Document:

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                                                                    EXHIBIT 10.6

           FIRST AMENDMENT TO SEPARATION AGREEMENT AND GENERAL RELEASE

      THIS FIRST AMENDMENT (the "AMENDMENT") TO SEPARATION AGREEMENT AND GENERAL
RELEASE by and between Halsey Drug Co., Inc. (the "CORPORATION") and Michael K.
Reicher ("REICHER"), dated September 18, 2003 (the "SEPARATION AGREEMENT"), is
dated December 4, 2003.

                                    RECITALS

A.    The Company and Reicher entered into the Separation Agreement providing
      the terms of Reicher's termination of employment with the Company.

B.    Under the terms of the Separation Agreement, the Company agreed, inter
      alia, (i) to make a termination payment to Reicher in the amount of
      $400,000 in the form of a note bearing interest at 6% per annum and
      maturing on July 16, 2006 (the "Note"), (ii) to pay Reicher $7,260.30
      representing his earned and unused vacation for the calendar year 2003,
      (iii) to reimburse Reicher for attorneys' fees incurred by Reicher in
      connection with the Separation Agreement, not to exceed $6,000, and (iv)
      to continue Reicher's health insurance coverage and certain other benefits
      for the period of twenty four (24) months commencing on June 16, 2003.

C.    On or about November 6, 2003, Reicher filed a Complaint in Illinois
      Circuit Court of the 17th Judicial Circuit (the "Court") seeking to
      enforce the Separation Agreement The ("Complaint").

D.    The Company is in default of the Note by failing to make the first
      installment due under the Note on October 16, 2003 and the Company has
      represented to Reicher that it will not have the ability to fulfill its
      obligations under the Note or the Separation Agreement and has requested
      Reicher to renegotiate and forgive a portion of the indebtedness and
      obligations.

E.    The Company has represented to Reicher that the negotiations and debt
      forgiveness is necessary for the Company to reorganize so it can continue
      operations and access new capital.

F.    The parties desire to enter into this Amendment, inter alia, to settle in
      full the Company's payment obligations to Reicher under the Separation
      Agreement.

      NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and obligations set forth herein, the Company and Reicher hereby agree
as follows:

      1.    Reicher agrees to compromise the monetary payments due him under the
            terms of the Separation Agreement. Reicher agrees to accept, and the
            Company agrees to pay to Reicher, the amount of $162,789.64 as and
            for full satisfaction of the Company's obligations as set forth in
            Paragraph B of the Recitals as well as any other monetary
            obligations of the Company under the Separation Agreement,

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            except for medical coverage as set forth in Paragraph 2 below. The
            payment shall be payable on the date of execution of this Amendment.

      2.    Section 3(b) of the Separation Agreement is hereby deleted in its
            entirety and replaced with the following:

                  "For the period commencing on the Termination Date and ending
                  on March 31, 2004, EMPLOYER shall continue EMPLOYEE's medical
                  insurance coverage at its full and complete expense."

      3.    The Promissory Note, dated September 18, 2003, in the principal
            amount of $400,000, issued by the Company in favor of Reicher
            pursuant to Section 3(a) of the Separation Agreement is, upon
            receipt of the payment required by Paragraph 1 hereof, fully
            satisfied. Reicher agrees to return such Promissory Note to the
            Company upon receipt of the payment. Reicher further waives and
            releases the Company from any and all interest and fees which may
            have accrued under the said Promissory Note including, without
            limitation, in connection with any default by the Company
            thereunder.

      4.    In the event that (i) a petition is filed by or against the Company,
            with any court of competent jurisdiction, seeking reorganization or
            liquidation of the Company under the United States Bankruptcy Code,
            as amended (the "CODE"), (ii) such court determines that the payment
            to Reicher set forth in Paragraph 1 of this Amendment is deemed a
            "preference" under the Code, and (iii) Reicher is required to pay
            and pays to the Bankruptcy Trustee the amount of such payment, the
            amendments set forth in Paragraphs 1 through 3 of this Amendment
            shall be deemed null and void and Reicher's claim for the amounts
            provided in the Separation Agreement, without giving effect to this
            Amendment, shall be deemed reinstated in full.

