shall
be determined by reference to, among other things, whether the untrue statement
of a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statements or omissions. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. No party shall be liable for
contribution under this Section 8.6 except to the extent and under such
circumstances as such party would have been liable to indemnify under this Sec
tion 8 if such indemnification were enforceable under applicable law.

          9.  Representations and Warranties. Endo LLC represents and warrants
              ------------------------------
to the Company that:

          (i)  Endo LLC has all limited liability company power and to execute,
deliver and perform this Agreement;

          (ii) the execution, delivery and performance of this Agreement
by Endo LLC has been duly and validly authorized and approved by all necessary
limited liability company action;

                                      14
<PAGE>

          (iii)  this Agreement has been duly and validly executed and delivered
by Endo LLC and constitutes a valid and legally binding obligation of Endo LLC,
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting or relating to
creditors' rights generally and general principles of equity; and

          (iv)   the execution, delivery and performance of this Agreement by
Endo LLC does not and will not violate the terms of or result in the
acceleration of any obligation under (A) any material contract, commitment or
                                      -
other material instrument to which Endo LLC is a party or by which Endo LLC is
bound and (B) the limited liability company agreement of Endo LLC.
           -

          10.  Definitions.  For purposes of this Agreement, the following terms
               -----------
shall have the following respective meanings:

          Affiliate:  a Person that directly, or indirectly through one or more
          ---------
intermediaries, controls, or is controlled by, or is under common control with,
the Person specified.

          Board:  the board of directors of the Company.
          -----

          Commission:  the Securities and Exchange Commission.
          ----------

          Common Stock:  the common stock of the Company, par value $.01 per
          ------------
share.

          Exchange Act:  the Securities Exchange Act of 1934, as amended, or any
          ------------
successor federal statute, and the rules and regulations thereunder which shall
be in effect at the time.

          NASD:  National Association of Securities Dealers, Inc.
          ----

          NASDAQ:  the Nasdaq National Market.
          ------

          Permitted Transferee:  as defined in Section 11.2 hereof.
          --------------------

          Person:  an individual, corporation, partnership, limited liability
          ------
company, joint venture, association, trust or other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.

          Registrable Securities: the shares of Common Stock beneficially owned
          ----------------------
(within the meaning of Rule 13d-3 of the Exchange Act) by Endo LLC or the
Permitted Transferees. As to any particular shares of Common Stock, such
securities shall cease

                                      15
<PAGE>

to be Registrable Securities when (i) a registration statement with respect to
                                   -
the sale of such securities shall have become effective under the Securities Act
and such securities shall have been disposed of in accordance with such
registration statement, (ii) a registration statement on Form S-8 with respect
                         --
to the sale of such securities shall have become effective under the Securities
Act, (iii) they shall have been sold to the public pursuant to Rule 144 under
      ---
the Securities Act, (iv) they shall have been otherwise transferred other than
                     --
to a Permitted Transferee and subsequent disposition of them shall not require
registration or qualification of them under the Securities Act or any similar
state law then in force or (v) they shall have ceased to be outstanding.
                            -

          Registration Expenses: all expenses incident to the Company's
          ---------------------
performance of or compliance with any registration pursuant to this Agreement,
including, without limitation, (i) registration, filing and NASD fees, (ii) fees
                                -                                       --
and expenses of complying with securities or blue sky laws, (iii) fees and
                                                             ---
expenses associated with listing securities on an exchange or NASDAQ, (iv) word
                                                                       --
processing, duplicating and printing expenses, (v) messenger and delivery
                                                -
expenses, (vi) transfer agents', trustees', depositories', registrars' and
           --
fiscal agents' fees, (vii) fees and disbursements of counsel for the Company and
                      ---
of its independent public accountants, including the expenses of any special
audits or "cold comfort" letters, (viii) reasonable fees and disbursements of
                                   ----
any one counsel retained by the sellers of Registrable Securities, which counsel
shall be designated in the manner specified in Section 3 hereof and (ix) any
                                                                     --
fees and disbursements of underwriters customarily paid by issuers or sellers of
securities, but excluding underwriting discounts and commissions and transfer
taxes, if any.

          Securities Act: the Securities Act of 1933 or any successor federal
          --------------
statute, and the rules and regulations thereunder which shall be in effect at
the time.

          11.  Miscellaneous.
               -------------

          11.1.  Rule 144, etc. If the Company shall have filed a registration
                 --------------
statement pursuant to the requirements of Section 12 of the Exchange Act or a
registration statement pursuant to the requirements of the Securities Act
relating to any class of equity securities, the Company will file the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the Commission thereunder, and will take such
further action as any holder of Registrable Securities may reasonably request,
all to the extent required from time to time to enable such holder to sell
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144 under the Securities Act,
                                          -
as such rule may be amended from time to time, or (b) any successor rule or
                                                   -
regulation hereafter adopted by the Commission. Upon the request of any holder
of Registrable Securities, the Company will deliver to such holder a written
statement as to whether it has complied with such requirements.

                                      16
<PAGE>

          11.2. Successors, Assigns and Transferees. This Agreement shall be
                -----------------------------------
binding upon and insure to the benefit of the parties hereto and their
respective successors and permitted assigns under this Section 11.2. Provided
that an express assignment shall have been made, and the assignee has executed a
joinder agreement agreeing to be bound by all of the assignor's obligations
hereunder, including, without limitation, Section 5 hereof, copies of which
shall have been delivered to the Company, the provisions of this Agreement which
are for the benefit of a holder of Registrable Securities shall be for the
benefit of and enforceable by any subsequent holder of any Registrable
Securities; provided that such transferee is a holder of Registrable Securities
            -------- ----
in accordance with the terms of the Stockholders Agreement ("Permitted
                                                             ---------
Transferees").
-----------

          11.3. Stock Splits. Each holder of Registrable Securities agrees that
                ------------
it will vote to effect a stock split, reverse stock split, recapitalization or
combination with respect to any Registrable Securities in connection with any
registration of any Registrable Securities hereunder, or otherwise, if the
managing underwriter shall advise the Company in writing (or, in connection with
an offering that is not underwritten, if an investment banker shall advise the
Company in writing) that in its opinion such a stock split, reverse stock split,
recapitalization or combination would facilitate or increase the likelihood of
success of the offering. The Company shall cooperate in all respects in
effecting any such stock split, reverse stock split, recapitalization or
combination.

          11.4. Amendment and Modification. This Agreement may be amended,
                --------------------------
modified or supplemented by the Company with the written consent of Endo LLC and
a majority (by number of shares) of any other holders of Registrable Securities
whose interests would be adversely affected by such amendment.

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

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

          11.7. Notices. All notices, requests, demands, letters, waivers and
                -------
other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (a) delivered
                                                                    -
personally, (b) mailed, certified or registered mail with postage prepaid, (c)
             -                                                              -
sent by next-day or overnight mail or delivery or (d) sent by fax, as follows:
                                                   -

                                      17
<PAGE>

    (i)   If to the Company, to it at:

          Endo Pharmaceuticals Holdings Inc.
          223 Wilmington-West Chester Pike
          Chadds Ford, PA 19317
          Fax: (610) 558-9683
          Attention: Carol A. Ammon
                     President and Chief Executive Officer

          with a copy to Endo LLC at its address set forth in (iv) below.

    (iv)  If to Endo LLC, to it at:

          Endo Pharma LLC
          c/o Kelso & Company
          320 Park Avenue
          New York, New York 10022
          Fax: 212-223-2379
          Attention: James J. Connors, II, Esq.
                     General Counsel

or to such other person or address as any party shall specify by notice in
writing to the Company. All such notices, requests, demands, letters, waivers
and other communications shall be deemed to have been received (w) if by
                                                                -
personal delivery on the day after such delivery, (x) if by certified or
                                                   -
registered mail, on the fifth business day after the mailing thereof, (y) if by
                                                                       -
next-day or overnight mail or delivery, on the day delivered or (z) if by fax,
                                                                 -
on the next day following the day on which such fax was sent, provided that a
copy is also sent by certified or registered mail.

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

          11.9. Injunctive Relief. Each of the parties recognizes and agrees
                -----------------
that money damages may be insufficient and, therefore, in the event of a breach
of any provision of this Agreement the aggrieved party may elect to institute
and prosecute proceedings in any court of competent jurisdiction to enforce
specific performance or to enjoin the continuing breach of this Agreement. Such
remedies shall, however, be cumulative and not exclusive, and shall be in
addition to any other remedy which such party may have.

                                      18
<PAGE>

          11.10. Term. This Agreement shall be effective as of the date hereof
                 ----
and shall continue in effect thereafter until the earlier of (a) its termination
                                                              -
by the consent of the parties hereto or their respective successors in interest
and (b) the date on which no Registrable Securities remain outstanding.
     -

          11.11. Further Assurances. Subject to the specific terms of this
                 ------------------
Agreement, each of the Company and Endo LLC shall make, execute, acknowledge and
deliver such other instruments and documents, and take all such other actions,
as may be reasonably required in order to effectuate the purposes of this
Agreement and to consummate the transactions contemplated hereby.

          11.12. Entire Agreement. This Agreement, together with the
                 ----------------
Stockholders Agreement and the Exchange Agreements (as defined in the
Stockholders Agreement), is intended by the parties hereto as a final expression
of their agreement and intended to be a complete and exclusive statement of
their agreement and understanding in respect of the subject matter contained
herein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.

                              [SIGNATURES FOLLOW]

                                      19
<PAGE>

          IN WITNESS WHEREOF this Agreement has been signed by each of the
parties hereto, and shall be effective as of the date first above written.

                                  ENDO PHARMACEUTICALS HOLDINGS INC.

