<PAGE>

                                                                     EXHIBIT 4.2

                                DEED OF COVENANT

THIS DEED OF COVENANT is made on 27th March, 2003 by each of Ciba Specialty
Chemicals Corporation, Ciba Specialty Chemicals PLC, Ciba Spezialitatenchemie
Holding Deutschland GmbH and Ciba Specialty Chemicals Eurofinance Ltd. (each an
ISSUER) in favour of the account holders of Clearstream Banking, societe anonyme
(CLEARSTREAM, LUXEMBOURG) and Euroclear Bank S.A./N.V. as operator of the
Euroclear System (EUROCLEAR), or any successor to the business thereof or any
other additional clearing system or systems as are specified in the Pricing
Supplement relating to any Note (as defined below) (each a CLEARING SYSTEM).

WHEREAS:

(a)   Each Issuer has entered into an amended and restated Program Agreement
      (the PROGRAM AGREEMENT, which expression includes the same as it may be
      amended, supplemented, novated or restated from time to time) dated 27th
      March, 2003 with Ciba Specialty Chemicals Holding Inc. (the GUARANTOR) and
      the Dealers named therein under which the relevant Issuer proposes from
      time to time to issue Euro Medium Term Notes (the NOTES), which amends and
      restates the amended and restated program agreement dated 16th June, 2000
      with Ciba Specialty Chemicals Corporation, Ciba Specialty Chemicals PLC,
      Ciba Spezialitatenchemie Holdings Deutschland GmbH, Ciba Specialty
      Chemicals Eurofinance Ltd., the Guarantor and the Dealers named therein
      (the PRINCIPAL PROGRAM AGREEMENT).

(b)   Each Issuer has also entered into an amended and restated Agency Agreement
      (the AGENCY AGREEMENT, which expression includes the same as it may be
      amended, supplemented, novated or restated from time to time) dated 27th
      March, 2003 between, inter alios, the Issuer and JPMorgan Chase Bank (the
      AGENT).

(c)   The Notes will initially be represented by, and comprised in, Temporary
      Global Notes (the TEMPORARY GLOBAL NOTES) and thereafter may be
      represented by, and comprised in, Permanent Global Notes (the PERMANENT
      GLOBAL NOTES and together with the Temporary Global Notes, the GLOBAL
      NOTES), such Global Notes representing a certain number of underlying
      Notes (the UNDERLYING NOTES).

(d)   Each Global Note will, after issue, be deposited with a common depository
      for one or more Clearing Systems (each such Clearing System or all such
      Clearing Systems together, the RELEVANT CLEARING SYSTEM). Upon such
      deposit of a Global Note the Underlying Notes represented by such Global
      Note will be credited to a securities account or securities accounts with
      the Relevant Clearing System. Any account holder with the Relevant
      Clearing System which has Underlying Notes credited to its securities
      account from time to time (each a RELEVANT ACCOUNT HOLDER) will, subject
      to and in accordance with the terms and conditions and operating
      procedures or management regulations of the Relevant Clearing System, be
      entitled to transfer such Underlying Notes and (subject to and upon
      payment being made by the relevant Issuer to the bearer in accordance with
      the terms of the relevant Global Note) will be entitled to receive
      payments from the Relevant Clearing System calculated by reference to the
      Underlying Notes credited to its securities account.

(e)   In certain circumstances specified in each Global Note, a Global Note will
      become void. The time at which a Global Note becomes void is hereinafter
      referred to as the RELEVANT TIME. In such circumstances each Relevant
      Account Holder will, subject to and in accordance with the terms of this
      Deed, acquire against the relevant Issuer all those rights which such
      Relevant Account Holder would have had if, prior to the Global Note
      becoming void, duly executed and authenticated Definitive Note(s) (as
      defined in the Agency Agreement) and, if the Notes are repayable in
      instalments, receipts in respect thereof (the RECEIPTS) and interest
      coupons


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<PAGE>
      (the COUPONS) appertaining to the Definitive Note(s) (if appropriate) had
      been issued in respect of its Underlying Note(s) and such Definitive
      Notes(s), Receipts (if appropriate) and Coupons (if appropriate) were held
      and beneficially owned by such Relevant Account Holder.