      5.    Reicher hereby consents to, and agrees to execute such documents as
            shall be necessary to effect, any and all amendments to, waivers of
            and releases from any and all restrictions set forth in, the
            Debenture and Warrant Purchase Agreement dated March 10, 1998, by
            and among the Company and certain signatories thereto and any and
            all documents executed in connection therewith, including, without
            limitation, the 5% Convertible Senior Secured Debentures issued
            thereunder (the "Debentures"), each as amended through the date
            hereof, which consents, waivers and releases may be required so as
            to (a) facilitate the purchase by certain investors of the
            promissory notes issued by the Company to Watson Pharmaceuticals,
            Inc., including the succession by such investors to the priority
            liens securing the Company's obligations under such promissory
            notes, and (b) allow the Company to obtain working capital financing
            to fund operations through 2004. Such consents, waivers and releases
            shall include, without limitation (i) waivers of lien, indebtedness,
            registration rights, transfer and other contractual restrictions,
            (ii) release and/or subordination of liens on Company and subsidiary
            assets, and (iii) conversion of the Debentures into equity of the
            Company; provided, however, that in each case (x) the holders of a
            majority in the

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            principal amount of the Debentures shall provide the same consents,
            waivers and releases as is requested of Reicher, and (y) each of the
            holders of the Debentures, in their capacity as Debenture holders,
            shall be treated, in all material respects, substantially identical.

      6.    Reicher shall execute and file with the Court within ten (10) days
            of the date hereof an appropriate order or stipulation voluntarily
            dismissing the Complaint with prejudice, and shall provide a filed
            copy to Halsey. Such dismissal shall not affect Reicher's right
            under this Amendment.

      7.    The Company hereby represents that it is currently engaged in
            negotiations with other unsecured creditors seeking to obtain
            payment reductions of the Company's outstanding obligations due to
            such creditors. As part of such negotiations the Company is seeking
            payment concessions which are consistent in all material respects in
            magnitude with the revised payment terms set forth in this
            Amendment.

      8.    The Company and Reicher agree that, except as expressly modified
            herein, all provisions of the Separation Agreement shall remain in
            full force and effect.

      9.    This Amendment may be executed in two or more facsimile
            counterparts, each of which shall be deemed an original but all of
            which shall constitute the same Amendment.

      IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
by their respective duly authorized officers as of the date first above written.

                                               HALSEY DRUG CO., INC.

                                               By: /s/ Andrew D. Reddick
                                                   -----------------------------
                                               Name:  Andrew D. Reddick
                                               Title: President and Chief
                                                      Executive Officer

                                               /s/ Michael K. Reicher
                                               ---------------------------------
                                               MICHAEL K. REICHER

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                                                                    EXHIBIT 10.7

                            ASSET PURCHASE AGREEMENT

      This Asset Purchase Agreement ("Agreement") is made and entered into as of
this 18th day of February, 2004, by and among Mutual Pharmaceutical Company,
Inc., a Pennsylvania corporation, having its principal offices located at 1100
Orthodox Street, Philadelphia, Pennsylvania 19124 (hereinafter referred to as
the "Purchaser"), and Halsey Drug Co., Inc., a New York corporation having its
principal offices located at 16235 State Road 17, Culver, Indiana 46511
(hereinafter referred to as the "Seller").

                                    RECITALS

      WHEREAS, Seller is engaged in the development of proprietary prescription
pharmaceutical products and is the owner of certain abbreviated new drug
applications ("ANDAs") set forth on Exhibit A attached hereto; and

      WHEREAS, Seller desires to convey, sell and assign certain Assets (as
defined herein) to Purchaser upon the terms and subject to the conditions set
forth in this Agreement; and

      WHEREAS, Purchaser desires to purchase the Assets and obtain the requisite
regulatory marketing authorization to resume marketing of some or all of the
products referenced in the Purchased ANDAs (as hereinafter defined), upon the
terms and subject to the conditions set forth in this Agreement.