                                  By:___________________________________________
                                     Name:  Carol A. Ammon
                                     Title: President & Chief Executive Officer

                                  ENDO PHARMA LLC

                                  By:___________________________________________
                                     Name:  Jeffrey R. Black
                                     Title: Chief Financial Officer

                                      20<PAGE>

                                                                    EXHIBIT 10.1

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

                          FORM OF WARRANT AGREEMENT

                                by and between

                      ENDO PHARMACEUTICALS HOLDINGS INC.

                                      and

                   UNITED STATES TRUST COMPANY OF NEW YORK,
                                      as
                                 Warrant Agent

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

                        Dated as of _____________, 2000

      --------------------------------------------------------------------
<PAGE>

                                TABLE OF CONTENTS

                                                                           Page
                                                                           ----

             Section 1.   Appointment of Warrant Agent........................1
             Section 2.   Warrant Certificates................................1
             Section 3.   Execution of Warrant Certificates...................2
             Section 4.   Registration and Countersignature...................3
             Section 5.   Transfer and Exchange of Warrants...................3
             Section 6.   Registration of Transfers and Exchanges.............4
             Section 7.   Terms of Warrants; Exercise of Warrants.............7
             Section 8.   Payment of Taxes...................................10
             Section 9.   Mutilated or Missing Warrant Certificates..........10
             Section 10.  Reservation of Warrant Shares......................11
             Section 11.  Obtaining Stock Exchange Listings. ................12
             Section 12.  Adjustment of Exercise Price and Number
                          of Warrant Shares Issuable.........................12
             Section 13.  Fractional Interests...............................20
             Section 14.  Notices to Warrant Holders; Reservation
                          of Dividends.......................................20
             Section 15.  Notices to the Company and Warrant Agent...........22
             Section 16.  Supplements and Amendments.........................23
             Section 17.  Concerning the Warrant Agent.......................24
             Section 18.  Change of Warrant Agent............................27
             Section 19.  Successors.........................................27
             Section 20.  Termination........................................27
             Section 21.  GOVERNING LAW......................................28
             Section 22.  Benefits of This Agreement.........................28
             Section 23.  Counterparts.......................................28
             Section 24.  Headings...........................................28

Exhibit A.   Form of Warrant Certificate....................................A-1
Exhibit B.   Certificate to be Delivered Upon Transfer......................B-1

                                       i
<PAGE>

                  WARRANT AGREEMENT (the "Agreement"), dated as of _______ __,
                                          ---------
2000, by and between Endo Pharmaceuticals Holdings Inc., a Delaware corporation
(together with any successors and assigns, the "Company"), and United States
                                                -------
Trust Company of New York, as Warrant Agent (the "Warrant Agent").
                                                  -------------

                  WHEREAS, pursuant to that certain Agreement and Plan of
Merger, dated as of November 26, 1999 (as may be amended and restated from time
to time, the "Merger Agreement"), by and among the Company, Endo Inc., a
              ----------------
Delaware corporation and wholly owned subsidiary of the Company ("Sub"), and
                                                                  ---
Algos Pharmaceutical Corporation, a Delaware corporation ("Algos"), the
                                                           -----
Company proposes to issue warrants (each a "Warrant," and collectively, the
                                            -------
"Warrants") for the purchase of an aggregate of 29,920,177 shares of common
 --------
stock, par value $.01 per share, of the Company (the "Common Stock," and the
                                                      ------------
shares of Common Stock issuable upon exercise of the Warrants being referred to
herein as the "Warrant Shares");
               --------------

                  WHEREAS, the Company desires the Warrant Agent to act on
behalf of the Company and the Warrant Agent is willing to act in connection with
the issuance, transfer, exchange and exercise of Warrants as provided herein;
and

                  NOW, THEREFORE, in consideration of the premises and mutual
agreements herein, the Company and the Warrant Agent hereby agree as follows:

                  Section 1. Appointment of Warrant Agent. The Company hereby
                             ----------------------------
appoints the Warrant Agent to act as agent for the Company in accordance with
the instructions hereinafter set forth in this Agreement, and the Warrant Agent
hereby accepts such appointment.

                  Section 2. Warrant Certificates. The Warrants will initially
                             --------------------
be issued in global form (the "Global Warrants"), substantially in the form of
                               ---------------
Exhibit A hereto. Any certificates evidencing the Global Warrants to be
delivered pursuant to this Agreement (the "Warrant Certificates") shall be
                                           --------------------
substantially in the form set forth in Exhibit A hereto. Such Global Warrants
shall represent such of the outstanding Warrants as shall be specified therein
and each shall provide that it shall represent the aggregate amount of
outstanding Warrants from time to time endorsed thereon and that the aggregate
amount of outstanding Warrants represented thereby may from time to time be
reduced or increased, as appropriate. Any endorsement of a

--------

   1These numbers shall be adjusted in the final Endo Warrant. See footnotes
     2-5 below.
<PAGE>

Global Warrant to reflect the amount of any increase or decrease in the amount
of outstanding Warrants represented thereby shall be made by the Warrant Agent
and the Depositary (as defined below) in accordance with instructions given by
the holder thereof. The Depository Trust Company shall act as the Depositary
with respect to the Global Warrants until a successor shall be appointed by the
Company. Upon written request, a Warrant holder who holds Warrants may receive
from the Depositary and Warrant Agent Warrants in registered form as definitive
Warrant Certificates (the "Definitive Warrants") as set forth in Section 6
                           -------------------
below.

                  Section 3. Execution of Warrant Certificates. Warrant
                             ---------------------------------
Certificates shall be signed on behalf of the Company by its Chairman of the
Board, its President, Chief Executive Officer, Chief Operating Officer, Chief
Financial Officer or Treasurer or a Vice President and by its Secretary or an
Assistant Secretary. Each such signature upon the Warrant Certificates may be in
the form of a facsimile signature of the present or any future Chairman of the
Board, President, Chief Executive Officer, Chief Operating Officer, Chief
Financial Officer, Treasurer, Vice President, Secretary or Assistant Secretary
and may be imprinted or otherwise reproduced on the Warrant Certificates and for
that purpose the Company may adopt and use the facsimile signature of any person
who shall have been Chairman of the Board, President, Chief Executive Officer,
Chief Operating Officer, Chief Financial Officer, Treasurer, a Vice President,
Secretary or an Assistant Secretary, notwithstanding the fact that at the time
the Warrant Certificates shall be countersigned and delivered or disposed of
such person shall have ceased to hold such office.

                  In case any officer of the Company who shall have signed any
of the Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been countersigned by the Warrant Agent, or
disposed of by the Company, such Warrant Certificates nevertheless may be
countersigned and delivered or disposed of as though such person had not ceased
to be such officer of the Company; and any Warrant Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Warrant Certificate, shall be a proper officer of the Company to sign such
Warrant Certificate, although at the date of the execution of this Warrant
Agreement any such person was not such officer.

                  Warrant Certificates shall be dated the date of
countersignature by the Warrant Agent.

                                       2
<PAGE>

                  Section 4. Registration and Countersignature. The Warrants
                             ---------------------------------
shall be numbered and shall be registered on the books of the Company maintained
at the principal office of the Warrant Agent in located at 114 West 47th Street,
25th Floor, New York, New York 10036, Attention: Corporate Trust Division (the
"Warrant Register") as they are issued.
 ----------------

                  Warrant Certificates shall be manually countersigned by the
Warrant Agent and shall not be valid for any purpose unless so countersigned.
The Warrant Agent shall, upon written instructions of the Chairman of the Board,
the President, Chief Executive Officer, Chief Operating Officer, Chief Financial
Officer, Treasurer, a Vice President, the Secretary or an Assistant Secretary of
the Company, initially countersign and deliver Warrants entitling the holders
thereof to purchase not more than the number of Warrant Shares referred to above
in the first recital hereof and shall thereafter countersign and deliver
Warrants as otherwise provided in this Agreement.

                  The Company and the Warrant Agent may deem and treat the
registered holders (the "Holders") of the Warrant Certificates as the absolute
                         -------
owners thereof (notwithstanding any notation of ownership or other writing
thereon made by anyone) for all purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary.

                  Section 5. Transfer and Exchange of Warrants. The Warrant
                             ---------------------------------
Agent shall from time to time, subject to the limitations of Section 6 hereof,
register the transfer of any outstanding Warrants upon the records to be
maintained by it for that purpose, upon surrender thereof duly endorsed or
accompanied (if so required by it) by a written instrument or instruments of
transfer in form satisfactory to the Warrant Agent, duly executed by the
registered Holder or Holders thereof or by the duly appointed legal
representative thereof or by a duly authorized attorney. Subject to the terms of
this Agreement, each Warrant Certificate may be exchanged for another
certificate or certificates entitling the Holder thereof to purchase a like
aggregate number of Warrant Shares as the certificate or certificates
surrendered then entitle each Holder to purchase. Any Holder desiring to
exchange a Warrant Certificate or Certificates shall make such request in
writing delivered to the Warrant Agent, and shall surrender, duly endorsed or
accompanied (if so required by the Warrant Agent) by a written instrument or
instruments of transfer in form satisfactory to the Warrant Agent, the Warrant
Certificate or Certificates to be so exchanged.

                                       3
<PAGE>

                  Upon registration of transfer, the Warrant Agent shall
countersign and deliver by certified or first class mail a new Warrant
Certificate or Certificates to the persons entitled thereto. The Warrant
Certificates may be exchanged at the option of the Holder thereof, when
surrendered at the office or agency of the Company maintained for such purpose,
which initially will be the corporate trust office of the Warrant Agent
located at 770 Broadway, 13th Floor, New York, New York 10003, Attention:
Corporate Trust Services, for another Warrant Certificate, or other Warrant
Certificates of different denominations, of like tenor and representing in the
aggregate the right to purchase a like number of Warrant Shares.

