<PAGE>
                                                                   EXHIBIT 10.15

                               WARRANT TO PURCHASE
                     COMMON STOCK, PAR VALUE $.01 PER SHARE

                                       OF

                              HALSEY DRUG CO., INC.

THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") NOR UNDER
ANY STATE SECURITIES LAW AND MAY NOT BE PLEDGED, SOLD, ASSIGNED, HYPOTHECATED OR
OTHERWISE TRANSFERRED UNTIL (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS
EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR (2) THE
COMPANY RECEIVES AN OPINION OF COUNSEL TO THE COMPANY OR OTHER COUNSEL TO THE
HOLDER OF SUCH WARRANT REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH WARRANT
AND/OR COMMON STOCK MAY BE PLEDGED, SOLD, ASSIGNED, HYPOTHECATED OR TRANSFERRED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE STATE
SECURITIES LAWS.

                  This certifies that, for value received, WATSON
PHARMACEUTICALS, INC., or its registered assigns ("Warrantholder"), is entitled
to purchase from HALSEY DRUG CO., INC. (the "Company"), subject to the
provisions of this Warrant, at any time during the Exercise Period (as
hereinafter defined) 10,700,665 shares of the Company's Common Stock, par value
$.01 per share ("Warrant Shares"). The purchase price payable upon the exercise
of this Warrant shall be $.34 per Warrant Share. The purchase price and the
number of Warrant Shares which the Warrantholder is entitled to purchase are
subject to adjustment upon the occurrence of the contingencies set forth in this
Warrant, and as adjusted from time to time, such purchase price is hereinafter
referred to as the "Warrant Price".

                  For purposes of this Warrant, the term "Exercise Period" means
the period commencing on the date of issuance of this Warrant and ending on
December 31, 2009.

                  This Warrant is subject to the following terms and conditions:

                  1.       Exercise of Warrant.

                           (a)       This Warrant may be exercised in whole
or in part but not for a fractional share. Upon delivery of this Warrant at the
offices of the Company or at such other address as the Company may designate by
notice in writing to the registered holder hereof with the Subscription Form
annexed hereto duly executed, accompanied by payment of the Warrant Price for
the number of Warrant Shares purchased (in cash, by certified, cashier's or
other check acceptable to the Company), the registered holder of this Warrant
shall be entitled to receive a certificate or certificates for the Warrant
Shares so purchased. Such certificate or certificates shall be promptly

                                        1
<PAGE>
delivered to the Warrantholder. Upon any partial exercise of this Warrant, the
Company shall execute and deliver a new Warrant of like tenor for the balance of
the Warrant Shares purchasable hereunder.

                           (b)      In lieu of exercising this Warrant
pursuant to Section 1(a), the holder may elect to receive shares of Common Stock
equal to the value of this Warrant determined in the manner described below (or
any portion thereof remaining unexercised) upon delivery of this Warrant at the
offices of the Company or at such other address as the Company may designate by
notice in writing to the registered holder hereof with the Notice of Cashless
Exercise Form annexed hereto duly executed. In such event the Company shall
issue to the holder a number of shares of the Company's Common Stock computed
using the following formula:

                                 X = Y (A-B)
                                     -------
                                        A

Where X = the number of shares of Common Stock to be issued to the holder.

      Y = the number of shares of Common Stock purchasable under this Warrant
            (at the date of such calculation).

      A = the Market Value of the Company's Common Stock on the business day
          immediately preceding the day on which the Notice of Cashless Exercise
          is received by the Company.

      B = Warrant Price (as adjusted to the date of such calculation).

                           (c)      The Warrant Shares deliverable hereunder
shall, upon issuance, be fully paid and non-assessable and the Company agrees
that at all times during the term of this Warrant it shall cause to be reserved
for issuance such number of shares of its Common Stock as shall be required for
issuance and delivery upon exercise of this Warrant.

