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                                                                   EXHIBIT 10.11

                             STOCK PLEDGE AGREEMENT

         This Stock Pledge Agreement (this "Agreement") is dated as of February
6, 2004 by and between Halsey Drug Co., Inc., a New York corporation (the
"Pledgor"), and Galen Partners III, L.P., a Delaware limited partnership, acting
in its capacity as agent for the Purchasers, as hereinafter defined (the
"Agent"), for the benefit of the Purchasers.

                             PRELIMINARY STATEMENTS

         The Pledgor has entered into a Debenture and Share Purchase Agreement
of even date herewith (as the same may be amended, modified, supplemented or
restated from time to time, the "Purchase Agreement;" terms which are
capitalized in this Agreement and not otherwise defined shall have the meanings
ascribed to them in the Purchase Agreement) with the Purchasers listed on
Exhibit B thereto (the "Purchasers"). It is a condition precedent to the
effectiveness of the Purchase Agreement that the Pledgor shall have executed
this Agreement and made the pledges referred to herein in favor of the Agent,
for the ratable benefit of the Purchasers, as contemplated hereby.

                                    AGREEMENT

         In consideration of the premises and to induce the Purchasers to enter
into the Purchase Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Pledgor hereby
agrees with the Agent as follows:

                                   ARTICLE 1

                             PLEDGE OF PLEDGED STOCK

1.1      DEFINITIONS; INTERPRETATION OF AGREEMENT

         Unless the context otherwise requires, all terms not defined herein or
in the Purchase Agreement shall have the meaning set forth in the New York
Uniform Commercial Code (the "Code"). Acceptance of or acquiescence in a course
of performance rendered under this Agreement shall not be relevant in
determining the meaning of this Agreement even though the accepting or
acquiescing party had knowledge of the nature of the performance and opportunity
for objection.

1.2      PLEDGE OF THE PLEDGED STOCK; POWER OF ATTORNEY

         (a)      As security for the prompt payment and performance when due of
the obligations owing by the Pledgor to the Purchasers under the Purchase
Agreement, the Debentures, the other Transaction Documents (as defined in the
Subordination Agreement) and under the agreements, documents and instruments
delivered by the Pledgor pursuant thereto or in connection therewith
(collectively, the "Obligations"), the Pledgor hereby pledges to the Agent, for
the ratable benefit of the Purchasers, and grants to the Agent, for the ratable
benefit of the Purchasers, a lien on and

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security interest having priority over any and all other security interests
(except as otherwise provided in the Subordination Agreement), in the following
(collectively the "Pledged Collateral"): (i) all of the issued and outstanding
shares of common stock of Houba, Inc. ("Houba"), and Axiom Pharmaceutical
Corporation ("Axiom" and, together with Houba, the "Subsidiaries"), which shares
are more particularly described on Schedule A attached hereto (the "Pledged
Stock"), (ii) all additional shares of common stock at any time issued to the
Pledgor by Houba or Axiom, (iii) the certificates evidencing all Pledged
Collateral, (iv) subject to Section 1.6 hereof, all dividends, cash, securities,
investment property, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the Pledged Stock and such shares and securities, and (v) all proceeds of any
and all Pledged Collateral (including, without limitation, proceeds constituting
any property of the types described above). The Pledgor shall deliver to the
Agent original stock certificates for all of the Pledged Stock, each accompanied
by an undated stock power executed in blank by the Pledgor.

         (b)      The Agent shall have no obligation with respect to the Pledged
Collateral or any other property held or received by it hereunder except to use
reasonable care in the custody thereof. The Agent may hold the Pledged
Collateral in the form in which it is received by it.

