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                                                                    Exhibit 10.7

                              TAX SHARING AGREEMENT

                                       BY

                            ICN PHARMACEUTICALS, INC.

                                       AND

                                 RIBAPHARM INC.
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                                TABLE OF CONTENTS

<TABLE>
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                                                                            PAGE

<S>           <C>                                                           <C>
SECTION 1.    Definition of Terms

SECTION 2.    Allocation of Income Tax Liabilities

SECTION 3.    Preparation and Filing of Tax Returns

SECTION 4.    Refunds, Carrybacks and Tax Benefits

SECTION 5.    Tax Payments and Intercompany Billings

SECTION 6.    Assistance and Cooperation.

SECTION 7.    Tax Records

SECTION 8.    Tax Contests

SECTION 9.    No Inconsistent Actions

SECTION 10.   Survival of Obligations

SECTION 11.   Employee Matters

SECTION 12.   Treatment of Payments; Tax Gross Up

SECTION 13.   Disagreements

SECTION 14.   Late Payments

SECTION 15.   Expenses

SECTION 16.   General
</TABLE>
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                              TAX SHARING AGREEMENT

         This Agreement is entered into as of [date] by ICN Pharmaceuticals,
Inc., a Delaware corporation ("ICN"), and RIBAPHARM Inc., a Delaware corporation
("RIBAPHARM"). Capitalized terms used in this Agreement are defined herein.
Unless otherwise indicated, all "Section" references in this Agreement are to
sections of this Agreement.

                                    RECITALS

         WHEREAS, the board of directors of ICN has determined that it would be
in the best interests of ICN and its stockholders to completely separate the
RIBAPHARM R&D Business from ICN;

         WHEREAS, ICN has caused RIBAPHARM to be incorporated in order to effect
such separation;

         WHEREAS, ICN has contributed and transferred to RIBAPHARM, and
RIBAPHARM has received and assumed, the assets and liabilities then associated
with the RIBAPHARM R&D Business;

         WHEREAS, ICN and RIBAPHARM intend that the contribution of the assets
and liabilities associated with the RIBAPHARM R&D Business in exchange for all
of RIBAPHARM's common stock qualify as a tax-free transfer under Section 351 or
368(a)(1)(D) of the Code;

         WHEREAS, ICN currently owns all of the issued and outstanding RIBAPHARM
common stock;

         WHEREAS, ICN and RIBAPHARM currently contemplate that ICN will make an
initial public offering of an amount of its RIBAPHARM common stock that will
reduce ICN's ownership of stock in RIBAPHARM to approximately 97% of the
combined voting power and 88% of all outstanding shares of RIBAPHARM stock;



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         WHEREAS, ICN currently contemplates that, following such initial public
offering, and subject to the satisfaction of certain conditions, ICN will
distribute to the holders of its common stock on a pro rata basis all of the
shares of RIBAPHARM common stock owned by ICN;

         WHEREAS, ICN and RIBAPHARM intend that the Distribution will be
tax-free to ICN and its stockholders under Section 355 of the Code;

         WHEREAS, as a result of the Distribution, RIBAPHARM will cease to be a
member of the affiliated group of which ICN is the common parent, effective as
of the Distribution Date; and

         WHEREAS, ICN and RIBAPHARM desire to provide for and agree upon the
allocation between the parties of liabilities for Taxes arising prior to, as a
result of, and subsequent to the Distribution, and to provide for and agree upon
other matters relating to Taxes;

         NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereby agree as follows:

SECTION 1. DEFINITION OF TERMS.

For purposes of this Agreement (including the recitals hereof), the following
terms have the following meanings:

         "ACCOUNTING CUTOFF DATE" means, with respect to RIBAPHARM, any date as
of the end of which there is a closing of its financial accounting records.

         "ADJUSTMENT REQUEST" means any formal or informal claim or request
filed with any Tax Authority, or with any administrative agency or court, for
the adjustment, refund, or credit of Taxes, including (a) any amended Tax Return
claiming adjustment to the Taxes as reported on


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the Tax Return, or if applicable, as previously adjusted, or (b) any claim for
refund or credit of Taxes previously paid.

         "AFFILIATE" means any entity that directly or indirectly is
"controlled" by the person or entity in question. "Control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through ownership
of voting securities, by contract or otherwise. Except as otherwise provided
herein, the term Affiliate shall refer to Affiliates of a person as determined
immediately after the Distribution.

         "AFFILIATION AND DISTRIBUTION AGREEMENT" means the Affiliation and
Distribution Agreement between ICN and RIBAPHARM dated [date].

         "AGREEMENT" means this Tax Sharing Agreement.

         "APPLICATION FOR RULING" means the letter filed by ICN requesting a
ruling from the Internal Revenue Service regarding certain tax consequences of
certain of the Transactions;

         "CARRYBACK" or "CARRYFORWARD" means any net operating loss, net capital
loss, excess tax credit, foreign tax credit or other similar Tax Item which may
or must be carried from one Tax Period to another Tax Period under the Code or
other applicable Tax Law.

         "CODE" means the U.S. Internal Revenue Code of 1986, as amended from
time to time, or any successor law.

         "COMPANY" means ICN or RIBAPHARM, as the context requires.

         "CONSOLIDATED INCOME TAX RETURN" OR "COMBINED INCOME TAX RETURN" means
any Tax Return relating to Income Tax which is computed by reference to the
assets and activities of members of the ICN Group (other than members of the
RIBAPHARM Group) and the RIBAPHARM Group.



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         "CONSOLIDATED PERIOD" or "CONSOLIDATED PERIODS" means any taxable
period or periods between the Contribution Date and the Distribution Date,
during which time RIBAPHARM is a member of the ICN Group.

         "CONTRIBUTION" has the meaning set forth in the Affiliation and
Distribution Agreement.

         "CONTRIBUTION DATE" means the date of the Contribution;

         "DISTRIBUTION" means the distribution of RIBAPHARM common stock by ICN
in one or more transactions occuring after the Initial Public Offering that
collectively have the effect that all shares of RIBAPHARM common stock held by
ICN are distributed to ICN stockholders.

         "DISTRIBUTION DATE" means any date or dates, as the case may be,
determined by ICN, in its sole and absolute discretion, to be a date on which
shares of RIBAPHARM common stock held by ICN are distributed in connection with
the Distribution.

         "FEDERAL INCOME TAX" means any Income Tax imposed by the United States
government.

         "FOREIGN INCOME TAX" means any Income Tax imposed by any foreign
country or any possession of the United States, or by any political subdivision
of any foreign country or United States possession, which is an income tax as
defined in Treasury Regulation Section 1.901-2.

         "GROUP" means the ICN Group or the RIBAPHARM Group, as the context
requires.

         "ICN AFFILIATE" has the meaning set forth in the Affiliation and
Distribution Agreement.

         "ICN FEDERAL CONSOLIDATED RETURN" means any United States federal
Consolidated Income Tax Return for the affiliated group (as that term is defined
in Code Section 1504) that includes ICN as the common parent and that includes,
during the Consolidated Periods, the RIBAPHARM Group.

         "ICN GROUP" means all corporations included in the ICN Federal
Consolidated Return.



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         "INCOME TAX" means all Taxes (i) based upon, measured by, or calculated
with respect to, net income or net receipts, proceeds or profits or (ii) based
upon, measured by, or calculated with respect to multiple bases (including, but
not limited to, corporate franchise and occupation Taxes) if such Tax may be
based upon, measured by, or calculated with respect to one or more bases
described in clause (i) above.

         "INITIAL PUBLIC OFFERING" has the meaning set forth in the Affiliation
and Distribution Agreement.

         "INTERNAL REVENUE SERVICE" OR "IRS" means the United States Internal
Revenue Service or the United States Department of the Treasury, as the context
requires.

         "IRS PRIVATE LETTER RULING" means the private letter ruling issued by
the IRS in response to the Application for Ruling.

         "OTHER TAX" means any Tax that is not an Income Tax.

         "PAYMENT DATE" means (i) with respect to any ICN Federal Consolidated
Return, the due date for any required installment of estimated taxes determined
under Code Section 6655, the due date (determined without regard to extensions)
for filing the return determined under Code Section 6072, and the date the
return is filed, and (ii) with respect to any Consolidated or Combined State
Income Tax Return, the corresponding dates determined under the applicable Tax
Law.

