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Exhibit 10.5
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "Agreement") dated as of March 10,
1998 from HALSEY DRUG CO., INC., a New York corporation (the "Pledgor"), to
GALEN PARTNERS III, L.P., a Delaware limited partnership, as Agent for the
Purchasers, as hereinafter defined (the "Pledgee").
WHEREAS, the Pledgor is entering into a Debenture and Warrant
Purchase Agreement dated of even date herewith (the "Purchase Agreement") with
various purchasers, including the Agent (collectively, the "Purchasers");
WHEREAS, 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 Pledgee, for the ratable benefit
of the Purchasers, as contemplated hereby.
NOW, THEREFORE, in consideration of the premises and to induce the
Purchasers and the Pledgee 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 Pledgee as follows:
1. Definitions. Unless the context otherwise requires, all terms
used but not expressly defined herein shall have the meanings given to them in
the Purchase Agreement, or, if they are not defined in the Purchase Agreement,
but are defined in the New York Uniform Commercial Code (the "Code"), they shall
have the same meaning herein as in the Code.
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 and the agreements, documents and instruments delivered by the Pledgor
pursuant thereto or in connection therewith (collectively, the "Obligations"),
the Pledgor hereby pledges to the Pledgee, for the ratable benefit of the
Purchasers, and grants to the Pledgee, for the ratable benefit of the
Purchasers, a lien on and security interest in the following (collectively the
"Pledged Collateral"): (i) all of the issued and outstanding shares of common
stock of each of Cenci Powder Products, Inc. ("Cenci" or a "Subsidiary"), Halsey
Pharmaceuticals, Inc. ("HP, Inc." or a "Subsidiary"), Houba, Inc. ("Houba" or a
"Subsidiary"), HR Cenci Laboratories, Inc. ("HR Cenci" or a "Subsidiary") and
Indiana Fine Chemicals, Inc. ("Indiana" or a "Subsidiary" and together with
Cenci, HP, Inc., Houba and HR Cenci, the "Subsidiaries") which shares are more
particularly described on Schedule A hereto (the "Pledged Stock"), (ii) all
additional shares of common stock at any time issued to the Pledgee by any of
Cenci, HP, Inc., Houba, HR Cenci and Indiana, (iii) the certificates evidencing
all such shares and securities, (iv) subject to Section 6 hereof, all dividends,
cash, instruments and other property from time to time received,
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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
of the foregoing (including, without limitation, proceeds constituting any
property of the types described above). The Pledgor shall deliver to the Pledgee
original stock certificates for all of the Pledged Stock, each accompanied by an
undated stock power executed in blank by the Pledgor.
(b) The Pledgee 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 to the extent required by law. The
Pledgee may hold the Pledged Collateral in the form in which it is received by
it.
(c) The Pledgor, to the full extent permitted by law, hereby
constitutes and irrevocably appoints the Pledgee (and any officer or agent of
the Pledgee, 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 Pledgee, to transfer, upon the occurrence and
during the continuance of an Event of Default (as hereinafter defined) or at any
time the Pledgee, based on all the facts and circumstances then existing, and in
the exercise of its commercially reasonable credit judgment, reasonably believes
in good faith, 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 (for the purposes of
this Agreement, the term "Person" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, institution, entity, party or government, including any division,
agency or department thereof), 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 Cenci, HP, Inc.,
Houba, HR Cenci and Indiana, as applicable, in whole or in part, to the name of
the Pledgee or such other Person or Persons as the Pledgee may designate and,
upon the occurrence and during the continuance of an Event of Default or at any
time the Pledgee, based on all the facts and circumstances then existing, and in
the exercise of its commercially reasonable credit judgment, reasonably believes
in good faith, 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 Pledgee 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 Pledgee'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.
(e) Except to the extent that the Pledgee 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 Pledgee, with full power of substitution and
revocation, as such Person's true and lawful attorney-in-fact in such
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Person's name and otherwise to do any and all acts herein permitted and to
exercise any and all powers herein conferred; provided, however, no Person shall
exercise any such power of attorney unless an Event of Default shall have
occurred and be continuing.
