Document:

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                                                                    EXHIBIT 10.1

                                 RIBAPHARM INC.

                        2002 STOCK OPTION AND AWARD PLAN

                          (As Adopted __________, 2002)
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                                 Ribapharm Inc.

                        2002 STOCK OPTION AND AWARD PLAN

         1.   Purpose.

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

         2.   Definitions.

              For purposes of the Plan:

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

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

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

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

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

              2.6 "Cause" means:

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

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

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

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

                  (a)  in the case of an Optionee or Grantee whose employment
with the Company or ICN is subject to the terms of an employment agreement
between such Optionee or Grantee and the Company or ICN, as the case may be,
which employment agreement includes a definition of "Change in Control", the
term "Change in Control" as used in this Plan or any Agreement shall have the
meaning set forth in such employment agreement during the period that such
employment agreement remains in effect; or

                   (b)  in all other cases,

                        (i)   an acquisition (other than directly from the
    Company in the case of voting securities of the Company or from the Parent
    (as defined below) in the case of voting securities of the Parent) of any
    voting securities (the "Voting Securities") of the Company or its Parent by
    any "Person" (as the term person is used for purposes of Section 13(d) or
    14(d) of the Exchange Act)

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    immediately after which such Person has "Beneficial Ownership" (within the
    meaning of Rule 13d-3 promulgated under the Exchange Act) of more than
    twenty-five percent (25%) of the then outstanding Shares or the then
    outstanding shares of common stock of its Parent (as applicable) or the
    combined voting power of the then-outstanding Voting Securities of the
    Company or its Parent (as applicable). For purposes of this Agreement,
    "Parent" shall mean an entity that owns, directly or indirectly, more than
    fifty percent (50%) of the then-outstanding Shares of the Company or the
    combined voting power of the then-outstanding Voting Securities of the
    Company (including ICN Pharmaceuticals, Inc. prior to (but only prior to)
    the Spin-Off); provided, however, in determining whether a Change in Control
    has occurred pursuant to this Section 8(b)(1), Shares or Voting Securities
    which are acquired in a "Non-Control Acquisition" (as hereinafter defined)
    shall not constitute an acquisition which would cause a Change in Control. A
    "Non-Control Acquisition" shall mean an acquisition by (1) an employee
    benefit plan (or a trust forming a part thereof) sponsored or maintained by
    (x) the Company or its Parent or (y) any corporation or other Person of
    which a majority of its voting power or its voting equity securities or
    equity interest is owned, directly or indirectly, by the Company (for
    purposes of this definition, a "Company Subsidiary") or its Parent (for
    purposes of this definition, a "Parent Subsidiary"), (2) the Company, a
    Parent, any Company Subsidiary, any Parent Subsidiary or any of their
    affiliates, (3) any underwriter temporarily holding securities pursuant to
    an offering of such securities, or (4) any Person in connection with a
    "Non-Control Transaction" (as hereinafter defined);

                   (ii)  The consummation of:

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

                               (x) the stockholders of the Company or such
    Parent immediately before such Merger own directly or indirectly immediately
    following such Merger at least fifty percent (50%) of the combined voting
    power of the outstanding voting securities of (A) the corporation resulting
    from such Merger (the "Surviving Corporation"), if the Surviving Corporation
    has no Parent immediately following such Merger, or (B) the ultimate Parent
    of the Surviving Corporation, if there is one or more Parents of the
    Surviving Corporation immediately following such Merger; and

                               (y) the members of the "Incumbent Board" (as
    defined below) or the "ICN Incumbent Board" (as defined below), as the case
    may be, immediately prior to the execution of the agreement providing for
    such

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    Merger, constitute at least a majority of the members of the board of
    directors of (A) the Surviving Corporation, if the Surviving Corporation has
    no Parent immediately following such Merger, or (B) the ultimate Parent of
    the Surviving Corporation, if there is one or more Parents of the Surviving
    Corporation immediately following such Merger;

                         (2)   a complete liquidation or dissolution of the
    Company or a Parent, as the case may be; or

                         (3)   the sale or other disposition of all or
    substantially all of the assets of the Company or a Parent, as the case may
    be, to any Person (other than (A) a transfer to a Company Subsidiary or
    Parent Subsidiary or (B) a transfer under conditions that would constitute a
    Non-Control Transaction (with the transfer of assets being regarded as a
    Merger for this purpose), (C) the Spin-Off or (D) any other distribution to
    the stockholders of the Company or a Parent of the stock of a Company
    Subsidiary or a Parent Subsidiary or any other assets); or