         (c)      The Pledgor, to the fullest extent permitted by law, hereby
constitutes and irrevocably appoints the Agent (and any officer or agent of the
Agent, with full power of substitution and revocation) as the Pledgor's true and
lawful attorney-in-fact, in the Pledgor's stead and in the name of the Pledgor
or in the name of the Agent, to transfer, upon the occurrence and during the
continuance of an Event of Default or at any time the Agent, based on all the
facts and circumstances then existing, and in the exercise of its commercially
reasonable credit judgment, believes, and has so notified the Pledgor in
writing, that, in connection with the Purchase Agreement and the agreements,
documents and instruments delivered by the Pledgor pursuant thereto or in
connection therewith, fraud has occurred with respect to the Pledgor or any
other Person controlling, controlled by, or under common control with the
Pledgor which has a material adverse effect on the operations or condition
(financial or otherwise) of the Pledgor and its subsidiaries, taken as a whole
(a "Fraud"), the Pledged Collateral on the books of Houba and Axiom, as
applicable, in whole or in part, to the name of the Agent or such other Person
or Persons as the Agent may designate and, upon the occurrence and during the
continuance of an Event of Default or at any time the Agent, based on all the
facts and circumstances then existing, and in the exercise of its commercially
reasonable credit judgment, believes, and has so notified the Pledgor in
writing, that Fraud has occurred, to take all such other and further actions as
the Pledgor could have taken with respect to the Pledged Collateral which the
Agent in its reasonable judgment determines to be necessary or appropriate to
accomplish the purposes of this Agreement.

         (d)      The powers of attorney granted pursuant to this Agreement and
all authority hereby conferred are granted and conferred solely to protect the
Agent's interests in the Pledged Collateral and shall not impose any duty upon
the attorney-in-fact to exercise such powers. Such powers of attorney shall be
irrevocable prior to the payment in full of the Obligations and shall not be
terminated prior thereto or affected by any act of the Pledgor or other Persons
or by operation of law. The foregoing power of attorney, being coupled with an
interest, is irrevocable so long as any Obligation remains outstanding.

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         (e)      Except to the extent that the Agent releases its pledge of any
of the Pledged Collateral, each Person who shall be a transferee of the
beneficial ownership of any of the Pledged Collateral shall be deemed to have
irrevocably appointed the Agent, with full power of substitution and revocation,
as such Person's true and lawful attorney-in-fact in such Person's name and
otherwise to do any and all acts herein permitted and to exercise any and all
powers herein conferred; provided, however, that no Person shall exercise any
such power of attorney unless an Event of Default shall have occurred and be
continuing or from and after such time as such Person has notified the Pledgor
in writing that based on all the facts and circumstances then existing, and in
the exercise of its commercially reasonable judgment, such Person believes that
Fraud has occurred.

1.3      RIGHTS OF PLEDGOR; VOTING

         (a)      During the term of this Agreement and subject to the
Subordination Agreement, and so long as the Pledgor has not received a Voting
Notice (as defined below) from the Agent following (i) the occurrence and during
the continuance of an Event of Default or (ii) from and after such time as the
Agent determines that based on all the facts and circumstances then existing,
and in the exercise of its commercially reasonable judgment, the Agent believes
that Fraud has occurred, the Pledgor shall have the right to vote any of the
Pledged Collateral in all corporate matters except those which would contravene
this Agreement, the Purchase Agreement or any of the agreements, documents and
instruments delivered by the Pledgor and each Subsidiary pursuant thereto unless
the Agent consents in writing thereto.

         (b)      Subject to the Subordination Agreement, upon the occurrence
and during the continuance of an Event of Default or from and after such time as
the Agent has notified the Pledgor in writing that based on all the facts and
circumstances then existing, and in the exercise of its commercially reasonable
judgment, Agent believes that Fraud has occurred, the Pledgor shall give the
Agent at least fifteen (15) days' prior notice of (i) any meeting of
stockholders of any of the Subsidiaries or any meeting of directors of any of
the Subsidiaries convened for any purpose and (ii) any written consent which the
Pledgor proposes to execute as the stockholder of any of the Subsidiaries or
which any of the representatives of the Pledgor proposes to execute as a
director of any of the Subsidiaries. Subject to the Subordination Agreement,
during the continuance of an Event of Default and from and after such time as
the Agent determines that based on all the facts and circumstances then
existing, and in the exercise of its commercially reasonable judgment, the Agent
believes that Fraud has occurred, the Pledgor hereby authorizes the Agent to
send its agents and representatives to any such meeting of stockholders or
directors of any of the Subsidiaries that the Agent wishes to attend, and agrees
to take such steps as may be necessary to confirm and effectuate such authority,
including, without limitation, causing such Subsidiary to give reasonable prior
written notice to the Agent of the time and place of any such meeting and the
principal actions to be taken thereat.

