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                                                                    EXHIBIT 10.1

                                 RIBAPHARM INC.

                        2001 STOCK OPTION AND AWARD PLAN

                          (As Adopted __________, 2001)
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                                 Ribapharm Inc.

                        2001 STOCK OPTION AND AWARD PLAN

         1.       Purpose.

                  The purpose of this Plan is to strengthen Ribapharm Inc., a
Delaware corporation (the "Company") by providing an incentive to certain
employees (including future employees who have received a formal written offer
of employment), officers, consultants and directors of the Company and to
certain directors, officers and employees of ICN Pharmaceuticals, Inc., a
Delaware corporation, and its affiliates ("ICN") thereby encouraging such
individuals to devote their abilities and industry to the success of the
Company's business enterprise. It is intended that this purpose be achieved by
extending to such individuals an added long-term incentive for high levels of
performance and unusual efforts through the grant of Incentive Stock Options,
Nonqualified Stock Options, Stock Appreciation Rights, Performance Units and
Performance Shares, Share Awards, Phantom Stock and Restricted Stock (as each
term is herein defined).

         2.       Definitions.

                  For purposes of the Plan:

                  2.1 "Affiliate" means any entity, directly or indirectly,
controlled by, controlling or under common control with the Company or any
corporation or other entity acquiring, directly or indirectly, all or
substantially all the assets and business of the Company, whether by operation
of law or otherwise.

                  2.2 "Agreement" means the written agreement between the
Company and an Optionee or Grantee evidencing the grant of an Option or Award
and setting forth the terms and conditions thereof.

                  2.3 "Award" means a grant of Restricted Stock, Phantom Stock,
a Stock Appreciation Right, a Performance Award, a Share Award or any or all of
them.

                  2.4 "Beneficial Ownership or "Beneficially Owned" or
"Beneficial Owner" shall have the meaning assigned in Section 2.8(a).

                  2.5 "Board" means the Board of Directors of the Company.

                  2.6 "Cause" means:

                           (a) in the case of an Optionee or Grantee whose
employment with the Company or ICN is subject to the terms of an employment
agreement between such



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Optionee or Grantee and the Company or ICN, as the case may be, which employment
agreement includes a definition of "Cause", the term "Cause" as used in this
Plan or any Agreement shall have the meaning set forth in such employment
agreement during the period that such employment agreement remains in effect;
and

                           (b) in all other cases, (i) intentional failure to
perform reasonably assigned duties, (ii) dishonesty or willful misconduct in the
performance of duties, (iii) involvement in a transaction in connection with the
performance of duties to the Company and/or ICN, which transaction is adverse to
the interests of the Company and/or ICN, and which is engaged in for personal
profit or (iv) willful violation of any law, rule or regulation in connection
with the performance of duties (other than traffic violations or similar
offenses); provided, however, that following a Change in Control, clause (i) of
this Section 2.6(b) shall not constitute "Cause."

                  2.7 "Change in Capitalization" means any increase or reduction
in the number of Shares, or any change (including, but not limited to, in the
case of a spin-off, dividend or other distribution in respect of Shares, a
change in value) in the Shares or exchange of Shares for a different number or
kind of shares or other securities of the Company or another corporation, by
reason of a reclassification, recapitalization, merger, consolidation,
reorganization, spin-off, split-up, issuance of warrants or rights or
debentures, stock dividend, stock split or reverse stock split, cash dividend,
property dividend, combination or exchange of shares, repurchase of shares,
change in corporate structure or otherwise.

                  2.8 A "Change in Control" shall mean the occurrence of any of
the following:

                           (a) An acquisition (other than directly from the
Company) of any voting securities of the Company (the "Voting Securities") by
any "Person" (as the term person is used for purposes of Section 13(d) or 14(d)
of the Exchange Act) immediately after which such Person has "Beneficial
Ownership" (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of more than fifty percent (50%) of the then outstanding Shares or the combined
voting power of the Company's then outstanding Voting Securities; provided,
however, in determining whether a Change in Control has occurred pursuant to
this Section 2.8(a), Shares or Voting Securities which are acquired in a
"Non-Control Acquisition" (as hereinafter defined) shall not constitute an
acquisition which would cause a Change in Control. A "Non-Control Acquisition"
shall mean an acquisition by (i) an employee benefit plan (or a trust forming a
part thereof) maintained by (A) the Company or ICN or (B) any corporation or
other Person of which a majority of its voting power or its voting equity
securities or equity interest is owned, directly or indirectly, by the Company
(for purposes of this definition, a "Related Entity"), (ii) the




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Company, ICN or any Related Entity, or (iii) any Person in connection with a
"Non-Control Transaction" (as hereinafter defined);

                           (b) The consummation of:

                                    (i) A merger, consolidation or
reorganization with or into the Company or in which securities of the Company
are issued (a "Merger"), unless such Merger, is a "Non-Control Transaction." A
"Non-Control Transaction" shall mean a Merger where:

                                             (A) the stockholders of the
Company, immediately before such Merger own directly or indirectly immediately
following such Merger, at least fifty percent (50%) of the combined voting power
of the outstanding voting securities of (x) the corporation resulting from such
Merger (the "Surviving Corporation"), if fifty percent (50%) or more of the
combined voting power of the then outstanding voting securities of the Surviving
Corporation is not Beneficially Owned, directly or indirectly by another Person
(a "Controlling Corporation"), or (y) if there are one or more Controlling
Corporations, the ultimate Controlling Corporation; and

                                             (B) the individuals who, as of
_________, _____, are members of the Board (the "Incumbent Board") immediately
prior to the execution of the agreement providing for such Merger, constitute at
least a majority of the members of the board of directors of (x) the Surviving
Corporation, if there is no Controlling Corporation, or (y) if there are one or
more Parent Corporations, the ultimate Controlling Corporation.

                                    (ii) A complete liquidation or dissolution
of the Company; or

                                    (iii) The sale or other disposition of all
or substantially all of the assets of the Company to any Person (other than a
transfer to a Related Entity or ICN, or under conditions that would constitute a
Non-Control Transaction with the disposition of assets being regarded as a
Merger for this purpose or the distribution to the Company's stockholders of the
stock of a Related Entity or any other assets); or

                           (c) The individuals who are members of the Incumbent
Board cease for any reason to constitute at least a majority of the members of
the Board or, following a Merger which results in a Controlling Corporation, the
board of directors of the ultimate Controlling Corporation; provided, however,
that if the election, or nomination for election by the Company's common
stockholders, of any new director was approved by a vote of at least two-thirds
of the Incumbent Board, such new director shall, for purposes of this Plan, be
considered as a member of the Incumbent Board; provided further, however, that
no individual shall be considered a member of the Incumbent Board if such
individual initially assumed office as a result of either an actual or



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threatened "Election Contest" (as described in Rule 14a-11 promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board (a "Proxy Contest") including
by reason of any agreement intended to avoid or settle any Election Contest or
Proxy Contest.

                  Notwithstanding the foregoing, a Change in Control shall not
be deemed to occur solely because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the then outstanding
Shares or Voting Securities as a result of the acquisition of Shares or Voting
Securities by the Company which, by reducing the number of Shares or Voting
Securities then outstanding, increases the proportional number of shares
Beneficially Owned by the Subject Persons, provided that if a Change in Control
would occur (but for the operation of this sentence) as a result of the
acquisition of Shares or Voting Securities by the Company, and after such share
acquisition by the Company, the Subject Person becomes the Beneficial Owner of
any additional Shares or Voting Securities which increases the percentage of the
then outstanding Shares or Voting Securities Beneficially Owned by the Subject
Person, then a Change in Control shall occur.