(f)   The obligations of each Issuer under this Deed have been guaranteed by the
      Guarantor pursuant to the amended and restated Deed of Guarantee (the
      GUARANTEE) executed by the Guarantor on 27th March, 2003 and an executed
      copy of the Guarantee has been deposited with and shall be held by the
      Agent for the time being for the Notes. A copy of the Guarantee shall be
      available for inspection at the office of the Agent for the time being
      (being at the date hereof at Trinity Tower, 9 Thomas More Street, London
      E1 9YT).

(g)   This Deed of Covenant amends and restates the amended and restated Deed of
      Covenant entered into by Ciba Specialty Chemicals Corporation, Ciba
      Specialty Chemicals PLC and Ciba Spezialitatenchemie Holding Deutschland
      GmbH dated 27th March, 2002. This Deed of Covenant does not affect any
      Notes issued pursuant to the Principal Program Agreement prior to the date
      hereof.

NOW THIS DEED WITNESSES AS FOLLOWS:

1.    If any Global Note becomes void in accordance with the terms thereof the
      relevant Issuer hereby undertakes and covenants with each Relevant Account
      Holder (other than when any Relevant Clearing System is an account holder
      of any other Relevant Clearing System) that each Relevant Account Holder
      shall automatically acquire at the Relevant Time, without the need for any
      further action on behalf of any person, against the relevant Issuer all
      those rights which such Relevant Account Holder would have had if at the
      Relevant Time it held and beneficially owned duly executed and
      authenticated Definitive Note(s), Receipts (if appropriate) and Coupons
      (if appropriate) in respect of each Underlying Note represented by such
      Global Note which such Relevant Account Holder has credited to its
      securities account with the Relevant Clearing System at the Relevant Time.
      The relevant Issuer's obligation pursuant to this clause shall be a
      separate and independent obligation by reference to each Underlying Note
      which a Relevant Account Holder has credited to its securities account
      with the Relevant Clearing System and the relevant Issuer agrees that a
      Relevant Account Holder may assign its rights hereunder in whole or in
      part.

2.    The records of the Relevant Clearing System shall be conclusive evidence
      of the identity of the Relevant Account Holders and the number of
      Underlying Notes credited to the securities account of each Relevant
      Account Holder. For the purposes hereof a statement issued by the Relevant
      Clearing System stating:

      (a)   the name of the Relevant Account Holder to which such statement is
            issued; and

      (b)   the aggregate nominal amount of Underlying Notes credited to the
            securities account of such Relevant Account Holder as at the opening
            of business on the first day following the Relevant Time on which
            the Relevant Clearing System is open for business,

      shall be conclusive evidence of the records of the Relevant Clearing
      System at the Relevant Time.

3.    In the event of a dispute, the determination of the Relevant Time by the
      Relevant Clearing System shall be final and conclusive for all purposes in
      connection with the Relevant Account Holders with securities accounts with
      the Relevant Clearing System.

4.    (a) Where the Issuer is Ciba Specialty Chemicals Corporation:


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<PAGE>
            The Issuer will, subject to the exceptions and limitations set forth
            below, pay as additional interest on an Underlying Note such
            additional amounts as are necessary in order that the net amounts
            receivable pursuant to the terms of the Underlying Note by each
            Relevant Account Holder who is a United States Alien (as such term
            is defined below), after deduction for any present or future tax,
            assessment or governmental charge of the United States (as such term
            is defined below), or a political subdivision or authority thereof
            or therein, imposed by withholding with respect to the payment, will
            not be less than the amounts provided for in such Underlying Note to
            be then due and payable; provided, however, that the foregoing
            obligation to pay additional amounts shall not apply to:

            (i)   any tax, assessment or governmental charge that would not have
                  been so imposed but for the existence of any present or former
                  connection between such Relevant Account Holder (or between a
                  fiduciary, settlor, beneficiary, member or shareholder of, or
                  holder of power over, such holder, if such Relevant Account
                  Holder is an estate, trust, partnership or corporation) and
                  the United States, including, without limitation, such
                  Relevant Account Holder (or fiduciary, settlor, beneficiary,
                  member, shareholder or holder of a power) being considered as:

                  (A)   being or having been present or engaged in a trade or
                        business in the United States or having or having had a
                        permanent establishment therein;