         "POST-DISTRIBUTION PERIOD" means any Tax Period beginning after the
Distribution Date, and, in the case of any Straddle Period, the portion of such
Straddle Period beginning the day after the Distribution Date.

         "PRE-DISTRIBUTION PERIOD" means any Tax Period ending on or before the
Distribution Date, and, in the case of any Straddle Period, the portion of such
Straddle Period ending on the Distribution Date.



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         "PRIME RATE" means the base rate on corporate loans charged by
Citibank, N.A., New York, New York from time to time, compounded on each March
31, June 30, September 30 and December 31.

         "RESPONSIBLE COMPANY" means, with respect to any Tax Return, the
Company having responsibility for preparing and filing such Tax Return under
this Agreement.

         "RESTRUCTURING TAX" means the Taxes described in clauses (ii) and (iii)
of Section 2.5(a).

         "RIBAPHARM GROUP" means RIBAPHARM and all corporations included in the
RIBAPHARM Federal Consolidated Return, or, during any Consolidated Period, that
would be included in such Return if RIBAPHARM were not included in the ICN
Federal Consolidated Return.

         "RIBAPHARM FEDERAL CONSOLIDATED RETURN" means any United States federal
Income Tax Return or Returns in respect of periods after the Consolidated Period
filed by RIBAPHARM alone or for the affiliated group (as that term is defined in
Code Section 1504) that includes RIBAPHARM as the common parent.

         "RIBAPHARM R&D BUSINESS" means the research and development business
conducted by RIBAPHARM that, prior to the Contribution, was conducted as a
division of ICN.

         "SEPARATE COMPANY TAX" means any Tax computed by reference solely to
the assets and activities of a member or members of a single Group.

         "STRADDLE PERIOD" means any Tax Period that begins on or before and
ends after the Distribution Date.

         "STATE INCOME TAX" means any Income Tax imposed by any State of the
United States or by any political subdivision of any such State.

         "TAINTING ACT" shall have the meaning provided in Section 9.



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         "TAX" or "TAXES" means any income, gross income, gross receipts,
profits, capital stock, franchise, withholding, payroll, social security,
workers compensation, unemployment, disability, property, ad valorem, stamp,
excise, severance, occupation, service, sales, use, license, lease, transfer,
import, export, value added, alternative minimum, estimated or other similar tax
(including any fee, assessment, or other charge in the nature of or in lieu of
any tax) imposed by any governmental entity or political subdivision thereof,
and any interest, penalties, additions to tax, or additional amounts in respect
of the foregoing.

         "TAX AUTHORITY" means, with respect to any Tax, the governmental entity
or political subdivision thereof that imposes such Tax, and the agency (if any)
charged with the collection of such Tax for such entity or political
subdivision.

         "TAX BENEFIT" means any refund of, credit against, or other reduction
in otherwise required Tax payments (including any reduction in estimated tax
payments) and any interest in respect of the foregoing, net of the effect on
otherwise required Tax payments of any associated or corresponding item of
income or gain, or other increase in otherwise required Tax payments.

         "TAX CONTEST" means an audit, review, examination, or any other
administrative or judicial proceeding with the purpose or effect of
redetermining Taxes of any of the Companies or their Affiliates (including any
administrative or judicial review of any claim for refund).

         "TAX ITEM" means, with respect to any Income Tax, any item of income,
gain, loss, deduction, or credit or other item that has the effect of increasing
or decreasing the amount of any Income Tax payable.

         "TAX LAW" means the law of any governmental entity or political
subdivision thereof relating to any Tax.

         "TAX OPINION" means the opinion of counsel selected by ICN, in its sole
discretion, confirming in form and substance reasonably satisfactory to ICN,
that no income, gain or loss for


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U.S. federal income tax purposes will be recognized by ICN, the stockholders or
former stockholders of ICN, or any ICN Affiliate with respect to the
Distribution, and following the receipt of which ICN may, pursuant to Section
3.1 of the Affiliation and Distribution Agreement, complete the Distribution.

         "TAX OPINION SUBMISSION" means any and all information, including any
representation or material fact, submitted to counsel in connection with the Tax
Opinion.

         "TAX PERIOD" means, with respect to any Tax, the period for which the
Tax is reported as provided under the Code or other applicable Tax Law.

         "TAX RECORDS" means Tax Returns, Tax Return workpapers, documentation
relating to any Tax Contest, and any other books of account or records required
to be maintained under the Code or other applicable Tax Laws or under any record
retention agreement with any Tax Authority.

         "TAX RETURN" means any report of Taxes due (including any report of
estimated tax payments), any claims for refund of Taxes paid, any information
return with respect to Taxes, or any other similar report, statement,
declaration, or document required to be filed under the Code or other Tax Law,
including any attachments, exhibits, or other materials submitted with any of
the foregoing, and including any amendments or supplements to any of the
foregoing.

         "TRANSACTIONS" means the transactions contemplated by the Affiliation
and Distribution Agreement, including the Contribution, the Initial Public
Offering and the Distribution.

         "TREASURY REGULATIONS" means the regulations promulgated from time to
time under the Code as in effect for the relevant Tax Period.

SECTION 2. ALLOCATION OF INCOME TAX LIABILITIES.

         2.1. General Rule



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                  (a) ICN Liability. ICN shall indemnify and hold harmless the
RIBAPHARM Group from and against any liability for Taxes for which ICN is liable
under this Section 2.

                  (b) RIBAPHARM Liability. RIBAPHARM shall indemnify and hold
harmless the ICN Group other than members of the RIBAPHARM Group from and
against any liability for Taxes for which RIBAPHARM is liable under this Section
2.

         2.2 Federal Income Tax. Except as otherwise provided in this Agreement,
Federal Income Tax liability shall be allocated as follows:

                  (a) Consolidated Period. For each Consolidated Period,
RIBAPHARM shall be liable for and pay to ICN an amount equal to the Federal
Income Tax determined under the "Stand Alone Method." Under this method
RIBAPHARM's liability for Tax for any Taxable Period is computed as if, since
its formation, RIBAPHARM had (i) never been part of the ICN Group and (ii) filed
a consolidated Federal Income Tax Return as parent of the RIBAPHARM Group with
each eligible member of that Group; provided, however, that the provisions of
Section 2.6(a) regarding special rules for application of the Stand Alone Method
shall apply. ICN shall be liable for all Federal Income Tax for the Consolidated
Period other than amounts for which RIBAPHARM is liable pursuant to this Section
2.2(a).

                  (b) Non-Consolidated Periods. With respect to all periods
which are not Consolidated Periods, RIBAPHARM shall be responsible for all
Federal Income Tax imposed on members of the RIBAPHARM Group, and ICN shall be
responsible for all Federal Income Tax imposed on members of the ICN Group.

         2.3. State and Foreign Income Taxes. Except as otherwise provided in
this Agreement, State and Foreign Income Tax liability shall be allocated as
follows:

                  (a) Consolidated or Combined State and Foreign Income Taxes.
RIBAPHARM shall be liable for and pay to ICN any State or Foreign Income Tax
with respect to


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any Consolidated or Combined State or Foreign Income Tax Return in an amount
that is equal to the amount determined under the Stand Alone Method for the
period covered by such Tax Return; provided, however, that RIBAPHARM's State
Income Tax liability shall be calculated taking into account ICN's worldwide
apportionment schedule, where applicable. ICN shall be liable for and pay any
State or Foreign Income Tax with respect to any Consolidated or Combined State
or Foreign Income Tax Return other than the amount for which RIBAPHARM is liable
pursuant to this Section 2.3(a).

                  (b) Separate Company Taxes. In the case of any State or
Foreign Income Tax which is a Separate Company Tax, RIBAPHARM shall be liable
for and shall pay any such Separate Company Tax imposed under Tax Law on any
member of the RIBAPHARM Group and ICN shall be liable for and shall pay any such
Separate Company Tax imposed on any member of the ICN Group other than a member
of the RIBAPHARM Group.

         2.4 Other Taxes. Except as otherwise provided in this Agreement,
RIBAPHARM shall be liable to and pay the applicable Tax Authority any Other Tax
that is imposed on any member of the RIBAPHARM Group and ICN shall be liable to
and pay the applicable Tax Authority any Other Tax that is imposed on any member
of the ICN Group other than a member of the RIBAPHARM Group.