                                    AGREEMENT

      NOW, THEREFORE, in consideration of the premises and mutual promises
contained herein, the parties hereto agree as follows:

                                    SECTION 1

                              ACQUISITION OF ASSETS

      1.01 Assets to be Conveyed. On the terms and subject to the conditions
contained herein, on the Closing Date (as that term is defined in Section 3.01
hereof) Seller shall convey, transfer, assign, sell and deliver to Purchaser,
and Purchaser shall acquire, accept and purchase, all right, title and interest
in and to those certain ANDAs set forth on Exhibit A attached hereto (the
"Purchased ANDAs"), including, without limitation, all of the properties and
rights of the Seller relating to the Purchased ANDAs as described in (a) and (b)
below (hereinafter, collectively with the "Purchased ANDA Assets"):

            (a) all documentation, files, binders, technical data and
information that is owned by and in the possession of Seller whether stored in
hard copy or electronically, including, without limitation all specifications,
formulae, stability data, manufacturing processes, master batch records,

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quality control data, analytical methods, and other information of any kind
including annual reports, bioequivalence and bioavailability test results
relating to the Purchased ANDAs and,

            (b) Any and all approvals, authorizations, licenses and consents of
the U.S. Food and Drug Administration (the "FDA"), any governmental agency or
entity, or any third party, relating to the Purchased ANDAs.

      1.02 Status of Purchased ANDAs. Notwithstanding anything to the contrary
contained herein, Purchaser understands and acknowledges that the Purchased
ANDAs have been withdrawn from the Orange book, or are discontinued or are
otherwise not active ANDAs and will require manufacturing site transfer and/or
other technical revisions or improvements in accordance with applicable
regulations in order to regain marketing authorization from the FDA.

      1.03 Further Assurances. From time to time after the Closing, the parties
shall execute and deliver such instruments of sale, transfer, conveyance,
assignment and delivery, consents, assurances, and other instruments and do all
matters and things which may be necessary in order to convey to Purchaser title
to the Purchased ANDA Assets and to carry out the purpose and intent of this
Agreement.

                                    SECTION 2

                      CONSIDERATION TO BE PAID BY PURCHASER

      2.01 Purchase Price and Delivery of Assets. In full consideration of the
sale of the Purchased ANDA Assets, Purchaser shall remit to Seller two million
dollars (US$2,000,000) in immediately available funds by wire transfer to an
account designated by Seller. Upon wire transfer of such amount, Seller shall
assist Purchaser in packing and loading the Purchased ANDA Assets into
Purchaser's vehicle for shipment to a location to be determined by the
Purchaser.

                                    SECTION 3

                                  CLOSING DATE

      3.01 Closing Date; Bill of Sale. The closing of the sale and purchase of
the Purchased ANDA Assets shall take place by facsimile or at the offices of St.
John & Wayne, L.L.C., Two Penn Plaza East, Newark, New Jersey 07105 (the
"Closing") on or before February 18, 2004 (the "Closing Date") or such other
date mutually agreed to by Seller and Purchaser. On the Closing Date, Seller
shall deliver to Purchaser a Bill of Sale conveying to Purchaser Seller's right,
title and interest in and to the Purchased ANDA Assets in substantially the form
of Exhibit 3.01 (attached hereto) together with such fully-executed
correspondence from Seller to the FDA as may be required to (a) inform the FDA
of the purchase and sale of the Purchased ANDAs, and (b) establish the Purchaser
as the new regulatory agent for such Purchased ANDAs from and after the Closing
Date. Seller's form letter to the FDA is attached as Exhibit B hereto.