3. Rights of the Pledgor; Voting.
(a) During the term of this Agreement, and so long as no
Voting Notice (as defined below) is received from the Pledgee following the
occurrence and during the continuance of an Event of Default as hereinafter
provided in this Section 3, 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 the agreements, documents and
instruments delivered by the Pledgor and each Subsidiary pursuant thereto unless
the Pledgee consents thereto.
(b) Upon the occurrence and during the continuance of an Event
of Default or from and after such time as the Pledgee has notified the Pledgor
in writing that based on all the facts and circumstances than existing, and in
the exercise of its commercially reasonable judgment, Pledgee reasonably
believes in good faith that Fraud has occurred, the Pledgor shall give the
Pledgee at least five (5) days' prior notice of (i) any meeting of stockholders
of any of the Subsidiaries or any meeting of directors 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. During
the continuance of an Event of Default, the Pledgor hereby authorizes the
Pledgee to send its agents and representatives to any such meeting of
shareholders or directors of any of one of the Subsidiaries that the Pledgee
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 Pledgee 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, 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
Pledgee may elect to exercise voting power (as determined by it in its sole
discretion) by a written notice given to the Pledgor at any time during the
continuance of an Event of Default (a "Voting Notice"), whereupon the Pledgee
shall have the exclusive right during the continuance of an Event of Default 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 Pledgee notifies the Pledgor of the release of such rights. Once any
such Event of Default has been cured or waived, any relevant Voting Notice shall
be deemed to be rescinded.
4. No Restrictions on Transfer. The Pledgor warrants and represents
that 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.
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5. No Transfer or 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 Pledgee, or as agreed to in advance by the Pledgee in accordance with the
terms of the Purchase Agreement. The Pledgor shall not cause, suffer or permit
any Subsidiary to issue any common or preferred stock, or any other equity
security, to any Person, unless the Pledgee otherwise consents in writing (which
consent may be withheld in the Pledgee's reasonable credit judgment).
6. Adjustments of Capital Stock; Payment and Application of
Dividends. 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 Pledgee 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 stock originally pledged
hereunder. Upon the occurrence and during the continuance of an Event of
Default, all cash dividends received by or payable to the Pledgor in respect of
the Pledged Collateral, including any additional shares of stock 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 Pledgee, to be held by the
Pledgee as Pledged Collateral hereunder or to be applied by the Pledgee against
the Obligations. Upon the occurrence and during the continuance of an Event of
Default, 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 Pledgee to be held by it and applied as
provided in the preceding sentence.
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 Pledgee by the Pledgor,
and said 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 Pledgee 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.
8. Return of Pledged Collateral Upon Termination. Upon the release,
satisfaction, discharge or termination of all of the Obligations and the
termination of the Purchase Agreement, the Pledgee 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 Pledgee pursuant hereto, to the
extent the Pledgee 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.
9. Events of Default; Remedies. (a) Upon the occurrence and during
the continuance of any Event of Default (as defined below), the Pledgee shall
have and at any time
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may exercise with respect to the Pledged Collateral, the proceeds thereof, and
any other property or money held by the Pledgee hereunder, all rights and
remedies available to it under law, including, without limitation, those given,
allowed or permitted to a secured party by or under the Code, and all rights and
remedies provided for herein. "Event of Default" shall mean the occurrence of an
Event of Default as defined in the Purchase Agreement.
(b) Without limiting the foregoing, in the event that the
Pledgee elects to sell the Pledged Stock (such term including, for purposes of
this Section 9, the Pledged Stock and all other shares of stock or securities at
any time forming part of the Pledged Collateral), the Pledgee 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 Pledgee 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 Pledgee may elect. All requirements of reasonable notice under
this Section 9 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 16 hereto or such other address as the Pledgor may
have, in writing, provided to the Pledgee. The Pledgee 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.
(c) Because federal and state securities laws may restrict the
methods of disposition of the Pledged Stock which are readily available to the
Pledgee, and specifically because a public sale thereof may be impossible or
impracticable by reason of certain restrictions under the Securities Act of
1933, as amended, or under applicable Blue Sky or other state securities laws as
now or hereafter in effect, the Pledgor agrees that the Pledgee 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 Pledgee deems appropriate and who agree that
they are purchasing for their own accounts for investment and not with a view to
distribution, and the Pledgee'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 Pledgee 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 Pledgee 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 Pledgee upon credit or for
future delivery, the Pledgee shall not be liable for the failure of the
purchaser to pay for same and, in such event, the Pledgee may resell such
Pledged Stock and the Pledgor shall continue to be liable to the Pledgee for the
full amount of the Obligations to the extent the Pledgee does not receive full
and final payment in cash therefor.