         (c)      Notwithstanding the occurrence of an Event of Default or the
determination by the Agent that based on all the facts and circumstances then
existing, and in the exercise of its commercially reasonable judgment, the Agent
believes that Fraud has occurred, and subject to the Subordination Agreement,
the Pledgor may continue to exercise the voting rights of the Pledgor as herein
described (and subject to the limitations herein) except to the extent that the
Agent elects to exercise voting power (as determined by it in its sole
discretion) by providing written notice to the

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Pledgor at any time during the continuance of an Event of Default or from and
after such time as the Agent has determined that based on all the facts and
circumstances then existing, and in the exercise of its commercially reasonable
judgment, the Agent believes that Fraud has occurred (a "Voting Notice"),
whereupon the Agent shall have the exclusive right during the continuance of an
Event of Default and after the Agent's determination of Fraud to exercise such
rights to the extent specified in such Voting Notice, and the Pledgor shall take
all such steps as may be necessary to effectuate such rights until the Agent
notifies the Pledgor in writing of the release of such rights. Once any such
Event of Default has been cured or waived and such cure or waiver is confirmed
by the Agent to the Pledgor in writing, any relevant Voting Notice shall be
deemed to be rescinded.

1.4      NO RESTRICTIONS ON TRANSFER

         The Pledgor warrants and represents that, except as provided pursuant
to (a) that certain Stock Pledge Agreement dated March 10, 1998 between the
Pledgor and the 1998 Debentureholders, (b) that certain Stock Pledge Agreement
dated May 26, 1999 between the Pledgor and the holders of the 1999 Debentures,
(c) that certain Stock Pledge Agreement dated March 29, 2000 between the Pledgor
and Watson, and (d) that certain Stock Pledge Agreement dated December 20, 2002
between the Pledgor and the 2002 Debentureholders, there are no restrictions on
the transfer of the Pledged Stock (except for such restrictions imposed by
operation of law), that there are no options, warrants or rights pertaining
thereto, and that the Pledgor has the right to transfer the Pledged Stock free
of any encumbrances and without the consent of the creditors of the Pledgor or
the consent of any of the Subsidiaries or any other Person or any governmental
agency whatsoever.

1.5      NO TRANSFER OF LIENS; ADDITIONAL SECURITIES

         The Pledgor agrees that it will not sell, transfer or convey any
interest in, or suffer or permit any lien or encumbrance to be created upon or
with respect to, any of the Pledged Collateral during the term of this
Agreement, except to or in favor of the Agent, or as agreed to in writing in
advance by the Agent in accordance with the terms of the Purchase Agreement and
the Subordination Agreement. The Pledgor shall not cause, suffer or permit any
Subsidiary to issue any common or preferred stock, or any other equity security
or any other instruments convertible into equity securities, to any Person,
unless the Agent otherwise consents in writing (which consent may be withheld in
the Agent's reasonable credit judgment).