                  (B)   having a current or former relationship with the United
                        States, including a relationship as a citizen or
                        resident or being treated as a resident thereof;

                  (C)   being or having been a personal holding company, a
                        controlled foreign corporation, a passive foreign
                        investment company, a foreign personal holding company
                        with respect to the United States, a corporation that
                        has accumulated earnings to avoid United States Federal
                        income tax or a private foundation or other tax-exempt
                        organisation; or

                  (D)   an actual or a constructive "10-per cent shareholder" of
                        the Issuer as defined in Section 871(h)(3) of the United
                        States Internal Revenue Code of 1986, as amended (the
                        CODE);

            (ii)  any Relevant Account Holder who is a fiduciary or partnership
                  or other than the sole beneficial owner of the Underlying Note
                  or Coupon, but only to the extent that a beneficiary or
                  settlor with respect to such fiduciary or member of such
                  partnership or a beneficial owner of the Underlying Note or
                  Coupon would not have been entitled to the payment of an
                  additional amount had such beneficiary, settlor, member or
                  beneficial owner been the Relevant Account Holder of such
                  Underlying Note or Coupon;

            (iii) any tax, assessment or governmental charge that would not have
                  been imposed or withheld but for the failure of the Relevant
                  Account Holder, if required, to comply with certification,
                  identification or information reporting requirements under
                  United States income tax laws, without regard to any tax
                  treaty, with respect to the payment, concerning the
                  nationality, residence, identity or connection with the United
                  States of the Relevant Account Holder


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<PAGE>
                  or a beneficial owner of such Underlying Note or Coupon, if
                  such compliance is required by United States income tax laws,
                  without regard to any tax treaty, as a precondition to relief
                  or exemption from such tax, assessment or governmental charge;

            (iv)  any tax, assessment or governmental charge that would not have
                  been so imposed or withheld but for the presentation by the
                  holder of such Underlying Note or Coupon for payment on a date
                  more than 30 days after the Relevant Date (as defined in the
                  Terms and Conditions of the Underlying Note) except to the
                  extent that the holder thereof would have been entitled to
                  such additional amounts on presenting the same for payment on
                  the last day of such 30 day period;

            (v)   any estate, inheritance, gift, sales, transfer, excise, wealth
                  or personal property tax or any similar tax, assessment or
                  governmental charge;

            (vi)  any tax, assessment or governmental charge that is payable
                  otherwise than by withholding from the payment of the amounts
                  receivable in respect of such Underlying Note or Coupon;

            (vii) any tax, assessment or governmental charge required to be
                  withheld by any paying agent from such payment of amounts
                  receivable in respect of any Underlying Note, if such payment
                  can be made without such withholding by any other paying
                  agent;

            (viii) any combination of items (i), (ii), (iii), (iv), (v), (vi) or
                  (vii);

            (ix)  any Underlying Note, Receipt or Coupon presented for payment
                  where such withholding or deduction is imposed on a payment to
                  an individual and is required to be made pursuant to any
                  European Union Directive on the taxation of savings
                  implementing the conclusions of the ECOFIN Council Meeting of
                  November 26-27, 2000, or any law implementing or complying
                  with, or introduced in order to conform to, such Directive; or

            (x)   any Underlying Note, Receipt or Coupon presented for payment
                  by or on behalf of a holder who would have been able to avoid
                  such withholding or deduction by presenting the relevant Note,
                  Receipt or Coupon to another Paying Agent in a Member State of
                  the EU.

            As used in this Clause, UNITED STATES means the United States of
            America, the Commonwealth of Puerto Rico and each possession of the
            United States of America and place subject to its jurisdiction and
            UNITED STATES ALIEN means any corporation, partnership, individual
            or fiduciary that, as to the United States, is for United States
            Federal income tax purposes (A) a foreign corporation, (B) a foreign
            partnership one or more of the members of which is, for United
            States Federal income tax purposes, a foreign corporation, a
            non-resident alien individual or a non-resident alien fiduciary of a
            foreign estate or trust, (C) a non-resident alien individual or (D)
            a non-resident alien fiduciary of a foreign estate or trust.