                   (iii) the individuals who, at the time of the initial public
    offering of the Company, are members of the Board (the "Incumbent Board")
    cease for any reason to constitute a majority of the members of the Board
    or, following a Merger which results in a Parent, the board of directors of
    the ultimate Parent; provided, however, that if the appointment or election,
    or nomination for election by the Company's stockholders, of any new
    director was approved by a vote of at least two-thirds (2/3) of the
    Incumbent Board, such new director shall, for purposes of this Agreement, be
    considered as a member of the Incumbent Board; provided further, however,
    that no individual shall be considered a member of the Incumbent Board if
    such individual initially assumed office as a result of either an actual or
    threatened "Election Contest" (as described in Rule 14a-11 promulgated under
    the Exchange Act) or other actual or threatened solicitation of proxies or
    consents by or on behalf of a Person other than the Board (a "Proxy
    Contest") including by reason of any agreement intended to avoid or settle
    any Election Contest or Proxy Contest; or

                   (iv)  prior to (but only prior to) the Spin-Off, the
    individuals who, as of May 1, 2001, are members of the board of directors of
    ICN Pharmaceuticals, Inc. (the "ICN Incumbent Board") cease for any reason
    to constitute a majority of the members of such board of directors or,
    following a merger, consolidation or reorganization with or into ICN
    Pharmaceuticals, Inc. that results in a Person owning, directly or
    indirectly, more than fifty percent (50%) of the then-outstanding Shares of
    ICN Pharmaceuticals, Inc. or the combined voting power of the
    then-outstanding Voting Securities of ICN Pharmaceuticals, Inc. (an "ICN
    Parent"), the board of directors of the ultimate ICN Parent; provided,
    however, that if the appointment or election, or nomination for

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    election by the stockholders of ICN Pharmaceuticals, Inc., of any new
    director was approved by a vote of at least two-thirds (2/3) of the ICN
    Incumbent Board, such new director shall, for purposes of this Agreement, be
    considered as a member of the ICN Incumbent Board; provided further,
    however, that no individual shall be considered a member of the ICN
    Incumbent Board if such individual initially assumed office as a result of
    either an actual or threatened Election Contest or other actual or
    threatened Proxy Contest, including by reason of any agreement intended to
    avoid or settle any Election Contest or Proxy Contest.

    Notwithstanding the foregoing, a Change in Control shall not be deemed to
    occur solely because any Person (the "Subject Person") acquired Beneficial
    Ownership of more than the permitted amount of the then-outstanding Shares
    or Voting Securities of the Company or a Parent as a result of the
    acquisition by the Company or by a Parent of its Shares or Voting Securities
    which, by reducing the number of Shares or Voting Securities then
    outstanding, increases the proportional number of shares Beneficially Owned
    by the Subject Person; provided, however, that, if a Change in Control would
    occur (but for the operation of this sentence) as a result of the
    acquisition of Shares or Voting Securities by the Company, and after such
    share acquisition by the Company or by such Parent, the Subject Person
    becomes the Beneficial Owner of any additional Shares or Voting Securities
    which increases the percentage of the then-outstanding Shares or Voting
    Securities of the Company or of such Parent Beneficially Owned by the
    Subject Person, then a Change in Control shall occur. In no event shall the
    Initial Public Offering or the Spin-Off, in and of themselves, either
    individually or together, constitute a "Change in Control" under this Plan.

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

              2.10 "Committee" means a committee, as described in Section 3.2,
appointed by the Board from time to time to administer the Plan and to perform
the functions set forth herein after the Initial Public Offering; provided,
however, that, during the period commencing on the Effective Date and ending on
the date of the Company's Initial Public Offering, Section 3.2 shall have no
effect and "Committee" shall mean the entire Board as described in Section 3.1.

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

              2.12 "Company Subsidiary" shall have the meaning assigned to it in
Section 2.8(b)(i).

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

              2.14 "Director" means a director of the Company.

              2.15 "Disability" means:

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

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

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

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

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

              2.18 "Election Contest" shall have the meaning assigned to it in
Section 2.8(b)(iii).

