**Exhibit4.1**

 

GUARANTY

 

This GUARANTY (“Guaranty”) is made as of the         day of           , 2003, byeach party set forth in Schedule I attached hereto (each, a“Guarantor”), in favor of WACHOVIA BANK, NATIONAL ASSOCIATION, a nationalbanking association, as Trustee for the Holders (the “Trustee”).  Unless otherwise defined herein, capitalizedterms used herein shall have the meanings ascribed to them in the Indenture (asdefined below).

 

W I T N E S S E T H

 

WHEREAS, Watson Pharmaceuticals, Inc., a Nevadacorporation (the “Company”), the financial institutions from time to time partythereto (the “Lenders”) and the agents thereto have entered into that certainCredit Agreement, dated as of May       , 2003(as the same may be amended, restated, modified or supplemented from time totime, the “Credit Agreement”), pursuant to which the Lenders will make certainloans to the Company for the working capital and other general corporate needsof Company and its Subsidiaries;

 

WHEREAS, the Lenders have required as a condition,among others, to entering into the Credit Agreement and making the loansthereunder, that the Guarantor guarantee the obligations of the Company underthe Credit Agreement;

 

WHEREAS, certain Subsidiaries of the Company(including some of the Guarantors) gave a guarantee to the Trustee on July 5,2000 (the “Old Guaranties”) related to the Company entering into that certainCredit Agreement dated as of July 5, 2002 (and amended and restated as ofAugust 28, 2002) by and among the Company, the lenders thereto, SG CowenSecurities Corporation, Societe General, First Union National Bank and SummitBank (the “Old Credit Agreement”);

 

**WHEREAS, the Old Credit Agreement was terminated on March7, 2003, and, pursuant to the terms of the Senior Indenture, dated as of May18, 1998, as supplemented by that certain First Supplemental Indenture dated asof May 18, 1998 (collectively the “Indenture”), by and between the Company andthe Trustee, the Old Guaranties terminated on that date as well;**

 

**WHEREAS, pursuant to the Credit Agreement, the Guarantor isgiving the guarantee to the Lenders and,**under theterms of the **Indenture,**theGuarantor is required to enter into this Guaranty;

 

WHEREAS, this Guaranty replaces and supercedes anyguaranty given by any Guarantor to the Trustee or the Holders related to theIndenture;

 

NOW THEREFORE, in consideration of the premises setforth above, the terms and conditions contained herein, and other good andvaluable consideration, the receipt and sufficiency of which are herebyacknowledged, the parties hereto hereby agree as follows:

 

# 1.                                       Guaranty.

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## (a)                                  TheGuarantor unconditionally guarantees for the benefit of the Trustee and theHolders the full and prompt payment when due, whether at maturity or earlier,by reason

 

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of acceleration or otherwise, and at all times thereafter, of all theObligations (including, without limitation, interest accruing following thefiling of a bankruptcy petition by or against the Company, at the applicablerate specified in the Indenture, whether or not such interest is allowed as aclaim in bankruptcy).  The term“Obligations” shall mean all loans, advances, debts, liabilities andobligations for monetary amounts from time to time owing by the Company to theHolders in connection with the Indenture and the Securities, whether due or tobecome due, matured or unmatured, liquidated or unliquidated, contingent ornon-contingent, and all covenants and duties regarding such amounts, of anykind or nature, present or future, whether or not evidenced by any note,agreement or instrument, arising under or in respect of the Indenture or theSecurities.  This term includes allprincipal, interest, fees, expenses, costs or other sums (including, withoutlimitation, all reasonable fees and disbursements of any law firm or otherexternal counsel) and any make-whole or other prepayment consideration, in eachcase chargeable to the Company under the Indenture or the Securities.