1.6      ADJUSTMENTS OF CAPITAL STOCK; PAYMENT AND APPLICATION OF DIVIDENDS

         Subject to the Subordination Agreement and the Purchase Agreement, in
the event that during the term of this Agreement any stock dividend,
reclassification, readjustment or other change is declared or made in the
capital structure of any Subsidiary or if any other or additional shares of
stock of any Subsidiary are issued to the Pledgor, all new, substituted and
additional shares or other securities issued by reason of any such change or
acquisition shall immediately be delivered by the Pledgor to the Agent and shall
be deemed to be part of the Pledged Collateral under the terms of this Agreement
in the same manner as the shares of capital stock originally pledged hereunder.
Subject to the Subordination Agreement and the Purchase Agreement, upon the
occurrence and during the continuance of an Event of Default and from and after
such time as the Agent determines that based

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on all the facts and circumstances then existing, and in the exercise of its
commercially reasonable judgment, the Agent believes that Fraud has occurred,
all cash dividends received by or payable to the Pledgor in respect of the
Pledged Collateral, including any additional shares of stock or investment
property received by the Pledgor as a result of the Pledgor's record ownership
of the Pledged Stock, shall immediately be delivered by the Pledgor to the
Agent, to be held by the Agent as Pledged Collateral hereunder or to be applied
by the Agent against the Obligations. Upon the occurrence and during the
continuance of an Event of Default or from and after such time as the Agent
determines that based on all the facts and circumstances then existing, and in
the exercise of its commercially reasonable judgment, the Agent believes that
Fraud has occurred, the Pledgor will not demand and will not be entitled to
receive, any cash dividends or other income, interest or property in or with
respect to the Pledged Collateral, and if the Pledgor receives any of the same,
the Pledgor shall immediately deliver it to the Agent to be held by it and
applied as provided in the preceding sentence.

1.7      WARRANTS AND OPTIONS

         In the event that during the term of this Agreement subscription
warrants or other rights or options shall be issued to the Pledgor in connection
with the Pledged Collateral, all such stock warrants, rights and options shall
forthwith be assigned to the Agent by the Pledgor, and such stock warrants,
rights and options shall be, and, if exercised by the Pledgor, all new stock
issued pursuant thereto shall be, pledged by the Pledgor to the Agent to be held
as, and shall be deemed to be part of, the Pledged Collateral under the terms of
this Agreement in the same manner as the shares of capital stock originally
pledged hereunder.

1.8      RETURN OF PLEDGED COLLATERAL UPON TERMINATION

         Upon the Security Interest Termination Date and the termination of the
Purchase Agreement, the Agent shall cause to be transferred or returned to the
Pledgor all of the stock pledged by the Pledgor herein and any money, property
and rights received by the Agent pursuant hereto, to the extent the Agent has
not taken, sold or otherwise realized upon the same as permitted hereunder,
together with all other documents reasonably required by the Pledgor to evidence
termination of the pledge contemplated hereby.

                                    ARTICLE 2

                           EVENTS OF DEFAULT; REMEDIES

2.1      RIGHTS OF AGENT UPON DEFAULT

         Upon the occurrence and during the continuance of any Event of Default
and from and after such time as the Agent determines that based on all the facts
and circumstances then existing, and in the exercise of its commercially
reasonable judgment, the Agent believes that Fraud has occurred, subject to the
Subordination Agreement, the Agent shall have and at any time may exercise with
respect to the Pledged Collateral, the proceeds thereof, and any other property
or money held by the Agent hereunder, all rights and remedies available to it
under law, including, without limitation,

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those given, allowed or permitted to a secured party by or under the Code, and
all rights and remedies provided for herein and in the Purchase Agreement.

2.2      DISPOSITION OF PLEDGED STOCK

         (a)      Without limiting the foregoing, in the event that the Agent
elects to sell the Pledged Stock (such term including, for purposes of this
Section 2.2, the Pledged Stock and all other shares of stock or securities at
any time forming part of the Pledged Collateral), the Agent shall have the power
and right in connection with any such sale, exercisable at its option and in its
absolute discretion, to sell, assign, and deliver the whole or any part of the
Pledged Stock or any additions thereto at a private or public sale for cash, on
credit or for future delivery and at such price as the Agent deems to be
satisfactory. Notice of any public sale shall be sufficient if it describes the
Pledged Collateral to be sold in general terms, and is published at least once
in The New York Times not less than ten (10) days prior to the date of sale. If
The New York Times is not then being published, publication may be made in lieu
thereof in any newspaper then being circulated in the City of New York, New
York, as the Agent may elect. All requirements of reasonable notice under this
Section 2.2 shall be met if such notice is mailed, postage prepaid at least ten
(10) days before the time of such sale or disposition, to the Pledgor at its
address set forth in Section 5.5 hereof or such other address as the Pledgor may
have, in writing, provided to the Agent. The Agent may, if it deems it
reasonable, postpone or adjourn any sale of any collateral from time to time by
an announcement at the time and place of the sale to be so postponed or
adjourned without being required to give a new notice of sale.