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

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

              2.21 "Fair Market Value" on any date shall mean (a) with respect
to any property other than Shares, the fair market value of such property on
such date as determined by such methods or procedures as shall be established
from time to time by the Committee, and (b) with respect to the Shares, the
reported closing price of the Shares as reported by The Nasdaq Stock Market at
the close of the primary trading session on

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such date, or if the Shares were not traded on such date, on the next preceding
day on which the Shares were traded. In the event Fair Market Value cannot be
determined in a manner described above, then Fair Market Value shall be
determined by the Committee in good faith and, in the case of an Incentive Stock
Option, in accordance with Section 422 of the Code.

              2.22 "First Exercise Date" shall mean the earlier to the
consummation of the Spin-Off and September 30, 2003.

              2.23 "Formula Option" means an Option granted pursuant to Section
6.

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

              2.25 "ICN" shall mean ICN Pharmaceuticals, Inc., a Delaware
corporation, and its Affiliates.

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

              2.27 "ICN Parent" shall have the meaning assigned to it in Section
2.8(b)(iv).

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

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

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

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

              2.32 "Non-Control Acquisition" shall have the meaning assigned to
it in Section 2.8(b)(i).

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

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

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Exchange Act; provided, however, that for purposes of Section 6, the term
"Nonemployee Director" means a director of the Company who is not an employee of
the Company.

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

              2.36 "Option" means a Nonqualified Stock Option, an Incentive
Stock Option, a Formula Option, or any or all of them.

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

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

              2.39 "Parent" means any corporation which is a parent corporation
within the meaning of Section 424(e) of the Code with respect to the Company,
except that for purposes of Section 2.8(b)(i), the term "Parent" shall have the
meaning assigned to it in such Section hereof.

              2.40 "Parent Subsidiary" shall have the meaning assigned to it in
Section 2.8(b)(i).

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

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

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

              2.44 "Performance Objectives" has the meaning set forth in Section
9.3.

              2.45 "Performance Shares" means Shares issued or transferred to an
Eligible Individual under Section 9.2.

              2.46 "Performance Units" means Performance Units granted to an
Eligible Individual under Section 9.1.

              2.47 "Person" shall have the meaning assigned to it in Section
2.8(b)(i).

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              2.48 "Phantom Stock" means a right granted to an Eligible
Individual under Section 10.2 representing a number of hypothetical Shares.

              2.49 "Plan" means the Ribapharm Inc. 2002 Stock Option and Award
Plan, as amended and restated from time to time.

              2.50 "Proxy Contest" shall have the meaning assigned to it in
Section 2.8(b)(iii).

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

              2.52 "Restricted Stock" means Shares issued or transferred to an
Eligible Individual pursuant to Section 8.

              2.53 "Share Award" means an Award of Shares granted pursuant to
Section 10.1.

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

              2.55 "Spin-Off" means the distribution by ICN of its remaining
interest in the Company to ICN's shareholders in a tax-free spin-off following
the Initial Public Offering.

              2.56 "Stock Appreciation Right" means a right to receive all or
some portion of the increase in the value of the Shares as provided in Section 7
hereof.

              2.57 "Subject Person" shall have the meaning assigned to it in
Section 2.8(b).

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

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

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

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

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

              2.63 "Voting Securities" shall have the meaning assigned to it in
Section 2.8(b)(i).

         3.   Administration.

              3.1 Prior to Initial Public Offering. During the period
commencing on the Effective Date and ending on the date of the Company's
Initial Public Offering, the Plan shall be administered by the entire Board in
accordance with any requirements set forth in the Company's charter or bylaws
or any other document that governs the conduct or function of the Board. During
such period, the Board shall have broad authority and powers to do that which
is necessary or appropriate under the Plan to effectuate its purposes (as
described in Section 1 hereof), which powers shall include, but shall not be
limited to, all of the powers set forth in Section 3.2(c) below.