         2.5. Transaction Taxes.

                  (a) General. Except as otherwise provided in this Section 2.5,
ICN shall be responsible for and pay, and shall indemnify and hold harmless the
RIBAPHARM Group from and against any liability for, any and all Taxes resulting
from the Transactions. This shall include but not be limited to (i) any sales
and use, gross receipts, or other transfer Taxes imposed on the transfers
occurring pursuant to the Transactions; (ii) any Tax resulting from any income
or gain recognized under Treasury Regulation Sections 1.1502-13 or 1.1502-19 (or
any


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corresponding provisions of other applicable Tax Laws) as a result of the
Transactions; and (iii) , except as otherwise provided in Section 2.5(b), any
Tax resulting from any income or gain recognized as a result of any of the
Transactions failing to qualify for tax-free treatment under Code Sections 332,
351, 355, 361, or other provisions of the Code (as contemplated in the IRS
Private Letter Ruling or the Tax Opinion) or corresponding provisions of other
applicable Tax Laws.

                  (b) Inconsistent Acts and Events. Notwithstanding the
provisions of Section 2.5(a), RIBAPHARM shall be liable for, and shall indemnify
and hold harmless ICN from and against any liability for, any Restructuring Tax
to the extent arising from (i) any breach by RIBAPHARM of the representations or
covenants under Section 9, (ii) any Tainting Act performed by RIBAPHARM, (iii)
the inaccuracy of any factual statements or representations made by RIBAPHARM to
ICN or to the IRS in connection with the IRS Private Letter Ruling or the Tax
Opinion, but only to the extent such inaccuracy arises from facts in existence
prior to the Distribution Date or (iv) any Section 355(e) Event with respect to
RIBAPHARM. A Section 355(e) Event with respect to RIBAPHARM will occur if
Section 355(e) of the Code applies to the Distribution as a result of one or
more persons acquiring directly or indirectly stock of RIBAPHARM representing a
50% or greater interest in RIBAPHARM within the meaning of Section 355(e).

         2.6. Calculation of Tax Liability.

                  (a) Stand Alone Method. The following rules shall apply for
purposes of computing RIBAPHARM's liability under the Stand Alone Method: (i)
transactions during any Consolidated Period between a member of the RIBAPHARM
Group and a member of the ICN Group that is not a member of the RIBAPHARM Group
shall, for Federal Income Tax purposes, be accounted for pursuant to the
provisions of the regulations under IRC Section 1502 that


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govern intercompany transactions (and to the extent appropriate for State or
Foreign Income Tax purposes, similar rules shall apply in the case of
transactions between such members which are included in State or Foreign
Consolidated or Combined Income Tax Returns); (ii) during Consolidated Periods
all computations shall be made in conformity with the positions, elections and
accounting methods used by ICN in preparing the consolidated returns of the ICN
Group; (iii) the highest marginal tax rate to which the RIBAPHARM Group could be
subject under applicable Tax Law shall be deemed to be the only Tax rate to
which such group is subject under such law; and (iv) subject to (i) through
(iii) above, all computations and other determinations shall be made in
accordance with the the laws and regulations applying to affiliated groups
filing consolidated returns (including, in the case of any company that becomes
or ceases to be a member of any Group, the laws and regulations applicable to a
company that becomes or ceases to be a member of a such Group), as well as all
other relevant federal Tax laws and regulations (and similar rules shall apply
in the case of State or Foreign Taxes in respect to Consolidated or Combined
Returns for such Taxes).

                  (b) The principles of Treasury Regulation Section 1.1502-76(b)
as reasonably interpreted, agreed and applied by the Companies shall apply in
determining whether a Tax Item is attributable to a Tax Period provided that (x)
no election shall be made under Treasury Regulation Section 1.1502-76(b)(2)(ii)
(relating to ratable allocation of a year's items) and (y) if the Distribution
Date is not an Accounting Cutoff Date, the provisions of Treasury Regulation
Section 1.1502-76(b)(2)(iii) will be applied to ratably allocate the items
(other than extraordinary items) for the month which includes the Distribution
Date.

                  (c) In determining the apportionment of Tax Items between
Pre-Distribution Periods and Post-Distribution Periods, any Tax Items relating
to the Transactions shall be treated as an extraordinary item described in
Treasury Regulation Section 1.1502-76(b)(2)(ii)(C) and


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shall be allocated to Pre-Distribution Periods, and any Taxes related to such
items shall be treated under Treasury Regulation Section 1.1502-76(b)(2)(iv) as
relating to such extraordinary item and shall be allocated to Pre-Distribution
Periods.

         2.7. Tax Payments and Intercompany Billings. Each Company shall pay the
Taxes allocated to it by this Section 2 either to the applicable Taxing
Authority or to the other Company in accordance with Section 5.

SECTION 3. PREPARATION AND FILING OF TAX RETURNS.

         3.1. General. Except as otherwise provided in this Section 3, Tax
Returns shall be prepared and filed when due (including extensions) by the
person obligated to file such Tax Returns under the Code or applicable Tax Law.
The Companies shall provide, and shall cause their Affiliates to provide,
assistance and shall cooperate with one another in accordance with Section 6
with respect to the preparation and filing of Tax Returns, including providing
information required to be provided in Section 6.

         3.2. Pre-Distribution Period and Straddle Period Tax Returns. All Tax
Returns required to be filed for Pre-Distribution Periods or Straddle Periods,
shall be:

                  (1) prepared and filed by ICN, in the case of any Consolidated
or Combined Income Tax Return; and

                  (2) prepared and filed, or caused to be prepared and filed, by
the Company to which such Tax Return relates in all other cases.

          RIBAPHARM shall, for each Tax Period or portion thereof for which
RIBAPHARM or a member of the RIBAPHARM Group is included in a Tax Return
described in clause (1) of the preceding sentence, provide ICN with (i) a true
and correct pro forma tax return for the RIBAPHARM Group together with an
accompanying computation of Tax liability of the Group


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prepared in accordance with the Stand Alone Method, (ii) separate pro forma tax
returns for each member of the RIBAPHARM Group together with accompanying
computations of the separate tax return Tax liabilities of each member of the
Group, and (iii) a reconciliation of book income to federal taxable income for
each member of the RIBAPHARM Group. RIBAPHARM hereby agrees to use its best
efforts to provide ICN with such returns and computations no later than the
first day of the sixth month following the end of the period to which such
returns and computations relate, but in any event shall provide such returns and
computations to ICN no later than the fifteenth day of the sixth month following
the end of the period to which such returns and computations relate. RIBAPHARM,
in preparing the above mentioned pro forma tax returns for its Group, shall not
consider or give effect to any (i) net operating loss carryover or carryback,
(ii) capital loss carryover or carryback, (iii) excess charitable deduction
carryover, (iv) excess tax carryover or carryback, or (v) other similar
carryback or carryback item.

         3.3. Post-Distribution Period Tax Returns. Except as otherwise provided
in Section 3.2 with respect to Straddle Period Tax Returns:

                  (1) All Tax Returns related exclusively to RIBAPHARM or to a
member of the RIBAPHARM Group for Post-Distribution Periods shall be prepared
and filed (or caused to be prepared and filed) by RIBAPHARM,

                  (2) All Tax Returns related exclusively to ICN or to a member
of the ICN Group, excluding for this purpose RIBAPHARM or members of the
RIBAPHARM Group, for Post-Distribution Periods shall be prepared and filed (or
caused to be prepared and filed) by ICN.

         3.4. Tax Accounting Practices.

                  (a) General Rule. Except as otherwise provided in this Section
3.4, any Tax Return for any Pre-Distribution Period or any Straddle Period, and
any Tax Return for any Post-Distribution Period to the extent items reported on
such Tax Return might reasonably affect


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items reported on any Tax Return for any Pre-Distribution Period or any Straddle
Period, shall be prepared in accordance with past Tax accounting practices used
with respect to the Tax Returns in question (unless such past practices are no
longer permissible under the Code or other applicable Tax Law), and to the
extent any items are not covered by past practices (or in the event such past
practices are not longer permissible under the Code or other applicable Tax
Law), in accordance with reasonable Tax accounting practice selected by the
Responsible Company.