      (b)   Where the Issuer is Ciba Spezialitatenchemie Holding Deutschland
            GmbH:

            All payments in respect of the Underlying Note, Receipt of Coupon by
            the Issuer will be made without withholding or deduction for or on
            account of any present or future taxes or duties of whatever nature
            imposed or levied by or on behalf of Germany or


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<PAGE>
            any state (Bundesland), municipality or other political subdivision
            or any authority thereof or therein having power to tax, unless such
            withholding or deduction is required by law. In such event, the
            Issuer will pay such additional amounts as shall be necessary in
            order that the net amounts received by the Relevant Account Holders
            after such withholding or deduction shall equal the amounts which
            would otherwise have been receivable in respect of the Underlying
            Note, Receipt of Coupon in the absence of such withholding or
            deduction; except that no such additional amounts shall be payable
            with respect to any Underlying Note, Receipt of Coupon to or to the
            order of a Relevant Account Holder who is liable for such taxes or
            duties in respect of such Underlying Note, Receipt of Coupon by
            reason of his having some connection with Germany other than the
            mere holding of such Underlying Note, Receipt of Coupon or with
            respect to any Underlying Note, Receipt of Coupon presented for
            payment to a paying agent which is required to deduct or withhold an
            amount for or on account of such taxes or duties if such amount can
            be paid without any deduction or withholding for or on account of
            any taxes or duties by any other paying agent or in respect to any
            Underlying Note, Receipt or Coupon presented for payment to a paying
            agent more than 30 days after the Relevant Date (as defined in the
            Terms and Conditions of the Underlying Note) except to the extent
            that the holder thereof would have been entitled to such additional
            amounts on presenting the same for payment on such thirtieth day or
            where such withholding or deduction is imposed on a payment to an
            individual and is required to be made pursuant to any European Union
            Directive on the taxation of savings implementing the conclusions of
            the ECOFIN Council meeting of November 26-27, 2000 or any law
            implementing or complying with, or introduced in order to conform
            to, such Directive or with respect to any Underlying Note, Receipt
            of Coupon presented for payment to a paying agent by or on behalf of
            a holder who would have been able to avoid such withholding or
            deduction by presenting the relevant Underlying Note, Receipt or
            Coupon to another paying agent in a Member State of the EU. Any
            advance income tax (Zinsabschlagsteuer) levied in Germany as well as
            the solidarity surcharge (Solidaritatszuschlag) imposed thereon do
            not constitute a withholding or deduction within the meaning of this
            Clause 4(a)(b).

      (c)   Where the Issuer is Ciba Specialty Chemicals PLC:

            All payments by the Issuer in respect of the Underlying Note,
            Receipt of Coupon shall be made without withholding or deduction for
            or on account of any present or future tax, duty or charge of
            whatever nature imposed or levied by or on behalf of the United
            Kingdom, or any authority thereof or therein having power to tax
            unless the withholding or deduction is required by law. In that
            event, the Issuer shall pay such additional amounts as will result
            (after such withholding or deduction) in the receipt by the Relevant
            Account Holders of the sums which would have been receivable (in the
            absence of such withholding or deduction) from the Issuer in respect
            of their Underlying Note, Receipt of Coupon; except that no such
            additional amounts shall be payable with respect to any Underlying
            Note, Receipt of Coupon to or to the order of a person liable to
            such tax, duty or charge in respect of such Underlying Note, Receipt
            of Coupon by reason of his having some connection with the United
            Kingdom other than the mere holding or ownership of such Underlying
            Note, Receipt of Coupon or with respect to any Underlying Note
            presented for payment to a paying agent which is required to deduct
            or withhold an amount for or on account of such tax, duty or charge
            if such amount can be paid without any deduction or withholding for
            or on account of any tax, duty or charge by any other paying agent
            or with respect to any Underlying Note, Receipt or Coupon presented
            for payment to a paying agent more than 30 days after the Relevant
            Date (as defined in the Terms and Conditions of


                                       5
<PAGE>
            the Underlying Note) except to the extent that the holder thereof
            would have been entitled to such additional amounts on presenting
            the same for payment on such thirtieth day or where such withholding
            or deduction is imposed on a payment to an individual and is
            required to be made pursuant to any European Union Directive on the
            taxation of savings implementing the conclusions of the ECOFIN
            Council meeting of November 26-27, 2000 or any law implementing or
            complying with, or introduced in order to conform to, such Directive
            or with respect to any Underlying Note presented for payment to a
            paying agent by or on behalf of a holder who would have been able to
            avoid such withholding or deduction by presenting the relevant
            Underlying Note, Receipt or Coupon to another paying agent in a
            Member State of the EU.