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                                    SECTION 4

                    REPRESENTATIONS AND WARRANTIES OF SELLER

      Seller hereby represents and warrants to Purchaser as follows:

      4.01 Organization of Seller. (a) Seller is a corporation organized and
validly existing and in good standing under the laws of the State of New York
and Seller has the full power and authority to convey the Purchased ANDA Assets
herein sold by Seller; (b) the execution and delivery of this Agreement and the
performance by Seller of its obligations hereunder have been duly authorized by
all necessary corporate action; and (c) this Agreement is a valid and binding
obligation of Seller enforceable against it in accordance with its terms, except
as enforceability of this Agreement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally.

      4.02 Execution of Documents. Neither the execution and delivery of this
Agreement nor the performance by Seller of any of its obligations hereunder, nor
the consummation of any of the transactions contemplated hereby will (a) violate
or conflict with any agreement to which Seller is a party or by which Seller or
any of its assets may be bound; (b) violate or conflict with any provision of
the Seller's Certificate of Incorporation, By-Laws, or other organizational
documents; or (c) be prevented, limited by or be in conflict with or result in a
breach of or default under any material indenture, agreement or other instrument
to which Seller is a party or by which Seller is bound.

      4.03 Third Party Rights. Seller has not sold, transferred, sublicensed,
pledged, encumbered or granted any rights or interest in the Purchased ANDAs to
any third party, and prior to the Closing, Seller shall not enter into any such
agreement with any third party. Except as otherwise disclosed in Schedule 4.3
hereto, there are no oral or written agreements, commitments or understandings
with third parties pertaining to the manufacture, production, packaging,
labeling, marketing, distribution or sale of any of the products described in
the Purchased ANDAs.

      4.04 Purchased ANDA Products. To the best of Seller's knowledge, there is
no product available for purchase in the marketplace that was manufactured
pursuant to the Purchased ANDAs and that is within the expiration date for such
product.

      4.05 Limitation of Warranties. EXCEPT AS SET FORTH ABOVE, SELLER MAKES NO
WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE PURCHASED ANDAs OR THE
PURCHASED ANDA ASSETS AND ALL SUCH PURCHASED ANDA ASSETS ARE PURCHASED "AS IS".
ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THE
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, ARE
HEREBY DISCLAIMED BY SELLER.

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                                    SECTION 5

                   REPRESENTATIONS AND WARRANTIES OF PURCHASER

      The Purchaser represents and warrants to Seller as follows:

      5.01 Corporate Organization of the Purchaser. Purchaser is a corporation
organized, validly existing and in good standing under the laws of the State of
Pennsylvania. The execution and delivery of this Agreement and the performance
by Purchaser of its obligations hereunder have been duly authorized by all
necessary corporate action on the part of Purchaser. This Agreement is a valid
and binding obligation of Purchaser enforceable against Purchaser in accordance
with its terms, except as enforceability of this Agreement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally.

      5.02 Execution of Documents. Neither the execution and delivery of this
Agreement nor the performance by Purchaser of any of its obligations hereunder,
nor the consummation of any of the transactions contemplated hereby will (a)
violate or conflict with any agreement to which Purchaser is a party or by which
Purchaser or any of its property may be bound; (b) violate or conflict with any
provision of Purchaser's Certificate of Incorporation or By-laws or other
organizational documents; or (c) be prevented, limited by or be in conflict with
or result in a breach of or default under any material indenture, agreement or
other instrument to which Purchaser is a party or by which Purchaser or its
property is bound.

                                    SECTION 6

                             COVENANTS OF PURCHASER

      6.01 Trademarks and Trade Dress. Purchaser shall not promote, sell or
distribute any of the products (if any) developed pursuant to the Purchased
ANDAs under trademarks, tradenames, service marks or names which are identical
or confusingly similar to any trademarks, tradenames, service marks or names
used by Seller in connection with the sale of any of its products; provided,
however, that it is expressly acknowledged and understood that nothing in this
Section 6.01 shall be construed to require Purchaser to change the size, shape
or color of the products described in the Purchased ANDAs prior to the marketing
and sale of such products.