                  If an Eligible Individual's employment is terminated by the
Company, or ICN, as the case may be, without Cause prior to the date of a Change
in Control but the Eligible Individual reasonably demonstrates that the
termination (A) was at the request of a third party who has indicated an
intention or taken steps reasonably calculated to effect a Change in Control or
(B) otherwise arose in connection with, or in anticipation of, a Change in
Control which has been threatened or proposed, such termination shall be deemed
to have occurred after a Change in Control for purposes of this Plan provided a
Change in Control shall actually have occurred.

                  2.9 "Code" means the Internal Revenue Code of 1986, as
amended.

                  2.10 "Committee" means a committee, as described in Section
3.1, appointed by the Board from time to time to administer the Plan and to
perform the functions set forth herein.

                  2.11 "Company" means Ribapharm Inc., a Delaware corporation.

                  2.12 "Controlling Corporation" shall have the meaning assigned
to it in Section 2.8(b).

                  2.13 "Director" means a director of the Company.

                  2.14 "Disability" means:

                           (a) in the case of an Optionee or Grantee whose
employment with the Company or ICN is subject to the terms of an employment
agreement between such




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Optionee or Grantee and the Company or ICN, as the case may be, which employment
agreement includes a definition of "Disability", the term "Disability" as used
in this Plan or any Agreement shall have the meaning set forth in such
employment agreement during the period that such employment agreement remains in
effect; or

                           (b) the term "Disability" as used in the Company's
long-term disability plan, if any; or

                           (c) in all other cases, the term "Disability" as used
in this Plan or any Agreement shall mean a physical or mental infirmity which
impairs the Optionee's or Grantee's ability to perform substantially his or her
duties for a period of one hundred eighty (180) consecutive days.

                  2.15 "Division" means any of the operating units or divisions
of the Company designated as a Division by the Committee.

                  2.16 "Dividend Equivalent Right" means a right to receive all
or some portion of the cash dividends that are or would be payable with respect
to Shares.

                  2.17 "Election Contest" shall have the meaning assigned to it
in Section 2.8(c).

                  2.18 "Eligible Individual" means any of the following
individuals who is designated by the Committee as eligible to receive Options or
Awards subject to the conditions set forth herein: (a) any director, officer or
employee of the Company or ICN, (b) any individual to whom the Company or ICN
has extended a formal, written offer of employment, or (c) any consultant or
advisor of the Company or ICN.

                  2.19 "Exchange Act" means the Securities Exchange Act of 1934,
as amended.

                  2.20 "Fair Market Value" on any date means the closing sales
prices of the Shares on such date on the principal national securities exchange
on which such Shares are listed or admitted to trading, or, if such Shares are
not so listed or admitted to trading, the average of the per Share closing bid
price and per Share closing asked price on such date as quoted on the National
Association of Securities Dealers Automated Quotation System or such other
market in which such prices are regularly quoted, or, if there have been no
published bid or asked quotations with respect to Shares on such date, the Fair
Market Value shall be the value established by the Board in good faith and, in
the case of an Incentive Stock Option, in accordance with Section 422 of the
Code.

                  2.21 "Grantee" means a person to whom an Award has been
granted under the Plan.



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                  2.22 "ICN" shall mean ICN Pharmaceuticals, Inc., a Delaware
corporation, and its affiliates.

                  2.23 "Incentive Stock Option" means an Option satisfying the
requirements of Section 422 of the Code and designated by the Committee as an
Incentive Stock Option.

                  2.24 "Initial Public Offering" means the consummation of the
first public offering of Shares pursuant to a registration statement (other than
a Form S-8 or successor forms) filed with, and declared effective by, the
Securities and Exchange Commission.

                  2.25 "Incumbent Board" shall have the meaning assigned to it
in Section 2.8(b).

                  2.26 "Merger" shall have the meaning assigned to it in Section
2.8(b).

                  2.27 "Non-Control Acquisition" shall have the meaning assigned
to it in Section 2.8(a).

                  2.28 "Non-Control Transaction" shall have the meaning assigned
to it in Section 2.8(b).

                  2.29 "Nonemployee Director" means a director of the Company
who is a "nonemployee director" within the meaning of Rule 16b-3 promulgated
under the Exchange Act.

                  2.30 "Nonqualified Stock Option" means an Option which is not
an Incentive Stock Option.

                  2.31 "Option" means a Nonqualified Stock Option, an Incentive
Stock Option, or either or both of them.

                  2.32 "Optionee" means a person to whom an Option has been
granted under the Plan.

                  2.33 "Outside Director" means a director of the Company who is
an "outside director" within the meaning of Section 162(m) of the Code and the
regulations promulgated thereunder.

                  2.34 "Parent" means any corporation which is a parent
corporation within the meaning of Section 424(e) of the Code with respect to the
Company.

                  2.35 "Performance Awards" means Performance Units, Performance
Shares, or either or both of them.


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                  2.36 "Performance-Based Compensation" means any Option or
Award that is intended to constitute "performance based compensation" within the
meaning of Section 162(m)(4)(C) of the Code and the regulations promulgated
thereunder.

                  2.37 "Performance Cycle" means the time period specified by
the Committee at the time Performance Awards are granted during which the
performance of the Company or a Division will be measured.

                  2.38 "Performance Objectives" has the meaning set forth in
Section 8.3.

                  2.39 "Performance Shares" means Shares issued or transferred
to an Eligible Individual under Section 8.2.

                  2.40 "Performance Units" means Performance Units granted to an
Eligible Individual under Section 8.1.

                  2.41 "Person" shall have the meaning assigned to it in Section
2.8(a).

                  2.42 "Phantom Stock" means a right granted to an Eligible
Individual under Section 9.2 representing a number of hypothetical Shares.

                  2.43 "Plan" means the Ribapharm Inc. 2000 Stock Option and
Award Plan, as amended and restated from time to time.

                  2.44 "Pooling Transaction" means an acquisition of the Company
in a transaction which is intended to be treated as a "pooling of interests"
under generally accepted accounting principles.

                  2.45 "Proxy Contest" shall have the meaning assigned to it in
Section 2.8(c).

                  2.46 "Related Entity" shall have the meaning assigned to it in
Section 2.8(a).

                  2.47 "Restricted Stock" means Shares issued or transferred to
an Eligible Individual pursuant to Section 7.

                  2.48 "Share Award" means an Award of Shares granted pursuant
to Section 9.1.

                  2.49 "Shares" means the Class A Common Stock of the Company,
par value $.01 per share, and any other securities into which such shares are
changed or for which such shares are exchanged.



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                  2.50 "Stock Appreciation Right" means a right to receive all
or some portion of the increase in the value of the Shares as provided in
Section 6 hereof.

                  2.51 "Subject Person" shall have the meaning assigned to it in
Section 2.8 hereof.

                  2.52 "Subsidiary" means (i) except as provided in subsection
(ii) below, any corporation which is a subsidiary corporation within the meaning
of Section 424(f) of the Code with respect to the Company, and (ii) in relation
to the eligibility to receive Options or Awards other than Incentive Stock
Options and continued employment for purposes of Options and Awards (unless the
Committee determines otherwise), any entity, whether or not incorporated, in
which the Company directly or indirectly owns 50% or more of the outstanding
equity or other ownership interests.

