Letter Agreement Regarding Executive Stock Option Plan Conversion – Endo Pharmaceuticals Inc. and Algos Pharmaceutical Corporation

Summary

This agreement is between Endo Pharmaceuticals Inc., Algos Pharmaceutical Corporation, and certain executives. It outlines the executives' consent to terminate the existing 1997 Executive Stock Option Plan and replace it with a new stock option plan managed by a newly formed LLC. The executives' current options will be converted into options under the new plan, with terms to be agreed upon. After the merger closes, the executives' rights regarding their options will be solely against the LLC, not Endo Holdings. The agreement becomes binding upon signature.

EX-10.4 18 0018.txt LETTER AGREEMENT EXHIBIT 10.4 Endo Pharmaceuticals Inc. 223 Wilmington West Chester Pike Chadds Ford, Pennsylvania 19317 November 26, 1999 Algos Pharmaceutical Corporation 1333 Campus Parkway Neptune, New Jersey 07753 Dear Sirs: In connection with that Agreement and Plan of Merger (the "Merger Agreement"), dated of even date herewith, by and among Endo Pharmaceuticals Holdings Inc. ("Holdings"), Endo Inc. and [Target] Pharmaceutical Corporation, each of the undersigned (collectively, the "Executives") hereby agrees to consent to (a) the termination of the Holdings' 1997 Executive Stock Option Plan, (b) the institution of a stock option plan of a newly formed limited liability company (the "LLC") pursuant to which each of the Executive's stock options will be exercisable only into shares of common stock of Holdings that is owned by the LLC, (c) the conversion of each of the Executive's outstanding options under Holdings' 1997 Executive Stock Option Plan into options under the stock option plan of the LLC and (d) the terms (including, but not limited to, the vesting schedule thereto) of such converted options under the stock option plan of the LLC are to be agreed upon by the Executives and the LLC. Each of the Executives hereby agrees and acknowledges that from and after the closing of the transaction contemplated by the Merger Agreement, the Executive's only recourse upon exercise of such Executive's stock options will be against the LLC and not against Holdings. [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] Algos Pharmaceutical Corporation November __, 1999 Page 2 If the foregoing correctly sets forth our agreement, please so indicate by signing a counterpart of this letter whereupon it shall become a binding agreement between us. Very truly yours, /s/ CAROL A. AMMON ------------------ Carol A. Ammon /s/ MARIANN T. MACDONALD ------------------------ Mariann T. MacDonald /s/ LOUIS J. VOLLMER -------------------- Louis J. Vollmer /s/ JEFFREY R. BLACK -------------------- Jeffrey R. Black /s/ OSAGIE O. IMASOGIE ---------------------- Osagie O. Imasogie /s/ DAVID A. LEE ---------------- David A. Lee