              3.2 After Initial Public Offering.

              (a) Generally. Immediately following the Company's Initial Public
Offering, the Plan shall be administered by the Committee, which shall
hold meetings at such times as may be necessary for the proper administration of
the Plan. The Committee shall keep minutes of its meetings. A quorum shall
consist of not fewer than two (2) members of the Committee and a majority of a
quorum may authorize any action. Any decision or determination reduced to
writing and signed by a majority of all of the members of the Committee shall be
as fully effective as if made by a majority vote at a meeting duly called and
held. The Committee shall consist of at least two (2) Directors and may consist
of the entire Board; provided, however, that from and after the date of an
Initial Public Offering, (a) with respect to any Option or Award to an Eligible
Individual who is subject to Section 16 of the Exchange Act, the Committee shall
consist solely of at least two (2) Directors each of whom shall be a Nonemployee
Director and (b) to the extent necessary for any Option or Award intended to
qualify as Performance-Based Compensation to so qualify, the Committee shall
consist of at least two (2) Directors, each of whom shall be an Outside
Director. For purposes of the preceding sentence, if one or more members of the
Committee is not a Nonemployee Director and an Outside Director but recuses
himself or herself or abstains from voting with respect to a particular action
taken by the Committee, then the Committee, with respect to that action, shall
be deemed to consist only of the members of the Committee who have not recused

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themselves or abstained from voting. Subject to applicable law, the Committee
may delegate its authority under the Plan to any other person or persons.

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

              (c) Powers.  Subject to the express terms and conditions set forth
herein, the Committee shall have the power from time to time to:

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

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

                   (iii) to construe and interpret the Plan and the Options and
Awards granted hereunder and to establish, amend and revoke rules and
regulations for the administration of the Plan, including, but not limited to,
correcting any defect or supplying any omission, or reconciling any
inconsistency in the Plan or in any Agreement, in the manner and to the extent
it shall deem necessary or advisable, including so that the Plan and the
operation of the Plan comply with Rule 16b-3 under the Exchange Act, the Code to
the extent applicable and other applicable law, and otherwise to make the Plan
fully effective. All decisions and determinations by the Committee in the
exercise of this power shall be final, binding and conclusive upon the Company,
the Optionees and the Grantees, and all other persons having any interest
therein;

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

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

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

         4.   Stock Subject to the Plan; Grant Limitations.

              4.1  Maximum Number. The maximum number of Shares that may be made
the subject of Options and Awards granted under the Plan is 22,500,000. The
Company shall reserve for the purposes of the Plan, out of its authorized but
unissued Shares or out of Shares held in the Company's treasury, or partly out
of each, such number of Shares as shall be determined by the Board.

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

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

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

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

         5.   Option Grants for Eligible Individuals.

              5.1 Authority of Committee. Subject to the provisions of the Plan,
the Committee shall have full and final authority to select those Eligible
Individuals who will receive Options, and the terms and conditions of the grant
to such Eligible Individuals

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shall be set forth in an Agreement. Incentive Stock Options may be granted only
to Eligible Individuals who are employees of the Company or any Parent or
Subsidiary thereof.

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

              5.3 Maximum Duration. Options granted hereunder shall be for such
term as the Committee shall determine, provided that an Incentive Stock Option
shall not be exercisable after the expiration of ten (10) years from the date it
is granted (five (5) years in the case of an Incentive Stock Option granted to a
Ten-Percent Stockholder) and a Nonqualified Stock Option shall not be
exercisable after the expiration of ten (10) years from the date it is granted;
provided, however, that unless the Committee provides otherwise, an Option
(other than an Incentive Stock Option) may, upon the death of the Optionee prior
to the expiration of the Option, be exercised for up to one (1) year following
the date of the Optionee's death (or, if later, the First Exercise Date (unless
this restriction has lapsed pursuant to Section 19 hereof)) even if such period
extends beyond ten (10) years from the date the Option is granted. The Committee
may, subsequent to the granting of any Option, extend the term thereof, but in
no event shall the term as so extended exceed the maximum term provided for in
the preceding sentence.

              5.4 Exercisability. Subject to Section 5.10, each Option shall
become vested and exercisable in such installments (which need not be equal) and
at such times as may be designated by the Committee and set forth in the
Agreement; provided, however, that, subject to Section 19 hereof, an Option
shall not become exercisable prior to the First Exercise Date. To the extent not
exercised, installments shall accumulate and be exercisable, in whole or in
part, at any time after becoming exercisable, but not later than the date the
Option expires (except as provided in Section 5.3). Notwithstanding the
foregoing, the Committee may accelerate the vesting and/or exercisability of any
Option or portion thereof at any time.