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## (b)                                 Atany time after the occurrence and during the continuance of an Event ofDefault, the Guarantor shall pay to the Trustee, for the benefit of the Trusteeand the Holders, promptly on demand and in immediately available funds, thefull amount of the Obligations.  TheGuarantor further agrees to pay and reimburse the Trustee and the Holders for,on demand and in immediately available funds, (i) all reasonable fees, costsand expenses (including, without limitation, all court costs and reasonablefees, costs and expenses of a single counsel to the Trustee and the Holders)paid or incurred by the Trustee or the Holders in: (A) endeavoring to collectall or any part of the Obligations owing to such Person from, or in prosecutingany action against, the Company relating to the Indenture, this Guaranty or thetransactions contemplated thereby; (B) taking any action with respect to theGuarantor’s obligations hereunder; and (C) preserving, protecting or defendingthe enforceability of, or enforcing, this Guaranty or the Trustee’s and theHolders’ rights hereunder (all such costs and expenses are hereinafter referredto as the “Expenses”) and (ii) interest on (A) such Obligations which do notconstitute interest, (B) to the extent permitted by applicable law, suchObligations which constitute interest, and (C) the Expenses, from the date ofdemand under this Guaranty until paid in full in cash at the per annum rate ofinterest described in the Indenture. The Guarantor hereby agrees that this Guaranty is an absolute guarantyof payment and is not a guaranty of collection.

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# 2.                                       ObligationsUnconditional.  The Guarantor herebyagrees that its obligations under this Guaranty shall be unconditional,irrespective of:

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### (i)                                     thevalidity, or enforceability, avoidance or subordination of any of theObligations or any other instruments (including the Securities) or agreementsevidencing the Obligations;

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### (ii)                                  theabsence of any attempt by, or on behalf of, the Trustee or the Holders tocollect, or to take any other action to enforce, all or any part of theObligations whether from or against the Company or any other Person;

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### (iii)                               theexistence of an Event of Default under the Indenture or the election of anyremedy available under the Indenture, the Securities or any other instrument oragreement related to the Indenture, or applicable requirements of law by, or onbehalf of, the Trustee or the Holders with respect to all or any part of theObligations;

 

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### (iv)                              thewaiver, consent, extension, forbearance or granting of any indulgence by, or onbehalf of, the Trustee or the Holders with respect to any provision of any ofthe Indenture, the Securities or the other instruments or agreements related tothe Indenture or evidencing the Obligations;

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### (v)                                 anyborrowing or grant of a security interest by the Company, asdebtor-in-possession, under Section 364 of Title 11 of the United States Code(11 U.S.C. §§ 101 et seq.) (the “Bankruptcy Code”);

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### (vi)                              thedisallowance, under Section 502 of the Bankruptcy Code, of all or any portionof the claims against the Company held by the Trustee or the Holders forrepayment of all or any part of the Obligations or any Expenses; or

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### (vii)                           anyother circumstance which might otherwise constitute a legal or equitabledischarge or defense of Company or guarantor of the Obligations.

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# 3.                                       Enforcement;Application of Payments.  Upon theoccurrence and during the continuance of an Event of Default, the Trustee andthe Holders may proceed directly and at once, without notice, against theGuarantor to obtain performance of and to collect and recover the full amount,or any portion, of the Obligations then due and payable to the Trustee and theHolders, without first proceeding against the Company or any other Person, oragainst any security or collateral for the Obligations.  The Trustee and the Holders shall have theexclusive right to determine the application of payments from the Guarantor,the Company or any other Person, on account of the Obligations or any otherliability of the Guarantor to the Trustee or the Holders.

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# 4.                                       Waivers.

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## (a)                                  TheGuarantor hereby waives diligence, presentment, demand of payment, protest ornotice with respect to the Obligations, all setoffs and counterclaims and allpresentments, demands for performance, notices of nonperformance, protests,notices of protest, notices of dishonor and notices of acceptance of thisGuaranty, the benefits of all statutes of limitation applicable to an action toenforce this Guaranty, and all other demands whatsoever (and shall not requirethat the same be made on the Company as a condition precedent to theGuarantor’s obligations hereunder), and covenants that this Guaranty will notbe discharged except by satisfaction of the Obligations or the termination ofthis Guaranty by its terms.  TheGuarantor further waives all notices that the principal amount, or any portionthereof, and/or any interest on any instrument or document evidencing all orany part of the Obligations is due, notices of any and all proceedings tocollect from the maker, any endorser or any other guarantor of all or any partof the Obligations, or from any other Person, and, to the extent permitted bylaw, notices of exchange, sale, surrender or other handling of security orcollateral given to the Trustee or the Holders to secure payment of all or anypart of the Obligations.