                                    SECTION 7

                                    INDEMNITY

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      7.01 Indemnification by Seller. Seller shall indemnify and hold Purchaser,
its affiliates, directors, officers, employees, agents, attorneys and the
successors and/or assigns of any of the foregoing (the "Purchaser Indemnitees")
from and against any and all liabilities, damages, losses, costs or expenses
(including attorneys' fees, professional fees and other expenses of litigation
and/or arbitration) resulting from the marketing or sale of any products covered
by any of the Purchased ANDAs by Seller, its affiliates or any designated third
party prior to the Closing Date. Notwithstanding the foregoing or anything to
the contrary contained herein, in no event shall Seller's aggregate indemnity
obligation to Purchaser Indemnitees under this Agreement exceed two million
dollars (US$2,000,000).

      7.02 Indemnification by Purchaser. Purchaser shall indemnify and hold
Seller, its subsidiaries, directors, officers, employees, agents, attorneys and
the successors and/or assigns of any of the foregoing (the "Seller Indemnitees")
harmless from and against any and all liabilities, damages, losses, costs and
expenses (including reasonable attorney and professional fees and other expenses
of litigation and/or arbitration) resulting from the manufacture and sale of any
products developed pursuant to or otherwise covered by any of the Purchased
ANDAs by Purchaser, its affiliates or any designated third party subsequent to
the Closing Date.

      7.03 Indemnification Notice. A party (the "Indemnitee") that intends to
claim indemnification under this Section 7 shall promptly notify the other party
(the "Indemnitor") in writing of any loss, claim, damage, liability or action in
respect of which the Indemnitee or any of its subsidiaries, directors, officers,
employees or agents intend to claim such indemnification, and the Indemnitor
shall have the right to participate in and, to the extent the Indemnitor so
desires, to assume the defense thereof with counsel mutually satisfactory to the
parties. The indemnity provided herein shall not apply to amounts paid in
settlement of any loss, claim, damage, liability or action if such settlement is
effected without the consent of the Indemnitor, which consent shall not be
unreasonably withheld or delayed. Failure to deliver written notice to the
Indemnitor within a reasonable time after the commencement of any such action,
if prejudicial to its ability to defend such action, shall relieve the
Indemnitor of any liability to the Indemnitee under this Section 7. At the
Indemnitor's request, the Indemnitee under this Section 7, and its employees and
agents, shall fully cooperate with the Indemnitor and its legal representatives
in the investigation of any action, claim or liability covered by this
indemnification and provide full information with respect thereto.

      7.04 NOTWITHSTANDING ANYTHING TO CONTRARY CONTAINED HEREIN, NEITHER PARTY
SHALL UNDER ANY CIRCUMSTANCES BE LIABLE FOR ANY CLAIMS FOR ANY INCIDENTAL,
CONSEQUENTIAL, INDIRECT OR SPECIAL DAMAGES, INCLUDING ANY LOST PROFITS OR
SAVINGS, ARISING FROM ANY BREACH OF WARRANTY OR THE PERFORMANCE OR BREACH OF ANY
PROVISION OF THIS AGREEMENT OR THE USE OF ANY PURCHASED ANDA ASSET, EVEN IF SUCH
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

                                    SECTION 8

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              SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS

      8.01 Survival of Representations, Warranties and Covenants. All the
representations, warranties, covenants and agreements of Seller and Purchaser
contained herein (including all Schedules and Exhibits hereto) including the
indemnity obligations under Section 7 hereof shall survive without limitation.