         (b)      Because federal and state securities laws may restrict the
methods of disposition of the Pledged Stock which are readily available to the
Agent, and specifically because a public sale thereof may be impossible or
impracticable by reason of certain restrictions under the Securities Act or
under applicable "blue sky" or other state securities laws as now or hereafter
in effect, the Pledgor agrees that the Agent may from time to time attempt to
sell the Pledged Stock by means of a private placement restricting the offering
or sale to a limited number of prospective purchasers who meet suitability
standards the Agent deems appropriate and who agree that they are purchasing for
their own accounts for investment and not with a view to distribution, and the
Agent's acceptance of the highest offer obtained therefrom shall be deemed to be
a commercially reasonable disposition of the Pledged Stock. To the extent
permitted by law, the Agent or its assigns may purchase all or any part of the
Pledged Stock and any purchaser thereof shall thereafter hold the same
absolutely free from any right or claim of any kind. To the fullest extent
permitted by law, the Agent shall not be obligated to make any such sale
pursuant to notice and may, without notice or publication, adjourn any public or
private sale by announcement at the time and place fixed for the sale, and such
sale may be held at any time or place to which the same may be adjourned. If any
of the Pledged Stock is sold by the Agent upon credit or for future delivery,
the Agent shall not be liable for the failure of the purchaser to pay for same
and, in such event, the Agent may resell such Pledged Stock and the Pledgor
shall continue to be liable to the Agent for the full amount of the Obligations
to the extent the Agent does not receive full and final payment in cash
therefor.

         (c)      Except as otherwise provided in the Purchase Agreement or by
applicable law, the Agent shall have the sole right to determine the order in
which Obligations shall be deemed discharged by the application of the proceeds
of Pledged Stock or any other property or money held

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hereunder or any amount realized thereon.

                                    ARTICLE 3

                         REPRESENTATIONS AND WARRANTIES

         The Pledgor represents and warrants to the Agent that:

3.1      CAPITALIZATION; GOOD TITLE

         (a)      All shares of Pledged Stock are fully paid, duly and properly
issued, nonassessable and owned by the Pledgor free and clear of any lien or
encumbrance of any kind whatsoever, excepting those herein granted to the Agent
and those granted to the holders of the Existing Debentures and Watson. The
Pledged Stock constitutes all of the outstanding securities of any class or kind
of all of the Subsidiaries.

         (b)      Except in the case of the liens granted to the holders of the
Existing Debentures and Watson, no effective financing statement or other
instrument similar in effect covering all or any part of the Pledged Collateral
is on file in any recording office.

3.2      VALID SECURITY INTEREST

         The pledge of the Pledged Collateral pursuant to this Agreement creates
a valid and perfected first-priority security interest, in accordance with and
subject to the Subordination Agreement, securing the payment of the Obligations,
and all filings and other actions necessary or desirable to perfect and protect
such security interest having been duly made or taken.

3.3      CONSENTS

         No authorization, approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required for (a)
the pledge by the Pledgor of the Pledged Collateral pursuant to this Agreement,
the grant by the Pledgor of the assignment or security interest granted hereby
or the execution, delivery or performance of this Agreement by the Pledgor, (b)
the perfection of or exercise by the Agent of its rights and remedies provided
for in this Agreement, or (c) the exercise by the Agent of the voting or other
rights provided for in this Agreement or the remedies in respect of the Pledged
Collateral pursuant to this Agreement (except as may be required in connection
with a judicial foreclosure, if applicable, or the disposition of the Pledged
Stock by laws affecting the offering and sale of securities generally).