                           (d)      For purposes of Section 1(b) of this
Warrant, the Market Value of a share of Common Stock on any date shall be equal
to (i) the closing sale price per share as published by a national securities
exchange on which shares of Common Stock are traded (an "Exchange") on such date
or, if there is no sale of Common Stock on such date, the average of the bid and
asked prices on such Exchange at the close of trading on such date or, (ii) if
shares of Common Stock are not listed on an Exchange on such date, the closing
price per share as published on the National Association of Securities Dealers
Automatic Quotation System ("NASDAQ") National Market System if the shares are
quoted on such system on such date, or (iii) the average of the bid and asked
prices in the over-the-counter market at the close of trading on such date if
the shares are not traded on an Exchange or listed on the NASDAQ National Market
System, or (iv) if the security is not traded on an Exchange or in the
over-the-counter market, the fair market value of a share of Common Stock on
such date as determined in good faith by the Board of Directors of the Company.
If the holder disagrees with the determination of the Market Value of any
securities of the Common Stock determined by the Board of Directors under
Section 1(d)(iv) the Market Value shall be

                                        2
<PAGE>
determined by an independent appraiser acceptable to the Company and the holder.
If they cannot agree on such an appraiser, then each of the Company and the
holder shall select an independent appraiser, such two appraisers shall select a
third independent appraiser and Market Value shall be the median of the
appraisals made by such appraisers. If there is one appraiser, the cost of the
appraisal shall be shared equally between the Company and the holder. If there
are three appraisers, each of the Company and the holder shall pay for its own
appraiser and shall share equally the cost of the third appraiser.

                  2.       Transfer or Assignment of Warrant.

                           (a)      Any assignment or transfer of this
Warrant shall be made by surrender of this Warrant at the offices of the Company
or at such other address as the Company may designate in writing to the
registered holder hereof with the Assignment Form annexed hereto duly executed
and accompanied by payment of any requisite transfer taxes, and the Company
shall, without charge, execute and deliver a new Warrant of like tenor in the
name of the assignee for the portion so assigned in case of only a partial
assignment, with a new Warrant of like tenor to the assignor for the balance of
the Warrant Shares purchasable.

                           (b)      Prior to any assignment or transfer of this
Warrant, the holder thereof shall deliver an opinion of counsel to the Company
to the effect that the proposed transfer may be effected without registration
under the Act. Each Warrant issued upon or in connection with such transfer
shall bear the restrictive legend set forth on the front of this Warrant unless,
in the opinion of the Company's counsel, such legend is no longer required to
insure compliance with the Act.

                  3.       Adjustments to Warrant Price and Warrant Shares --
Anti-Dilution Provisions. In order to prevent dilution of the exercise right
granted hereunder, the Warrant Price shall be subject to adjustment from time to
time in accordance with this Section 3.

                  The Warrant Price in effect at the time of the exercise of
this Warrant shall be subject to adjustment from time to time as follows:

                  (a)      In the event that the Company shall at any time: (i)
declare or pay to the holders of the Common Stock a dividend payable in any kind
of shares of capital stock of the Company; or (ii) change or divide or otherwise
reclassify its Common Stock into the same or a different number of shares with
or without par value, or in shares of any class or classes; or (iii) transfer
its property as an entirety or substantially as an entirety to any other company
or entity; or (iv) make any distribution of its assets to holders of its Common
Stock as a liquidation or partial liquidation dividend or by way of return of
capital; then, upon the subsequent exercise of this Warrant, the holder thereof
shall receive, in addition to or in substitution for the shares of Common Stock
to which it would otherwise be entitled upon such exercise, such additional
shares of stock or scrip of the Company, or such reclassified shares of stock of
the Company, or such shares of the securities or property of the company
resulting from transfer, or such assets of the Company, which it would have been
entitled to receive had it exercised these rights prior to the happening of any
of the foregoing events. If, at any time during the Exercise Period, the number
of outstanding shares of Common Stock is (i) increased by a stock dividend
payable in shares of Common Stock or by a

                                        3
<PAGE>
subdivision or split up of shares of Common Stock, or (ii) decreased by a
combination of shares of Common Stock, then, simultaneously with the occurrence
of such event, the Warrant Price shall be adjusted automatically to a new amount
equal to the product of (A) the Warrant Price in effect on such record date and
(B) the quotient obtained by dividing (x) the number of shares of Common Stock
outstanding on such record date (without giving effect to the events referred to
in the foregoing clauses (i) or (ii)) by (y) the number of shares of Common
Stock which would be outstanding immediately after the event referred to in the
foregoing clauses (i) or (ii).