                                    SECTION 9

                                    EXPENSES

      9.01 Fees and Expenses. Except as otherwise provided herein, Purchaser and
Seller will each be solely responsible for their respective expenses, including,
without limitation, fees and expenses of legal counsel, accountants, and other
advisors incurred in connection with the consummation of the transactions
contemplated hereby. No broker's or finder's fee or commission will be payable
with respect to this Agreement or any of the transactions contemplated hereby or
thereby, and Purchaser and Seller hereby indemnify each other against, and agree
that they will hold each other harmless from, any claim, demand or liability for
any such broker's or finder's fees alleged to have been incurred in connection
herewith or therewith and any expenses (including reasonable fees, expenses and
disbursements of counsel) arising in connection with any such claim, demand or
liability.

                                   SECTION 10

                               DISPUTE RESOLUTION

      10.01 Arbitration. Should the parties to this Agreement fail to resolve
any controversy or claim arising out of or relating to the interpretation or
application of any term or provision set forth herein, or the alleged breach
hereof, such controversy or claim shall be resolved by arbitration in accordance
with the Commercial Arbitration Rules of the American Arbitration Association.
Judgement upon any award rendered pursuant to the terms set forth herein may be
entered in any court having jurisdiction over the party against whom the award
is rendered. Any award rendered pursuant to the terms and conditions set forth
herein shall be final and binding upon the parties and their subsidiaries. Any
arbitration held pursuant to this Agreement shall be held in Newark, New Jersey
or such other site as the parties may mutually agree. In no event shall the
arbitrators in any arbitration proceeding relating to this Agreement be
authorized to award punitive damages under any circumstances. All costs and
expenses, including reasonable attorney's fees incurred in the enforcement of
this Agreement shall be satisfied by the party incurring such expenses.

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                                   SECTION 11

                            MISCELLANEOUS PROVISIONS

      11.01 Amendment and Modification. The parties hereto may amend, modify and
supplement this Agreement in such manner as may be agreed upon by them in a
writing executed by each of the parties.

      11.02 Notices. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given if delivered by hand on the
date of such delivery or if mailed, certified or registered mail, return receipt
requested, with postage prepaid, three days after the date of posting or, if
sent via telecopier, upon receipt of reasonably adequate confirmation thereof:

                           (a) if to the Seller at:

                           Halsey Drug Co., Inc.
                           16235 State Road 17
                           Culver, Indiana  46511
                           Attention: Andrew D. Reddick
                                      President and Chief Executive Officer
                           Telephone No.: (610) 304-6106
                           Facsimile No.: (610) 280-3221

            Copy to:       St. John & Wayne, L.L.C.
                           Two Penn Plaza East
                           Newark, New Jersey 07105
                           Attention: John P. Reilly, Esq.
                           Telephone No.: (973) 491-3600
                           Facsimile No.: (973) 491-3555

                  (b)      if to the Purchaser at:

                           Mutual Pharmaceutical Company, Inc.
                           1100 Orathodox Street
                           Philadelphia, Pennsylvania 19124
                           Attention: President
                           Telephone No.: (215) 288-6500
                           Facsimile No.: (215) 744-1929

            Copy to:       Quinn, Emanuel, Urquhart & Hedges, LLP
                           335 Madison Avenue
                           New York, New York  10017
                           Telephone No.: (212) 702-8107
                           Facsimile No.: (212) 702-8700

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<PAGE>

      11.03 Headings. The headings of the sections of this Agreement are for
convenience only and shall not constitute a part hereof.

      11.04 Public Announcements. Except to the extent disclosure may be
required by applicable law or the rules or regulations of any stock exchange or
over-the-counter market on which such party's stock is traded, neither party
shall issue or make any public announcement or press release, or otherwise make
any public statement, with respect to this Agreement without obtaining the other
party's approval, which approval shall not be unreasonably withheld or delayed.

      11.05 Entire Agreement. This Agreement and other documents specifically
referred to herein which form a part hereof or are marked for identification by
each of the parties hereto, contain the entire understanding of the parties
hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties, covenants or undertakings, other than those
expressly set forth herein.