                  2.53 "Successor Corporation" means a corporation, or a Parent
or Subsidiary thereof within the meaning of Section 424(a) of the Code, which
issues or assumes a stock option in a transaction to which Section 424(a) of the
Code applies.

                  2.54 "Surviving Corporation" shall have the meaning assigned
to it in Section 2.8(b).

                  2.55 "Ten-Percent Stockholder" means an Eligible Individual,
who, at the time an Incentive Stock Option is to be granted to him or her, owns
(within the meaning of Section 422(b)(6) of the Code) stock possessing more than
ten percent (10%) of the total combined voting power of all classes of stock of
the Company, or of a Parent or a Subsidiary thereof.

                  2.56 "Transition Period" means the period beginning on the
date that the corporation becomes a separate publicly held corporation and
ending on the date prior to the first regularly scheduled meeting of the
shareholders of the new publicly held corporation that occurs more than 12
months after the date that the corporation becomes a separate publicly held
corporation.

                  2.57 "Voting Securities" shall have the meaning assigned to it
in Section 2.8(a).

         3.       Administration.

                  3.1 The Plan shall be administered by the Committee, which
shall hold meetings at such times as may be necessary for the proper
administration of the Plan. The Committee shall keep minutes of its meetings. A
quorum shall consist of not fewer than two (2) members of the Committee and a
majority of a quorum may authorize any action. Any decision or determination
reduced to writing and signed by a majority of all of the members of the
Committee shall be as fully effective as if made by a majority vote at a




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meeting duly called and held. The Committee shall consist of at least two (2)
Directors and may consist of the entire Board; provided, however, that from and
after the date of an Initial Public Offering, (a) with respect to any Option or
Award to an Eligible Individual who is subject to Section 16 of the Exchange
Act, the Committee shall consist solely of at least two (2) Directors each of
whom shall be a Nonemployee Director and (b) to the extent necessary for any
Option or Award intended to qualify as Performance-Based Compensation to so
qualify, the Committee shall consist of at least two (2) Directors, each of whom
shall be an Outside Director. For purposes of the preceding sentence, if one or
more members of the Committee is not a Nonemployee Director and an Outside
Director but recuses himself or herself or abstains from voting with respect to
a particular action taken by the Committee, then the Committee, with respect to
that action, shall be deemed to consist only of the members of the Committee who
have not recused themselves or abstained from voting. Subject to applicable law,
the Committee may delegate its authority under the Plan to any other person or
persons.

                  3.2 No member of the Committee shall be liable for any action,
failure to act, determination or interpretation made in good faith with respect
to this Plan or any transaction hereunder. The Company hereby agrees to
indemnify each member of the Committee for all costs and expenses and, to the
extent permitted by applicable law, any liability incurred in connection with
defending against, responding to, negotiating for the settlement of or otherwise
dealing with any claim, cause of action or dispute of any kind arising in
connection with any actions in administering this Plan or in authorizing or
denying authorization to any transaction hereunder.

                  3.3 Subject to the express terms and conditions set forth
herein, the Committee shall have the power from time to time to:

                           (a) determine those Eligible Individuals to whom
Options shall be granted under the Plan and the number of such Options to be
granted and to prescribe the terms and conditions (which need not be identical)
of each such Option, including the exercise price per Share, the vesting
schedule and the duration of each Option, and make any amendment or modification
to any Option Agreement consistent with the terms of the Plan;

                           (b) select those Eligible Individuals to whom Awards
shall be granted under the Plan and to determine the number of Shares in respect
of which each Award is granted, and to prescribe the terms and conditions (which
need not be identical) of each such Award, and to make any amendment or
modification to any Award Agreement consistent with the terms of the Plan;

                           (c) to construe and interpret the Plan and the
Options and Awards granted hereunder and to establish, amend and revoke rules
and regulations for the administration of the Plan, including, but not limited
to, correcting any defect or




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supplying any omission, or reconciling any inconsistency in the Plan or in any
Agreement, in the manner and to the extent it shall deem necessary or advisable,
including so that the Plan and the operation of the Plan complies with Rule
16b-3 under the Exchange Act, the Code to the extent applicable and other
applicable law, and otherwise to make the Plan fully effective. All decisions
and determinations by the Committee in the exercise of this power shall be
final, binding and conclusive upon the Company, the Optionees and the Grantees,
and all other persons having any interest therein;

                           (d) to determine the duration and purposes for leaves
of absence which may be granted to an Optionee or Grantee on an individual basis
without constituting a termination of employment or service for purposes of the
Plan;

                           (e) to exercise its discretion with respect to the
powers and rights granted to it as set forth in the Plan; and

                           (f) generally, to exercise such powers and to perform
such acts as are deemed necessary or advisable to promote the best interests of
the Company with respect to the Plan.

         4.       Stock Subject to the Plan; Grant Limitations.

                  4.1 The maximum number of Shares that may be made the subject
of Options and Awards granted under the Plan is 21,000,000. The Company shall
reserve for the purposes of the Plan, out of its authorized but unissued Shares
or out of Shares held in the Company's treasury, or partly out of each, such
number of Shares as shall be determined by the Board.

                  4.2 Upon the granting of an Option or an Award, the number of
Shares available under Section 4.1 for the granting of further Options and
Awards shall be reduced as follows:

                           (a) In connection with the granting of an Option or
an Award (other than the granting of a Performance Unit denominated in dollars),
the number of Shares shall be reduced by the number of Shares in respect of
which the Option or Award is granted or denominated; provided, however, that if
any Option is exercised by tendering Shares, either actually or by attestation,
to the Company as full or partial payment of the exercise price, the maximum
number of Shares available under Section 4.1 shall be increased by the number of
Shares so tendered.

                           (b) In connection with the granting of a Performance
Unit denominated in dollars, the number of Shares shall be reduced by an amount
equal to the quotient of (i) the dollar amount in which the Performance Unit is
denominated, divided by (ii) the Fair Market Value of a Share on the date the
Performance Unit is granted.



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                  4.3 Whenever any outstanding Option or Award or portion
thereof, expires, is canceled, is settled in cash (including the settlement of
tax withholding obligations using Shares) or is otherwise terminated for any
reason without having been exercised or payment having been made in respect of
the entire Option or Award, the Shares allocable to the expired, canceled,
settled or otherwise terminated portion of the Option or Award may again be the
subject of Options or Awards granted hereunder.

         5.       Option Grants for Eligible Individuals.

                  5.1 Authority of Committee. Subject to the provisions of the
Plan, the Committee shall have full and final authority to select those Eligible
Individuals who will receive Options, and the terms and conditions of the grant
to such Eligible Individuals shall be set forth in an Agreement. Incentive Stock
Options may be granted only to Eligible Individuals who are employees of the
Company or any Parent or Subsidiary thereof.

                  5.2 Exercise Price. The purchase price or the manner in which
the exercise price is to be determined for Shares under each Option shall be
determined by the Committee and set forth in the Agreement; provided, however,
that the exercise price per Share under each Incentive Stock Option shall not be
less than 100% of the Fair Market Value of a Share on the date the Option is
granted (110% in the case of an Incentive Stock Option granted to a Ten-Percent
Stockholder).