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## (b)                                 TheTrustee and the Holders are hereby authorized, without notice or demand andwithout affecting the liability of the Guarantor hereunder, from time to time,(i) to renew, extend, accelerate or otherwise change the time for payment of,or other terms relating to, all or any part of the Obligations, or to otherwisemodify, amend or change the terms of the

 

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Indenture, the Securities and any other instruments or agreementsrelated thereto; (ii) to accept partial payments on all or any part of theObligations; (iii) to take and hold security or collateral for the payment ofall or any part of the Obligations, this Guaranty, or any other guaranties ofall or any part of the Obligations or other liabilities of the Company; (iv) toexchange, enforce, waive and release any such security or collateral; (v) toapply such security or collateral and direct the order or manner of salethereof as in its discretion it may determine; (vi) to settle, release,exchange, enforce, waive, compromise or collect or otherwise liquidate all orany part of the Obligations, this Guaranty, any other guaranty of all or anypart of the Obligations, and any security or collateral for the Obligations orfor any such guaranty.  Any of theforegoing may be done in any manner, without affecting or impairing theobligations of the Guarantor hereunder.

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# 5.                                       Setoff.  Upon the occurrence and during thecontinuance of an Event of Default, the Trustee and each Holder may, withoutnotice to the Guarantor and regardless of the acceptance of any security orcollateral for the payment hereof, appropriate and apply toward the payment ofall or any part of the Obligations owing to such Persons (i) any indebtednessdue or to become due from the Trustee or such Holder to the Guarantor, and (ii)any moneys, credits or other property belonging to the Guarantor, at any timeheld by or coming into the possession of the Trustee or such Holder or theirrespective affiliates.

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# 6.                                       FinancialInformation.  The Guarantor herebyassumes responsibility for keeping itself informed of the financial conditionof the Company and any and all other endorsers and/or other guarantors of allor any part of the Obligations, and of all other circumstances bearing upon therisk of nonpayment of the Obligations, or any part thereof, that diligentinquiry would reveal, and the Guarantor hereby agrees that the Trustee and theHolders shall have no duty to advise the Guarantor of information known to itregarding such condition or any circumstances. In the event the Trustee or any Holder, in its sole discretion,undertakes at any time or from time to time to provide any such information tothe Guarantor, the Trustee or such Holder shall be under no obligation (i) to undertakeany investigation not a part of its regular business routine, (ii) to discloseany information which the Trustee or such Holder, pursuant to accepted orreasonable commercial finance or banking practices, wishes to maintainconfidential or (iii) to make any other or future disclosures of suchinformation or any other information to the Guarantor.

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# 7.                                       Reinstatement.  The Guarantor further agrees that, to theextent that the Company or any other guarantor of all or any part of theObligations makes a payment or payments to the Trustee or the Holders, whichpayment or payments, or any part thereof are subsequently invalidated, declaredto be fraudulent or preferential, set aside and/or required to be repaid to theCompany, the Guarantor, such other guarantor or any other Person, or theirrespective estates, trustees, receivers or any other party, including, withoutlimitation, the Guarantor under any bankruptcy law, state or federal law,common law or equitable cause, then, to the extent of such payment orrepayment, the part of the Obligations which has been paid, reduced orsatisfied by such amount shall be reinstated and continued in full force andeffect as of the time immediately preceding such initial payment, reduction orsatisfaction.

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# 8.                                       Subrogation.  Until the Obligations have been paid infull, the Guarantor hereby agrees that it shall have no right of subrogationwith respect to such Obligations (under

 

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contract, Section 509 of the Bankruptcy Code or otherwise) or any otherright of indemnity, reimbursement or contribution.

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# 9.                                       Subordination.  The Guarantor agrees that any and all claimsof the Guarantor against the Company, any endorser or other guarantor of all orany part of the Obligations, or against any of the Company’s properties, shallbe subordinated to all of the Obligations until the Obligations have been paid,performed or otherwise satisfied in full. Notwithstanding any right of the Guarantor to ask for, demand, sue for,take or receive any payment from the Company, all rights of the Guarantor,whether now or hereafter arising and howsoever existing, in any assets of theCompany shall be and hereby are subordinated to the rights of the Trustee andthe Holders in those assets until the Obligations are paid, performed orotherwise satisfied in full or this Guaranty terminates by its terms.  The Guarantor shall have no right topossession of any such asset or to foreclose upon any such asset, whether byjudicial action or otherwise, unless and until all of the Obligations shallhave been fully paid, performed or otherwise satisfied or this Guarantyterminates by its terms.  If all or anypart of the assets of the Company, or the proceeds thereof, are subject to anydistribution, division or application to the creditors of the Company, whetherpartial or complete, voluntary or involuntary, and whether by reason ofliquidation, bankruptcy, arrangement, receivership, assignment for the benefitof creditors or any other action or proceeding, or if the business of theCompany is dissolved or if substantially all of the assets of the Company aresold, then, and in any such event, any payment or distribution of any kind orcharacter, either in cash, securities or other property, which shall be payableor deliverable upon or with respect to any Indebtedness of the Company to theGuarantor (“Company Indebtedness”) shall be paid or delivered directly to theTrustee, for the benefit of the Trustee and the Holders, for application on theObligations, due or to become due, until such Obligations shall have first beenfully paid and performed or otherwise satisfied.  The Guarantor agrees that until the Obligations have been paid infull in cash, the Guarantor will not assign or transfer to any Person (otherthan to the Trustee) any claim the Guarantor has or may have against theCompany in respect of payments hereunder.

