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Exhibit 10.7
March 10, 1998
Galen Partners III, L.P.
610 Fifth Avenue, 5th Floor
New York, New York 10020
Gentlemen:
Reference is made to the Debenture and Warrant Purchase Agreement
dated the date hereof among Halsey Drug Co., Inc. (the "Company"), Galen
Partners III, L.P. ("Galen") and each of the undersigned (the "Purchase
Agreement") and each of the agreements, documents and instruments executed and
delivered pursuant thereto or in connection therewith (collectively with the
Purchase Agreement, the "Transaction Documents"). Capitalized terms used herein
which are not defined herein have the meanings ascribed to them in the Purchase
Agreement.
This will confirm that, notwithstanding anything to the contrary
contained in the Transaction Documents:
1. Appointment of Agent
(a) Each Purchaser hereby designates Galen as its agent (the
"Agent") and irrevocably authorizes the Agent to take action on its behalf
under the Transaction Documents, to exercise the powers and perform the duties
described therein, and to exercise such other powers reasonably incidental
thereto; provided, however, that each Purchaser shall retain the sole power and
discretion to convert outstanding principal of the Debentures held by it into
Shares and the exercise the Warrants held by it for Shares and to exercise any
registration rights under the Transaction Documents. The Agent may perform any
of its duties through its agents or employees.
(b) This Section 1 is for the benefit of the Agent and Purchasers
only. The Agent shall act only for the Purchasers and assumes no obligation to
or agency or trust relationship with the Company or any of its Subsidiaries,
except for the disbursement to the Purchasers of payments received by the Agent
for the account of the Purchasers.
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Galen Partners III, L.P.
March 10, 1998
Page 2
2. Nature of Duties of Agent. With respect to the other Purchasers,
the Agent has no duties or responsibilities, except those expressly set forth in
this agreement and the Transaction Documents. Neither the Agent nor any of its
officers, directors, employees or agents shall be liable for any action taken or
omitted hereunder or in connection herewith. The duties of the Agent shall be
mechanical and administrative in nature. The Agent shall not have a fiduciary
relationship to any Purchaser or any participant of any Purchaser.
3. Lack of Reliance on Agent. Independently and without reliance
upon the Agent, each Purchaser has made and shall continue to make its own
independent investigation and analysis of the content and validity of this
agreement and the Transaction Documents or of the performance and
creditworthiness of the Company thereunder. The Agent assumes no responsibility
and undertakes no obligation to make inquiry with respect to such matters.
4. Certain Rights of the Agent. The Agent may request instructions
from the Purchasers at any time. If the Agent requests instructions from the
Purchasers with respect to any action or inaction, the Agent shall be entitled
to await instructions from such Purchasers before such action or inaction. No
Purchaser shall have any right of action based upon the Agent's action or
inaction in response to instructions from such Purchasers.
5. Reliance by Agent. The Agent may rely upon written or telephonic
communication it believes to be genuine and to have been signed, sent or made by
the proper person. The Agent may obtain the advice of legal counsel (including,
for matters concerning the Company, counsel for the Company), independent public
accountants and other experts selected by it and shall have no liability for
action or inaction in good faith based upon such advice.
6. Indemnification of Agent. Each Purchaser agrees to reimburse and
indemnify the Agent for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including counsel fees
and disbursements) or disbursements of any kind or nature whatsoever which may
be imposed on, incurred by or asserted against the Agent in performing its
duties hereunder or otherwise relating to this agreement and the Transaction
Documents, unless resulting from the Agent's gross negligence or willful
misconduct.
7. The Agent in its Individual Capacity. In its individual
capacity, the Agent shall have the same rights and powers hereunder as any
other Purchaser and may exercise them as though it was not performing the
duties specified herein.
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Galen Partners III, L.P.
March 10, 1998
Page 3
8. Successor Agent.
(a) The Agent may, upon fifteen (15) business days' notice to the
Purchasers and the Company, resign by giving written notice thereof to the
Purchasers and the Company. The Agent's resignation shall be effective upon the
appointment of a successor Agent.
(b) Upon receipt of the Agent's resignation, the Purchasers may
appoint a successor Agent. If a successor Agent has not accepted its
appointment within fifteen business days, then the retiring Agent may, on
behalf of the Purchasers, appoint a successor Agent.
(c) Upon its acceptance of the agency hereunder, a successor Agent
shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Agent, and the retiring Agent shall be discharged from
its duties and obligations under this agreement. The retiring Agent shall
continue to have the benefit of this agreement for any action or inaction while
it was Agent.