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(d) Except as otherwise provided in the Purchase Agreement or
by applicable law, the Pledgee 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 hereunder or any
amount realized thereon.
10. Certain Representations and Warranties. The Pledgor represents
and warrants to the Pledgee that: (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 Pledgee, and the Pledged Stock constitutes all of the outstanding
securities of any class or kind of all of the Subsidiaries.
(b) 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.
(c) The pledge of the Pledged Collateral pursuant to this
Agreement creates a valid and perfected first priority security interest in the
Pledged Collateral, securing the payment of the Obligations, and all filing and
other actions necessary or desirable to perfect and protect such security
interest having been duly made or taken.
(d) No authorization, approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required for (i) 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, (ii) the perfection of or exercise by the Pledgee of its rights and
remedies provided for in this Agreement, or (iii) the exercise by the Pledgee 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).
(e) 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 (i) limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforceability of creditors' rights generally, and (ii) subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
11. Indemnity and Expenses. (a) The Pledgor agrees to and hereby
indemnifies the Pledgee from and against any and all claims, damages, losses,
liabilities and expenses 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 negligence, willful
misconduct or bad faith of the Pledgee.
(b) The Pledgor agrees promptly upon the Pledgee's demand to
pay or reimburse the Pledgee for all reasonable expenses (including, without
limitation, reasonable fees and disbursements of counsel) incurred by the
Pledgee in connection with (i) any modification
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or amendment to or waiver of any provision of this Agreement requested by the
Pledgor, (ii) the custody or preservation of the Pledged Collateral, (iii) 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 Pledgee
hereunder reasonably necessary to enforce its rights, whether directly or as
attorney-in-fact pursuant to the power of attorney herein conferred, or (iv) 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 Pledgee 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.
12. Pledgee May Perform. If the Pledgor fails to perform any
agreement contained herein, the Pledgee may, but shall not be obligated to,
perform, or cause performance of, such agreement, and the reasonable,
out-of-pocket expenses of the Pledgee incurred in connection therewith shall be
payable by the Pledgor.
13. 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 Pledgee 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 Pledgee hereunder in respect of the Pledged Collateral and any other
property or money held hereunder may at the option of the Pledgee 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 Pledgor.
14. Continuing Security Interest; Assignments of Secured Debt. This
Agreement shall create a continuing security interest in the Pledged Collateral
and shall (i) remain in full force and effect until released in accordance
herewith, (ii) be binding upon the Pledgor, and the Pledgor's successors and
assigns, and upon each of the Subsidiaries, and its successors and assigns, and
(iii) inure, together with the rights and remedies of the Pledgee hereunder, to
the benefit of the Pledgee, its successors and permitted assigns. Without
limiting the generality of the foregoing clause (iii), the Pledgee may assign or
otherwise transfer all or any portion of its rights and obligations under this
Agreement to any other person or entity, to the extent and in the manner
provided in the Purchase Agreement and such other person or entity shall
thereupon become vested with all the benefits in respect hereof granted to the
Pledgee herein; the Pledgee 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 Pledgee shall have the benefit of this Agreement as if named
herein and may exercise all the rights and powers given to the Pledgee
hereunder.
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15. GOVERNING LAW; SUITS. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PLEDGOR AND THE PLEDGEE HEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, NOTWITHSTANDING
ITS CONFLICTS OF LAW PRINCIPLES. THE PLEDGOR HEREBY IRREVOCABLY (I) CONSENTS
THAT ANY SUIT, ACTION OR LEGAL PROCEEDING ARISING OUT OF OR RELATED IN ANY WAY
TO THIS AGREEMENT SHALL, IF THE PLEDGEE SO ELECTS, BE BROUGHT AND ENFORCED IN
STATE OR FEDERAL COURTS HAVING SITUS WITHIN THE CITY OF NEW YORK, STATE OF NEW
YORK AND (II) WAIVES ANY OBJECTION TO JURISDICTION OR VENUE IN ANY SUCH SUIT,
ACTION OR PROCEEDING COMMENCED IN ANY SUCH COURT AND ANY CLAIM THAT SUCH SUIT,
ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. THE PLEDGOR
AGREES THAT SERVICE OF PROCESS IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED
MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL) POSTAGE PREPAID, TO THE PLEDGOR
AT ITS ADDRESS SET FORTH IN SECTION 16 HEREOF.