                  5.3 Maximum Duration. Options granted hereunder shall be for
such term as the Committee shall determine, provided that an Incentive Stock
Option shall not be exercisable after the expiration of ten (10) years from the
date it is granted (five (5) years in the case of an Incentive Stock Option
granted to a Ten-Percent Stockholder) and a Nonqualified Stock Option shall not
be exercisable after the expiration of ten (10) years from the date it is
granted; provided, however, that unless the Committee provides otherwise, an
Option (other than an Incentive Stock Option) may, upon the death of the
Optionee prior to the expiration of the Option, be exercised for up to one (1)
year following the date of the Optionee's death even if such period extends
beyond ten (10) years from the date the Option is granted. The Committee may,
subsequent to the granting of any Option, extend the term thereof, but in no
event shall the term as so extended exceed the maximum term provided for in the
preceding sentence.

                  5.4 Vesting. Subject to Section 5.10, each Option shall become
exercisable in such installments (which need not be equal) and at such times as
may be designated by the Committee and set forth in the Agreement. To the extent
not exercised, installments shall accumulate and be exercisable, in whole or in
part, at any time after becoming exercisable, but not later than the date the
Option expires. The Committee may accelerate the exercisability of any Option or
portion thereof at any time.



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                  5.5 Deferred Delivery of Option Shares. The Committee may, in
its discretion permit Optionees to elect to defer the issuance of Shares upon
the exercise of one or more Nonqualified Stock Options granted pursuant to the
Plan. The terms and conditions of such deferral shall be determined at the time
of the grant of the Option or thereafter and shall be set forth in the Agreement
evidencing the Option.

                  5.6 Limitations on Incentive Stock Options. To the extent that
the aggregate Fair Market Value (determined as of the date of the grant) of
Shares with respect to which Incentive Stock Options granted under the Plan and
"incentive stock options" (within the meaning of Section 422 of the Code)
granted under all other plans of the Company or ICN (in either case determined
without regard to this Section 5.6) are exercisable by an Optionee for the first
time during any calendar year exceeds $100,000, such Incentive Stock Options
shall be treated as Nonqualified Stock Options. In applying the limitation in
the preceding sentence in the case of multiple Option grants, Options which were
intended to be Incentive Stock Options shall be treated as Nonqualified Stock
Options according to the order in which they were granted such that the most
recently granted Options are first treated as Nonqualified Stock Options.

                  5.7 Non-Transferability. No Option shall be transferable by
the Optionee otherwise than by will or by the laws of descent and distribution
or, in the case of an Option other than an Incentive Stock Option, pursuant to a
domestic relations order (within the meaning of Rule 16a-12 promulgated under
the Exchange Act), and an Option shall be exercisable during the lifetime of
such Optionee only by the Optionee or his or her guardian or legal
representative. Notwithstanding the foregoing, the Committee may set forth in
the Agreement evidencing an Option (other than an Incentive Stock Option) at the
time of grant or thereafter, that the Option may be transferred to members of
the Optionee's immediate family, to trusts solely for the benefit of such
immediate family members and to partnerships in which such family members and/or
trusts are the only partners, and for purposes of this Plan, a transferee of an
Option shall be deemed to be the Optionee. For this purpose, immediate family
means the Optionee's spouse, parents, children, stepchildren and grandchildren
and the spouses of such parents, children, stepchildren and grandchildren. The
terms of an Option shall be final, binding and conclusive upon the
beneficiaries, executors, administrators, heirs and successors of the Optionee.

                  5.8 Method of Exercise. The exercise of an Option shall be
made only by a written notice delivered in person or by mail to the Secretary of
the Company at the Company's principal executive office, specifying the number
of Shares to be exercised and, to the extent applicable, accompanied by payment
therefor and otherwise in accordance with the Agreement pursuant to which the
Option was granted; provided, however, that Options may not be exercised by an
Optionee for twelve months following a hardship distribution to the Optionee, to
the extent such exercise is prohibited under




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Treasury Regulation Section 1.401(k)-1(d)(2)(iv)(B)(4). The exercise price for
any Shares purchased pursuant to the exercise of an Option shall be paid in
either of the following forms (or any combination thereof): (a) cash or (b) the
transfer, either actually or by attestation, to the Company of Shares that have
been held by the Optionee for at least six (6) months (or such lesser period as
may be permitted by the Committee) prior to the exercise of the Option, such
transfer to be upon such terms and conditions as determined by the Committee or
(c) a combination of cash and the transfer of Shares; provided, however, that
the Committee may determine that the exercise price shall be paid only in cash.
In addition, Options may be exercised through a registered broker-dealer
pursuant to such cashless exercise procedures which are, from time to time,
deemed acceptable by the Committee. Any Shares transferred to the Company as
payment of the exercise price under an Option shall be valued at their Fair
Market Value on the day of exercise of such Option. If requested by the
Committee, the Optionee shall deliver the Agreement evidencing the Option to the
Secretary of the Company who shall endorse thereon a notation of such exercise
and return such Agreement to the Optionee. No fractional Shares (or cash in lieu
thereof) shall be issued upon exercise of an Option and the number of Shares
that may be purchased upon exercise shall be rounded to the nearest number of
whole Shares.

                  5.9 Rights of Optionees. No Optionee shall be deemed for any
purpose to be the owner of any Shares subject to any Option unless and until (a)
the Option shall have been exercised pursuant to the terms thereof, (b) the
Company shall have issued and delivered Shares to the Optionee, and (c) the
Optionee's name shall have been entered as a stockholder of record on the books
of the Company. Thereupon, the Optionee shall have full voting, dividend and
other ownership rights with respect to such Shares, subject to such terms and
conditions as may be set forth in the applicable Agreement.

                  5.10 Effect of Change in Control. In the event that (i) an
Optionee's employment with the Company or ICN is terminated by the Company or by
ICN, as the case may be, without Cause following a Change in Control, or (ii) in
the case of a director of the Company or ICN, his or her services as a director
ceases following a Change in Control, and in either case the Optionee is not
employed by, or otherwise does not provide services to, the Company, ICN or any
of their Affiliates immediately following such termination of employment or
cessation of services, each Option held by the Optionee as of the date of
termination of the Optionee's employment or service shall become immediately and
fully exercisable and shall, notwithstanding any shorter period set forth in the
Agreement evidencing the Option, remain exercisable for a period ending not
before the earlier of (a) the six (6) month anniversary of the termination of
the Optionee's employment or service, and (b) the expiration of the stated term
of the Option. In addition, the Agreement evidencing the grant of an Option may
provide for any other treatment of the Option in the event of a Change in
Control.




                                      -13-
<PAGE>   15
         6.       Stock Appreciation Rights.

                  The Committee may in its discretion, either alone or in
connection with the grant of an Option, grant Stock Appreciation Rights in
accordance with the Plan, the terms and conditions of which shall be set forth
in an Agreement. If granted in connection with an Option, a Stock Appreciation
Right shall cover the same Shares covered by the Option (or such lesser number
of Shares as the Committee may determine) and shall, except as provided in this
Section 6, be subject to the same terms and conditions as the related Option.

                  6.1 Time of Grant. A Stock Appreciation Right may be granted
(a) at any time if unrelated to an Option, or (b) if related to an Option,
either at the time of grant of the Option or at any time thereafter during the
term of the Option.

                  6.2 Stock Appreciation Right Related to an Option.

                           (a) Exercise. A Stock Appreciation Right granted in
connection with an Option shall be exercisable at such time or times and only to
the extent that the related Options are exercisable, and will not be
transferable except to the extent the related Option may be transferable. A
Stock Appreciation Right granted in connection with an Incentive Stock Option
shall be exercisable only if the Fair Market Value of a Share on the date of
exercise exceeds the exercise price specified in the related Incentive Stock
Option Agreement.