                  No service charge shall be made for any exchange or
registration of transfer of Warrant Certificates, but the Company may require
payment of a sum sufficient to cover any stamp or other tax or other
governmental charge that is imposed in connection with any such exchange or
registration of transfer.

                  Section 6.        Registration of Transfers and Exchanges.
                                    ---------------------------------------

                  (a)      Transfer and Exchange of Definitive Warrants.  When
                           --------------------------------------------
Definitive Warrants are presented to the Warrant Agent with a request:

         (i)      to register the transfer of the Definitive Warrants; or

         (ii)     to exchange such Definitive Warrants for an equal number of
                  Definitive Warrants of other authorized denominations,

the Warrant Agent shall register the transfer or make the exchange as requested
if its requirements under this Agreement are met; provided, however, that the
                                                  --------  -------
Definitive Warrants presented or surrendered for registration of transfer or
exchange shall be duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Warrant Agent, duly executed by the Holder
thereof or by such Holder's attorney, duly authorized in writing.

                  (b)      Restrictions on Transfer of a Definitive Warrant for
                           ----------------------------------------------------
a Beneficial Interest in a Global Warrant.  The Warrant Agent may exchange a
-----------------------------------------
Definitive Warrant for a beneficial interest in a Global Warrant only if the
Warrant Agent has received such Definitive Warrant, duly endorsed or accompanied
by appropriate instruments of transfer, in form satisfactory to the Warrant
Agent, together with written instructions directing the Warrant Agent to make,
or to direct the Depositary

                                       4
<PAGE>

to make, an endorsement on the Global Warrant to reflect an increase in the
aggregate amount of the Warrants represented by the Global Warrant. If such
conditions have been satisfied, the Warrant Agent shall cancel such Definitive
Warrant and cause, or direct the Depositary to cause, in accordance with the
standing instructions and procedures existing between the Depositary and the
Warrant Agent, the number of Warrant Shares represented by the Global Warrant to
be increased accordingly. If no Global Warrant is then outstanding, the Company
shall issue and the Warrant Agent shall countersign a new Global Warrant in the
appropriate amount.

                  (c)      Transfer and Exchange of Global Warrants. The
                           ----------------------------------------
transfer and exchange of Global Warrants or beneficial interests therein shall
be effected through the Depositary, in accordance with this Warrant Agreement
(including the restrictions on transfer set forth herein) and the procedures of
the Depositary therefor.

                  (d)      Transfer of a Beneficial Interest in a Global Warrant
                           -----------------------------------------------------
for a Definitive Warrant.
------------------------

         (i)      Any person having a beneficial interest in a Global Warrant
                  may upon his, her or its request exchange such beneficial
                  interest for a Defini tive Warrant. Upon receipt by the
                  Warrant Agent of written instructions (or such other form of
                  instructions as is customary for the Depositary) from the
                  Depositary or its nominee on behalf of any person having a
                  beneficial interest in a Global Warrant and upon receipt by
                  the Warrant Agent of a written order or such other form of
                  instructions as is customary for the Depositary or the person
                  designated by the Depositary as having such a beneficial
                  interest containing registration instructions, then the
                  Warrant Agent will cause, in according dance with the standing
                  instructions and procedures existing between the Depositary
                  and the Warrant Agent, the aggregate amount of the Global
                  Warrant to be reduced and, following such reduction, the
                  Company will execute and, upon receipt of a countersignature,
                  the Warrant Agent will countersign and deliver to the
                  transferee a Definitive Warrant.

         (ii)     Definitive Warrants issued in exchange for a beneficial
                  interest in a Global Warrant pursuant to this Section 6(d)
                  shall be registered in such names and in such authorized
                  denominations as the Depositary, pursuant to instructions from
                  its direct or indirect participants or

                                       5
<PAGE>

                  otherwise, shall instruct the Warrant Agent in writing,
                  provided such designation is in accordance with this Section
                  6(d). The Warrant Agent shall deliver such Definitive Warrants
                  to the persons in whose names such Definitive Warrants are
                  registered.

                  (e) Restrictions on Transfer and Exchange of Global Warrants.
                      --------------------------------------------------------
Notwithstanding any other provisions of this Warrant Agreement (other than the
provisions set forth in subsection (f) of this Section 6), a Global Warrant may
not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.

                  (f) Authentication of Definitive Warrants in Absence of
                      ---------------------------------------------------
Depositary.  If at any time:
----------

         (i)      the Depositary for the Global Warrants notifies the Company
                  that the Depositary is unwilling or unable to continue as
                  Depositary for the Global Warrant and a successor Depositary
                  for the Global Warrant is not appointed by the Company within
                  90 days after delivery of such notice; or

         (ii)     the Company, at its sole discretion, notifies the Warrant
                  Agent in writing that it elects to cause the issuance of
                  Definitive Warrants under this Warrant Agreement,

then the Company will execute, and the Warrant Agent, upon receipt of an
officers' certificate, signed by the President, Chief Executive Officer, Chief
Operating Officer, Chief Financial Officer or a Vice President of the Company,
requesting the counter signature and delivery of Definitive Warrants, will
countersign and deliver Definitive Warrants, in an aggregate number equal to the
aggregate number of Warrants represented by the Global Warrant, in exchange for
such Global Warrant.

                  (g) Cancellation and/or Adjustment of a Global Warrant. At
                      --------------------------------------------------
such time as all beneficial interests in a Global Warrant have either been
exchanged for Definitive Warrants, redeemed, repurchased or cancelled, such
Global Warrant shall be returned to or retained and cancelled by the Warrant
Agent. At any time prior to such cancellation, if any beneficial interest in a
Global Warrant is exchanged for

                                       6
<PAGE>

Definitive Warrants, redeemed, repurchased or cancelled, the number of Warrants
represented by such Global Warrant shall be reduced and an endorsement shall be
made on such Global Warrant, by the Warrant Agent to reflect such reduction.

                  (h)      Obligations with Respect to Transfers and Exchanges
                           ---------------------------------------------------
of Definitive Warrants.
----------------------

         (i)      To permit registrations of transfers and exchanges in
                  accordance with the terms of this Agreement, the Company shall
                  execute, and the Warrant Agent shall countersign Definitive
                  Warrants and Global Warrants.

         (ii)     All Definitive Warrants and Global Warrants issued upon any
                  registration, transfer or exchange of Definitive Warrants or
                  Global War rants shall be the valid obligations of the
                  Company, entitled to the same benefits under this Warrant
                  Agreement as the Definitive War rants or Global Warrants
                  surrendered upon the registration of transfer or exchange.

         (iii)    Prior to due presentment for registration of transfer of any
                  Warrant, the Warrant Agent and the Company may deem and treat
                  the person in whose name any Warrant is registered as the
                  absolute owner of such Warrant, and neither the Warrant Agent
                  nor the Company shall be affected by notice to the contrary.

                  Section 7. Terms of Warrants; Exercise of Warrants. Subject to
                             ---------------------------------------
the terms of this Agreement, the Warrant Holders shall have the right, which may
be exercised commencing on or after the Exercisability Date (as defined below)
and until 5:00 p.m., New York City time, on July 7, 2003 (the six-month
anniversary of the Exercisability Date) (the "Expiration Date"), to receive from
                                              ---------------
the Company (on exercise of such Warrants and payment of the Exercise Price then
in effect for such Warrant Shares) (together, if applicable, with cash payable
as provided in Section 13 hereof and any dividends or distributions payable as
provided in Section 14 hereof) (a) 29,920,177 Warrant Shares (in the aggregate)
(with each Warrant being exercise-

                                       7
<PAGE>

able for 0.416667 Warrant Shares)2 in the event the Adjustment Event has not
occurred prior to such time or (b) 17,952,106 Warrant Shares (in the aggregate)
(with each Warrant being exercisable for 0.250000 Warrant Shares)3 in the event
the Adjustment Event has occurred prior to such time. Each Warrant not exercised
prior to the Expiration Date shall become void and all rights thereunder and all
rights in respect thereof under this Agreement shall cease as of the Expiration
Date. If applicable, dividends and other distributions will be made upon
exercise of the Warrants as set forth in Section 14 hereof.

                  "Exercisability Date" shall mean the fifth (5th) Business Day
                   -------------------
(as defined below) following December 31, 2002 if the Company (or any of its
subsidiaries) has not received approval from the U.S. Food and Drug
Administration (the "FDA") with respect to its New Drug Application for
MorphiDex(R) for the treatment of any pain prior to December 31, 2002.

                  In addition to the notices required by Section 14 hereof, the
Company shall give prompt written notice to the Warrant Agent that the
Exercisability Date has occurred and shall cause the Warrant Agent, on behalf of
and at the expense of the Company, within 5 Business Days after such
notification is received by the Warrant Agent, to mail by first class mail,
postage prepaid, to each Holder a notice specifying that the Exercisability Date
has occurred and that the Warrant has become exercisable pursuant to its terms
and that the Warrant will expire at 5:00 p.m., New York City time, on the
Expiration Date. In addition, the Company shall post appropriate
notices of the Exercisability Date on its web pages and issue press releases to
wire services. A "Business Day" is a day that is not a Legal Holiday. A "Legal
                  ------------                                           -----
Holiday"
-------

________________

         2 These numbers shall be adjusted in the final Agreement and Warrants
in order to reflect that at the Effective Time such aggregate number, when taken
together with the shares of Parent Common Stock held by Persons who had been
holders of Parent Common Stock immediately prior to the Effective Time, shall
equal 85% of the shares of Parent Common Stock on a fully diluted basis
(excluding the effect of the Algos Warrants as if no Adjustment Event had
occurred).

         3 These numbers shall be adjusted in the final Agreement and Warrants
in order to reflect that at the Effective Time such aggregate number, when taken
together with the shares of Parent Common Stock held by Persons who had been
holders of Parent Common Stock immediately prior to the Effective Time, shall
equal 80% of the shares of Parent Common Stock on a fully diluted basis
(excluding the effect of the Algos Warrants and after giving effect to the
Adjustment Event as if it had occurred).