9. Collateral Matters.
(a) Each Purchaser authorizes and directs the Agent to enter
into the other agreements for the benefit of the Purchasers. At any time,
without notice to or consent from any Purchaser, the Agent may take any action
necessary or advisable to perfect and maintain the perfection of the liens upon
the Collateral.
(b) The Agent is authorized to release any lien granted to or
held by the Agent upon any Collateral.
(c) The Agent shall have no obligation to assure that the
Collateral exists or is owned by the Company or any of its Subsidiaries, or
that such Collateral is cared for, protected or insured, or that the liens in
the Collateral have been created, perfected, or have any particular priority.
With respect to the Collateral, the Agent may act in any manner it may deem
appropriate, in its sole discretion, given the Agent's own interest in the
Collateral as one of the Purchasers, and it shall have no duty or liability
whatsoever to the Purchasers, except for its gross negligence or willful
misconduct.
10. Waiver. No failure on the part of the Agent to exercise, and no
delay in exercising, any right, power, or remedy hereunder shall operate as a
waiver thereof.
11. Governing Law. This Agreement is entered into in accordance with
and shall be governed by the laws of the State of New York, without regard to
any principles of conflicts of laws.
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Galen Partners III, L.P.
March 10, 1998
Page 4
12. Severability. If any provision or portion of any provision of
this agreement is held to be unenforceable or invalid by any court of competent
jurisdiction, the remaining portions of any such provision and the remaining
provisions hereof shall remain in effect.
13. Further Assurances. The Purchasers 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.
14. Counterparts. This agreement may be executed simultaneously in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
15. Entire Agreement; Amendment. This Agreement constitutes the
entire agreement between the parties relating to the subject matter hereof, and
no modification or amendment may be made except by a written instrument signed
by all parties.
16. Notices. All notices, approvals, consents or other
communications required or desired to be given hereunder shall be delivered in
person, by facsimile transmission followed promptly by first class mail or by
overnight mail, and delivered, if to any Purchaser, then to the address set
forth opposite the name of the Purchaser on the signature page hereof, and if
to the Agent, then to the attention of Mr. Srini Conjeevaram c/o Galen
Associates, Rockefeller Center, 610 Fifth Avenue, 5th Floor, New York, New York
10020, fax no. (212) 218-4999, with a copy to George N. Abrahams, Esq. c/o
Wolf, Block, Schorr and Solis-Cohen LLP, 250 Park Avenue, New York, New York
10177, fax no. (212) 986-0604.
17. Arbitration. Any controversy or claim arising out of or
relating to this agreement, or any breach or termination thereof, shall be
settled by arbitration in the County of New York in accordance with the laws of
the State of New York and rules then obtaining of the American Arbitration
Association or any successor thereto. Within ten days after a request for
arbitration by one party to the other, each party shall each select one
arbitrator (provided that if more than one Purchaser is a party to an
arbitration with the Agent then the Purchasers shall jointly select one
arbitrator). Within ten days after the second of such arbitrators has been
selected, the two arbitrators thereby selected shall choose a third arbitrator
who shall be the Chairman of the panel. If the first two arbitrators selected
cannot agree upon a third arbitrator, the American Arbitration Association
shall name the third arbitrator. The arbitration shall be held in New York
County, New York. The arbitrators may grant injunctions or other relief in such
dispute or controversy. In the arbitration, the parties shall be entitled to
pre-hearing discovery. The decision of the arbitrators shall be final,
conclusive and binding on the parties to the arbitration. In connection with
such arbitration and the enforcement of any award rendered as a result thereof,
the parties hereto irrevocably consent to the personal jurisdiction
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Galen Partners III, L.P.
March 10, 1998
Page 5
of the Courts of the State of New York, and further consent that any process or
notice of motion or other application to the said Court or Judge thereof may be
served inside or outside the State of New York by registered mail or personal
service, provided a time period of at least twenty days for appearance is
allowed.
Very truly yours,
Name and Signature of Purchaser: Address of Purchaser:
Galen Employee Fund III, L.P. 610 Fifth Avenue, 5th Floor
By: Wesson Enterprises, Inc. NY, NY 10020
By: /s/ Bruce F. Wesson
--------------------
President
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Galen Partners III, L.P.
March 10, 1998
Page 5
of the Courts of the State of New York, and further consent that any process or
notice of motion or other application to the said Court or Judge thereof may be
served inside or outside the State of New York by registered mail or personal
service, provided a time period of at least twenty days for appearance is
allowed.
Very truly yours,
Name and Signature of Purchaser: Address of Purchaser:
Galen Partners III, L.P.