                  (b) Reporting of Transaction Tax Items. The tax treatment
reported on any Tax Return of Tax Items relating to the Transaction shall be
consistent with the treatment of such item in the IRS Private Letter Ruling or
the Tax Opinion. To the extent there is a Tax Item relating to the Transactions
which is not covered by the IRS Private Letter Ruling or the Tax Opinion, the
tax treatment of such Tax Items on a Tax Return shall be determined by the
Responsible Company with respect to such Tax Return, provided (i) there is
substantial authority for such tax treatment, and (ii) such tax treatment is not
inconsistent with the tax treatment contemplated in the IRS Private Letter
Ruling or the Tax Opinion. Such Tax Return shall be submitted for review
pursuant to Section 3.5(a), and any dispute regarding such proper tax treatment
shall be referred for resolution pursuant to Section 13 sufficiently in advance
of the filing date of such Tax Return (including extensions) to permit timely
filing of the return.

         3.5. Right to Review Tax Returns.

                  (a) General. The Responsible Company with respect to any Tax
Return shall make such Tax Return and related Tax Records available for review
by the other Company, if requested, to the extent (i) such Tax Return relates to
Taxes for which the requesting party may be liable, (ii) such Tax Return relates
to Taxes for which the requesting party may be liable in whole or in part for
any additional Taxes owing as a result of adjustments to the amount of Taxes
reported on such Tax Return, (iii) such Tax Return relates to Taxes for which
the requesting


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party may have a claim for Tax Benefits under this Agreement, or (iv) the
requesting party reasonably determines that it must inspect such Tax Return to
confirm compliance with the terms of this Agreement. The Responsible Company
shall use its reasonable best efforts to make such Tax Return and Tax Records
available for review as required under this paragraph sufficiently in advance of
the due date for filing such Tax Returns to provide the requesting party with a
meaningful opportunity to analyze and comment on such Tax Returns and have such
Tax Returns modified before filing, taking into account the person responsible
for payment of the Tax (if any) reported on such Tax Return and the materiality
of the amount of Tax liability with respect to such Tax Return. The Companies
shall attempt in good faith to resolve any issues arising out of the review of
such Tax Returns or Tax Records.

                  (b) Execution of Returns Prepared by Other Party. In the case
of any Tax Return which is required to be prepared and filed by one Company
under this Agreement and which is required by law to be signed by another
Company (or by its authorized representative), the Company that is legally
required to sign such Tax Return shall not be required to sign such Tax Return
under this Agreement if there is not substantial authority for the tax treatment
of any material items reported on the Tax Return. Any such Tax Return shall be
supplied by the Company responsible for its preparation and filing to the
Company responsible for its signing at least five days prior to the due date of
such Tax Return (including applicable extensions) and such signing Company shall
deliver an executed copy of such Tax Return to the filing Company at least two
days prior to the due date of such Tax Return (including applicable extensions).

SECTION 4. REFUNDS, CARRYBACKS AND TAX BENEFITS.

         4.1. Compensation for Use of RIBAPHARM Consolidated Period Tax Items.
In the event that (i) the ICN Group realizes an actual Tax Benefit during any
Consolidated Period as a


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result of the use by members of the ICN Group (other than members of the
RIBAPHARM Group) of Tax Items of the RIBAPHARM Group and (ii) as a result of
such use the Federal Income Tax liability of the RIBAPHARM Group for any period
which is not a Consolidated Period is greater than the amount of such liability
computed under the Stand Alone Method (but without regard to clauses (iii) and
(iv) of Section 2.6(a)), then ICN will pay to RIBAPHARM, in accordance with
Section 5.7, an amount equal to the lesser of (x) the excess of the Tax Benefit
actually realized by ICN referred to in clause (i) over the amount of any prior
payments to RIBAPHARM pursuant to this Section 4.1 in respect of that Tax
Benefit and (y) the excess referred to in clause (ii) for such non-Consolidated
Period.

         4.2. Claims for Refund, Carrybacks, and Self-Audit Adjustments
("Adjustment Requests").

                  (a) Consent Required for Adjustment Requests Related to
Consolidated or Combined Income Tax Returns. Except as provided in paragraph (b)
below, each of the Companies hereby agrees that, unless the other Company
consents in writing, which consent shall not be unreasonably delayed or
withheld, no Adjustment Request shall be filed with respect to any Consolidated
or Combined Tax Return that included the RIBAPHARM Group for a Pre-Distribution
Period and affects the RIBAPHARM Group Tax liability. Any Adjustment Request
which the Companies consent to make under this Section 4.2 shall be prepared and
filed by the Responsible Company under Sections 3.2 and 3.3 for the Tax Return
to be adjusted. The Company requesting the Adjustment Request, if other than the
Responsible Company, shall provide to the Responsible Company all information
required for the preparation and filing of such Adjustment Request in such form
and detail as reasonably requested by the Responsible Company.

                  (b) Exception for Adjustment Requests Related to Audit
Adjustments. Each Company shall be entitled, without the consent of the other
Company, to require ICN to file an


                                      -17-
<PAGE>   20
Adjustment Request to take into account any net operating loss, net capital
loss, deduction, credit, or other adjustment attributable to such Company or any
member of its Group corresponding to any adjustment resulting from any audit by
the Internal Revenue Service or other Tax Authority with respect to Consolidated
or Combined Income Tax Returns for any Pre-Distribution Period. In addition, ICN
shall be entitled to require RIBAPHARM to file a corresponding Adjustment
Request with respect to Separate Company Taxes for any Pre-Distribution Periods.

                  (c) Other Adjustment Requests Permitted. Nothing in this
Section 4.2 shall prevent any Company or its Affiliates from filing any
Adjustment Request with respect to Tax Returns which are not Consolidated or
Combined Income Tax Returns or with respect to any Other Taxes; provided,
however, that neither Company shall file an amended Tax Return with respect to
Separate Company or Other Taxes for which the other Company is liable under this
Agreement without the written consent of such other Company (which consent shall
not be unreasonably withheld). If any refund or credit is obtained as a result
of any such Adjustment Request (or otherwise), the parties shall recalculate the
amounts that would have been paid under this Agreement based on the changes
resulting in such refund or credit, and shall make such payments between them as
necessary to place each in the position it would have been in had the payments
made under this Agreement originally been made based on such changes.

                  (d) Payment of Refunds and other Tax Benefits. Except as set
forth in Section 4.2(e), any refunds or other Tax Benefits received by either
Company (or any of its Affiliates) as a result of any Adjustment Request which
are for the account of the other Company (or member of such other Company's
Group) shall be paid by the Company receiving (or whose Affiliate received) such
refund or Tax Benefit to such other Company in accordance with Section 5.

                  (e) Ordering of and Payment for Carrybacks.



                                      -18-
<PAGE>   21
                           (i) In the event that a member of the ICN Group other
than a member of the RIBAPHARM Group, on the one hand, and a member of the
RIBAPHARM Group, on the other hand, are each entitled to carryback a Tax Item to
a Pre-Distribution Period, the respective Tax Items shall be used under the
rules of applicable Tax Law (which shall be, in the case of Carrybacks to such
Tax Periods of the affiliated group of which ICN is the common parent, the rules
contained in Treasury Regulation Section 1.1502-21).

                           (ii) Any Tax refund or other Tax Benefit resulting
from the Carryback of any member of one Group (the "Carryback Group") of any Tax
Item arising after the Distribution Date to a Pre-Distribution Period shall be
for the account of the Carryback Group (and in the event RIBAPHARM Group is the
Carryback Group, then upon receipt of the Tax refund or other Tax Benefit, ICN
shall pay to RIBAPHARM the amount of such Tax refund or other Tax Benefit);
provided, however, that if at the time of the use of the Carryback Items of a
member of the Carryback Group, a member of the other Group (the "Other Group")
possesses Carryback Tax Items which, but for the ordering rule set forth in (i)
above, would have been available to be used (the "Other Group Carryback") in
lieu of the Carryback Group's Tax Items, then (but only to the extent of the
Other Group Carryback) the Carryback Group shall not be entitled to payment of
the amount of such Tax refund or Tax Benefit until the earlier of (X) the date
on which a member of the Other Group claims the Other Group Carryback on a Tax
Return or (Y) the date on which a member of the Carryback Group would have been
able to use the Carryback had it not been claimed with respect to the
Pre-Distribution Period Tax Return.