3.4      AUTHORIZATION; ENFORCEABILITY

         The Pledgor has full right, power and authority to enter into this
Agreement and to grant the security interest in the Pledged Collateral made
hereby, and this Agreement constitutes the legal, valid and binding obligation
of the Pledgor enforceable against the Pledgor in accordance with its terms,
except as the enforceability thereof may be (a) limited by bankruptcy,
insolvency,

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reorganization, moratorium or similar laws affecting the enforceability of
creditors' rights generally, and (b) subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).

3.5      NO CONFLICT

         The execution, delivery and performance by the Pledgor of this
Agreement will not result in any violation, conflict with, or result in a breach
of any of the terms of, or constitute a default under, any agreements,
contracts, court orders or consent decrees, the Certificate of Incorporation or
the By-laws, as amended, of the Pledgor.

                                    ARTICLE 4

                             INDEMNITY AND EXPENSES

4.1      INDEMNITY

         The Pledgor agrees to and hereby indemnifies the Agent and each of the
Purchasers from and against any and all Losses arising out of, or in connection
with, or resulting from this Agreement (including, without limitation,
enforcement of this Agreement) unless resulting from or arising out of the gross
negligence or willful misconduct of the Agent or such Purchaser.

4.2      EXPENSES

         The Pledgor agrees promptly upon the Agent's or such Purchaser's demand
to pay or reimburse the Agent or such Purchaser for all reasonable expenses
(including, without limitation, reasonable fees and disbursements of counsel)
incurred by the Agent or such Purchaser in connection with (a) any modification
or amendment to or waiver of any provision of this Agreement requested by the
Pledgor, (b) the custody or preservation of the Pledged Collateral, (c) any
actual or attempted sale or exchange of, or any enforcement, collection,
compromise or settlement respecting, the Pledged Collateral or any other
property or money held hereunder or any other action taken by the Agent or such
Purchaser hereunder reasonably necessary to enforce its rights, whether directly
or as attorney-in-fact pursuant to the power of attorney herein conferred, or
(d) the failure by the Pledgor to perform or observe any of the provisions
hereof. All such expenses shall be deemed a part of the Obligations for all
purposes of this Agreement and the Agent may apply the Pledged Collateral or any
other property or money held hereunder to payment of or reimbursement for such
expenses after notice and demand to the Pledgor.

                                    ARTICLE 5

                                  MISCELLANEOUS

5.1      AGENT MAY PERFORM

         If the Pledgor fails to perform any representation, warranty, covenant
or agreement required to be performed by it contained herein, the Agent may, but
shall not be obligated to, perform, or

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cause performance of, such representation, warranty, covenant or agreement, and
the out-of-pocket expenses of the Agent incurred in connection therewith shall
be payable by the Pledgor.

5.2      WAIVERS AND AMENDMENT

         The rights and remedies given hereby are in addition to all others
however arising, but it is not intended that any right or remedy be exercised in
any jurisdiction in which such exercise would be prohibited by law. No action,
failure to act or knowledge of the Agent shall be deemed to constitute a waiver
of any power, right or remedy hereunder, nor shall any single or partial
exercise thereof preclude any further exercise thereof or the exercise of any
other power, right or remedy. Any right or power of the Agent hereunder in
respect of the Pledged Collateral and any other property or money held hereunder
may at the option of the Agent be exercised as to all or any part of the same
and the term the "Pledged Collateral" wherever used herein, unless the context
clearly requires otherwise, shall be deemed to mean (and shall be read as) "the
Pledged Collateral and any other property or money held hereunder or any part
thereof." This Agreement shall not be amended nor shall any right hereunder be
deemed waived except by a written agreement expressly setting forth the
amendment or waiver and signed by the Agent.