                           (b) Amount Payable. Upon the exercise of a Stock
Appreciation Right related to an Option, the Grantee shall be entitled to
receive an amount determined by multiplying (i) the excess of the Fair Market
Value of a Share on the date of exercise of such Stock Appreciation Right over
the per Share exercise price under the related Option, by (ii) the number of
Shares as to which such Stock Appreciation Right is being exercised.
Notwithstanding the foregoing, the Committee may limit in any manner the amount
payable with respect to any Stock Appreciation Right by including such a limit
in the Agreement evidencing the Stock Appreciation Right at the time it is
granted.

                           (c) Treatment of Related Options and Stock
Appreciation Rights Upon Exercise. Upon the exercise of a Stock Appreciation
Right granted in connection with an Option, the Option shall be canceled to the
extent of the number of Shares as to which the Stock Appreciation Right is
exercised, and upon the exercise of an Option granted in connection with a Stock
Appreciation Right, the Stock Appreciation Right shall be canceled to the extent
of the number of Shares as to which the Option is exercised or surrendered.

                  6.3 Stock Appreciation Right Unrelated to an Option. The
Committee may grant to Eligible Individuals Stock Appreciation Rights unrelated
to Options.



                                      -14-
<PAGE>   16
Subject to Section 6.7, Stock Appreciation Rights unrelated to Options shall
contain such terms and conditions as to exercisability, vesting and duration as
the Committee shall determine, but in no event shall they have a term of greater
than ten (10) years; provided, however, that the Committee may provide that
Stock Appreciation Rights may, upon the death of the Grantee, be exercised for
up to one (1) year following the date of the Grantee's death even if such period
extends beyond ten (10) years from the date the Stock Appreciation Right is
granted. Upon exercise of a Stock Appreciation Right unrelated to an Option, the
Grantee shall be entitled to receive an amount determined by multiplying (a) the
excess of the Fair Market Value of a Share on the date of exercise of such Stock
Appreciation Right over the Fair Market Value of a Share on the date the Stock
Appreciation Right was granted, by (b) the number of Shares as to which the
Stock Appreciation Right is being exercised. Notwithstanding the foregoing, the
Committee may limit in any manner the amount payable with respect to any Stock
Appreciation Right by including such a limit in the Agreement evidencing the
Stock Appreciation Right at the time it is granted.

                  6.4 Non-Transferability. No Stock Appreciation Right shall be
transferable by the Grantee otherwise than by will or by the laws of descent and
distribution or pursuant to a domestic relations order (within the meaning of
Rule 16a-12 promulgated under the Exchange Act), and such Stock Appreciation
Right shall be exercisable during the lifetime of such Grantee only by the
Grantee or his or her guardian or legal representative. The terms of such Stock
Appreciation Right shall be final, binding and conclusive upon the
beneficiaries, executors, administrators, heirs and successors of the Grantee.

                  6.5 Method of Exercise. Stock Appreciation Rights shall be
exercised by a Grantee only by a written notice delivered in person or by mail
to the Secretary of the Company at the Company's principal executive office,
specifying the number of Shares with respect to which the Stock Appreciation
Right is being exercised. If requested by the Committee, the Grantee shall
deliver the Agreement evidencing the Stock Appreciation Right being exercised
and the Agreement evidencing any related Option to the Secretary of the Company
who shall endorse thereon a notation of such exercise and return such Agreement
to the Grantee.

                  6.6 Form of Payment. Payment of the amount determined under
Sections 6.2(b) or 6.3 may be made in the discretion of the Committee solely in
whole Shares in a number determined at their Fair Market Value on the date of
exercise of the Stock Appreciation Right, or solely in cash, or in a combination
of cash and Shares. If the Committee decides to make full payment in Shares and
the amount payable results in a fractional Share, payment for the fractional
Share will be made in cash.

                  6.7 Effect of Change in Control. In the event a Grantee's
employment with the Company or ICN is terminated by the Company or by ICN, as
the case may be,




                                      -15-
<PAGE>   17
without Cause following a Change in Control, or in the case of a director of the
Company or ICN, his or her services as a director ceases following a Change in
Control, and in either case the Grantee is not employed by, or otherwise does
not provide services to, the Company, ICN or any of their Affiliates immediately
following such termination of employment or cessation of services, each Stock
Appreciation Right held by the Grantee shall become immediately and fully
exercisable and shall, notwithstanding any shorter period set forth in the
Agreement evidencing the Stock Appreciation Right, remain exercisable for a
period ending not before the earlier of (a) the six (6) month anniversary of the
termination of the Grantee's employment or service and (b) the expiration of the
stated term of the Stock Appreciation Right. In addition, the Agreement
evidencing the grant of a Stock Appreciation Right unrelated to an Option may
provide for any other treatment of the Stock Appreciation Rights in the event of
a Change in Control.

         7.       Restricted Stock.

                  7.1 Grant. The Committee may grant Awards to Eligible
Individuals of Restricted Stock, which shall be evidenced by an Agreement
between the Company and the Grantee. Each Agreement shall contain such
restrictions, terms and conditions as the Committee may, in its discretion,
determine and (without limiting the generality of the foregoing) such Agreements
may require that an appropriate legend be placed on Share certificates. Awards
of Restricted Stock shall be subject to the terms and provisions set forth below
in this Section 7.

                  7.2 Rights of Grantee. Shares of Restricted Stock granted
pursuant to an Award hereunder shall be issued in the name of the Grantee as
soon as reasonably practicable after the Award is granted provided that the
Grantee has executed an Agreement evidencing the Award, the appropriate blank
stock powers and, in the discretion of the Committee, an escrow agreement and
any other documents which the Committee may require as a condition to the
issuance of such Shares. If a Grantee shall fail to execute the Agreement
evidencing a Restricted Stock Award, or any documents which the Committee may
require within the time period prescribed by the Committee at the time the Award
is granted, the Award shall be null and void. At the discretion of the
Committee, Shares issued in connection with a Restricted Stock Award shall be
deposited together with the stock powers with an escrow agent (which may be the
Company) designated by the Committee. Unless the Committee determines otherwise
and as set forth in the Agreement, upon delivery of the Shares to the escrow
agent, the Grantee shall have all of the rights of a stockholder with respect to
such Shares, including the right to vote the Shares and to receive all dividends
or other distributions paid or made with respect to the Shares.

                  7.3 Non-transferability. Until all restrictions upon the
Shares of Restricted Stock awarded to a Grantee shall have lapsed in the manner
set forth in




                                      -16-
<PAGE>   18
Section 7.4, such Shares shall not be sold, transferred or otherwise disposed of
and shall not be pledged or otherwise hypothecated.

                  7.4 Lapse of Restrictions.

                           (a) Generally. Restrictions upon Shares of Restricted
Stock awarded hereunder shall lapse at such time or times and on such terms and
conditions as the Committee may determine. The Agreement evidencing the Award
shall set forth any such restrictions.

                           (b) Effect of Change in Control. The Committee may
determine at the time of the grant of an Award of Restricted Stock the extent to
which the restrictions upon Shares of Restricted Stock shall lapse upon a Change
in Control. The Agreement evidencing the Award shall set forth any such
provisions.