                  (b)      Until such time as the Company completes a Subsequent
Material Offering (as defined in Section 3(k) hereof), if the Company shall
grant or issue any shares of Common Stock, or grant or issue any rights or
options for the purchase of, or stock or other securities convertible into,
Common Stock (such convertible stock or securities being herein collectively
referred to as "Convertible Securities"), including in connection with a
Subsequent Material Offering, other than:

                  (i)      shares issued in a transaction described in
                           subsection (d) of this Section 3; or

                  (ii)     shares issued, subdivided or combined in transactions
                           described in Section 3(a) if and to the extent that
                           the number of shares of Common Stock received upon
                           exercise of this Warrant shall have been previously
                           adjusted pursuant to Section 3(a) as a result of such
                           issuance, subdivision or combination of such
                           securities;

for a consideration per share which is less than the Warrant Price in effect
immediately prior to such issuance or sale (the "Applicable Warrant Price"),
then the Applicable Warrant Price in effect immediately prior to such issuance
or sale shall, and thereafter, except as otherwise provided in Subsection 3(c)
hereof, upon each issuance or sale for a consideration per share which is less
than the Applicable Warrant Price, the Applicable Warrant Price shall,
simultaneously with such issuance or sale, be adjusted, so that such Applicable
Warrant Price shall equal (A) the price per share received by the Company, in
the case of the issuance of Common Stock by the Company, or (B) the exercise or
conversion price of the Convertible Securities issued by the Company, as
applicable.

                  (c)      If at any time following the Company's completion of
a Subsequent Material Offering the Company shall grant or issue any shares of
Common Stock, or grant or issue any Convertible Securities, other than:

                  (i)      shares issued in a transaction described in
                           subsection (d) of this Section 3; or

                  (ii)     shares issued, subdivided or combined in transactions
                           described in Section 3(a) if and to the extent that
                           the number of shares of Common Stock received upon
                           conversion of this Debenture shall have been
                           previously adjusted pursuant to

                                        4
<PAGE>
                           Section 3(a) as a result of such issuance,
                           subdivision or combination of such securities;

for a consideration per share which is less than the Fair Market Value (as
hereinafter defined) of the Common Stock, then the Applicable Warrant Price
shall, and thereafter upon each issuance or sale for a consideration per share
which is less than the Fair Market Value of the Common Stock, the Applicable
Warrant Price shall, simultaneously with such issuance or sale, be adjusted, so
that the Applicable Warrant Price shall equal a price determined by multiplying
the Applicable Warrant Price by a fraction, of which:

                  (A)      the numerator of which shall be the sum of (x) the
                  total number of shares of Common Stock outstanding when the
                  Applicable Warrant Price became effective, plus (y) the number
                  of shares of Common Stock which the aggregate consideration
                  received, as determined in accordance with Section 3(e) for
                  the issuance or sale of such additional Common Stock or
                  Convertible Securities deemed to be an issuance of Common
                  Stock as provided in Section 3(f), would purchase (including
                  any consideration received by the Company upon the issuance of
                  any shares of Common Stock since the date the Applicable
                  Warrant Price became effective not previously included in any
                  computation resulting in an adjustment pursuant to this
                  subsection 3(c)) at the Fair Market Value of the Common Stock;
                  and

                  (B)      the denominator of which shall be the total number of
                  shares of Common Stock outstanding (or deemed to be
                  outstanding as provided in subsection 3(f) hereof) immediately
                  after the issuance or sale of such additional shares.

                  For purposes of this Section 3, "Fair Market Value" shall mean
the average of the closing price of the Common Stock for each of the twenty (20)
consecutive trading days prior to such issuance or sale on an Exchange or if
shares of Common Stock are not listed on an Exchange during such period, the
closing price per share as reported by NASDAQ National Market System if the
shares are quoted on such system during such period, or the average of the bid
and asked prices of the Common Stock in the over-the-counter market at the close
of trading during such period if the shares are not traded on an Exchange or
listed on the NASDAQ National Market System, or if the Common Stock is not
traded on an Exchange or in the over-the-counter market, the fair market value
of a share of Common Stock during such period as determined in good faith by the
Board of Directors.