                                       8
<PAGE>

is a Saturday, a Sunday, a federally recognized holiday or a day on which
banking institutions are not required to be open in the State of New York.

                  The initial price per share at which Warrant Shares shall be
purchasable upon exercise of Warrants (the "Exercise Price") shall equal $0.01.
                                             --------------
A Warrant may be exercised upon surrender at the office or agency of the Company
maintained for such purpose, which initially will be the corporate trust office
of the Warrant Agent or its agents located at 114 West 47th Street, 25th
Floor, New York, New York 10036, Attention: Corporate Trust Division, of the
Warrant Certificate(s) evidencing the Warrants to be exercised with the form of
election to purchase on the reverse thereof duly filled in and signed, which
signature shall be guaranteed by a participant in a recognized Signature
Guarantee Medallion Program, and upon payment to the Warrant Agent for the
account of the Company of the Exercise Price, as adjusted as herein provided,
for the number of Warrant Shares together, if applicable, with cash payable as
provided in Section 13 hereof and any dividends or distributions as provided in
Section 14 hereof in respect of which such Warrants are then exercised. Payment
of the Exercise Price may be made (a) in the form of cash or by certified or
official bank check payable to the order of the Company in New York Clearing
House Funds, (b) by delivering to the Company a written notice accompanying the
surrender of a Warrant to, at the time of exercise, apply to the payment of the
Exercise Price such number of Warrant Shares as shall be specified in such
notice, in which case an amount equal to the excess of the Current Market Value
(as defined in Section 12(d) hereof) of such Warrant Shares on the date of
exercise over the Exercise Price required for such exercise shall be deemed to
have been paid to the Company and the number of Warrant Shares issuable upon
such exercise shall be reduced by such specified number (a "Cashless Exercise")
                                                            -----------------
or (c) any combination of (a) and (b) above.

                  Subject to the provisions of Section 6 hereof, upon such
surrender of Warrants and payment of the Exercise Price, the Company shall issue
and cause to be delivered with all reasonable dispatch to or upon the written
order of the Holder and in such name or names as the Warrant Holder may
designate a certificate or certificates for the number of full Warrant Shares
issuable upon the exercise of such Warrants together with cash as provided in
Section 13 hereof. Such certificate or certificates shall be deemed to have been
issued and any person so named therein shall be deemed to have become a holder
of record of such Warrant Shares as of the date of the surrender of such
Warrants and payment of the Exercise Price.

                                       9
<PAGE>

                  On or after the Exercisability Date, the Warrants shall be
exercisable, at the election of the Holders thereof, either in full or from time
to time in part and, in the event that a certificate evidencing Warrants is
exercised in respect of fewer than all of the Warrant Shares issuable on such
exercise at any time prior to the Expiration Date, a new certificate evidencing
the remaining Warrant or Warrants will be issued, and the Warrant Agent is
hereby irrevocably authorized to countersign and to deliver the required new
Warrant Certificate or Certificates pursuant to the provisions of this Section 7
and of Section 3 hereof, and the Company, whenever required by the Warrant
Agent, will promptly supply the Warrant Agent with Warrant Certificates duly
executed on behalf of the Company for such purpose.

                  All Warrant Certificates surrendered upon exercise of Warrants
shall be cancelled by the Warrant Agent. Such cancelled Warrant Certificates
shall then be either delivered to the Company or disposed of by the Warrant
Agent in a manner consistent with the Warrant Agent's customary procedure for
such disposal and in a manner reasonably satisfactory to the Company. The
Warrant Agent shall account promptly to the Company with respect to Warrants
exercised and concurrently pay to the Company all monies received by the Warrant
Agent for the purchase of the Warrant Shares through the exercise of such
Warrants.

                  The Warrant Agent shall keep copies of this Agreement
available for inspection by the Holders during normal business hours at its
office. The Company shall supply the Warrant Agent from time to time with such
numbers of copies of this Agreement as the Warrant Agent may request.

                  Section 8. Payment of Taxes. The Company will pay all
                             ----------------
documentary stamp taxes attributable to the initial issuance of Warrant Shares
upon the exercise of Warrants; provided, however, that the Company shall not be
                               --------  -------
required to pay any tax or taxes which may be payable in respect of any transfer
involved in the issue of any Warrant Certificates or any certificates for
Warrant Shares in a name other than that of the registered Holder of a Warrant
Certificate surrendered upon the exercise of a Warrant, and the Company shall
not be required to issue or deliver such Warrant Certificates unless or until
the person or persons requesting the issuance thereof shall have paid to the
Company the amount of such tax or shall have established to the satisfaction of
the Company that such tax has been paid.

                  Section 9. Mutilated or Missing Warrant Certificates. In case
                             -----------------------------------------
any of the Warrant Certificates shall be mutilated, lost, stolen or destroyed,
the Company

                                      10
<PAGE>

may in its discretion issue and the Warrant Agent may countersign, in exchange
and substitution for and upon cancellation of the mutilated Warrant Certificate,
or in lieu of and substitution for the Warrant Certificate lost, stolen or
destroyed, a new Warrant Certificate of like tenor and representing an
equivalent number of Warrants, but only upon receipt of evidence satisfactory to
the Company and the Warrant Agent of such loss, theft or destruction of such
Warrant Certificate and indemnity, if requested, also satisfactory to them.
Applicants for such substitute Warrant Certificates shall also comply with such
other reasonable regulations and pay such other reasonable charges as the
Company or the Warrant Agent may prescribe.

                  Section 10. Reservation of Warrant Shares. The Company will at
                              -----------------------------
all times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued Common Stock or its authorized and
issued Common Stock held in its treasury, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon exercise of Warrants, the
maximum number of shares of Common Stock which may then be deliverable upon the
exercise of all outstanding Warrants.

                  The Company will keep a copy of this Agreement on file with
the transfer agent for the Common Stock (the "Transfer Agent") and with every
                                              --------------
subsequent transfer agent for any shares of the Company's capital stock
issuable upon the exercise of the rights of purchase represented by the
Warrants. The Warrant Agent is hereby irrevocably authorized to requisition from
time to time from such Transfer Agent the stock certificates required to honor
outstanding warrants upon exercise thereof in accordance with the terms of this
Agreement. The Company will supply such Transfer Agent with duly executed
certificates for such purposes and will provide or otherwise make available any
cash which may be payable as provided in Section 13 hereof. The Company will
furnish such Transfer Agent a copy of all notices of adjustments and
certificates related thereto transmitted to each Holder pursuant to Section 14
hereof.

                  The Company covenants that all Warrant Shares which may be
issued upon exercise of Warrants will, upon payment of the Exercise Price
therefor and issue, be validly authorized and issued, fully paid, nonassessable,
free of preemptive rights and free from all taxes, liens, charges and security
interests with respect to the issuance thereof. The Company will use its
reasonable best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having

                                      11
<PAGE>

jurisdiction thereof as may be necessary to enable the Company to perform its
obligations under this Agreement.

                  Section 11. Obtaining Stock Exchange Listings. The Company
                              ---------------------------------
will from time to time take all action which may be necessary so that the
Warrants and, immediately upon their issuance upon exercise of the Warrants, the
Warrant Shares will be listed on the principal securities exchanges and markets
within the United States of America, if any, on which other shares of Common
Stock are then listed.

                  Section 12.  Adjustment of Exercise Price and Number of
                               ------------------------------------------
Warrant Shares Issuable.
-----------------------

                  (a)       If the Company:

         (i)      pays a dividend or makes a distribution on its Common Stock in
                  shares of its Common Stock or other capital stock of the
                  Company; or

         (ii)     subdivides, splits, combines or reclassifies its outstanding
                  shares of Common Stock into a different number of securities
                  of the same class,

then the number of shares of Common Stock issuable upon the exercise of each
Warrant (the "Exercise Rate") in effect immediately prior to such action shall
              -------------
be proportionately adjusted so that the Holder of any Warrant thereafter
exercised may receive the aggregate number and kind of shares of capital stock
of the Company which such Holder would have owned immediately following such
action if such Warrant had been exercised immediately prior to such action and
the Exercise Price in effect immediately prior to such action shall be adjusted
to a price determined by multiplying the Exercise Price in effect immediately
prior to such action by a fraction, the numerator of which shall be the number
of shares of Common Stock outstanding before giving effect to such action and
the denominator of which shall be the number of shares of Common Stock and/or
such other capital stock outstanding referred to in the foregoing clause (a)(1)
after giving effect to such action.

                  An adjustment pursuant to this Section 12(a) shall become
effective immediately after the record date in the case of a dividend or
distribution and immediately after the effective date in the case of a
subdivision, combination or reclassification.

                                      12
<PAGE>

                  If, after an adjustment pursuant to this Section 12(a), a
Holder of a Warrant upon exercise of it may receive shares of two or more
classes of capital stock of the Company, the board of directors of the Company
shall determine the allocation of the adjusted Exercise Price between the
classes of capital stock. After such allocation, the exercise privilege and the
Exercise Price of each class of capital stock shall thereafter be subject to
adjustment on terms comparable to those applicable to Common Stock in this
Section 12.

                  Such adjustment shall be made successively whenever any event
listed above shall occur.