                           (iii) In the event the Carryback of Tax Items of a
member of the ICN Group other than a member of the RIBAPHARM Group, or a member
of the RIBAPHARM Group, as the case may be, does not result in a Tax refund, due
to an offsetting Tax adjustment to a member of the Other Group, then the Other
Group shall promptly pay the amount of any


                                      -19-
<PAGE>   22
decrease in Tax liability resulting from the Carryback claim, provided, however,
that in the event the Other Group possesses Carryback Items which, but for the
ordering rules set forth in (i) above would have been available to be used in
lieu of the Carryback Group's Items, then (but only to the extent of the Other
Group Carryback), the Other Group shall not be required to pay the amount of
such decrease in Tax liability to the Carryback Group until the earlier of (X)
the date on which a member of the Other Group claims the Other Group Carryback
on a Tax Return or (Y) the date on which a member of the Carryback Group would
have been able to utilize the Carryback had it not been claimed with respect to
the Pre-Distribution Period Tax Return.

         4.3. Adjustment of Tax Items. In the event that the Carryback of Tax
Items of one Group, or a Tax adjustment attributable to such Group under the
terms of this Agreement, results in the disallowance or limitation of Tax Items
claimed on the Tax Return as filed, the Carryback Group shall be responsible for
any increase in Tax liability resulting from the disallowance or limitation of
Tax attributes; provided, however, that in the event the disallowance or
limitation of Tax attributes results in a Tax Benefit resulting from the use of
such Tax attributes in another Tax Period, such Tax Benefit shall be deemed to
be for the account of the Carryback Group for such purposes of this Agreement.

         4.4. Adjustments on Audit. If, upon examination by any Tax Authority of
any Tax Return including a member of the ICN Group or RIBAPHARM Group for any
Tax Period, any item of deduction, credit or expense is disallowed for which ICN
is or may be liable for Taxes hereunder (or an item of income is required to be
recognized on a Tax Return which was not reported on such Tax Return), in either
such case resulting in a tax detriment suffered by the ICN Group, and such
disallowance (or recognition) results in a Tax Benefit to the RIBAPHARM Group
(with respect to that Tax Period or another Tax Period), then RIBAPHARM shall
pay to ICN the amount of such Tax Benefit that is realized in the form of an
actual reduction in Tax


                                      -20-
<PAGE>   23
(which shall be computed by comparing the Tax which would have been owed by
RIBAPHARM but for the item giving rise to the Tax Benefit with the Tax owed by
RIBAPHARM taking such item into account) provided, however, that in no case will
the amount that RIBAPHARM is required to pay to ICN with respect to such Tax
Benefit exceed the corresponding tax detriment to ICN (reduced by payments
previously made by RIBAPHARM to ICN with respect to such Tax Benefit). Any
payment required to be made hereunder shall be made in accordance with Section
5.10. The provisions of this Section 4.4 shall apply mutatis mutandis where an
item of deduction, credit or expense is disallowed for which RIBAPHARM is or may
be liable for Taxes hereunder (or any item of income is required to be
recognized on a Tax Return which was not reported on such Tax Return), as they
apply where the ICN Group suffers such a detriment. For avoidance of doubt, any
payment required to be made by ICN to the RIBAPHARM Group under this Section 4.4
shall, to the extent applicable, be deemed as an offset to amounts owing by
RIBAPHARM to ICN under Section 2.2 hereof.

SECTION 5. TAX PAYMENTS AND INTERCOMPANY BILLINGS.

         5.1. Payment of Taxes With Respect to ICN Federal Consolidated Returns.
In the case of any ICN Federal Consolidated Return -

                  (a) Computation and Payment of Tax Due. Unless otherwise
agreed to by the Companies, at least five business days prior to any Payment
Date, ICN shall compute the amount of Tax required to be paid to the Internal
Revenue Service (taking into account the requirements of Section 3.4 relating to
consistent accounting practices) with respect to such Tax Return on such Payment
Date and shall notify RIBAPHARM in writing of the amount of Tax required to be
paid on such Payment Date. ICN will pay such amount to the Internal Revenue
Service on or before such Payment Date.



                                      -21-
<PAGE>   24
                  (b) Computation and Payment of RIBAPHARM Liability With
Respect to Tax Due. Within 30 days following any Payment Date, RIBAPHARM will
pay to ICN the excess (if any) of

                           (i) the amount of liability determined as of such
Payment Date with respect to the applicable Tax Period allocable to RIBAPHARM in
a manner consistent with the provisions of Section 2.2, over

                           (ii) the amount equal to the cumulative net payments
with respect to such Tax Return prior to such Payment Date made by RIBAPHARM or
members of its Group. If the amount in clause (ii) above is greater than the
amount in clause (i) above as of any Payment Date, then ICN shall pay such
excess to RIBAPHARM within 30 days following the Payment Date.

                  (c) Interest on Intergroup Tax Allocation Payments. In the
case of any payments to ICN required under paragraph (b) of this Section 5.1,
RIBAPHARM shall also pay to ICN an amount of interest computed at the Prime Rate
on the amount of the payment required based on the number of days from the
applicable Payment Date until the date of RIBAPHARM's subsequent payment. In the
case of any payments by ICN required under paragraph (b) of this Section 5.1,
ICN shall also pay to RIBAPHARM an amount of interest computed at the Prime Rate
on the amount of the payment required based on the number of days from the
applicable Payment Date until the date of ICN's subsequent payment of such
amount to RIBAPHARM.

         5.2. Payment of Federal Income Tax Related to Adjustments.

                  (a) Adjustments Resulting in Underpayments. ICN shall pay to
the Internal Revenue Service when due any additional Federal Income Tax required
to be paid as a result of any adjustment to the tax liability with respect to
any ICN Federal Consolidated Return. RIBAPHARM shall pay to ICN an amount that
is allocable to RIBAPHARM under Section 2.2


                                      -22-
<PAGE>   25
within 30 days from the later of (i) the date the additional Tax was paid by ICN
or (ii) the date of receipt by RIBAPHARM of a written notice and demand from ICN
for payment of the amount due, accompanied by evidence of payment and a
statement detailing the Taxes paid and describing in reasonable detail the
particulars relating thereto. Any payments required under this Section 5.2 (a)
shall include interest computed at the Prime Rate based on the number of days
from the date the additional Tax was paid by ICN to the date of the payment
under this Section 5.2(a).

                  (b) Adjustments Resulting in Overpayments. Within 30 days of
receipt by ICN of any Tax Benefit resulting from any adjustment to the tax
liability with respect to any ICN Federal Consolidated Return, ICN shall pay to
RIBAPHARM its share of any such Tax Benefit, as determined in accordance with
the principles of Sections 2.2 and 4. Any payments required under this Section
5.2(b) shall include interest computed at the Prime Rate based on the number of
days from the date the Tax Benefit was received by ICN to the date of payment to
RIBAPHARM under this Section 5.2(b).

         5.3. Payment of State Income Tax Relating to Pre-Distribution Periods.

                  (a) Computation and Payment of Tax Due. Unless otherwise
agreed to by the Companies, at least five business days prior to any Payment
Date for any Tax Return with respect to any State Income Tax relating to a
Pre-Distribution Period, the Responsible Company shall compute the amount of Tax
required to be paid to the applicable Tax Authority (taking into account the
requirements of Section 3.4 relating to consistent accounting practices) with
respect to such Tax Return on such Payment Date and --

                           (i) If such Tax Return is with respect to a
Consolidated or Combined State Income Tax, the Responsible Company shall, if ICN
is not the Responsible Company with respect to such Tax Return, notify ICN in
writing of the amount of Tax required to be paid on


                                      -23-
<PAGE>   26
such Payment Date. ICN will pay such amount to such Tax Authority on or before
such Payment Date.

                           (ii) If such Tax Return is with respect to a Separate
Company Tax, the Responsible Company shall, if it is not the Company liable for
the Tax reported on such Tax Return, notify the Company liable for such Tax in
writing of the amount of Tax required to be paid on such Payment Date. The
Company liable for such Tax will pay such amount to such Tax Authority on or
before such Payment Date.

                  (b) Computation and Payment of RIBAPHARM Liability With
Respect to Tax Due. Within 30 days following the due date (including extensions)
for filing any Tax Return for any Consolidated or Combined State Income Tax
(excluding any Tax Return with respect to payment of estimated Taxes or Taxes
due with a request for extension of time to file) relating to a Pre-Distribution
Period, RIBAPHARM shall pay to ICN the Tax liability allocable to RIBAPHARM as
determined by ICN under the provisions of Sections 2.3 and 4, (and following the
procedures described in Section 5.2(a)), plus interest computed at the Prime
Rate on the amount of the payment based on the number of days from the due date
(including extensions) to the date of payment by RIBAPHARM to ICN.