                  If, however, the Applicable Warrant Price thus obtained would
result in the issuance of a lesser number of shares upon conversion than would
be issued at the initial Warrant Price, the Applicable Warrant Price shall be
such initial Warrant Price.

                  Upon each adjustment of the Warrant Price solely pursuant to
this subsection 3(c), the Warrantholder shall thereafter be entitled to acquire
upon exercise under Section 1, at the Applicable Warrant Price, the number of
shares of Common Stock obtainable by multiplying the Warrant Price in effect
immediately prior to such adjustment by the number of shares of Common

                                        5
<PAGE>
Stock acquirable immediately prior to such adjustment and dividing the product
thereof by the Applicable Warrant Price resulting from such adjustment.

                  (d)      Anything in this Section 3 to the contrary
notwithstanding, no adjustment in the Warrant Price shall be made in connection
with:

                  (i)      the grant, issuance or exercise of any Convertible
                           Securities pursuant to the Company's qualified or
                           non-qualified Employee Stock Option Plans or any
                           other bona fide employee benefit plan or incentive
                           arrangement, adopted or approved by the Company's
                           Board of Directors or approved by the Company's
                           shareholders, as may be amended from time to time, or
                           under any other bona fide employee benefit plan
                           hereafter adopted by the Company's Board of
                           Directors; or

                  (ii)     the grant, issuance or exercise of any Convertible
                           Securities in connection with the hire or retention
                           of any officer, director or key employee of the
                           Company, provided such grant is approved by the
                           Company's Board of Directors; or

                  (iii)    the issuance of any shares of Common Stock or
                           Convertible Securities issued in satisfaction of
                           interest payments on all of the Company's 5%
                           convertible senior secured debentures due March 31,
                           2006, including (i) the 5% convertible senior
                           secured debentures issued pursuant to the Debenture
                           and Warrant Purchase Agreement dated as of March 10,
                           1998 between the Company, Galen Partners III, L.P.
                           and the other signatories thereto, the Debenture and
                           Warrant Purchase Agreement dated as of May 26, 1999
                           between the Company, Oracle Strategic Partners, L.P.
                           and the other signatories thereto, and the Debenture
                           Purchase Agreement dated December 20, 2002 between
                           the Company, Care Capital LLC, Essex Woodlands
                           Health Ventures Fund V and the other signatories
                           thereto, and (ii) the issuance of Common Stock or
                           Convertible Securities issued in satisfaction of
                           interest payments on debentures instruments issued
                           by the Company in satisfaction of interest payments
                           on the Company's 5% convertible senior secured
                           debentures due March 31, 2006; or

                  (iv)     the issuance of any shares of Common Stock pursuant
                           to the grant or exercise or conversion of Convertible
                           Securities outstanding as of the date hereof
                           (exclusive of any subsequent amendments thereto); or

                  (v)      the issuance of the Company's 5% convertible senior
                           secured debentures due March 31, 2006 issued pursuant
                           to that certain Debenture Purchase Agreement dated
                           December 20, 2002 between the Company, Care Capital,
                           LLC, Essex Woodlands Health Ventures Fund V and the
                           other purchasers listed on the signature page
                           thereto; or

                                        6
<PAGE>
                  (vi)     the issuance of 5,970,083 shares of the Company's
                           Common Stock pursuant to that certain Warrant
                           Recapitalization Agreement dated December 20, 2002
                           between the Company, Oracle Strategic Partners, L.P.
                           and the other parties listed on the signature page
                           thereto.

                  (e)      For the purpose of Sections 3(b), 3(c) and 3(d), the
following provisions shall also be applied:

                  (i)      In case of the issuance or sale of additional shares
                           of Common Stock for cash, the consideration received
                           by the Company therefor shall be deemed to be the
                           amount of cash received by the Company for such
                           shares, before deducting therefrom any commissions,
                           compensation or other expenses paid or incurred by
                           the Company for any underwriting of, or otherwise in
                           connection with, the issuance or sale of such shares.

                  (ii)     In the case of the issuance of Convertible
                           Securities, the consideration received by the Company
                           therefor shall be deemed to be the amount of cash, if
                           any, received by the Company for the issuance of such
                           rights or options, plus the minimum amounts of cash
                           and fair market value of other consideration, if any,
                           payable to the Company upon the exercise of such
                           rights or options or payable to the Company upon
                           conversion of such Convertible Securities.