Claudius, L.L.C. 610 Fifth Avenue, Suite 5
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By: /s/ Bruce F. Wesson New York, NY 10020
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Managing Member
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Galen Partners III, L.P.
March 10, 1998
Page 5
of the Courts of the State of New York, and further consent that any process or
notice of motion or other application to the said Court or Judge thereof may be
served inside or outside the State of New York by registered mail or personal
service, provided a time period of at least twenty days for appearance is
allowed.
Very truly yours,
Name and Signature of Purchaser: Address of Purchaser:
Galen Partners International III, L.P. 610 Fifth Avenue, 5th Floor
- -------------------------------------- -------------------------------
By: Claudius, L.L.C.
By: /s/ Bruce F. Wesson New York, NY 10020
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Managing Member
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Galen Partners III, L.P.
March __, 1998
Page 5
of the Courts of the State of New York, and further consent that any process or
notice of motion or other application to the said Court or Judge thereof may be
served inside or outside the State of New York by registered mail or personal
service, provided a time period of at least twenty days for appearance is
allowed.
Very truly yours,
Name and Signature of Purchaser: Address of Purchaser:
/s/ Bernard Seiz 121 East 73rd St.
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By: Bernard Seiz New York, NY 10021
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Galen Partners III, L.P.
March __, 1998
Page 5
of the Courts of the State of New York, and further consent that any process or
notice of motion or other application to the said Court or Judge thereof may be
served inside or outside the State of New York by registered mail or personal
service, provided a time period of at least twenty days for appearance is
allowed.
Very truly yours,
Name and Signature of Purchaser: Address of Purchaser:
Kenneth J. Gimbel 876 Kimball Rd
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By: /s/ Kenneth J. Gimbel Highland Park, IL 60035
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Galen Partners III, L.P.
March 9, 1998
Page 5
of the Courts of the State of New York, and further consent that any process or
notice of motion or other application to the said Court or Judge thereof may be
served inside or outside the State of New York by registered mail or personal
service, provided a time period of at least twenty days for appearance is
allowed.
Very truly yours,
Name and Signature of Purchaser: Address of Purchaser:
/s/ Hemant K. Shah 29 Christy Drive
- -------------------------------- ----------------------
/s/ Varsha H. Shah Warren, N.J. 07059
- -------------------------------- ----------------------
By: Hemant K. Shah &
Varsha H. Shah
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Galen Partners III, L.P.
March 9, 1998
Page 5
of the Courts of the State of New York, and further consent that any process or
notice of motion or other application to the said Court or Judge thereof may be
served inside or outside the State of New York by registered mail or personal
service, provided a time period of at least twenty days for appearance is
allowed.
Very truly yours,
Name and Signature of Purchaser: Address of Purchaser:
/s/ Varsha H. Shah
By: Varsha H. Shah as Custodian for -----------------------
Sachin H. Shah
-----------------------
-----------------------
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Galen Partners III, L.P.
March 9, 1998
Page 5
of the Courts of the State of New York, and further consent that any process or
notice of motion or other application to the said Court or Judge thereof may be
served inside or outside the State of New York by registered mail or personal
service, provided a time period of at least twenty days for appearance is
allowed.
Very truly yours,
Name and Signature of Purchaser: Address of Purchaser:
/s/ Varsha H. Shah
- --------------------------------
By: Varsha H. Shah as Custodian --------------------------
for Sumzet H. Shah
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Galen Partners III, L.P.
March --, 1998
Page 5
of the Courts of the State of New York, and further consent that any process or
notice of motion or other application to the said Court or Judge thereof may be
served inside or outside the State of New York by registered mail or personal
service, provided a time period of at least twenty days for appearance is
allowed.
Very truly yours,
Name and Signature of Purchaser: Address of Purchaser:
/s/ Ilene Rainisch 315 Devon Pl.
- --------------------------------- --------------------------
By: Ilene Rainisch Morganville, NJ 07751
--------------------------
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Galen Partners III, L.P.
March 9, 1998
Page 5
of the Courts of the State of New York, and further consent that any process or
notice of motion or other application to the said Court or Judge thereof may
be served inside or outside the State of New York by registered mail or
personal service, provided a time period of at least twenty days for appearance
is allowed.
Very truly yours,
Name and Signature of Purchaser: Address of Purchaser:
/s/ Michael Rainish 48 Madford St
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By: Michael Rainish Staten Island, NY 10314
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Galen Partners III, L.P.