         5.4. Payment of State Income Taxes Related to Adjustments.

                  (a) Adjustments Resulting in Underpayments. ICN shall pay to
the applicable Tax Authority when due any additional State Income Tax required
to be paid as a result of any adjustment to the Tax liability with respect to
any Tax Return for any Consolidated or Combined State Income Tax for any
Pre-Distribution Period. RIBAPHARM shall pay to ICN its respective share of any
such additional Tax payment determined in accordance with Sections 2.3 and 4
within 30 days from the later of (i) the date the additional Tax was paid by ICN
or (ii) the date of receipt by RIBAPHARM of a written notice and demand from ICN
for payment of the amount


                                      -24-
<PAGE>   27
due, accompanied by evidence of payment and a statement detailing the Taxes paid
and describing in reasonable detail the particulars relating thereto. RIBAPHARM
shall also pay to ICN interest on its respective share of such Tax computed at
the Prime Rate based on the number of days from the date the additional Tax was
paid by ICN to the date of its payment to ICN under this Section 5.4(a).

                  (b) Adjustments Resulting in Overpayments. Within 30 days of
receipt by ICN of any Tax Benefit resulting from any adjustment to the Tax
liability with respect to any Tax Return for any Consolidated or Combined State
Income Tax for any Pre-Distribution Period, ICN shall pay to RIBAPHARM its share
of any such Tax Benefit determined in accordance with the principles of Sections
2.3 and 4. Any payments required under this Section 5.4(b) shall include
interest computed at the Prime Rate based on the number of days from the date
the Tax Benefit was received by ICN to the date of payment under this Section
5.4(b).

         5.5. Payment of Separate Company Taxes and Other Taxes. Each Company
shall pay, or shall cause to be paid, to the applicable Tax Authority when due
all Separate Company Taxes and Other Taxes owed by such Company or a member of
such Company's Group.

         5.6. Indemnification Payments. If any Company (the "payor") is
required to pay to a Tax Authority a Tax that another Company (the "responsible
party") is required to pay to such Taxing Authority under this Agreement, the
responsible party shall reimburse the payor within 30 days of delivery by the
payor to the responsible party of an invoice for the amount due, accompanied by
evidence of payment and a statement detailing the Taxes paid and describing in
reasonable detail the particulars relating thereto. The reimbursement shall
include interest on the Tax payment computed at the Prime Rate based on the
number of days from the date of the payment to the Tax Authority to the date of
reimbursement under this Section 5.6.



                                      -25-
<PAGE>   28
         5.7. Compensation for use of RIBAPHARM Consolidated Period Tax Items.
In the event ICN is required to pay RIBAPHARM in accordance with Section 4.1,
RIBAPHARM shall deliver to ICN an invoice stating the amount due to RIBAPHARM,
accompanied by a reasonably detailed calculation of that amount, as prescribed
by section 4.1. ICN shall pay RIBAPHARM within 30 days from the due date
(including any extensions) for the Tax Return filed by RIBAPHARM with respect to
such amount, including interest computed at the Prime Rate based on the number
of days from such due date to the date ICN pays RIBAPHARM.

         5.8. Payment of Refunds and Other Tax Benefits.

                  (a) Except as otherwise provided in this Agreement, if a
member of one Group receives a Tax refund or other Tax Benefit with respect to
Taxes for which a member of the other Group is liable hereunder, the Company
receiving such Tax refund or other Tax Benefit shall make a payment to the
Company who is liable for such Taxes hereunder within 30 days following the
receipt of the Tax refund or other Tax Benefit in an amount equal to such Tax
refund or other Tax Benefit, plus interest on such amount computed at the Prime
Rate based on the number of days from the date of receipt of the Tax refund or
other Tax Benefit to the date of payment under this Section 5.8.

                  (b) In the event one Group is reimbursed for its payment of a
Tax liability of the other Group, the amount of such reimbursement shall be
computed net of any Tax Benefit realized by the reimbursed Group as the result
of payment of the other Group's Tax liability.

         5.9. Payment for Carrybacks. Each Company shall pay the other Company
for Carrybacks in accordance with Section 4.2(e). Any such payment shall include
interest at the Prime Rate based on the number of days from the date Company is
required to make the payment under Section 4.2(e) to the date the Company
actually makes the payment.



                                      -26-
<PAGE>   29
         5.10. Payment for Adjustments on Audit. Any payment required under
Section 4.4 shall be made within 30 days of the due date (including any
extensions) of the Tax Return on which the Tax Benefit described in that section
is claimed. Such payment shall include interest computed at the Prime Rate based
on the number of days from such due date to the date the payment is made.

SECTION 6. ASSISTANCE AND COOPERATION.

         6.1. General. Each of the Companies shall cooperate (and cause their
respective Affiliates to cooperate) with each other and with each other's
agents, including accounting firms and legal counsel, in connection with Tax
matters relating to the Companies and their Affiliates including (i) preparation
and filing of Tax Returns, (ii) determining the liability for and amount of any
Taxes due (including estimated Taxes) or the right to and amount of any refund
of Taxes, (iii) examinations of Tax Returns, and (iv) any administrative or
judicial proceeding in respect of Taxes assessed or proposed to be assessed.
Such cooperation shall include making all information and documents in their
possession relating to the other Companies and their Affiliates available to
such other Companies as provided in Section 7. Each of the Companies shall also
make available to each other, as reasonably requested and available, personnel
(including officers, directors, employees and agents of the Companies or their
respective Affiliates) responsible for preparing, maintaining, and interpreting
information and documents relevant to Taxes, and personnel reasonably required
as witnesses or for purposes of providing information or documents in connection
with any administrative or judicial proceedings relating to Taxes. Any
information or documents provided under this Section 6 shall be kept
confidential by the Company receiving the information or documents, except as
may otherwise be necessary


                                      -27-
<PAGE>   30
in connection with the filing of Tax Returns or in connection with any
administrative or judicial proceedings relating to Taxes.

         6.2. Income Tax Return Information. Each Company will provide to each
other Company information and documents relating to their respective Groups
required by the other Companies to prepare Tax Returns. The Responsible Company
shall determine a reasonable compliance schedule for such purpose in accordance
with past practices. Any additional information or documents the Responsible
Company requires to prepare such Tax Returns will be provided in accordance with
past practices, if any, or as the Responsible Company reasonably requests and in
sufficient time for the Responsible Company to file such Tax Returns timely.

SECTION 7. TAX RECORDS.

         7.1. Retention of Tax Records. Except as provided in Section 7.2, each
Company shall preserve and keep all Tax Records exclusively relating to the
assets and activities of their respective Groups for Pre-Distribution Tax
Periods, and ICN shall preserve and keep all other Tax Records relating to Taxes
of the Groups for Pre-Distribution Tax Periods, for so long as the contents
thereof may become material in the administration of any matter under the Code
or other applicable Tax Law, but in any event until the later of (i) the
expiration of any applicable statutes of limitation, as extended, and (ii) seven
years after the Distribution Date. Prior to disposing of any Tax Records which
it is required to preserve and keep under this Section 7, a Company shall
provide 90-days written notice to the other Company. Such notice shall include a
list of the records to be disposed of describing in reasonable detail each file,
book, or other record accumulation being disposed of. The notified Company shall
have the opportunity, at its cost and expense, to copy or remove, within such
90-day period, all or any part of such Tax Records.



                                      -28-
<PAGE>   31
         7.2. State Income Tax Returns. Tax Returns with respect to State Income
Taxes and workpapers prepared in connection with preparing such Tax Returns
shall be preserved and kept, and disposed of, in accordance with the guidelines
of Section 7.1, by the Company responsible for preparing and filing the
applicable Tax Return.

         7.3. Access to Tax Records. The Companies and their respective
Affiliates shall make available to each other for inspection and copying during
normal business hours upon reasonable notice all Tax Records in their possession
to the extent reasonably requested by the other Company in connection with the
preparation of Tax Returns, audits, litigation, or the resolution of items under
this Agreement.

SECTION 8. TAX CONTESTS.