      (d)   Where the Issuer is Ciba Specialty Chemicals Eurofinance Ltd.:

            All payments by the Issuer in respect of the Underlying Note,
            Receipt of Coupon shall be made without withholding or deduction for
            or on account of any present or future tax, duty or charge of
            whatever nature imposed or levied by or on behalf of Bermuda, or any
            authority thereof or therein having power to tax unless the
            withholding or deduction is required by law. In that event, the
            Issuer shall pay such additional amounts as will result (after such
            withholding or deduction) in the receipt by the Relevant Account
            Holders of the sums which would have been receivable (in the absence
            of such withholding or deduction) from the Issuer in respect of
            their Underlying Note, Receipt of Coupon; except that no such
            additional amounts shall be payable with respect to any Underlying
            Note to or to the order of any person liable to such tax, duty or
            charge in respect of such Underlying Note, Receipt of Coupon by
            reason of his having some connection with Bermuda other than the
            mere holding or ownership of such Underlying Note or with respect to
            any Underlying Note, Receipt or Coupon presented for payment to a
            paying agent more than 30 days after the Relevant Date (as defined
            in the Terms and Conditions of the Underlying Note) except to the
            extent that the holder thereof would have been entitled to such
            additional amounts on presenting the same for payment on such
            thirtieth day or where such withholding or deduction is imposed on a
            payment to an individual and is required to be made pursuant to any
            European Union Directive on the taxation of savings implementing the
            conclusions of the ECOFIN Council meeting of November 26-27, 2000 or
            any law implementing or complying with, or introduced in order to
            conform to, such Directive or with respect to any Underlying Note
            presented for payment to a paying agent by or on behalf of a holder
            who would have been able to avoid such withholding or deduction by
            presenting the relevant Underlying Note, Receipt or Coupon to
            another paying agent in a Member State of the EU.

5.    Each Issuer hereby warrants, represents and covenants with each Relevant
      Account Holder that it has all corporate power, and has taken all
      necessary corporate or other steps, to enable it to execute, deliver and
      perform this Deed, and that this Deed constitutes a legal, valid and
      binding obligation of the relevant Issuer enforceable in accordance with
      its terms subject to the laws of bankruptcy and other laws affecting the
      rights of creditors generally.

6.    This Deed shall take effect as a Deed Poll for the benefit of the Relevant
      Account Holders from time to time and for the time being. This Deed shall
      be deposited with and held by a depository for Clearstream, Luxembourg and
      Euroclear, or any successor to the business thereof and for the time being
      (being at the date hereof JPMorgan Chase Bank at Trinity Tower, 9 Thomas
      More Street, London E1 9YT) until all the obligations of each Issuer
      hereunder have been discharged in full.


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<PAGE>
7.    Each Issuer hereby acknowledges the right of every Relevant Account Holder
      to the production of, and the right of every Relevant Account Holder to
      obtain (upon payment of a reasonable charge) a copy of, this Deed, and
      further acknowledges and covenants that the obligations binding upon it
      contained herein are owed to, and shall be for the account of, each and
      every Relevant Account Holder, and that each Relevant Account Holder shall
      be entitled severally to enforce the said obligations against the relevant
      Issuer.

8.    No rights are conferred on any person under the Contracts (Rights of Third
      Parties) Act 1999 to enforce any term of this Deed, but this does not
      affect any right or remedy of any person which exists or is available
      apart from that Act.