5.3      CONTINUING SECURITY INTEREST; ASSIGNMENTS OF SECURED DEBT

         This Agreement shall create a continuing security interest having
priority over any and all security interests (except as otherwise provided in
the Subordination Agreement) in the Pledged Collateral and shall (a) remain in
full force and effect until the Security Interest Termination Date, (b) be
binding upon the Pledgor, and the Pledgor's successors and assigns, and upon
each of the Subsidiaries, and their successors and assigns, and (c) inure,
together with the rights and remedies of the Agent and the Purchasers hereunder,
to the benefit of the Agent, its successors and permitted assigns. Without
limiting the generality of the foregoing clause (c), the Agent may assign or
otherwise transfer all or any portion of its rights and obligations under this
Agreement to any other Person, to the extent and in the manner provided in the
Purchase Agreement and the Subordination Agreement and such other Person shall
thereupon become vested with all the benefits in respect hereof granted to the
Agent herein; the Agent shall, however, retain all of its rights and powers with
respect to any part of the Pledged Collateral not transferred. Any agent or
nominee of the Agent shall have the benefit of this Agreement as if named herein
and may exercise all the rights and powers given to the Agent hereunder.

5.4      GOVERNING LAW; CONSENT TO JURISDICTION

         (a)      This Agreement and the rights of the parties hereunder shall
be governed in all respects by the laws of the State of New York wherein the
terms of this Agreement were negotiated, excluding to the greatest extent
permitted by law any rule of law that would cause the application of the laws of
any jurisdiction other than the State of New York.

         (b)      Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any New York State court or United States Federal court sitting
in New York City, and any appellate court from any thereof, in any action or
proceeding arising our of or relating to this Agreement or any of the other
Transaction Documents to

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which it is a party, or for recognition or enforcement of any judgment, and each
of the parties hereto irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in any such
New York State court or, to the fullest extent permitted by law, in such United
States Federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the right that any party may otherwise have to bring
any action or proceeding relating to this Agreement or any of the other
Transaction Documents in the courts of any other jurisdiction.

         (c)      Each of the parties hereto irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or in relation to this Agreement or any
other Transaction Document to which it is a party in any such New York State or
United States Federal court sitting in New York City. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.

5.5      NOTICES

         All notices hereunder shall be in writing (except only as otherwise
provided in Section 5.2) and shall be conclusively deemed to have been received
and shall be effective (a) on the day on which delivered if delivered personally
(including delivery by courier or overnight mail providing evidence of
delivery), or transmitted by telex or telegram or telecopier with transmission
confirmed, or (b) five (5) days after the date on which the same is deposited in
the United States mail (certified or registered if required under Section 5.4),
with postage prepaid and properly addressed, and any notice mailed shall be
addressed:

         (a)      in the case of the Pledgor, to:

                  Halsey Drug Co., Inc.
                  695 N. Perryville Road
                  Rockford, Illinois 61107
                  Telecopier No.: (815) 399-9710

                  with copies to:

                  St. John & Wayne
                  2 Penn Plaza East
                  Newark, New Jersey 07105
                  Attention: John P. Reilly, Esq.
                  Telephone No.: (973) 491-3600
                  Telecopier No.: (973) 491-3555

         (b)      in the case of the Agent, to:

                  Galen Partners III, L.P.
                  610 Fifth Avenue, Fifth Floor

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                  New York, NY 10020
                  Telecopier No.: (212) 218-4999
                  Attention: Bruce F. Wesson
                  with a copies to:

                  Wolf, Block, Schorr & Solis-Cohen
                  250 Park Avenue
                  New York, NY  10177
                  Attention: George N. Abrahams, Esq.
                  Telephone No.:  (212) 986-1116
                  Telecopier No.: (212)  986-0604

or at such other address as the party giving such notice shall have been advised
of in writing for such purpose by the party to whom or to which the same is
directed.