                  (b)      Adjustment for Certain Issuances of Common Stock.  If
                           ------------------------------------------------
the Company issues or sells to any Affiliate (as defined in Section 12(d)
hereof) of the Company (other than KIA V, L.P. and KEP V, L.P.) shares of its
Common Stock or distributes to any Affiliate of the Company (other than KIA V,
L.P. and KEP V, L.P.) any rights, options or warrants entitling them to purchase
shares of Common Stock, or securities convertible into or exchangeable for
Common Stock, in each case, at a price per share less than the Current Market
Value on the record date for determining entitlements of such Affiliates to
participate in such issuance, sale or distribution (the "Time of Determination")
                                                         ---------------------
and prior to such issuance, sale or distribution the Company did not first offer
to issue, sell or distribute such shares of its Common Stock or such rights,
options or warrants or such securities convertible into or exchangeable for
Common Stock to all holders of Common Stock on the same economic terms and on a
pro rata basis with the issuance, sale or distribution to such Affiliates of the
Company, then the Exercise Rate shall be adjusted in accordance with the
         ----
formula:

                                    E' = E x   O + N
                                             ----------
                                             O + N x P
                                                 -----
                                                   M

and the Exercise Price shall be adjusted in accordance with the following
formula:

                                    EP' = EP x E
                                               -
                                               E'

where:

                                      13
<PAGE>

                  E'  =    the adjusted Exercise Rate.

                  E   =    the Exercise Rate immediately prior to the Time of
                           Determination for any such issuance, sale or
                           distribution.

                  EP' =    the Adjusted Exercise Price.

                  EP  =    the Exercise Price immediately prior to the Time of
                           Determination for any such issuance, sale or
                           distribution.

                  O   =    the number of Fully Diluted Shares (as defined below)
                           outstanding immediately prior to the Time of
                           Determination for any such issuance, sale or
                           distribution.

                  N   =    the number of additional shares of Common Stock
                           issued, sold or issuable upon exercise of such
                           rights, options or warrants.

                  P   =    the per share price received and receivable by the
                           Company in the case of any issuance or sale of Common
                           Stock or rights, options or warrants as to which such
                           adjustment is being made, inclusive of the exercise
                           price per share of Common Stock payable upon exercise
                           of such rights, options or warrants.

                  M   =    the Current Market Value per share of Common Stock on
                           the Time of Determination for any such issuance, sale
                           or distribution.

                  For purposes of this Section 12(b), the term "Fully Diluted
                                                                -------------
Shares" shall mean (i) the shares of Common Stock outstanding as of a specified
------
date, and (ii) the shares of Common Stock into or for which rights, options,
warrants or other securities of the Company outstanding as of such date are
exercisable or convertible (other than the Warrants).

                  Any adjustments shall be made successively whenever any such
rights, options or warrants are issued and shall become effective immediately
after the relevant Time of Determination. Notwithstanding the foregoing, the
Exercise

                                      14
<PAGE>

Rate and the Exercise Price shall not be subject to adjustment in connection
with (i) the issuance of any shares of Common Stock upon exercise of any such
rights, options or warrants which have previously been the subject of an
adjustment under this Agreement for which the required adjustment has been made
and (ii) any exercise of the Warrants. If at the end of the period during which
any such rights, options or warrants are exercisable, not all rights, options or
warrants shall have been exercised, the Warrant shall be immediately readjusted
to what it would have been if "N" in each of the above formulas had been the
number of shares actually issued.

                  (c) When De Minimis Adjustment May Be Deferred. No adjustment
                      ------------------------------------------
in the Exercise Rate need be made unless the adjustment would require an
increase or decrease of at least 1% in the Exercise Rate. Notwithstanding the
foregoing, any adjustments that are not made shall be carried forward and taken
into account in any subsequent adjustment, provided that no such adjustment
                                           -------- ----
shall be deferred beyond the date on which a Warrant is exercised.

                  All calculations under this Section 12 shall be made to the
nearest cent or to the nearest 1/100th of a share, as the case may be.

                  (d)      Certain Definitions.  "Current Market Value" per
                           -------------------    --------------------
share of Common Stock or of any other security (herein collectively referred to
as a "Security") at any date shall be:

                  (1) if the Security is not registered under the Securities
         Exchange Act of 1934, as amended (the "Exchange Act"), (i) the value of
                                                ------------
         the Security determined in good faith by the board of directors of the
         Company and certified in a board resolution, based on the most recently
         completed arm's-length transaction between the Company and a person
         other than an Affiliate of the Company and the closing of which occurs
         on such date or shall have occurred within the six months preceding
         such date or (ii) if no such transaction shall have occurred on such
         date or within such six-month period, the value of the Security
         determined as of a date within 30 days preceding such date by an
         Independent Financial Expert (as defined below), or

                  (2) if the Security is registered under the Exchange Act, the
         average of the daily closing bid prices of such Security for 30
         consecutive Business Days selected by the Company from the period of 45
         Business Days

                                      15
<PAGE>

         preceding such date, but only if such Security shall have been listed
         on a national securities exchange or the Nasdaq National Market or
         traded through an automated quotation system during such entire
         45-Business Day period.

                  The "closing bid price" for any Security on each Business Day
                       -----------------
means the closing price, regular way, on such day on the principal exchange on
which such Security is traded, or if no sale takes place on such day, the
average of the closing bid and asked prices on such day.

                  "Independent Financial Expert" shall mean any nationally
                   ----------------------------
recognized investment banking firm that is not an Affiliate of the Company. Any
such person may receive customary compensation and indemnification by the
Company for opinions or services it provides as an Independent Financial Expert.

                  "Affiliate" of any specified person means any other person
                   ---------
which directly or indirectly through one or more intermediaries controls or is
controlled by, or is under common control with, such specified person. For the
purposes of this definition, "control" (including with correlative meanings, the
terms "controlling," "controlled by" and "under common control with") as used
with respect to any person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
person, whether through the ownership of voting securities, by agreement or
otherwise.

                  "Ordinary Cash Distribution" means any quarterly cash dividend
                   --------------------------
on the Common Stock to the extent that the aggregate cash dividend per share of
Common Stock in any calendar quarter does not exceed the greater of (x) the
amount per share of Common Stock of the next preceding quarterly cash dividend
on the Common Stock (as adjusted to reflect subdivisions or combinations of the
Common Stock) and (y) 3.0% of the average of the last reported sales prices of
the Common Stock during the ten trading days immediately prior to the date of
declaration of such dividend.

                  (e)      When No Adjustment Required. If an adjustment is made
                           ---------------------------
upon the establishment of a record date for an issuance, sale or distribution
subject to subsection (a) or (b) hereof and such issuance, sale or distribution
is subsequently cancelled or is not otherwise made, the Exercise Rate and
Exercise Price then in effect shall be readjusted, effective as of the date when
the board of directors of the

                                      16
<PAGE>

         Company determines to cancel such issuance, sale or distribution or
         when it is otherwise evident that such issuance, sale or distribution
         will not be so made, to that which would have been in effect if such
         record date had not been fixed. If an adjustment would be required
         under both subsections (a) and (b) above, such adjustments will be
         determined without duplication.

                  To the extent the Warrants become convertible into cash, no
adjustment need be made thereafter as to the amount of cash into which such
Warrants are exercisable. Interest will not accrue on the cash.

                  (f)      Notice of Adjustment.  Whenever the Exercise Rate or
                           --------------------
Exercise Price is adjusted, the Company shall provide the notices required by
Section 14 hereof.

                  (g)      Voluntary Reduction. The Company from time to time
                           -------------------
may increase the Exercise Rate or reduce the Exercise Price by any amount for
any period of time (including, without limitation, permanently) if the period is
at least 20 Business Days and the Company has given notice of such increase or
reduction in accordance with Section 14 hereof.

                  An increase of the Exercise Rate or reduction in the Exercise
Price under this subsection (g) (other than a permanent increase) does not
change or adjust the Exercise Rate otherwise in effect for purposes of
subsection (a) and (b) of this Section 12.

                  (h)      When Issuance or Payment May Be Deferred. In any case
                           ----------------------------------------
in which this Section 12 shall require that an adjustment in the Exercise Rate
or Exercise Price be made effective as of a record date for a specified event,
the Company may elect to defer until the occurrence of such event (i) issuing to
the Holder of any Warrant exercised after such record date the Warrant Shares
and other capital stock of the Company, if any, issuable upon such exercise over
and above the Warrant Shares and other capital stock of the Company, if any,
issuable upon such exercise on the basis of the Exercise Rate prior to such
adjustment, and (ii) paying to such Holder any amount in cash in lieu of a
fractional share pursuant to Section 13 hereof; provided, however, that the
                                                --------  -------
Company shall deliver to the Warrant Agent and shall cause the Warrant Agent, on
behalf of and at the expense of the Company, to deliver to such Holder a due
bill or other appropriate instrument evidencing such

                                      17
<PAGE>

Holder's right to receive such additional Warrant Shares, other capital stock
and cash upon the occurrence of the event requiring such adjustment.

                  (i) Reorganizations. In case of (i) any capital
                      ---------------
reorganization, other than in the cases referred to in Section 12(a) and (b)
hereof and other than any capital reorganization that does not result in any
reclassification of the outstanding shares of Common Stock into shares of other
stock or other securities or property, or (ii) the consolidation or merger of
the Company with or into another corporation (other than a merger or
consolidation in which the Company is the continuing corporation and which does
not result in any reclassification of the outstanding shares of Common Stock
into shares of other stock or other securities or property), or (iii) the sale
of all or substantially all of the assets of the Company (collectively such
actions being hereinafter referred to as "Reorganizations"), there shall
                                          ---------------
thereafter be deliverable upon exercise of any Warrant in accordance with the
terms hereof (in lieu of the number of shares of Common Stock theretofore
deliverable) the number of shares of stock or other securities or property to
which a holder of the number of shares of Common Stock that would otherwise have
been deliverable upon the exercise of such Warrant would have been entitled upon
such Reorganization if the Exercisability Date had occurred and such Warrant had
been exercised in full immediately prior to such Reorganization. In case of any
Reorganization, appropriate adjustment, as determined in good faith by the
board of directors of the Company, whose determination shall be described in a
duly adopted resolution certified by the Company's Secretary or Assistant
Secretary, shall be made in the application of the provisions herein set forth
with respect to the rights and interests of Holders so that the provisions set
forth herein shall thereafter be applicable, as nearly as possible, in relation
to any such shares or other securities or property thereafter deliverable upon
exercise of Warrants.