      11.06 Force Majeure. No party shall be liable to the other party for delay
or failure in the performance of the obligations on its part contained in this
Agreement if and to the extent that such failure or delay is due to
circumstances beyond its control which it could not have avoided by the exercise
of reasonable diligence. The affected party shall notify the other party
promptly should such circumstances arise, giving an indication of the likely
extent and duration thereof, and shall use all commercially reasonable efforts
to resume performance of its obligations as soon as practicable.

      11.07 Assignment.

            A.    Assignment to Affiliates. A party may assign any of its rights
                  or obligations under this Agreement to any of its Affiliates,
                  for so long as they remain Affiliates; provided, however, that
                  such assignment shall not relieve the assigning party of its
                  responsibilities for performance of its obligations under this
                  Agreement.

            B.    Binding Nature of Assignment. This Agreement shall be binding
                  upon and inure to the benefit of the successors and permitted
                  assigns of the parties.

      11.08 No Waiver. The failure of either party to require performance by the
other party of any of the other party's obligations hereunder shall in no manner
affect the right of such party to enforce the same at a later time. No waiver by
either party hereto of any condition, or of the breach of any provision, term,
representation or warranty contained in this Agreement, whether by conduct or
otherwise, in any one or more instances, shall be deemed to be or construed as a
further or continuing waiver of any such condition or breach, or of any other
condition or of the breach of any other provision, term, representation or
warranty hereof.

      11.09 Severability. If a court or other tribunal of competent jurisdiction
should hold any term or provisions of this Agreement to be excessive, or
invalid, void or unenforceable, the

                                       8
<PAGE>

offending term or provision shall be deleted or revised to the extent necessary
to be enforceable, and, if possible, replaced by a term or provision which, so
far as practicable achieves the legitimate aims of the parties.

      11.10 Relationship between the Parties. Seller and Purchaser are
independent contractors under this Agreement. Nothing herein contained shall be
deemed to create an employment, agency, joint venture or partnership
relationship between the parties hereto or any of their agents or employees, or
any other legal arrangement that would impose liability upon one party for the
act or failure to act of the other party. No party shall have on accord of this
Agreement any express or implied power to enter into any contracts or
commitments or to incur any liabilities in the name of, or on behalf of, the
other party, or to bind the other party in any respect whatsoever.

      11.11 Facsimile Execution. This document may be executed in facsimile
counterpart each of which is hereby agreed to have the legal binding effect of
an original signature. The parties hereto agree to forward original signatures
by overnight mail upon execution.

      11.12 GOVERNING LAW. IT IS THE INTENTION OF THE PARTIES HERETO THAT THIS
AGREEMENT AND THE RIGHTS, OBLIGATIONS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK. WHENEVER POSSIBLE EACH PROVISION OF THIS AGREEMENT SHALL
BE INTERPRETED IN SUCH MANNER, AS TO BE EFFECTIVE AND VALID UNDER NEW YORK LAW,
BUT IF ANY PROVISION OF THIS AGREEMENT SHALL BE PROHIBITED BY OR INVALID UNDER
SUCH APPLICABLE LAW, SAID PROVISION SHALL BE INEFFECTIVE TO THE EXTENT OF THE
PROHIBITION OR INVALIDITY, WITHOUT INVALIDATING THE REMAINDER OF THE PROVISION
OR THE REMAINING PROVISIONS OF THIS AGREEMENT.

      IN WITNESS WHEREOF, the parties have duly executed and delivered this
Asset Purchase Agreement as of the 18th day of February, 2004.

Attest:                               HALSEY DRUG CO., INC.

                                      By: /s/ Andrew D. Reddick
By:____________________________           --------------------------------
Name:                                     Andrew D. Reddick
Title:                                    President and Chief Executive Officer

Attest:                               MUTUAL PHARMACEUTICAL COMPANY, INC.

                                      By: /s/Richard H . Roberts
By:____________________________           --------------------------------
Name:                                     Richard H. Roberts, M.D., Ph.D.
Title:                                    President and Chief Executive Officer

                                       9

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