         8.1. Notice. Each of the parties shall provide prompt notice to the
other party of any pending or threatened Tax audit, assessment or proceeding or
other Tax Contest of which it becomes aware related to Taxes for Tax Periods for
which it is indemnified by the other party hereunder. Such notice shall contain
factual information (to the extent known) describing any asserted Tax liability
in reasonable detail and shall be accompanied by copies of any notice and other
documents received from any Tax Authority in respect of any such matters. If an
indemnified party has knowledge of an asserted Tax liability with respect to a
matter for which it is to be indemnified hereunder and such party fails to give
the indemnifying party prompt notice of such asserted Tax liability, then (i) if
the indemnifying party is precluded from contesting the asserted Tax liability
in any forum as a result of the failure to give prompt notice, the indemnifying
party shall have no obligation to indemnify the indemnified party for any Taxes
arising out of such asserted Tax liability, and (ii) if the indemnifying party
is not precluded from contesting the asserted Tax liability in any forum, but
such failure to give prompt notice results in


                                      -29-
<PAGE>   32
a monetary detriment to the indemnifying party, then any amount which the
indemnifying party is otherwise required to pay the indemnified party pursuant
to this Agreement shall be reduced by the amount of such detriment.

         8.2. Control of Tax Contests. Each Company shall have full
responsibility and discretion in handling, settling or contesting any Tax
Contest involving a Tax for which it is liable pursuant to Section 2 of this
Agreement; provided, however, ICN shall have full responsibility and discretion
in handling, settling or contesting any Tax Contest with respect to a
Consolidated or Combined Income Tax Return of the ICN Group. Furthermore, both
Companies may participate in any Tax Contest with respect to Restructuring Taxes
regardless of whether it has liability or indemnification obligations with
respect to such Taxes under this Agreement.

SECTION 9. NO INCONSISTENT ACTIONS.

                  (a) Each of the Companies covenants and agrees that it will
not take any action, and it will cause its Affiliates to refrain from taking any
action, which may be inconsistent with the Tax treatment of the Transactions as
contemplated in the IRS Private Letter Ruling or the Tax Opinion (any such
action is referred to in this Section 9 as a "Tainting Act"), unless (i) the
Company or Affiliate thereof proposing such Tainting Act (the "Requesting
Party") either (A) obtains a ruling with respect to the Tainting Act from the
Internal Revenue Service or other applicable Tax Authority that is reasonably
satisfactory to the other Company (the "Requested Party") (except that the
Requesting Party shall not submit any such ruling request if a Requested Party
determines in good faith that filing such request might have a materially
adverse effect upon such Requested Party), or (B) obtains an opinion reasonably
acceptable to each Requested Party of independent, nationally-recognized tax
counsel acceptable to each Requested Party, on a basis of assumed facts and
representations consistent with the facts at the time of such action,


                                      -30-
<PAGE>   33
that such Tainting Act will not affect the Tax treatment of the Transactions as
contemplated in the IRS Private Letter Ruling or the Tax Opinion, or (ii) each
Requested Party consents in writing to such Tainting Act, which consent shall be
granted or withheld in the sole and absolute discretion of each such Requested
Party. Without limiting the foregoing:

                           (i) Specified Actions. During the two year period
following the Distribution Date, unless clause (i) or (ii) of the preceding
paragraph is satisfied with respect to the applicable action, no Company or its
Affiliate will (A) liquidate or merge with or into any other corporation (other
than a merger which results in the outstanding stock of such Company or its
Affiliates immediately before the merger continuing to represent at least eighty
(80) percent of the outstanding voting stock and non-voting stock of the merged
corporations after the transaction); (B) issue more than twenty (20) percent, in
the aggregate, by vote or value, of its capital stock in one or more
transactions, including the Initial Public Offering; (C) redeem, purchase or
otherwise reacquire its capital stock in one or more transactions, except to the
extent such redemption, purchase or reacquisition meets the requirements of
section 4.05(1)(b) of Revenue Procedure 96-30; (D) sell, exchange, distribute or
otherwise dispose of, other than in the ordinary course of business, more than
twenty-five (25) percent of the assets constituting the trades or businesses
relied upon in the IRS Private Letter Ruling or the Tax Opinion to satisfy
Section 355(b) of the Code; or (E) discontinue or cause to be discontinued the
active conduct of the trades or businesses relied upon in the IRS Private Letter
Ruling or the Tax Opinion to satisfy Section 355(b) of the Code.

                           (ii) No Inconsistent Plan or Intent. Each of the
Companies represents and warrants that neither it nor any of its Affiliates has
any plan or intent to take any action which is inconsistent with any factual
statements or representations in the IRS Private Letter Ruling or the Tax
Opinion. Regardless of any change in circumstances, each of the Companies


                                      -31-
<PAGE>   34
covenants and agrees that it will not take, and it will cause its Affiliates to
refrain from taking, any such inconsistent action on or before the second
anniversary of the Distribution Date other than as permitted in this Section 9.

                           (iii) 355(e) Covenant. Notwithstanding anything in
this Agreement to the contrary, each of ICN and RIBAPHARM covenants and agrees
that, during the two-year periods ending on and beginning on the Distribution
Date, unless clause (i) or (ii) of section 9(a) of this Agreement is satisfied
with respect to the applicable action, it will not enter into any negotiations,
agreements or arrangements with respect to transactions or events (including
stock issuances, option grants, capital contributions or acquisitions, but not
including the Initial Public Offering), which may cause the Distribution to be
treated as part of a plan pursuant to which one or more persons acquire directly
or indirectly ICN or RIBAPHARM stock, as the case may be, representing a "50
percent or greater interest" within the meaning of Section 355(e)(4) of the
Code.

                           (iv) Amended or Supplemental Rulings. Each of the
Companies covenants and agrees that it will not file, and it will cause its
Affiliates to refrain from filing, any amendment or supplement to the
Application for Ruling with respect to the Transactions subsequent to the
Distribution Date without the consent of the other Companies, which consent
shall not be unreasonably withheld.

                           (v) Liability for Breach of Representations or
Omission or Misstatement of Material Facts. RIBAPHARM represents that (i) it has
read or will read the Application for Ruling, any amendment or supplement to the
Application for Ruling (each a "Supplemental Application"), and any Tax Opinion
Submission made available to it by ICN, (ii) all information relating to
RIBAPHARM or any member of the RIBAPHARM Group contained in such Application for
Ruling, Supplemental Application and Tax Opinion Submission is or will


                                      -32-
<PAGE>   35
be true, correct and complete in all material respects at the time such
information is submitted, and (iii) except to the extent that RIBAPHARM shall
have notified ICN in writing to the contrary, with reasonable specificity and as
promptly as possible, prior to the Distribution, all such information supplied
to ICN in writing by RIBAPHARM or any member of the RIBAPHARM Group will be
true, correct and complete in all material respects as of the Distribution Date.
If the IRS withdraws all, or any portion, of an IRS Private Letter Ruling issued
to ICN in connection with the Distribution, or if any Tax Opinion is rendered
inapplicable or ineffective because of a breach by RIBAPHARM or any member of
the RIBAPHARM Group of a representation or because of the omission or
misstatement by RIBAPHARM or any member of the RIBAPHARM Group of any material
fact, which breach, omission or misstatement was not known to ICN on or before
the Distribution Date, RIBAPHARM and every member of the RIBAPHARM Group shall
be responsible for one hundred (100) percent of any Restructuring Tax resulting
from such breach, omission or misstatement, and shall jointly and severally
indemnify, on an after-tax-basis, ICN, each member of the ICN Group other than a
member of the RIBAPHARM Group, and their directors, officers and employees and
hold them harmless from and against such Restructuring Tax.

                  (b) Notwithstanding anything to the contrary in this
Agreement, each Company shall be solely liable for, and shall indemnify and hold
harmless the other Company from any Restructuring Tax resulting from a Tainting
Act by such first Company or its Affiliates, regardless of whether clause (i) or
(ii) of Section 9(a) was satisfied with respect to such Tainting Act.

SECTION 10. SURVIVAL OF OBLIGATIONS.



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         The representations, warranties, covenants and agreements set forth in
this Agreement shall be unconditional and absolute and shall remain in effect
without limitation as to time.

SECTION 11. EMPLOYEE MATTERS.

         Each of the Companies agrees to utilize, or cause its Affiliates to
utilize, the alternative procedure set forth in section 5 of Revenue Procedure
96-60, 1996-2 C.B. 399, with respect to wage reporting.

SECTION 12. TREATMENT OF PAYMENTS; TAX GROSS UP.