                  The Company shall not effect any such Reorganization unless
prior to or simultaneously with the consummation thereof the successor
corporation (if other than the Company) resulting from such Reorganization or
the corporation or other entity purchasing such assets shall expressly assume,
by a supplemental warrant agreement or other acknowledgment executed and
delivered to the Warrant Agent, the obligation to deliver to the Warrant Agent
and to cause the Warrant Agent to deliver to each such Holder such shares of
stock, securities or assets as, in accordance with the foregoing provisions,
such Holder may be entitled to purchase in accordance with the terms hereof upon
the occurrence of the Exercisability Date, and

                                      18
<PAGE>

the due and punctual performance and observance of each and every covenant,
condition, obligation and liability under this Agreement to be performed and
observed by the Company in the manner prescribed herein.

                  The foregoing provisions of this Section 12(i) shall apply to
successive Reorganization transactions.

                  (j)      Form of Warrants. Irrespective of any adjustments in
                           ----------------
the number or kind of shares purchasable upon the exercise of the Warrants,
Warrants theretofore or thereafter issued may continue to express the same price
and number and kind of shares as are stated in the Warrants initially issuable
pursuant to this Agreement.

                  (k)      Warrant Agent's Disclaimer.  The Warrant Agent has no
                           --------------------------
duty to determine when an adjustment under this Section 12 should be made, how
it should be made or what it should be. The Warrant Agent has no duty to
determine whether any provisions of a supplemental warrant agreement under
subsection (i) of this Section 12 are correct. The Warrant Agent makes no
representation as to the validity or value of any securities or assets issued
upon exercise of Warrants. The Warrant Agent shall not be responsible for the
Company's failure to comply with this Section 12.

                  (l)      Miscellaneous. For purpose of this Section 12 the
                           -------------
term "shares of Common Stock" shall mean (i) shares of the class of stock
      ----------------------
designated as the Common Stock, par value $.01 per share, of the Company as of
the date of this Agreement, and (ii) shares of any other class of stock
resulting from successive changes or reclassification of such shares consisting
solely of changes in par value, or from par value to no par value, or from no
par value to par value. In the event that at any time, as a result of an
adjustment made pursuant to this Section 12, the Holders of Warrants shall
become entitled to purchase any securities of the Company other than, or in
addition to, shares of Common Stock, thereafter the number or amount of such
other securities so purchasable upon exercise of each Warrant shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Warrant Shares contained in
subsections (a) through (l) of this Section 12, inclusive, and the provisions of
Sections 7, 8, 10 and 13 with respect to the Warrant Shares or the Common Stock
shall apply on like terms to any such other securities.

                                      19
<PAGE>

                  Section 13. Fractional Interests. The Company shall not be
                              --------------------
required to issue fractional Warrant Shares on the exercise of Warrants. If more
than one Warrant shall be presented for exercise in full at the same time by the
same Holder, the number of full Warrant Shares which shall be issuable upon the
exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section 13,
be issuable on the exercise of any Warrants (or specified portion thereof), the
Company shall pay an amount in cash equal to the excess of the Current Market
Value of a Warrant Share over the Exercise Price on the day immediately
preceding the date the Warrant is presented for exercise, multiplied by such
fraction.

                  Section 14. Notices to Warrant Holders; Reservation of
                              ------------------------------------------
Dividends. Upon any adjustment pursuant to Section 12 hereof, the Company shall
---------
give prompt written notice of such adjustment to the Warrant Agent and shall
cause the Warrant Agent, on behalf of and at the expense of the Company, within
10 days after notification is received by the Warrant Agent of such adjustment,
to mail by first class mail, postage prepaid, to each Holder a notice of such
adjustment(s) and shall deliver to the Warrant Agent a certificate of the Chief
Financial Officer of the Company, setting forth in reasonable detail (i) the
number of Warrant Shares purchasable upon the exercise of each Warrant and the
Exercise Price of such Warrant after such adjustment(s), (ii) a brief statement
of the facts requiring such adjustment(s) and (iii) the computation by which
such adjustment(s) was made. Where appropriate, such notice may be given in
advance and included as a part of the notice required under the other provisions
of this Section 14.

                  In case the Exercisability Date has occurred and:

                  (a) the Company shall authorize the issuance to all holders of
shares of Common Stock of rights, options or warrants to subscribe for or
purchase shares of Common Stock or of any other subscription rights or warrants;
or

                  (b) the Company shall authorize the distribution to all
holders of shares of Common Stock of evidences of its indebtedness or assets or
cash; or

                                      20
<PAGE>

                  (c) of any consolidation or merger to which the Company is a
party and for which approval of any stockholders of the Company is required, or
of the conveyance or transfer of the properties and assets of the Company
substantially as an entirety, or of any reclassification or change of Common
Stock issuable upon exercise of the Warrants (other than a change in par value,
or from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination), or a tender offer or exchange offer for
shares of Common Stock; or

                  (d) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company; or

                  (e) the Company proposes to take any action that would require
an adjustment to the Exercise Rate pursuant to Section 12 hereof;

then the Company shall give prompt written notice to the Warrant Agent and shall
cause the Warrant Agent, on behalf of and at the expense of the Company to give
to each of the registered holders of the Warrant Certificates at his, her or its
address appearing on the Warrant Register, at least 30 days (or 20 days in any
case specified specified, or the date of the event in the case of events for
which there is no record date, by first-class mail, postage prepaid, a written
notice stating (i) the date as of which the holders of record of shares of
Common Stock to be entitled to receive any such rights, options, warrants or
distribution are to be determined, or (ii) the initial expiration date set forth
in any tender offer or exchange offer for shares of Common Stock, or (iii) the
date on which any such consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up is expected to become effective or consummated, and
the date as of which it is expected that holders of record of shares of Common
Stock shall be entitled to exchange such shares for securities or other
property, if any, deliverable upon such reclassification, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up. The failure by the
Company or the Warrant Agent to give such notice or any defect therein shall not
affect the legality or validity of any distribution, right, option, warrant,
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up, or the vote upon any action.

                  The Company shall give prompt written notice to the Warrant
Agent and shall cause the Warrant Agent, on behalf of and at the expense of the
Company

                                      21
<PAGE>

to give to each Holder written notice of any determination to make a
distribution or dividend to the holders of its Common Stock of any assets
(including cash (other than any Ordinary Cash Distribution)), debt securities,
preferred stock, or any rights or warrants to purchase debt securities,
preferred stock, assets or other securities (other than Common Stock, or rights,
options, or warrants to purchase Common Stock) of the Company, which notice
shall state the nature and amount of such planned dividend or distribution and
the record date therefor, and shall be given by the Company at least 20 days
prior to such record date therefor.

                  At any time prior to the date that is 30 Business Days after
the Exercisability Date, with respect to any distribution or dividend made by
the Company to all of the holders of its Common Stock for which notice to the
Holders of the Warrants under this Section 14 would be required had such
dividend or distribution occurred after the Exercisability Date and except for
such distributions or dividends as are provided for in Section 12 hereof, the
Company shall hold in reserve the amount of any such dividend or distribution
that would have been payable to the Holders in respect of their Warrant Shares
had the Holders exercised their Warrants immediately prior to such dividend or
distribution. The Company shall release to each Holder of Warrants his, her or
its pro rata share of such reserved dividends or distributions upon the exercise
of such Holder's Warrants pursuant to Section 7 hereof. Any notice delivered to
the Holders by the Company pursuant to this Section 14 shall state the nature
and amount of such dividend or distribution that shall be held in reserve.

                  Nothing contained in this Agreement or in any Warrant
Certificate shall be construed as conferring upon the Holders the right to vote
or to consent or to receive notice as stockholders in respect of the meetings of
stockholders or the election of directors of the Company or any other matter, or
any rights whatsoever as stockholders of the Company.

                  Section 15. Notices to the Company and Warrant Agent. Any
                              ----------------------------------------
notice or demand authorized by this Agreement to be given or made by the Warrant
Agent or by any Holder to or on the Company shall be sufficiently given or made
when received at the office of the Company expressly designated by the Company
as its office for purposes of this Agreement (until the Warrant Agent is
otherwise notified in accordance with this Section 15 by the Company), as
follows:

                                      22
<PAGE>

                           Endo Pharmaceuticals Holdings Inc.
                           c/o Kelso & Company
                           320 Park Avenue
                           24th Floor
                           New York, New York 10022
                           Attention:   Managing Director
                                        with a copy to General Counsel

                           with a copy to:

                           Skadden, Arps, Slate, Meagher & Flom LLP
                           Four Times Square
                           New York, New York  10036-6522
                           Attention:  Eileen T. Nugent, Esq.

                  Any notice pursuant to this Agreement to be given by the
Company or by any Holder(s) to the Warrant Agent shall be sufficiently given
when received by the Warrant Agent at the address appearing below (until the
Company is otherwise notified in accordance with this Section by the Warrant
Agent).