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# 10.                                 Enforcement;Amendments; Waivers.  No delay onthe part of the Trustee or the Holders in the exercise of any right or remedyarising under this Guaranty, the Indenture, the Securities or any of the otherinstrument or agreement related to the Indenture or otherwise with respect toall or any part of the Obligations or any other guaranty of or security for allor any part of the Obligations shall operate as a waiver thereof, and no singleor partial exercise by the Trustee or the Holders of any such right or remedyshall preclude any further exercise thereof. No modification or waiver of any of the provisions of this Guarantyshall be binding upon the Trustee and the Holders, except as expressly setforth in a writing duly signed and delivered by the Trustee.  Failure by the Trustee or the Holders at anytime or times hereafter to require strict performance by the Company, any otherguarantor of all or any part of the Obligations or any other Person of any ofthe provisions, warranties, terms and conditions contained in the Indenture,the Securities or any other instruments or agreements related thereto now or atany time or times hereafter executed by such Persons and delivered to theTrustee or any Holder shall not waive, affect or diminish any right of theTrustee or the Holders at any time or times hereafter to demand strictperformance thereof and such right shall not be deemed to have been waived byany act or knowledge of the Trustee or the Holders, or their respective agents,officers or employees, unless such waiver is contained in an instrument inwriting, directed and delivered to the Company or the Guarantor, as applicable,specifying such waiver,

 

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and is signed by the Trustee. No waiver of any Event of Default by the Trustee or the Holders shalloperate as a waiver of any other Event of Default or the same Event of Defaulton a future occasion, and no action by the Trustee or the Holders permittedhereunder shall in any way affect or impair the Trustee’s or the Holders’rights and remedies or the obligations of the Guarantor under this Guaranty.  Any determination by a court of competentjurisdiction of the amount of any principal and/or interest owing by theCompany to the Trustee or any Holder shall be conclusive and binding on theGuarantor irrespective of whether the Guarantor was a party to the suit oraction in which such determination was made.

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# 11.                                 Effectiveness;Termination.  This Guaranty shallbecome effective against the Guarantor upon its execution by the Guarantor anddelivery to the Trustee and shall continue in full force and effect and may notbe terminated or otherwise revoked until the Obligations shall have been fullypaid and discharged.  If,notwithstanding the foregoing, the Guarantor shall have any right underapplicable law to terminate or revoke its obligations under this Guaranty, theGuarantor agrees that such termination or revocation shall not be effectiveuntil a written notice of such revocation or termination, specificallyreferring hereto, signed by the Guarantor, is received by the Trustee.  Such notice shall not affect the right andpower of the Trustee and the Holders to enforce rights arising prior to receiptthereof by the Trustee.  If the Holdersmake loans or take other action after the Guarantor terminates or revokes itsobligations under this Guaranty but before the Trustee receives such writtennotice, the rights of the Trustee and the Holders with respect thereto shall bethe same as if such termination or revocation had not occurred.

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Notwithstanding any other provision of this Guaranty, **i**f **(i) the Guarantor is sold in accordancewith the terms of the Credit Agreement or (ii)**theGuarantor has executed and delivered this Guaranty solely because of therequirement under the Indenture that any guarantor under the Credit Agreementalso be a Guarantor under the Indenture, then at such time as the Guarantor issold or is no longer a guarantor under the Credit Agreement, as the case maybe, this Guaranty shall automatically terminate, without any further actionfrom any party, and the Guarantor shall thereupon be released from anyobligations thereafter arising hereunder.