         12.1. Treatment of Tax Indemnity and Tax Benefit Payments. In the
absence of any change in tax treatment under the Code or other applicable Tax
Law, any Tax indemnity payments or Tax Benefit payments made by a Company under
Section 5 shall be reported for Tax purposes by the payor and the recipient as
distributions or capital contributions, as appropriate, occurring immediately
before the Distribution on the Distribution Date, but only to the extent the
payment does not relate to a Tax allocated to the payor in accordance with
Treasury Regulation Section 1.1502-33(d) (or under corresponding principles of
other applicable Tax Laws).

         12.2. Tax Gross Up. If notwithstanding the manner in which Tax
indemnity payments and Tax Benefit payments were reported, there is an
adjustment to the Tax liability of a Company as a result of its receipt of a
payment pursuant to this Agreement, such payment shall be appropriately adjusted
so that the amount of such payment, reduced by the amount of all Income Taxes
payable with respect to the receipt thereof (but taking into account all
correlative Tax Benefits resulting from the payment of such Income Taxes), shall
equal the amount of the payment which the Company receiving such payment would
otherwise be entitled to receive pursuant to this Agreement.



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         12.3. Interest Under This Agreement. Anything herein to the contrary
notwithstanding, to the extent one Company ("indemnitor") makes a payment of
interest to another Company ("indemnitee") under this Agreement with respect to
the period from the date that the indemnitee made a payment of Tax to a Tax
Authority to the date that the indemnitor reimbursed the indemnitee for such Tax
payment, or with respect to the period from the date that the indemnitor
received a Tax Benefit to the date indemnitor paid the indemnitee with respect
to such Tax Benefit, the interest payment shall be treated as interest expense
to the indemnitor (deductible to the extent provided by law) and as interest
income by the indemnitee (includible in income to the extent provided by law).
The amount of the payment shall not be adjusted under Section 12.2 to take into
account any associated Tax Benefit to the indemnitor or increase in Tax to the
indemnitee.

SECTION 13. DISAGREEMENTS.

         If after good faith negotiations the parties cannot agree on the
application of this Agreement to any matter concerning (i) calculation or
allocation of any liability for Tax, (ii) computation or payment of any Tax due,
(iii) compensation for any Tax Benefit, (iv) preparation or filing of any Tax
Return or (v) control of any Tax Contest, then the matter will be referred to an
independent law firm or accounting firm acceptable to each of the parties (the
"Firm"). The Firm shall furnish written notice to the parties of its resolution
of any such disagreement as soon as practical, but in any event no later than 45
days after its acceptance of the matter for resolution. Any such resolution by
the Firm will be conclusive and binding on all parties to this Agreement. In
accordance with Section 15, each party shall pay its own fees and expenses
(including the fees and expenses of its representatives) incurred in connection
with the referral of


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<PAGE>   38
the matter to the Firm. All fees and expenses of the Firm in connection with
such referral shall be shared equally by the parties affected by the matter.

SECTION 14. LATE PAYMENTS.

         Any amount owed by one party to another party under this Agreement
which is not paid when due shall bear interest at the Prime Rate plus two
percent, compounded on each March 31, June 30, September 30 and December 31,
from the due date of the payment to the date paid. To the extent interest
required to be paid under this Section 14 duplicates interest required to be
paid under any other provision of this Agreement, interest shall be computed at
the higher of the interest rate provided under this Section 14 or the interest
rate provided under such other provision.

SECTION 15. EXPENSES.

         Except as provided in Section 14, each Company and its Affiliates shall
bear their own expenses incurred in connection with preparation of Tax Returns,
Tax Contests, and other matters related to Taxes under the provisions of this
Agreement.

SECTION 16. GENERAL PROVISIONS.

         16.1. Notices. All notices and other communications hereunder shall be
in writing and shall be delivered in person, by telecopy, by express or
overnight mail delivered by a nationally recognized air courier (delivery
charges prepaid), or by registered or certified mail (postage prepaid, return
receipt requested) to the respective parties as follows:

                  (a)      If to ICN, to:

                           ICN Pharmaceuticals, Inc.
                           3300 Hyland Avenue
                           Costa Mesa, CA  92626
                           Attention:  David Watt, Esq.



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<PAGE>   39
                  (b)      If to RIBAPHARM, to:

                           RIBAPHARM Inc.
                           3300 Hyland Avenue
                           Costa Mesa, CA  92626
                           Attention:  Harry Roosje, Esq.

or to such other address as the party to whom notice is given may have
previously furnished to the others in writing in the manner set forth above. Any
notice or communication delivered in person shall be deemed effective on
delivery or when delivery is refused. Any notice or communication sent by
telecopy or by air courier shall be deemed effective on the first Business Day
at the place at which such notice or communication is received following the day
on which such notice or communication was sent.

         16.2. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same agreement. The Agreement may be
delivered by facsimile transmission of a signed copy thereof.

         16.3. Binding Effect; Assignment. This Agreement and all of the
provisions hereof shall be binding upon the parties hereto and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. Except with respect to a merger of either party, neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
either party hereto without the prior written consent of the other party, which
consent shall not be unreasonably withheld or delayed; provided, however, that
ICN and RIBAPHARM may


                                      -37-
<PAGE>   40
assign their respective rights, interests, duties, liabilities and obligations
under this Agreement to any of their respective subsidiaries, but such
assignment shall not relieve ICN or RIBAPHARM, as the assignee, of its
obligations hereunder. The schedules attached hereto or referred to herein are
an integral part of this Agreement and are hereby incorporated into this
Agreement and made a part hereof as if set forth in full herein.

         16.4. Dispute Resolution. Except as otherwise provided for in Section
13, resolution of any and all disputes arising from or in connection with this
Agreement, whether based on contract, tort, or otherwise (collectively,
"Disputes"), shall be governed by and settled in accordance with the provisions
of this Section 16.4. The parties hereto shall use all commercially reasonable
efforts to settle all Disputes without resorting to mediation, arbitration,
litigation or other third party dispute resolution mechanisms. If any Dispute
remains unsettled, the parties hereby agree to mediate such Dispute using a
mediator reasonably acceptable to all parties involved in such Dispute. If the
parties are unable to resolve such dispute through mediation, each party will be
free to commence proceedings for the resolution thereof. No party shall be
entitled to consequential, special, exemplary or punitive damages.

         16.5. Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.



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<PAGE>   41
         16.6. Waiver. The observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively) by the party entitled to enforce such term, but such waiver shall
be effective only if it is in writing signed by the party against which such
waiver is to be asserted. Unless otherwise expressly provided in this Agreement,
no delay or omission on the part of any party in exercising any right or
privilege under this Agreement shall operate as a waiver thereof, nor shall any
waiver on the part of any party of any right or privilege under this Agreement
operate as a waiver of any other right or privilege under this Agreement nor
shall any single or partial exercise of any right or privilege preclude any
other or further exercise thereof or the exercise of any other right or
privilege under this Agreement. No failure by either party to take any action or
assert any right or privilege hereunder shall be deemed to be a waiver of such
right or privilege in the event of the continuation or repetition of the
circumstances giving rise to such right unless expressly waived in writing by
the party against whom the existence of such waiver is asserted.

         16.7. Amendment. This Agreement may not be amended or modified in any
respect except by a written agreement signed by both of the parties hereto.

         16.8. Authority. Each of the parties hereto represents to the other
that (a) it has the corporate power and authority to execute, deliver and
perform this Agreement, (b) the execution, delivery and performance of this
Agreement by it has been duly authorized by all necessary corporate action, (c)
it has duly and validly executed and delivered this Agreement, and (d) this
Agreement is a legal, valid and binding obligation, enforceable against it in
accordance with its


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<PAGE>   42
terms subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting creditors' rights generally and general equity
principles.

         16.9. Interpretation. The headings contained in this Agreement, in any
Schedule hereto and in the table or contents to this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Any capitalized term used in any Schedule but not otherwise
defined therein, shall have the meaning assigned to such term in this Agreement.
When a reference is made in this Agreement to an Article or a Section or
Schedule, such reference shall be to an Article or Section of, or a Schedule to,
this Agreement unless otherwise indicated.

         16.10. Effective Time. This Agreement shall become effective upon the
closing of RIBAPHARM's Initial Public Offering.

         IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by the respective officers as of the date set forth above.


                                       ICN PHARMACEUTICALS, INC.

                                       By: _______________________
                                       Name:
                                       Title:


                                       RIBAPHARM INC.

                                       By: _______________________
                                       Name:
                                       Title:





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