                           United States Trust Company of New York
                           114 West 47th Street, 25th Floor
                           New York, New York 10036
                           Attention: Corporate Trust Division

                  Section 16. Supplements and Amendments. The Company and the
                              --------------------------
Warrant Agent may from time to time supplement or amend this Agreement without
the approval of any holders of Warrants in order to cure any ambiguity or to
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provision herein, or to make any other provisions in
regard to matters or questions arising hereunder which the Company and the
Warrant Agent may deem necessary or desirable and which shall not in any way
adversely affect the rights of any holder of Warrants hereunder. Any amendment
or supplement to this Agreement that has a material adverse effect on the rights
of holders hereunder shall require the written consent of registered holders of
a majority of the then outstanding Warrants, which consent shall then be
effective against all the Holders of Warrants hereunder. The consent of each
holder of a Warrant affected shall be required for any amendment pursuant to
which the Exercise Price would be increased or the number of

                                      23
<PAGE>

Warrant Shares purchasable upon exercise of Warrants would be decreased (not
including adjustments contemplated hereunder). The Warrant Agent shall be
entitled to receive and shall be fully protected in relying upon an officers'
certificate and opinion of counsel as conclusive evidence that any such
amendment or supplement is authorized or permitted hereunder, that it is not
inconsistent herewith, and that it will be valid and binding upon the Company in
accordance with its terms.

                  Section 17. Concerning the Warrant Agent. The Warrant Agent
                              ----------------------------
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the Holders, by
their acceptance of Warrants, shall be bound:

                  (a) The statements contained herein and in the Warrant
Certificate shall be taken as statements of the Company, and the Warrant Agent
assumes no responsibility for the correctness of any of the same except such as
describe the Warrant Agent or any action taken by it. The Warrant Agent assumes
no responsibility with respect to the distribution of the Warrants except as
herein otherwise provided.

                  (b) The Warrant Agent shall not be responsible for any failure
of the Company to comply with the covenants contained in this Agreement or in
the Warrants to be complied with by the Company.

                  (c) The Warrant Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
(through its employees) or by or through its attorneys or agents (which shall
not include its employees) and shall not be responsible for the misconduct of
any agent appointed with due care.

                  (d) The Warrant Agent may consult at any time with legal
counsel satisfactory to it (who may be counsel for the Company), and the Warrant
Agent shall incur no liability or responsibility to the Company or to any Holder
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in accordance with the opinion or the advice of such counsel.

                  (e) Whenever in the performance of its duties under this
Agreement the Warrant Agent shall deem it necessary or desirable that any fact
or matter

                                      24
<PAGE>

be proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless such evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by the Chairman of the Board, the President,
Chief Financial Officer, one of the Vice Presidents, the Treasurer or the
Secretary of the Company and delivered to the Warrant Agent; and such
certificate shall be full authorization to the Warrant Agent for any action
taken or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.

                  (f) The Company agrees to pay the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent in the performance
of its duties under this Agreement, to reimburse the Warrant Agent for all
expenses, taxes and governmental charges and other charges of any kind and
nature incurred by the Warrant Agent (including reasonable fees and expenses of
the Warrant Agent's counsel and agents) in the performance of its duties under
this Agreement, and to indemnify the Warrant Agent and save it harmless against
any and all liabilities, including judgments, costs and counsel fees, for
anything done or omitted by the Warrant Agent in the performance of its duties
under this Agreement, except as a result of the Warrant Agent's negligence or
bad faith.

                  (g) The Warrant Agent shall be under no obligation to
institute any action, suit or legal proceeding or to take any other action
likely to involve expense unless the Company or one or more Holders shall
furnish the Warrant Agent with reasonable security and indemnity satisfactory to
the Warrant Agent for any costs and expenses which may be incurred, but this
provision shall not affect the power of the Warrant Agent to take such action as
the Warrant Agent may consider proper, whether with or without any such security
or indemnity. All rights of action under this Agreement or under any of the
Warrants may be enforced by the Warrant Agent without the possession of any of
the Warrants or the production thereof at any trial or other proceeding relative
thereto, and any such action, suit or proceeding instituted by the Warrant Agent
shall be brought in its name as Warrant Agent, and any recovery of judgment
shall be for the ratable benefit of the Holders, as their respective rights or
interests may appear.

                  (h) The Warrant Agent and any stockholder, director, officer
or employee of the Warrant Agent may buy, sell or deal in any of the Warrants or
other securities of the Company or become pecuniarily interested in any
transactions in

                                      25
<PAGE>

which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Warrant Agent
under this Agreement or such director, officer or employee. Nothing herein shall
preclude the Warrant Agent from acting in any other capacity for the Company or
for any other legal entity including, without limitation, acting as Transfer
Agent or as a lender to the Company or an Affiliate thereof.

                  (i) The Warrant Agent shall act hereunder solely as agent, and
its duties shall be determined solely by the provisions hereof. The Warrant
Agent shall not be liable for anything which it may do or refrain from doing in
connection with this Agreement except for its own negligence or bad faith.

                  (j) The Warrant Agent will not incur any liability or
responsibility to the Company or to any Holder for any action taken in reliance
on any notice, resolution, waiver, consent, order, certificate, or other paper,
document or instrument reasonably believed by it to be genuine and to have been
signed, sent or presented by the proper party or parties.

                  (k) The Warrant Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Warrant Agent) or in respect of the
validity or execution of any Warrant (except its countersignature thereof); nor
shall the Warrant Agent by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any Warrant
Shares (or other stock) to be issued pursuant to this Agreement or any Warrant,
or as to whether any Warrant Shares (or other stock) will, when issued, be
validly issued, fully paid and nonassessable, or as to the Exercise Price or the
number or amount of Warrant Shares or other securities or other property
issuable upon exercise of any Warrant.

                  (l) The Warrant Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
the Chairman of the Board, the President, any Vice President or the Secretary
of the Company, and to apply to such officers for advice or instructions in
connection with its duties, and shall not be liable for any action taken or
suffered to be taken by it in good faith and without negligence in accordance
with instructions of any such officer or officers.

                                      26
<PAGE>

                  Section 18. Change of Warrant Agent. The Warrant Agent may
                              -----------------------
resign at any time and be discharged from its duties under this Agreement by
giving to the Company 30-days' notice in writing. The Warrant Agent may be
removed by like notice to the Warrant Agent from the Company. If the Warrant
Agent shall resign or be removed or shall otherwise become incapable of acting,
the Company shall appoint a successor to the Warrant Agent. If the Company shall
fail to make such appointment within a period of 30 days after such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Warrant Agent or by any Holder (who shall with such
notice submit his, her or its Warrant for inspection by the Company), then any
Holder may apply to any court of competent jurisdiction for the appointment of a
successor to the Warrant Agent. Pending appointment of a successor warrant
agent, either by the Company or by such court, the duties of the Warrant Agent
shall be carried out by the Company. Any successor warrant agent, whether
appointed by the Company or such a court, shall be a bank or trust company in
good standing, incorporated under the laws of the United States of America or
any State thereof or the District of Columbia and having at the time of its
appointment as warrant agent a combined capital and surplus of at least
$10,000,000. After appointment, the successor warrant agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Warrant Agent without further act or deed; but the former
Warrant Agent shall deliver and transfer to the successor warrant agent any
property at the time held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for such purpose. Failure to file
any notice provided for in this Section 18, however, or any defect therein,
shall not affect the legality or validity of the resignation or removal of the
Warrant Agent or the appointment of the successor warrant agent, as the case may
be. In the event of such resignation or removal, the Company or the successor
warrant agent shall mail by first class mail, postage prepaid, to each Holder,
written notice of such removal or resignation and the name and address of such
successor warrant agent.

                  Section 19. Successors.  All the covenants and provisions of
                              ----------
this Agreement by or for the benefit of the Company, the Warrant Agent or any
holder of Warrants shall bind and inure to the benefit of their respective
successors and assigns hereunder.

                  Section 20. Termination.  This Agreement shall terminate
                              -----------
at 5:00 p.m., New York City time, on the Expiration Date. Notwithstanding the
foregoing,

                                      27
<PAGE>

this Agreement will terminate on any earlier date if all Warrants have been
exercised pursuant to this Agreement.

                  Section 21.  GOVERNING LAW. THIS AGREEMENT AND EACH WARRANT
                               -------------
CERTIFICATE ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE
LAWS OF THE STATE OF NEW YORK AND SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF SAID STATE, WITHOUT REGARD TO THE CONFLICT OF LAW
RULES THEREOF.

                  Section 22.  Benefits of This Agreement. Nothing in this
                               --------------------------
Agreement shall be construed to give to any person or corporation other than
the Company, the Warrant Agent and the registered Holders of the Warrant
Certificates any legal or equitable right, remedy or claim under this Agreement;
but this Agreement shall be for the sole and exclusive benefit of the Company,
the Warrant Agent and the registered Holders of the Warrant Certificates.

                  Section 23.  Counterparts.  This Agreement may be
                               ------------
executed in any number of counterparts and each of such counterparts shall for
all purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.

                  Section 24.  Headings.  The headings in this Agreement
                               --------
are for convenience of reference only and shall not limit or otherwise affect
the meaning hereof.

                                      28
<PAGE>

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

                                       ENDO PHARMACEUTICALS HOLDINGS INC.

                                       By:  ________________________________
                                            Name:
                                            Title:

                                       UNITED STATES TRUST COMPANY OF NEW YORK,
                                            as Warrant Agent

                                       By:  ________________________________
                                            Name:
                                            Title:
<PAGE>

                                                                       EXHIBIT A

                         [Form of Warrant Certificate]
                                    [Face]

     THIS SECURITY IS A GLOBAL CERTIFICATE AND IS REGISTERED IN THE NAME OF A
DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS
SECURITY IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON
OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE WARRANT AGREEMENT, DATED AS OF ____________, 2000, BY AND
BETWEEN THE COMPANY AND THE WARRANT AGENT (THE "WARRANT AGREEMENT"), AND NO
TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY
THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY
TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT
IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE WARRANT AGREEMENT. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (A NEW YORK CORPORATION) ("DTC") TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.

                                      A-1
<PAGE>

                EXERCISABLE ON OR AFTER THE EXERCISABILITY DATE
                         AND ON OR BEFORE JULY 7, 2003

No. __________                                               __________ Warrants

                              Warrant Certificate

                      ENDO PHARMACEUTICALS HOLDINGS INC.

