SEPARATION AGREEMENT AND GENERAL RELEASE
THIS SEPARATION AGREEMENT AND GENERAL RELEASE ("Agreement") is between MICHAEL K.
REICHER ("EMPLOYEE") and HALSEY DRUG CO., INC., a corporation ("EMPLOYER").
SECTION A: PARTIES' UNDERSTANDINGS
EMPLOYEE has been employed by EMPLOYER in the capacity of Chief Executive Officer and Chairman; and
EMPLOYEE and EMPLOYER have engaged in discussions resulting in EMPLOYEE's termination from
employment with EMPLOYER; and
EMPLOYEE and EMPLOYER wish to resolve any and all issues arising from EMPLOYEE's employment
and/or separation from employment with EMPLOYER.
SECTION B: PARTIES' AGREEMENTS
In consideration of the above and the promises set forth in this Agreement, the parties agree as follows:
1. EMPLOYMENT TERMINATION. EMPLOYER and EMPLOYEE acknowledge that EMPLOYEE's
employment as Chief Executive Officer and Chairman has been terminated by Employer without cause effective
as of June 16, 2003 (the "Termination Date").
2. RESIGNATION FROM BOARD. Simultaneous with the execution of this Agreement by EMPLOYEE and
EMPLOYER (the "Effective Date"), EMPLOYEE shall execute and deliver to EMPLOYER his resignation from
the Board of the Directors of EMPLOYER and all subsidiaries and affiliates thereof, which Resignation shall be in
the form of Exhibit A attached hereto.
3. CONSIDERATION. EMPLOYER, in recognition of and in consideration for EMPLOYEE's release of
claims (as set forth in paragraph 9 of this Agreement) and covenant not to sue (as set forth in subparagraph 14 of
this Agreement), agrees to provide the following to EMPLOYEE:
a. TERMINATION PAYMENT: In full satisfaction of Paragraph 8.6 of the Employment Agreement executed
by and between EMPLOYER and EMPLOYEE as of March 10, 1998, as amended by the First Amendment to
Employment Agreement executed by and between the parties as of May 24, 2000 ("Employment Agreement"),
EMPLOYER shall pay to EMPLOYEE the sum of Four Hundred Thousand Dollars and 00/100 Dollars
($400,000.00) (the "Severance