                  7.5 Treatment of Dividends. At the time an Award of Shares of
Restricted Stock is granted, the Committee may, in its discretion, determine
that the payment to the Grantee of dividends, or a specified portion thereof,
declared or paid on such Shares by the Company shall be (a) deferred until the
lapsing of the restrictions imposed upon such Shares and (b) held by the Company
for the account of the Grantee until such time. In the event that dividends are
to be deferred, the Committee shall determine whether such dividends are to be
reinvested in Shares (which shall be held as additional Shares of Restricted
Stock) or held in cash. If deferred dividends are to be held in cash, there may
be credited at the end of each year (or portion thereof) interest on the amount
of the account at the beginning of the year at a rate per annum as the
Committee, in its discretion, may determine. Payment of deferred dividends in
respect of Shares of Restricted Stock (whether held in cash or as additional
Shares of Restricted Stock), together with interest accrued thereon, if any,
shall be made upon the lapsing of restrictions imposed on the Shares in respect
of which the deferred dividends were paid. Any dividends deferred (together with
any interest accrued thereon) in respect of any Shares of Restricted Stock shall
be forfeited upon the forfeiture of such Shares.

                  7.6 Delivery of Shares. Upon the lapse of the restrictions on
Shares of Restricted Stock, the Committee shall cause a stock certificate to be
delivered to the Grantee with respect to such Shares, free of all restrictions
hereunder.

         8.       Performance Awards.

                  8.1 Performance Units. The Committee, in its discretion, may
grant Awards of Performance Units to Eligible Individuals, the terms and
conditions of which shall be set forth in an Agreement between the Company and
the Grantee. Performance Units may be denominated in Shares or a specified
dollar amount and, contingent upon the attainment of specified Performance
Objectives within the Performance Cycle,




                                      -17-
<PAGE>   19
represent the right to receive payment as provided in Section 8.3(c) of (1) in
the case of Share-denominated Performance Units, the Fair Market Value of a
Share on the date the Performance Unit was granted, the date the Performance
Unit became vested or any other date specified by the Committee, (2) in the case
of dollar-denominated Performance Units, the specified dollar amount or (3) a
percentage (which may be more than 100%) of the amount described in clause (1)
or (2) depending on the level of Performance Objective attainment; provided,
however, that, the Committee may at the time a Performance Unit is granted
specify a maximum amount payable in respect of a vested Performance Unit. Each
Agreement shall specify the number of Performance Units to which it relates, the
Performance Objectives which must be satisfied in order for the Performance
Units to vest and the Performance Cycle within which such Performance Objectives
must be satisfied.

                           (a) Vesting and Forfeiture. Subject to Sections
8.3(c) and 8.4, a Grantee shall become vested with respect to the Performance
Units to the extent that the Performance Objectives set forth in the Agreement
are satisfied for the Performance Cycle.

                           (b) Payment of Awards. Subject to Section 8.3(c),
payment to Grantees in respect of vested Performance Units shall be made as soon
as practicable after the last day of the Performance Cycle to which such Award
relates unless the Agreement evidencing the Award provides for the deferral of
payment, in which event the terms and conditions of the deferral shall be set
forth in the Agreement. Subject to Section 8.4, such payments may be made
entirely in Shares valued at their Fair Market Value, entirely in cash, or in
such combination of Shares and cash as the Committee in its discretion shall
determine at any time prior to such payment; provided, however, that if the
Committee in its discretion determines to make such payment entirely or
partially in Shares of Restricted Stock, the Committee must determine the extent
to which such payment will be in Shares of Restricted Stock and the terms of
such Restricted Stock at the time the Award is granted.

                  8.2 Performance Shares. The Committee, in its discretion, may
grant Awards of Performance Shares to Eligible Individuals, the terms and
conditions of which shall be set forth in an Agreement between the Company and
the Grantee. Each Agreement may require that an appropriate legend be placed on
Share certificates. Awards of Performance Shares shall be subject to the
following terms and provisions:

                           (a) Rights of Grantee. The Committee shall provide at
the time an Award of Performance Shares is made the time or times at which the
actual Shares represented by such Award shall be issued in the name of the
Grantee; provided, however, that no Performance Shares shall be issued until the
Grantee has executed an Agreement evidencing the Award, the appropriate blank
stock powers and, in the discretion of the Committee, an escrow agreement and
any other documents which the




                                      -18-
<PAGE>   20
Committee may require as a condition to the issuance of such Performance Shares.
If a Grantee shall fail to execute the Agreement evidencing an Award of
Performance Shares, the appropriate blank stock powers and, in the discretion of
the Committee, an escrow agreement and any other documents which the Committee
may require within the time period prescribed by the Committee at the time the
Award is granted, the Award shall be null and void. At the discretion of the
Committee, Shares issued in connection with an Award of Performance Shares shall
be deposited together with the stock powers with an escrow agent (which may be
the Company) designated by the Committee. Except as restricted by the terms of
the Agreement, upon delivery of the Shares to the escrow agent, the Grantee
shall have, in the discretion of the Committee, all of the rights of a
stockholder with respect to such Shares, including the right to vote the Shares
and to receive all dividends or other distributions paid or made with respect to
the Shares.

                           (b) Non-transferability. Until any restrictions upon
the Performance Shares awarded to a Grantee shall have lapsed in the manner set
forth in Sections 8.2(c) or 8.4, such Performance Shares shall not be sold,
transferred or otherwise disposed of and shall not be pledged or otherwise
hypothecated, nor shall they be delivered to the Grantee. The Committee may also
impose such other restrictions and conditions on the Performance Shares, if any,
as it deems appropriate.

                           (c) Lapse of Restrictions. Subject to Sections 8.3(c)
and 8.4, restrictions upon Performance Shares awarded hereunder shall lapse and
such Performance Shares shall become vested at such time or times and on such
terms, conditions and satisfaction of Performance Objectives as the Committee
may, in its discretion, determine at the time an Award is granted.

                           (d) Treatment of Dividends. At the time the Award of
Performance Shares is granted, the Committee may, in its discretion, determine
that the payment to the Grantee of dividends, or a specified portion thereof,
declared or paid on Shares represented by such Award which have been issued by
the Company to the Grantee shall be (i) deferred until the lapsing of the
restrictions imposed upon such Performance Shares and (ii) held by the Company
for the account of the Grantee until such time. In the event that dividends are
to be deferred, the Committee shall determine whether such dividends are to be
reinvested in Shares (which shall be held as additional Performance Shares) or
held in cash. If deferred dividends are to be held in cash, there may be
credited at the end of each year (or portion thereof) interest on the amount of
the account at the beginning of the year at a rate per annum as the Committee,
in its discretion, may determine. Payment of deferred dividends in respect of
Performance Shares (whether held in cash or in additional Performance Shares),
together with interest accrued thereon, if any, shall be made upon the lapsing
of restrictions imposed on the Performance Shares in respect of which the
deferred dividends were paid. Any dividends





                                      -19-
<PAGE>   21
deferred (together with any interest accrued thereon) in respect of any
Performance Shares shall be forfeited upon the forfeiture of such Performance
Shares.

                           (e) Delivery of Shares. Upon the lapse of the
restrictions on Performance Shares awarded hereunder, the Committee shall cause
a stock certificate to be delivered to the Grantee with respect to such Shares,
free of all restrictions hereunder.

                  8.3 Performance Objectives

                           (a) Establishment. Performance Objectives for
Performance Awards may be expressed in terms of (i) earnings per Share, (ii)
Share price, (iii) pre-tax profits, (iv) net earnings, (v) return on equity or
assets, (vi) sales, or (vii) any combination of the foregoing. Performance
Objectives may be in respect of the performance of the Company, any of its
Divisions or any combination thereof. Performance Objectives may be absolute or
relative (to prior performance of the Company or to the performance of one or
more other entities or external indices) and may be expressed in terms of a
progression within a specified range. The Performance Objectives with respect to
a Performance Cycle shall be established in writing by the Committee by the
earlier of (x) the date on which a quarter of the Performance Cycle has elapsed
or (y) the date which is ninety (90) days after the commencement of the
Performance Cycle, and in any event while the performance relating to the
Performance Objectives remains substantially uncertain.