 

Notwithstanding any of the foregoing, if and for solong as the Securities are (without any requirement that any Subsidiarysubsequently be the Guarantor of any Securities) assigned a rating of (a) Baa2(or the equivalent) or higher by Moody’s Investors Service, Inc., or itssuccessors, and (b) BBB (or the equivalent) or higher by Standard & Poor’sRatings Service, a division of the McGraw-Hill Companies, Inc., or itssuccessors, this Guaranty shall be of no further force or effect and theGuarantor of any such Securities shall be deemed automatically andunconditionally released and discharged from all obligations hereunder.

 

# 12.                                 Successorsand Assigns.  This Guaranty shall bebinding upon the Guarantor and upon the successors and permitted assigns of theGuarantor and shall inure to the benefit of the Trustee and the Holders andtheir respective successors and permitted assigns; all references herein to theCompany and to the Guarantor shall be deemed to include their respectivesuccessors and permitted assigns.  Thesuccessors and permitted assigns of the Guarantor and the Company shallinclude, without limitation, their respective receivers, trustees ordebtors-in-possession.  All referencesto the singular shall be deemed to include the plural where the context sorequires.

 

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# 13.                                 **GoverningLaw.  This Guaranty shall beconstrued and enforced and the rights and duties of the parties shall begoverned in all respects in accordance with the law of the State of New York.**

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# 14.                                 **CertainConsents and Waivers.**

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## (a)                                  **PersonalJurisdiction.**

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### (i)                                     **EACH OF THETRUSTEE, THE HOLDERS AND THE GUARANTOR IRREVOCABLY AND UNCONDITIONALLY SUBMITS,FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY NEW YORKSTATE COURT OR FEDERAL COURT SITTING IN NEW YORK, NEW YORK, AND ANY COURTHAVING JURISDICTION OVER APPEALS OF MATTERS HEARD IN SUCH COURTS, IN ANY ACTIONOR PROCEEDING ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIPESTABLISHED AMONG THEM IN CONNECTION WITH THIS GUARANTY, THE INDENTURE, THESECURITIES OR THE OTHER INSTRUMENTS OR AGREEMENTS RELATED THERETO, WHETHERARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, OR FOR RECOGNITION ORENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY ANDUNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION ORPROCEEDING MAY BE HEARD AND DETERMINED IN SUCH STATE COURT OR, TO THE EXTENTPERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE TRUSTEE, THE HOLDERS AND THE GUARANTOR AGREES THAT A FINALNON-APPEALABLE JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVEAND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANYOTHER MANNER PROVIDED BY LAW.**

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### (ii)                                  **THE GUARANTORAGREES THAT THE TRUSTEE AND THE HOLDERS SHALL HAVE THE RIGHT TO PROCEED AGAINSTSUCH PERSON OR ITS PROPERTY IN A COURT IN ANY OTHER JURISDICTION TO ENABLE THETRUSTEE AND THE HOLDERS TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED INFAVOR OF THE TRUSTEE AND THE HOLDERS.**

 

(b)                                 **Service of Process.  THEGUARANTOR IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THEAFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIESTHEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE GUARANTOR’SNOTICE ADDRESS SPECIFIED PURSUANT TO SECTION 17, SUCH SERVICE TO BECOMEEFFECTIVE FIVE (5) DAYS AFTER SUCH MAILING. THE GUARANTOR IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING, WITHOUT LIMITATION,ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUMNONCONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANYSUCH ACTION OR**

 

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## **PROCEEDINGWITH RESPECT TO THIS GUARANTY, THE INDENTURE, THE SECURITIES OR ANY OTHERINSTRUMENTS OR AGREEMENTS RELATED THERETO IN ANY JURISDICTION SET FORTHABOVE.  NOTHING HEREIN SHALL AFFECT THERIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THERIGHT OF THE TRUSTEE OR THE HOLDERS TO BRING PROCEEDINGS AGAINST THE GUARANTORIN THE COURTS OF ANOTHER JURISDICTION.**

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## (c)                                  Waiverof Jury Trial.  EACH OF THE TRUSTEE,THE HOLDERS AND THE GUARANTOR WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE,WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE HOLDER OR THEGUARANTOR ARISING OUT OF OR RELATED TO THIS GUARANTY.  ANY SUCH PERSON MAY FILE AN ORIGINAL COUNTERPART OR A COPY OFTHIS GUARANTY WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIESHERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

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# 15.                                 Waiverof Bond.  The Guarantor waives theposting of any bond otherwise required of the Trustee or the Holders inconnection with any judicial process or proceeding to enforce any judgment orother court order entered in favor of the Trustee or the Holders, or to enforceby specific performance, temporary restraining order, or preliminary orpermanent injunction or this Guaranty.