16. Notices. All notices hereunder shall be in writing (except only
as otherwise provided in Section 13) 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 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 15),
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.
1827 Pacific Street
Brooklyn, New York 11233
with copies to:
St. John & Wayne
2 Penn Plaza East
Newark, New Jersey 07105
Attention: John P. Reilly, Esq.
Telecopier No. (973) 491-3555
(b) in the case of the Pledgee, to:
Galen Partners III, L.P.
610 Fifth Avenue, 5th Floor
New York, New York 10020
Attention: Mr. Srini Conjeevaram
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with a copy to:
Wolf, Block, Schorr and Solis-Cohen LLP
250 Park Avenue, 10th Floor
New York, New York 10177
Attention: George N. Abrahams, Esq.
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.
17. WAIVERS OF JURY TRIAL AND CONSEQUENTIAL DAMAGES. THE PLEDGOR
AND, BY ITS ACCEPTANCE HEREOF, THE PLEDGEE HEREBY WAIVE TRIAL BY JURY IN ANY
LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF
THIS AGREEMENT, THE PLEDGED COLLATERAL, OR ANY INSTRUMENT OR DOCUMENT DELIVERED
PURSUANT HERETO.
NEITHER THE PLEDGOR OR THE PLEDGEE, 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.
18. 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 constitutes 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.
19. Miscellaneous. This Agreement shall be binding upon and shall
inure to the benefit of the Pledgor and the Pledgee 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.
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IN WITNESS WHEREOF, the Pledgor has caused this Agreement to be
executed by its duly authorized officer as of the day and year first above
written.
HALSEY DRUG CO., INC.
By: /s/ Micheal Reicher
------------------------------------
Name: Michael Reicher
Title: Chief Executive Officer
ACCEPTED AND AGREED TO
AS OF MARCH 10, 1998
GALEN PARTNERS III, L.P.,
INDIVIDUALLY AND AS AGENT
By: Claudius, L.L.C., General Partner
By: /s/ Bruce F. Wesson
----------------------------------
Name: Bruce F. Wesson
Title: General Partner
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Each of the undersigned hereby agrees to recognize all of the rights
granted to the Pledgee under the foregoing Agreement and to take all actions
necessary to effectuate said rights and the purposes of the Agreement including,
without limitation, performance of any acts requested by the Pledgee pursuant to
the terms thereof.
Date: as of March 10, 1998
CENCI POWDER PRODUCTS, INC.
By: /s/ Micheal K. Reicher
------------------------------------
Name: Michael K. Reicher
Title: Chief Executive Officer
HALSEY PHARMACEUTICAL, INC.
By: /s/ Micheal K. Reicher
------------------------------------
Name: Michael K. Reicher
Title: Chief Executive Officer
HOUBA, INC.
By: /s/ Micheal K. Reicher
------------------------------------
Name: Michael K. Reicher
Title: Chief Executive Officer
H.R. CENCI LABORATORIES, INC.
By: /s/ Micheal K. Reicher
------------------------------------
Name: Michael K. Reicher
Title: Chief Executive Officer
INDIANA FINE CHEMICALS, INC.
By: /s/ Micheal K. Reicher
------------------------------------
Name: Michael K. Reicher
Title: Chief Executive Officer
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SCHEDULE A
Designation and Number of
shares of capital stock owned by Pledgor
===============================================================================================
Number of
Issuer Certificate Designation Shares
No.
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Cenci Powder Products, Inc. _ Common Stock, $.01 par value ___
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Halsey Pharmaceutical, Inc. _ Common Stock, $.01 par value ___
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Houba, Inc. _ Common Stock, $.01 par value ___
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H.R. Cenci Laboratories, Inc. _ Common Stock, $.01 par value ___
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Indiana Fine Chemicals, Inc. _ Common Stock, $.01 par value ___
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