March 9, 1998
Page 5
of the Courts of the State of New York, and further consent that any process or
notice of motion or other application to the said Court or Judge thereof may
be served inside or outside the State of New York by registered mail or
personal service, provided a time period of at least twenty days for appearance
is allowed.
Very truly yours,
Name and Signature of Purchaser: Address of Purchaser:
/s/ Dennis L. Adams 120 Kynlyn Road
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By: Dennis L. Adams Radnor, PA 19087
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--------------------------------
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Galen Partners III, L.P.
March , 1998
Page 5
of the Courts of the State of New York, and further consent that any process or
notice of motion or other application to the said Court or Judge thereof may
be served inside or outside the State of New York by registered mail or
personal service, provided a time period of at least twenty days for appearance
is allowed.
Very truly yours,
Name and Signature of Purchaser: Address of Purchaser:
Patrick P. Coyne II 477 Margo Lane
- -------------------------------- --------------------------------
By: /s/ Patrick P. Coyne II Berwyn, PA 19312
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Galen Partners III, L.P.
March 9, 1998
Page 5
of the Courts of the State of New York, and further consent that any process or
notice of motion or other application to the said Court or Judge thereof may
be served inside or outside the State of New York by registered mail or
personal service, provided a time period of at least twenty days for appearance
is allowed.
Very truly yours,
Name and Signature of Purchaser: Address of Purchaser:
x Michael M. Weisbrot
x Susan R. Weisbrot 1136 Rock Creek Rd
- -------------------------------- --------------------------------
By: /s/ Michael M. Weisbrot Gladwyne, PA 19035-1440
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/s/ Susan R. Weisbrot
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Galen Partners III, L.P.
March 9, 1998
Page 5
of the Courts of the State of New York, and further consent that any process or
notice of motion or other application to the said Court or Judge thereof may be
served inside or outside the State of New York by registered mail or personal
service, provided a time period of at least twenty days for appearance is
allowed.
Very truly yours,
Name and Signature of Purchaser: Address of Purchaser:
GREG WOOD 1263 E. Calaveras St.
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By: /s/ Greg Wood Altadena, CA 91001
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Galen Partners III, L.P.
March , 1998
Page 5
of the Courts of the State of New York, and further consent that any process or
notice of motion or other application to the said Court or Judge thereof may be
served inside or outside the State of New York by registered mail or personal
service, provided a time period of at least twenty days for appearance is
allowed.
Very truly yours,
Name and Signature of Purchaser: Address of Purchaser:
ALAN JERRARD SMITH 21 BEDLOW AVE
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By: /s/ Alan Jerrard Smith NEWPORT
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RI 02540
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Galen Partners III, L.P.
March , 1998
Page 5
of the Courts of the State of New York, and further consent that any process or
notice of motion or other application to the said Court or Judge thereof may be
served inside or outside the State of New York by registered mail or personal
service, provided a time period of at least twenty days for appearance is
allowed.
Very truly yours,
Name and Signature of Purchaser: Address of Purchaser:
Michael K. Reicher 2214 Churchview Dr. #10
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By: /s/ Michael K. Reicher Rockford, IL 61107
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Galen Partners III, L.P.
March , 1998
Page 5
of the Courts of the State of New York, and further consent that any process or
notice of motion or other application to the said Court or Judge thereof may be
served inside or outside the State of New York by registered mail or personal
service, provided a time period of at least twenty days for appearance is
allowed.
Very truly yours,
Name and Signature of Purchaser Address of Purchaser:
/s/ Daniel W. Hill 6725 Lynch Ave.
- --------------------------------- ------------------------------
By: Daniel W. Hill Riverbank, California
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95367
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Galen Partners III, L.P.
March , 1998
Page 5
of the Courts of the State of New York, and further consent that any process or
notice of motion or other application to the said Court or Judge thereof may be
served inside or outside the State of New York by registered mail or personal
service, provided a time period of at least twenty days for appearance is
allowed.
Very truly yours,
Name and Signature of Purchaser Address of Purchaser:
/s/ Peter R. Clemens 20860 Valley Road
- --------------------------------- ------------------------------
By: Kildeer, Illinois 60047
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Galen Partners III, L.P.
March , 1998
Page 5
of the Courts of the State of New York, and further consent that any process or
notice of motion or other application to the said Court or Judge thereof may be
served inside or outside the State of New York by registered mail or personal
service, provided a time period of at least twenty days for appearance is
allowed.
Very truly yours,
Name and Signature of Purchaser: Address of Purchaser:
Stephanie Heitmeyer 17759 St. Rt. 66
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By: /s/ Stephanie Heitmeyer Ft. Jennings, OH 45844
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