9.    This Deed is governed by, and shall be construed in accordance with, the
      laws of England.

      Each Issuer hereby irrevocably agrees, for the exclusive benefit of the
      Relevant Account Holders, that the courts of England are to have
      jurisdiction to settle any dispute which may arise out of, or in
      connection with, this Deed and that accordingly any suit, action or
      proceedings (together referred to as PROCEEDINGS) arising out of, or in
      connection with, this Deed may be brought in such courts. Each Issuer
      irrevocably waives any objection which it may have now or hereafter to the
      laying of the venue of any Proceedings in any such court and any claim
      that any such Proceedings have been brought in an inconvenient forum and
      further irrevocably agrees that a judgment in any Proceedings brought in
      the English courts shall be conclusive and binding upon the relevant
      Issuer and may be enforced in the courts of any other jurisdiction
      (subject to the laws of the jurisdiction in which enforcement is sought).
      Nothing contained in this Clause shall limit any right to take Proceedings
      against any Issuer in any other court of competent jurisdiction, nor shall
      the taking of Proceedings in one or more jurisdictions preclude the taking
      of Proceedings in any other jurisdiction, whether concurrently or not
      (subject to the laws of the relevant jurisdictions). Ciba Specialty
      Chemicals Corporation, Ciba Spezialitatenchemie Holding Deutschland GmbH
      and Ciba Specialty Chemicals Eurofinance Ltd. each hereby appoints Ciba
      Specialty Chemicals PLC at its registered office for the time being to
      accept service of process on its behalf. If Ciba Specialty Chemicals PLC
      shall cease to be registered under the laws of England and Wales, the
      relevant Issuer shall appoint another person with an office in London to
      accept such service. Nothing herein shall affect the right to serve
      process in any other manner permitted by law.

10.   This Deed may be executed by any one or more of the parties hereto in any
      number of counterparts, each of which shall be deemed to be an original,
      but all such counterparts shall together constitute one and the same
      instrument.

IN WITNESS whereof each Issuer has caused this Deed to be duly executed the day
and year first above mentioned.


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<PAGE>
                                   SIGNATORIES

EXECUTED as a Deed by CIBA                      )     KIRK ERSTLING
SPECIALTY CHEMICALS                             )
CORPORATION                                     )     OLIVER STRUB
acting by                                       )
and                                             )
acting under the authority of that company      )
in the presence of:                             )

Witness's
Signature   A.STEINER
            ------------------------------------

Name        A.STEINER
            ------------------------------------

Address     C/o CIBA SPECIALTY CHEMICALS INC.
            ------------------------------------
            CH-4002 BASEL
            ------------------------------------



EXECUTED as a Deed by CIBA                      )     KIRK ERSTLING
SPECIALTY CHEMICALS                             )
PLC                                             )     OLIVER STRUB
acting by its attorney(s)                       )
                                                )
in the presence of:                             )

Witness's
Signature   A. STEINER
            ------------------------------------

Name        A. STEINER
            ------------------------------------

Address     C/O CIBA SPECIALTY CHEMICALS INC.
            ------------------------------------
            CH-4002 BASEL
            ------------------------------------


                                       8
<PAGE>
EXECUTED as a Deed by CIBA                      )     KIRK ERSTLING
SPEZIALITATENCHEMIE                             )
HOLDING DEUTSCHLAND GMBH                        )     OLIVER STRUB
acting by                                       )
and                                             )
acting under the authority of that company      )
in the presence of:                             )

Witness's
Signature   A. STEINER
            ------------------------------------

Name        A. STEINER
            ------------------------------------

Address     C/O CIBA SPECIALTY CHEMICALS INC.
            ------------------------------------
            CH-4002 BASEL
            ------------------------------------



EXECUTED as a Deed under                        )
Seal by CIBA SPECIALTY CHEMICALS                )     KIRK ERSTLING
EUROFINANCE LTD.                                )
and SIGNED AND DELIVERED as                     )     OLIVER STRUB
a deed on its behalf by                         )

pursuant to a power of attorney dated 26th      )
March, 2002 in the presence of:                 )

Witness's
Signature   A. STEINER
            ------------------------------------

Name        A. STEINER
            ------------------------------------

Address     C/O CIBA SPECIALTY CHEMICALS INC.
            ------------------------------------
            CH-4002 BASEL
            ------------------------------------


                                       9
<PAGE>
                                                                  CONFORMED COPY

                                27TH MARCH, 2003




                          CIBA SPECIALTY CHEMICALS PLC
                      CIBA SPECIALTY CHEMICALS CORPORATION
                CIBA SPEZIALITATENCHEMIE HOLDING DEUTSCHLAND GMBH
                    CIBA SPECIALTY CHEMICALS EUROFINANCE LTD.
                                   AS ISSUERS



                  ---------------------------------------------

                                DEED OF COVENANT

                  --------------------------------------------




                              [ALLEN & OVERY LOGO]
                                     LONDON