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# 16.                                 Adviceof Counsel.  The Guarantorrepresents and warrants to the Trustee and the Holders that it has discussedthis Guaranty and, specifically, the provisions of Sections 13 through 15hereof, with the Guarantor’s lawyers.

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# 17.                                 Notices.  Any notice, demand, request or any othercommunication required or desired to be served, given or delivered hereundershall be in writing and shall be served, given and delivered as provided in theIndenture.

 

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# 18.                                 Severability.  Wherever possible, each provision of thisGuaranty shall be interpreted in such manner as to be effective and valid underapplicable law, but if any provision of this Guaranty shall be prohibited by orinvalid under such law, such provision shall be ineffective to the extent ofsuch prohibition or invalidity without invalidating the remainder of suchprovision or the remaining provisions of this Guaranty.

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# 19.                                 Merger.  This Guaranty represents the final agreementof the Guarantor with respect to the matters contained herein and supercedesany and all prior agreements, including but not limited to any prior guaranty,and may not be contradicted by evidence of prior or contemporaneous agreementsor subsequent oral agreements between the Guarantor and the Trustee and theHolders.

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# 20.                                 Executionin Counterparts.  This Guaranty maybe executed in any number of counterparts and by different parties hereto inseparate counterparts, each of which when so executed shall be deemed to be anoriginal and all of which taken together shall constitute one and the sameagreement.

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[Signature PageFollows]

 

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IN WITNESS WHEREOF, this Guaranty has been dulyexecuted as of the day and year first set forth above.

 
|   | GUARANTORS:                                                          |
|--------|----------------------------------------------------------------------|
|   |                                                                 |
|   | Watson Laboratories, Inc., a Nevada corporation                      |
|   | Watson Laboratories, Inc., a New York corporation                    |
|   | Watson Laboratories, Inc—Ohio., a New York  corporation         |
|   | Watson Laboratories, Inc., a Delaware corporation                    |
|   | Watson Pharma, Inc., a Delaware corporation                          |
|   | Watson Laboratories Caribe, Inc., a Delaware  corporation            |
|   | The Rugby Group, Inc., a New York corporation                        |
|   | Rugby Laboratories, Inc., a New York corporation                     |
|   | Rugby Laboratories, Inc., a Florida corporation                      |
|   | Watson Laboratories, Inc., a Connecticut corporation                 |
|   | Makoff R&D Laboratories, Inc., a California  corporation         |
|   | R&D Ferrlecit Capital Resources, Inc., a  California corporation |
|   |                                                                 |
|   |                                                                 |
|   | By:                                                                  |   |   |
|   | Name:                                                                |
|   | Title:                                                               |

 

 
| Acknowledged and agreed to  as of the         day  of         , 2003 |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                           |
| WACHOVIA BANK, NATIONAL  ASSOCIATION, as Trustee                                                                                                               |
|                                                                                                                                                           |
|                                                                                                                                                           |
| By:                                                                                                                                                            |   |   |
|                                                                                                                                                           | Name: |
|                                                                                                                                                           | Title: |

 

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Schedule I

 

SubsidiaryGuarantors

 
| **Subsidiary**                             |   | **Jurisdiction  of Organization** |
|--------------------------------------------|--------|-----------------------------------|
| Watson  Laboratories, Inc.                 |   | Nevada                            |
| Watson  Laboratories, Inc.                 |   | New York                          |
| Watson  Laboratories, Inc—Ohio.       |   | New York                          |
| Watson  Laboratories, Inc.                 |   | Delaware                          |
| Watson Pharma,  Inc.                       |   | Delaware                          |
| Watson Laboratories  Caribe, Inc.          |   | Delaware                          |
| The Rugby Group,  Inc.                     |   | New York                          |
| Rugby  Laboratories, Inc.                  |   | New York                          |
| Royce  Laboratories, Inc.                  |   | Florida                           |
| Watson  Laboratories, Inc.                 |   | Connecticut                       |
| Makoff R&D  Laboratories, Inc.         |   | California                        |
| R&D  Ferrlecit Capital Resources, Inc. |   | California                        |

 

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