     This Warrant Certificate certifies that _______, or registered assigns, is
the registered holder of Warrants expiring on or before July 7, 2003 (the
"warrants") to purchase shares of Common Stock, par value $.01 per share (the
"Common Stock"), of Endo Pharmaceuticals Holdings Inc., a Delaware corporation
(the "Company"). Each Warrant entitles the holder upon exercise to receive from
the Company on or after the Exercisability Date and on or before 5:00 p.m. New
York City Time on July 7, 2003 (the six-month anniversary of the Exercisability
Date), (a) 0.4166674 fully paid and nonassessable shares of Common Stock (each
such share, a "Warrant Share") in the event the Adjustment Event (as defined in
that certain Agreement and Plan of Merger, dated as of November 26, 1999, as may
be amended and restated from time to time, by and among the Company, Endo Inc.,
a Delaware corporation and wholly owned subsidiary of the Company, and Algos
Pharmaceutical Corporation, a Delaware corporation) has not occurred prior to
such time or (b) 0.2500005 Warrant Shares in the event the Adjustment Event has
occurred prior to such time, in either case, at the initial exercise price (the
"Exercise Price") equal to $0.01 payable upon surrender of this Warrant
Certificate and payment of the Exercise Price in the manner set forth in the
Warrant Agreement, subject only to the conditions set forth herein and in the
Warrant Agreement referred

------------------
     4This number shall be adjusted in the final Agreement and Warrants in order
to reflect that at the Effective Time the aggregate number on which it is based,
when taken together with the shares of Parent Common Stock held by Persons who
had been holders of Parent Common Stock immediately prior to the Effective Time,
shall equal 85% of the shares of Parent Common Stock on a fully diluted basis
(excluding the effect of the Algos Warrants as if no Adjustment Event had
occurred).

     5This number shall be adjusted in the final Agreement and Warrants in order
to reflect that at the Effective Time the aggregate number on which it is based,
when taken together with the shares of Parent Common Stock held by Persons who
had been holders of Parent Common Stock immediately prior to the Effective Time,
shall equal 80% of the shares of Parent Common Stock on a fully diluted basis
(excluding the effect of the Algos Warrants and after giving effect to the
Adjustment Event as if it had occurred).

                                      A-2
<PAGE>

to on the reverse hereof. The Exercise Price and number of Warrant Shares
issuable upon exercise of the Warrants are subject to adjustment upon the
occurrence of certain events as set forth in the Warrant Agreement.

     No Warrant may be exercised before the Exercisability Date or after 5:00
p.m., New York City Time, on July 7, 2003 and to the extent not exercised by
such time such Warrants shall become void.

     This Warrant Certificate shall not be valid unless countersigned by the
Warrant Agent, as such term is used in the Warrant Agreement.

     THIS WARRANT CERTIFICATE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.

                                      A-3
<PAGE>

     IN WITNESS WHEREOF, Endo Pharmaceuticals Holdings Inc. has caused this
Warrant Certificate to be signed by an officer and by its Secretary, each by a
facsimile of his or her signature, and has caused a facsimile of its corporate
seal to be affixed hereunto or imprinted hereon.

Dated:      , ____

                                            ENDO PHARMACEUTICALS HOLDINGS INC.

                                            By:      __________________________
                                                     Name:
                                                     Title:

                                            By:      __________________________
                                                     Name:
                                                     Title:   Secretary

Countersigned:

UNITED STATES TRUST COMPANY
OF NEW YORK,
 as Warrant Agent

By:      ____________________________
         Name:
         Title:

                                      A-4
<PAGE>

                         [Form of Warrant Certificate]

                                   [Reverse]

     The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring July 7, 2003, entitling the holder on
exercise to receive shares of Common Stock, par value $.01 per share, of the
Company (the "Common Stock"), and are issued or to be issued pursuant to a
Warrant Agreement dated as of ________ __, 2000 (the "Warrant Agreement"), duly
executed and delivered by the Company to United States Trust Company of New
York, as warrant agent (the "Warrant Agent"), which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument and is hereby
referred to for a description of the rights, limitation of rights, obligations,
duties and immunities thereunder of the Warrant Agent, the Company and the
holders (the words "holders" or "holder" meaning the registered holders or
registered holder) of the Warrants. A copy of the Warrant Agreement may be
obtained by the holder hereof upon written request to the Company.

     Warrants may be exercised at any time on or after the "Exercisability Date"
and on or before July 7, 2003. The holder of Warrants evidenced by this Warrant
Certificate may exercise them by surrendering this Warrant Certificate, with the
form of election to purchase set forth hereon properly completed and executed,
together with payment in the manner provided for in the Warrant Agreement at the
office of the Warrant Agent. In the event that upon any exercise of Warrants
evidenced hereby, the number of Warrants exercised shall be less than the total
number of Warrants evidenced hereby, there shall be issued to the holder hereof
or his, her or its assignee a new Warrant Certificate evidencing the number of
Warrants not exercised.

     The Warrant Agreement provides that upon the occurrence of certain events
the number of Warrants set forth on the face hereof and the Exercise Price may,
subject to certain conditions, be adjusted. No fractions of a share of Common
Stock will be issued upon the exercise of any Warrant, but the Company will pay
the cash value thereof determined as provided in the Warrant Agreement.

     Warrant Certificates, when surrendered at the office of the Warrant Agent
by the registered holder thereof in person or by legal representative or
attorney

                                      A-5
<PAGE>

duly authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.

     Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.

     The Company and the Warrant Agent may deem and treat the registered
holder(s) thereof as the absolute owner(s) of this Warrant Certificate (notwith-
standing any notation of ownership or other writing hereon made by anyone), for
the purpose of any exercise hereof, of any distribution to the holder(s) hereof,
and for all other purposes, and neither the Company nor the Warrant Agent shall
be affected by any notice to the contrary. Neither the Warrants nor this Warrant
Certificate entitles any holder hereof to any rights of a stockholder of the
Company.

                                      A-6
<PAGE>

                        [Form of Election to Purchase]

                   (To Be Executed upon Exercise of Warrant)

     The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive _____shares of Common Stock
and herewith tenders payment for such shares to the order of Endo
Pharmaceuticals Holdings Inc. in the amount of $______ payable in (select one or
more: (i) cash and/or (ii) pursuant to a Cashless Exercise) in accordance with
the terms hereof and of the Warrant Agreement. The undersigned requests that a
certificate for such shares be registered in the name of _________, whose
address is ________ and that such shares be delivered to ________ whose address
is ________. If said number of shares is less than all of the shares of Common
Stock purchasable hereunder, the undersigned requests that a new Warrant
Certificate representing the remaining balance of such shares be registered in
the name of ________, whose address is ________, and that such Warrant
Certificate be delivered to ________, whose address is ________.

                                                     Signature:

Date:

                                                     Signature Guaranteed:

                                      A-7
<PAGE>

                SCHEDULE OF EXCHANGES OF CERTIFICATED WARRANTS

     The following exchanges of a part of this Global Warrant for certificated
Warrants have been made:

<TABLE>
<CAPTION>
                                                                 Number of
                                                                 Warrants of
                      Amount of             Amount of            this Global
                      decrease in           increase in          Warrant               Signature of
                      Number of             Number of            following             authorized
Date of               Warrants of this      Warrants of this     such decrease         officer of
Exchange              Global Warrant        Global Warrant       (or increase)         Warrant Agent
-----------------------------------------------------------------------------------------------------------
<S>                   <C>                   <C>                  <C>                   <C>
</TABLE>

                                      A-8
<PAGE>

                                                                       EXHIBIT B

                   CERTIFICATE TO BE DELIVERED UPON EXCHANGE
                    OR REGISTRATION OF TRANSFER OF WARRANTS

Re:      Warrants to Purchase Common Stock (the "Warrants") of Endo
         Pharmaceuticals Holdings Inc.

                 This Certificate relates to Warrants held in* ___book-entry or
* ____ certificated form by ____________ (the "Transferor").

The Transferor:*

                 [ ] has requested the Warrant Agent by written order to deliver
in exchange for its beneficial interest in the Global Warrant held by the
depository a Warrant or Warrants in definitive, registered form equal to its
beneficial interest in Warrants represented by such Global Warrant (or the
portion thereof indicated above); or

                 [ ] has requested the Warrant Agent by written order to
exchange or register the transfer of a Warrant or Warrants.

                                          ---------------------------
                                          [INSERT NAME OF TRANSFEROR]

                                          By: _______________________

Date:    __________________

         *Check applicable box.

<PAGE>

                            INDEX OF DEFINED TERMS
                            ----------------------
Affiliate.....................................................................16
Agreement......................................................................1
Algos..........................................................................1
Business Day...................................................................9
Cashless Exercise..............................................................9
closing bid price.............................................................16
Common Stock...................................................................1
Company........................................................................1
Current Market Value..........................................................15
Definitive Warrants............................................................2
Exchange Act..................................................................16
Exercisability Date............................................................8
Exercise Price.................................................................9
Exercise Rate.................................................................12
Expiration Date................................................................7
FDA............................................................................8
Fully Diluted Shares..........................................................15
Global Warrants................................................................1
Holders........................................................................3
Independent Financial Expert..................................................16
Legal Holiday..................................................................9
Merger Agreement...............................................................1
Ordinary Cash Distribution....................................................17
Reorganizations...............................................................18
Security......................................................................15
shares of Common Stock........................................................20
Sub............................................................................1
Time of Determination.........................................................13
Transfer Agent................................................................11
Warrant........................................................................1
Warrant Agent..................................................................1
Warrant Certificates...........................................................1
Warrant Register...............................................................3
Warrant Shares.................................................................1
Warrants.......................................................................1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00075-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00075-of-00352.parquet"}]]