                  (iii)    In the case of the issuance of shares of Common Stock
                           or Convertible Securities for a consideration in
                           whole or in part, other than cash, the consideration
                           other than cash shall be deemed to be the fair
                           market value thereof as reasonably determined in
                           good faith by the Board of Directors of the Company
                           (irrespective of accounting treatment thereof);
                           provided, however, that if such consideration
                           consists of the cancellation of debt issued by the
                           Company, the consideration shall be deemed to be the
                           amount the Company received upon issuance of such
                           debt (gross proceeds) plus accrued interest and, in
                           the case of original issue discount or zero coupon
                           indebtedness, accrued value to the date of such
                           cancellation, but not including any premium or
                           discount at which the debt may then be trading or
                           which might otherwise be appropriate for such class
                           of debt.

                  (iv)     In case of the issuance of additional shares of
                           Common Stock upon the conversion or exchange of any
                           obligations (other than Convertible Securities), the
                           amount of the consideration received by the Company
                           for such Common Stock shall be deemed to be the
                           consideration received by the Company for such
                           obligations or shares so converted or exchanged,
                           before deducting from such consideration so received
                           by the Company any expenses or commissions or
                           compensation incurred or paid by the Company for any
                           underwriting of, or otherwise in connection with,
                           the issuance or sale of such

                                        7
<PAGE>
                           obligations or shares, plus any consideration
                           received by the Company in connection with such
                           conversion or exchange other than a payment in
                           adjustment of interest and dividends. If
                           obligations or shares of the same class or series of
                           a class as the obligations or shares so converted or
                           exchanged have been originally issued for different
                           amounts of consideration, then the amount of
                           consideration received by the Company upon the
                           original issuance of each of the obligations or
                           shares so converted or exchanged shall be deemed to
                           be the average amount of the consideration received
                           by the Company upon the original issuance of all
                           such obligations or shares. The amount of
                           consideration received by the Company upon the
                           original issuance of the obligations or shares so
                           converted or exchanged and the amount of the
                           consideration, if any, other than such obligations
                           or shares, received by the Company upon such
                           conversion or exchange shall be determined in the
                           same manner as provided in paragraphs (i) and (ii)
                           above with respect to the consideration received by
                           the Company in case of the issuance of additional
                           shares of Common Stock or Convertible Securities.

                  (v)      In the case of the issuance of additional shares of
                           Common Stock as a dividend, the aggregate number of
                           shares of Common Stock issued in payment of such
                           dividend shall be deemed to have been issued at the
                           close of business on the record date fixed for the
                           determination of stockholders entitled to such
                           dividend and shall be deemed to have been issued
                           without consideration; provided, however, that if the
                           Company, after fixing such record date, shall legally
                           abandon its plan to so issue Common Stock as a
                           dividend, no adjustment of the Applicable Conversion
                           Price shall be required by reason of the fixing of
                           such record date.

                  (f)      For purposes of the adjustment provided for in
Sections 3(b) and 3(c) above, if at any time the Company shall issue any
Convertible Securities, the Company shall be deemed to have issued at the time
of the issuance of such Convertible Securities the maximum number of shares of
Common Stock issuable upon conversion of the total amount of such Convertible
Securities.

                  (g)      On the expiration, cancellation or redemption of any
Convertible Securities, the Warrant Price then in effect hereunder shall
forthwith be readjusted to such Warrant Price as would have been obtained (i)
had the adjustments made upon the issuance or sale of such expired, canceled or
redeemed Convertible Securities been made upon the basis of the issuance of only
the number of shares of Common Stock theretofore actually delivered upon the
exercise or conversion of such Convertible Securities (and the total
consideration received therefor) and (ii) had all subsequent adjustments been
made on only the basis of the Warrant Price as readjusted under this Section
3(g) for all transactions (which would have affected such adjusted Warrant
Price) made after the issuance or sale of such Convertible Securities.

                  (h)      Anything in this Section 3 to the contrary
notwithstanding, no adjustment in the Warrant Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in such
Warrant Price; provided, however, that any adjustments which by reason of this

                                        8
<PAGE>
Section 3(h) are not required to be made shall be carried forward and taken into
account in making subsequent adjustments. All calculations under this Section 3
shall be made to the nearest cent.