                           (b) Effect of Certain Events. At the time of the
granting of a Performance Award, or at any time thereafter, in either case to
the extent permitted under Section 162(m) of the Code and the regulations
thereunder without adversely affecting the treatment of the Performance Award as
Performance-Based Compensation, the Committee may provide for the manner in
which performance will be measured against the Performance Objectives (or may
adjust the Performance Objectives) to reflect the impact of specified corporate
transactions, accounting or tax law changes and other extraordinary or
nonrecurring events.

                           (c) Determination of Performance. Prior to the
vesting, payment, settlement or lapsing of any restrictions with respect to any
Performance Award that is intended to constitute Performance-Based Compensation
made to a Grantee who is subject to Section 162(m) of the Code, the Committee
shall certify in writing that the applicable Performance Objectives have been
satisfied to the extent necessary for such Award to qualify as Performance-Based
Compensation.

                  8.4 Effect of Change in Control. The Agreements evidencing
Performance Shares and Performance Units may provide for the treatment of such
Awards (or portions thereof) in the event of a Change in Control, including, but
not limited to, provisions for the adjustment of applicable Performance
Objectives.



                                      -20-
<PAGE>   22
                  8.5 Non-transferability. Until the vesting of Performance
Units or the lapsing of any restrictions on Performance Shares, as the case may
be, such Performance Units or Performance Shares shall not be sold, transferred
or otherwise disposed of and shall not be pledged or otherwise hypothecated.

         9.       Other Share Based Awards.

                  9.1 Share Awards. The Committee may grant a Share Award to any
Eligible Individual on such terms and conditions as the Committee may determine
in its sole discretion. Share Awards may be made as additional compensation for
services rendered by the Eligible Individual or may be in lieu of cash or other
compensation to which the Eligible Individual is entitled from the Company or
ICN, as the case may be.

                  9.2 Phantom Stock Awards.

                           (a) Grant. The Committee may, in its discretion,
grant shares of Phantom Stock to any Eligible Individuals. Such Phantom Stock
shall be subject to the terms and conditions established by the Committee and
set forth in the applicable Agreement.

                           (b) Payment of Awards. Upon the vesting of a Phantom
Stock Award, the Grantee shall be entitled to receive a cash payment in respect
of each share of Phantom Stock which shall be equal to the Fair Market Value of
a Share as of the date the Phantom Stock Award was granted, or such other date
as determined by the Committee at the time the Phantom Stock Award was granted.
The Committee may, at the time a Phantom Stock Award is granted, provide a
limitation on the amount payable in respect of each share of Phantom Stock. In
lieu of a cash payment, the Committee may settle Phantom Stock Awards with
Shares having a Fair Market Value equal to the cash payment to which the Grantee
has become entitled.

         10.      Effect of a Termination of Employment.

                  The Agreement evidencing the grant of each Option and each
Award shall set forth the terms and conditions applicable to such Option or
Award upon a termination or change in the status of the employment of the
Optionee or Grantee by the Company or ICN (including a termination or change by
reason of the sale of a Division), which shall be as the Committee may, in its
discretion, determine at the time the Option or Award is granted or thereafter.

         11.      Adjustment Upon Changes in Capitalization.

                           (a) In the event of a Change in Capitalization, the
Committee shall conclusively determine the appropriate adjustments, if any, to
(i) the maximum number and class of Shares or other stock or securities with
respect to which Options or




                                      -21-
<PAGE>   23
Awards may be granted under the Plan, (ii) the number and class of Shares or
other stock or securities which are subject to outstanding Options or Awards
granted under the Plan and the exercise price therefor, if applicable, and (iii)
the Performance Objectives.

                           (b) Any such adjustment in the Shares or other stock
or securities (i) subject to outstanding Incentive Stock Options (including any
adjustments in the exercise price) shall be made in such manner as not to
constitute a modification as defined by Section 424(h)(3) of the Code and only
to the extent otherwise permitted by Sections 422 and 424 of the Code, or (ii)
subject to outstanding Options or Awards that are intended to qualify as
Performance-Based Compensation shall be made in such a manner as not to
adversely affect the treatment of the Option or Award as Performance-Based
Compensation.

                           (c) If, by reason of a Change in Capitalization, a
Grantee of an Award shall be entitled to, or an Optionee shall be entitled to
exercise an Option with respect to, new, additional or different shares of stock
or securities of the Company or any other corporation, such new, additional or
different shares shall thereupon be subject to all of the conditions,
restrictions and performance criteria which were applicable to the Shares
subject to the Award or Option, as the case may be, prior to such Change in
Capitalization.

         12.      Effect of Certain Transactions.

                  Subject to Sections 5.10, 6.7, 7.4(b) and 8.4 or as otherwise
provided in an Agreement, in the event of (a) the liquidation or dissolution of
the Company or (b) a merger or consolidation of the Company (a "Transaction"),
the Plan and the Options and Awards issued hereunder shall continue in effect in
accordance with their respective terms, except that following a Transaction
either (i) each outstanding Option or Award shall be treated as provided for in
the agreement entered into in connection with the Transaction or (ii) if not so
provided in such agreement, each Optionee and Grantee shall be entitled to
receive in respect of each Share subject to any outstanding Options or Awards,
as the case may be, upon exercise of any Option or payment or transfer in
respect of any Award, the same number and kind of stock, securities, cash,
property or other consideration that each holder of a Share was entitled to
receive in the Transaction in respect of a Share; provided, however, that such
stock, securities, cash, property, or other consideration shall remain subject
to all of the conditions, restrictions and performance criteria which were
applicable to the Options and Awards prior to such Transaction. The treatment of
any Option or Award as provided in this Section 12 shall be conclusively
presumed to be appropriate for purposes of Section 11.




                                      -22-
<PAGE>   24
         13.      Interpretation.

                  Following the required registration of any equity security of
the Company pursuant to Section 12 of the Exchange Act:

                           (a) The Plan is intended to comply with Rule 16b-3
promulgated under the Exchange Act and the Committee shall interpret and
administer the provisions of the Plan or any Agreement in a manner consistent
therewith. Any provisions inconsistent with such Rule shall be inoperative and
shall not affect the validity of the Plan.

                           (b) Unless otherwise expressly stated in the relevant
Agreement, each Option, Stock Appreciation Right and Performance Award granted
under the Plan is intended to be Performance-Based Compensation. The Committee
shall not be entitled to exercise any discretion otherwise authorized hereunder
with respect to such Options or Awards if the ability to exercise such
discretion or the exercise of such discretion itself would cause the
compensation attributable to such Options or Awards to fail to qualify as
Performance-Based Compensation.

                           (c) To the extent that any legal requirement of
Section 16 of the Exchange Act or Section 162(m) of the Code as set forth in the
Plan ceases to be required under Section 16 of the Exchange Act or Section
162(m) of the Code, that Plan provision shall cease to apply.