5.6      SEVERABILITY; ENTIRE AGREEMENT

         (a)      If any provision of this Agreement shall be invalid, illegal,
or unenforceable in any jurisdiction, the validity, legality or enforceability
of any such provision in any other jurisdiction shall not be affected or
impaired, and to the extent any provision is held invalid, illegal or
unenforceable, then such provision shall be deemed severable from, and shall in
no way affect the validity or enforceability of the remaining provisions of this
Agreement.

         (b)      This Agreement, the Company General Security Agreement, and
the Subordination Agreement constitute the entire agreement of the Pledgor and
replaces any other or prior agreements or undertakings, with respect to the
subject matter hereof, and there are no other agreements or undertakings, oral
or written, respecting such subject matter which are intended to have any force
or effect after the execution hereof.

         (c)      Notwithstanding anything to the contrary contained herein, the
rights and remedies of the Agent, and the obligations of the Pledgor, under this
Stock Pledge Agreement are subject to the Subordination Agreement, as it may be
amended, supplemented or otherwise modified from time to time.

5.7      SUCCESSORS AND ASSIGNS; HEADINGS

         This Agreement shall be binding upon and shall inure to the benefit of
the Pledgor and the Agent and their respective successors and permitted assigns.
Section headings used herein are for convenience only and shall not affect the
meaning or construction of any of the provisions hereof.

5.8      COUNTERPARTS

         This Agreement may be executed in any number of counterparts, each
executed counterpart constituting an original but all counterparts together
constituting only one instrument.

5.9      FURTHER ASSURANCES

                                       11

<PAGE>

         Pledgor and the Agent shall execute, in a proper and timely manner, at
or after the date hereof, such additional documents and instruments as may be
reasonably requested by the other parties in connection with the consummation or
confirmation of the transactions contemplated by this Agreement.

5.10     NO ASSIGNMENT

         This Agreement may not be assigned by the Pledgor without the prior
express written consent of the Agent.

5.11     WAIVERS OF JURY TRIAL

         THE PLEDGOR AND, BY ITS ACCEPTANCE HEREOF, THE AGENT HEREBY IRREVOCABLY
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY
TRANSACTION DOCUMENT OR THE ACTIONS OF ANY PARTY IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.

5.12     WAIVERS OF CONSEQUENTIAL DAMAGES

         NEITHER THE PLEDGOR OR THE AGENT, NOR ANY EMPLOYEE AGENT OR ATTORNEY OF
EITHER OF THEM, SHALL BE LIABLE TO THE OTHER FOR CONSEQUENTIAL DAMAGES ARISING
FROM ANY BREACH OF CONTRACT, TORT OR OTHER WRONG RELATING TO THIS AGREEMENT OR
THE ESTABLISHMENT, ADMINISTRATION OR COLLECTION OF THE OBLIGATIONS, EXCEPT FOR
BAD FAITH.

                           [SIGNATURE PAGE TO FOLLOW]

                                       12

<PAGE>

         IN WITNESS WHEREOF, the Pledgor has caused this Stock Pledge Agreement
to be executed by its duly authorized officer as of the date first written
above.

                                         HALSEY DRUG CO., INC.

                                         By:________________________________
                                            Name:  Andrew D. Reddick
                                            Title: President and Chief Executive
                                                   Officer

Accepted and Agreed to:

GALEN PARTNERS III, L.P.
on behalf of itself and as Agent
By: Claudius, L.L.C., General Partner

By:______________________
   Name:
   Title:

<PAGE>

                                   SCHEDULE A

                            Designation and Number of
                    shares of capital stock owned by Pledgor

<TABLE>
<CAPTION>
                           Certificate                                          Number of
       Issuer                  No.                   Designation                  Shares
-----------------------------------------------------------------------------------------
<S>                        <C>               <C>                                <C>
Houba, Inc.                     1            Common Stock, $.01 par value           100
Axiom Pharmaceutical            1            Common Stock, $.01 par value           100
Corporation
</TABLE>