                  (i)      If, at any time while this Warrant is outstanding,
the Company shall pay any dividend payable in cash or in Common Stock, shall
offer to the holders of its Common Stock for subscription or purchase by them
any shares of stock of any class or any other rights, shall enter into an
agreement to merge or consolidate with another corporation, shall propose any
capital reorganization or reclassification of the capital stock of the Company,
including any subdivision or combination of its outstanding shares of Common
Stock or there shall be contemplated a voluntary or involuntary dissolution,
liquidation or winding up of the Company, the Company shall cause notice thereof
to be mailed to the registered holder of this Warrant at its address appearing
on the registration books of the Company, at least 30 days prior to the record
date as of which holders of Common Stock shall participate in such dividend,
distribution or subscription or other rights or at least 30 days prior to the
effective date of the merger, consolidation, reorganization, reclassification or
dissolution. Upon any adjustment of any Warrant Price, then and in each such
case the Company shall promptly deliver a notice to the registered holder of
this Warrant, which notice shall state the Warrant Price resulting from such
adjustment, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.

                  (j)      If the Company is a party to a merger or other
transaction which reclassifies or changes its outstanding Common Stock, upon
consummation of such transaction this Warrant shall automatically become
exercisable for the kind and amount of securities, cash or other assets which
the holder of this Warrant would have owned immediately after such transaction
if the holder had converted this Warrant at the Warrant Price in effect
immediately before the effective date of the transaction. Concurrently with the
consummation of such transaction, the person obligated to issue securities or
deliver cash or other assets upon exercise of this Warrant shall execute and
deliver to the holder a supplemental Warrant so providing and further providing
for adjustments which shall be as nearly equivalent as may be practical to the
adjustments provided in this Section 3. The successor company shall mail to the
holder a notice describing the supplemental Warrant.

                  If securities deliverable upon exercise of this Warrant, as
provided above, are themselves convertible into or exercisable for the
securities of an affiliate of a corporation formed, surviving or otherwise
affected by the merger or other transaction, that issuer shall join in the
supplemental Warrant which shall so provide. If this Section 3(j) applies,
Section 3(a) does not apply.

                  (k)      For purposes hereof, "Subsequent Material Offering"
shall mean the grant or issuance of shares of Common Stock, or the grant or
issuance of Convertible Securities, during any six (6) month period for an
aggregate gross consideration (determined in accordance with Section 3(e)
hereof) of at least ten million dollars ($10,000,000) for a consideration per
share that is in excess of the then Applicable Exercise Price.

                  4.       Charges, Taxes and Expenses. The issuance of
certificates for Warrant Shares upon any exercise of this Warrant shall be made
without charge to the holder of this Warrant for any tax or other expense in
respect to the issuance of such certificates, all of which taxes and

                                        9
<PAGE>
expenses shall be paid by the Company, and such certificates shall be issued
only in the name of the holder of this Warrant.

                  5.       Miscellaneous.

                           (a)      The terms of this Warrant shall be binding
upon and shall inure to the benefit of any successors or assigns of the Company
and of the holder or holders hereof and of the shares of Common Stock issued or
issuable upon the exercise hereof.

                           (b)      No holder of this Warrant, as such, shall
be entitled to vote or receive dividends or be deemed to be a stockholder of the
Company for any purpose, nor shall anything contained in this Warrant be
construed to confer upon the holder of this Warrant, as such, any rights of a
stockholder of the Company or any right to vote, give or withhold consent to any
corporate action, receive notice of meetings, receive dividends or subscription
rights, or otherwise.

                           (c)      Receipt of this Warrant by the holder
hereof shall constitute acceptance of an agreement to the foregoing terms and
conditions.

                           (d)      The Warrant and the performance of the
parties hereunder shall be construed and interpreted in accordance with the laws
of the State of New York without giving effect to its conflict of laws rules
wherein it was negotiated and executed and the parties hereunder consent and
agree that the State and Federal Courts which sit in the State of New York and
the County of New York shall have exclusive jurisdiction with respect to all
controversies and disputes arising hereunder.