         14.      Pooling Transactions.

                  Notwithstanding anything contained in the Plan or any
Agreement to the contrary, in the event of a Change in Control which is also
intended to constitute a Pooling Transaction, the Committee shall take such
actions, if any, as are specifically recommended by an independent accounting
firm retained by the Company to the extent reasonably necessary in order to
assure that the Pooling Transaction will qualify as such, including but not
limited to (a) deferring the vesting, exercise, payment, settlement or lapsing
of restrictions with respect to any Option or Award, (b) providing that the
payment or settlement in respect of any Option or Award be made in the form of
cash, Shares or securities of a successor or acquirer of the Company, or a
combination of the foregoing, and (c) providing for the extension of the term of
any Option or Award to the extent necessary to accommodate the foregoing, but
not beyond the maximum term permitted for any Option or Award.




                                      -23-
<PAGE>   25
         15.      Termination and Amendment of the Plan or Modification of
                  Options and Awards.

                  15.1 Plan Amendment or Termination. The Plan shall terminate
on the day preceding the tenth anniversary of the date of its adoption by the
Board, and no Option or Award may be granted thereafter. The Board may sooner
terminate the Plan and the Board may at any time and from time to time amend,
modify or suspend the Plan; provided, however, that:

                           (a) no such amendment, modification, suspension or
termination shall impair or adversely alter any Options or Awards theretofore
granted under the Plan, except with the consent of the Optionee or Grantee, nor
shall any amendment, modification, suspension or termination deprive any
Optionee or Grantee of any Shares which he or she may have acquired through or
as a result of the Plan; and

                           (b) to the extent necessary under any applicable law,
regulation or exchange requirement no amendment shall be effective unless
approved by the stockholders of the Company in accordance with applicable law,
regulation or exchange requirement.

                  15.2 Modification of Options and Awards. No modification of an
Option or Award shall adversely alter or impair any rights or obligations under
the Option or Award without the consent of the Optionee or Grantee, as the case
may be.

         16.      Non-Exclusivity of the Plan.

                  The adoption of the Plan by the Board shall not be construed
as amending, modifying or rescinding any previously approved incentive
arrangement or as creating any limitations on the power of the Board to adopt
such other incentive arrangements as it may deem desirable, including, without
limitation, the granting of stock options otherwise than under the Plan, and
such arrangements may be either applicable generally or only in specific cases.

         17.      Limitation of Liability.

                  As illustrative of the limitations of liability of the Company
and ICN, but not intended to be exhaustive thereof, nothing in the Plan shall be
construed to:

                           (a) give any person any right to be granted an Option
or Award other than at the sole discretion of the Committee;

                           (b) give any person any rights whatsoever with
respect to Shares except as specifically provided in the Plan;




                                      -24-
<PAGE>   26
                           (c) limit in any way the right of the Company or ICN
to terminate the employment of any person at any time; or

                           (d) be evidence of any agreement or understanding,
expressed or implied, that the Company or ICN will employ any person at any
particular rate of compensation or for any particular period of time.

         18.      Regulations and Other Approvals; Governing Law.

                  18.1 Except as to matters of federal law, the Plan and the
rights of all persons claiming hereunder shall be construed and determined in
accordance with the laws of the State of Delaware without giving effect to
conflicts of laws principles thereof.

                  18.2 The obligation of the Company to sell or deliver Shares
with respect to Options and Awards granted under the Plan shall be subject to
all applicable laws, rules and regulations, including all applicable federal and
state securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.

                  18.3 The Board may make such changes as may be necessary or
appropriate to comply with the rules and regulations of any government
authority, or to obtain for Eligible Individuals granted Incentive Stock Options
the tax benefits under the applicable provisions of the Code and regulations
promulgated thereunder.

                  18.4 Each Option and Award is subject to the requirement that,
if at any time the Committee determines, in its discretion, that the listing,
registration or qualification of Shares issuable pursuant to the Plan is
required by any securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the grant of an Option or
Award or the issuance of Shares, no Options or Awards shall be granted or
payment made or Shares issued, in whole or in part, unless listing,
registration, qualification, consent or approval has been effected or obtained
free of any conditions as acceptable to the Committee.

                  18.5 Notwithstanding anything contained in the Plan or any
Agreement to the contrary, in the event that the disposition of Shares acquired
pursuant to the Plan is not covered by a then current registration statement
under the Securities Act of 1933, as amended (the "Securities Act"), and is not
otherwise exempt from such registration, such Shares shall be restricted against
transfer to the extent required by the Securities Act and Rule 144 or other
regulations thereunder. The Committee may require any individual receiving
Shares pursuant to an Option or Award granted under the Plan, as a condition
precedent to receipt of such Shares, to represent and warrant to the Company in
writing that the Shares acquired by such individual are acquired without a view
to any distribution




                                      -25-
<PAGE>   27
thereof and will not be sold or transferred other than pursuant to an effective
registration thereof under said Act or pursuant to an exemption applicable under
the Securities Act or the rules and regulations promulgated thereunder. The
certificates evidencing any of such Shares shall be appropriately amended or
have an appropriate legend placed thereon to reflect their status as restricted
securities as aforesaid.

         19.      Miscellaneous.

                  19.1 Multiple Agreements. The terms of each Option or Award
may differ from other Options or Awards granted under the Plan at the same time,
or at some other time. The Committee may also grant more than one Option or
Award to a given Eligible Individual during the term of the Plan, either in
addition to, or in substitution for, one or more Options or Awards previously
granted to that Eligible Individual.

                  19.2 Withholding of Taxes.

                           (a) At such times as an Optionee or Grantee
recognizes taxable income in connection with the receipt of Shares or cash
hereunder (a "Taxable Event"), the Optionee or Grantee shall pay to the Company
(or to its designee) an amount equal to the federal, state and local income
taxes and other amounts as may be required by law to be withheld by the Company
(or to its designee) in connection with the Taxable Event (the "Withholding
Taxes") prior to the issuance, or release from escrow, of such Shares or the
payment of such cash. The Company (or to its designee) shall have the right to
deduct from any payment of cash to an Optionee or Grantee an amount equal to the
Withholding Taxes in satisfaction of the obligation to pay Withholding Taxes.
The Committee may provide in an Agreement evidencing an Option or Award at the
time of grant or thereafter, that the Optionee or Grantee, in satisfaction of
the obligation to pay Withholding Taxes to the Company (or to its designee), may
elect to have withheld a portion of the Shares issuable to him or her pursuant
to the Option or Award having an aggregate Fair Market Value equal to the
Withholding Taxes.

                           (b) If an Optionee makes a disposition, within the
meaning of Section 424(c) of the Code and regulations promulgated thereunder, of
any Share or Shares issued to such Optionee pursuant to the exercise of an
Incentive Stock Option within the two-year period commencing on the day after
the date of the grant or within the one-year period commencing on the day after
the date of transfer of such Share or Shares to the Optionee pursuant to such
exercise, the Optionee shall, within ten (10) days of such disposition, notify
the Company thereof, by delivery of written notice to the Company at its
principal executive office.

                  19.3 Effective Date. The effective date of this Plan shall be
as determined by the Board, subject only to the approval by the holders of a
majority of the




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<PAGE>   28
securities of the Company entitled to vote thereon, in accordance with the
applicable laws within twelve (12) months of the adoption of the Plan, by the
Board.

                  19.4 Post-Transition Period. Following the Transition Period,
any Option, Stock Appreciation Right or Performance Award granted under the Plan
which is intended to be Performance-Based Compensation shall be subject to the
approval of the material terms of the Plan by a majority of the shareholders of
the Company in accordance with Section 162(m) of the Code and the regulations
promulgated thereunder.





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