                                       10
<PAGE>
                  IN WITNESS WHEREOF, the Company has caused this Warrant to be
signed by its duly authorized officer and its corporate seal to be affixed
hereto.

Dated as of December  20, 2002

                                     HALSEY DRUG CO., INC.

                                     BY:________________________________________
                                         Name:  Michael Reicher
                                         Title: Chief Executive Officer
<PAGE>
                                SUBSCRIPTION FORM

                    (TO BE EXECUTED BY THE REGISTERED HOLDER
                     IF HE DESIRES TO EXERCISE THE WARRANT)

         To:      HALSEY DRUG CO., INC.

                  The undersigned hereby exercises the right to purchase
_________ shares of Common Stock, par value $.01 per share, covered by the
attached Warrant in accordance with the terms and conditions thereof, and
herewith makes payment of the Warrant Price for such shares in full.

                                       _________________________________________
                                       SIGNATURE

                                       _________________________________________
                                       ADDRESS

                                       _________________________________________

DATED:______________
<PAGE>
                   NOTICE OF EXERCISE OF COMMON STOCK WARRANT
             PURSUANT TO NET ISSUE ("CASHLESS") EXERCISE PROVISIONS

                                                               [ Date ]

<TABLE>
<S>                                    <C>                     <C>
Halsey Drug Co., Inc.                  Aggregate Price of      $________________
a New York corporation                 of Warrant
695 N. Perryville Road                 Aggregate Price Being
Rockford, Illinois 61107               Exercised:              $________________
Attention: _______________

                                       Warrant Price (per
                                       share):                 $________________

                                       Market Value (per
                                       share):                 $________________

                                       Number of Shares of
                                       Common Stock under
                                       this Warrant:           _________________

                                       Number of Shares of
                                       Common Stock to be
                                       Issued Under this
                                       Notice:                 _________________
</TABLE>

                                CASHLESS EXERCISE

Gentlemen:

                  The undersigned, the registered holder of the Warrant to
Purchase Common Stock delivered herewith ("Warrant"), hereby irrevocably
exercises such Warrant for, and purchases thereunder, shares of the Common Stock
of HALSEY DRUG CO., INC., a New York corporation, as provided below. Capitalized
terms used herein, unless otherwise defined herein, shall have the meanings
given in the Warrant. The portion of the Aggregate Price (as hereinafter
defined) to be applied toward the purchase of Common Stock pursuant to this
Notice of Exercise is $______, thereby leaving a remainder Aggregate Price (if
any) equal to $______. Such exercise shall be pursuant to the net issue exercise
provisions of Section 1(b) of the Warrant; therefore, the holder makes no
payment with this Notice of Exercise. The number of shares to be issued pursuant
to this exercise shall be determined by reference to the formula in Section 1(b)
of the Warrant which requires the use of the Market Value (as defined in Section
1(d) of the Warrant) of the Company's Common Stock on the business day
immediately preceding the day on which this Notice is received by the Company.
To the extent the foregoing exercise is for less than the full Aggregate Price
of the Warrant, the remainder of the Warrant representing a number of Shares
equal to the quotient obtained by dividing the remainder of the Aggregate Price
by the Warrant Price (and otherwise of like form, tenor and effect) may be
exercised under Section 1(a) of the Warrant. For purposes of this
<PAGE>
Notice the term "Aggregate Price" means the product obtained by multiplying the
number of shares of Common Stock for which the Warrant is exercisable times the
Warrant Price.

                                       _________________________________________
                                       SIGNATURE

DATE:_______________                   _________________________________________
                                       ADDRESS

                                       2
<PAGE>
                                   ASSIGNMENT

                    (TO BE EXECUTED BY THE REGISTERED HOLDER
                     IF HE DESIRES TO TRANSFER THE WARRANT)

                  FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto________ the right to purchase shares of Common Stock of HALSEY
DRUG CO., INC., evidenced by the within Warrant, and does hereby irrevocably
constitute and appoint_____________ Attorney to transfer the said Warrant on the
books of the Company, with full power of substitution.

                                       _________________________________________
                                       SIGNATURE

                                       _________________________________________
                                       ADDRESS

DATED:______________

IN THE PRESENCE OF:

____________________

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