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

              5.6 Limitations on Incentive Stock Options. To the extent that the
aggregate Fair Market Value (determined as of the date of the grant) of Shares
with respect to which Incentive Stock Options granted under the Plan and
"incentive stock

                                      -13-
<PAGE>
options" (within the meaning of Section 422 of the Code) granted under all other
plans of the Company or ICN (in either case determined without regard to this
Section 5.6) are exercisable by an Optionee for the first time during any
calendar year exceeds $100,000, such Incentive Stock Options shall be treated as
Nonqualified Stock Options. In applying the limitation in the preceding sentence
in the case of multiple Option grants, Options which were intended to be
Incentive Stock Options shall be treated as Nonqualified Stock Options according
to the order in which they were granted such that the most recently granted
Options are first treated as Nonqualified Stock Options.

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

              5.8 Method of Exercise. The exercise of an Option shall be made
only by a written notice delivered in person or by mail to the Secretary of the
Company at the Company's principal executive office, specifying the number of
Shares to be exercised and, to the extent applicable, accompanied by payment
therefor and otherwise in accordance with the Agreement pursuant to which the
Option was granted; provided, however, that Options may not be exercised by an
Optionee for six months following a hardship distribution to the Optionee under
any tax-qualified plan of the Company or ICN, to the extent such exercise is
prohibited under Treasury Regulation Section 1.401(k)-1(d)(2)(iv)(B)(4). The
exercise price for any Shares purchased pursuant to the exercise of an Option
shall be paid in either of the following forms (or any combination thereof): (a)
cash (or check) or (b) the transfer, either actually or by attestation, to the
Company of Shares that have been held by the Optionee for at least six (6)
months (or such lesser period as may be permitted by the Committee) prior to the
exercise of the Option, such transfer to be upon such terms and conditions as
determined by the Committee or (c) a combination of cash (or check) and the
transfer of Shares; provided, however, that the Committee may determine that the
exercise price shall be paid only in cash. In addition,

                                      -14-
<PAGE>
Options may be exercised through a registered broker-dealer pursuant to such
cashless exercise procedures which are, from time to time, deemed acceptable by
the Committee. Any Shares transferred to the Company as payment of the exercise
price under an Option shall be valued at their Fair Market Value on the day of
exercise of such Option. If requested by the Committee, the Optionee shall (i)
deliver the Agreement evidencing the Option to the Secretary of the Company who
shall endorse thereon a notation of such exercise and return such Agreement to
the Optionee, and/or (ii) provide satisfactory proof as to the right of such
Optionee to exercise the Option. No fractional Shares (or cash in lieu thereof)
shall be issued upon exercise of an Option and the number of Shares that may be
purchased upon exercise shall be rounded to the nearest number of whole Shares.

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

              5.10 Effect of Change in Control. Subject to Section 19 hereof, in
the event that (i) an Optionee's employment with the Company or ICN is
terminated by the Company or by ICN, as the case may be, without Cause following
a Change in Control, or (ii) in the case of a director of the Company or ICN,
his or her services as a director cease following a Change in Control, and in
either case the Optionee is not employed by, or otherwise does not provide
services to, the Company or ICN immediately following such termination of
employment or cessation of services, each Option held by the Optionee as of the
date of termination of the Optionee's employment or service shall (a) become
immediately and fully vested, (b) become fully exercisable on the later of the
date of the Change in Control and the First Exercise Date and (c)
notwithstanding any shorter period set forth in the Agreement evidencing the
Option, remain exercisable for a period of six (6) months after the later of the
date of termination of the Optionee's employment or service and the First
Exercise Date, but in no event after the expiration of the stated term of the
Option. In addition, the Agreement evidencing the grant of an Option may provide
for any other treatment of the Option in the event of a Change in Control.

         6.   Option Grants for Nonemployee Directors.

                  6.1 Grant. Formula Options shall be granted to all Nonemployee
Directors who are members of the Board as of the date of the consummation of the
Initial Public Offering and (ii) to a Nonemployee Director who becomes a member
of the Board

                                      -15-
<PAGE>
after the date of the consummation of the Initial Public Offering upon election
or appointment as follows:

                   (a) IPO Grant. Each Nonemployee Director who is an Director
as of the date of the consummation of the Initial Public Offering shall be
granted a Formula Option as of such date in respect of 15,000 shares.

                   (b) Initial Grant. Each Nonemployee Director who becomes a
Director after the date of the consummation of the Initial Public Offering
shall, upon becoming a Director, be granted a Formula Option in respect of
15,000 Shares.

                   (c) Annual Grant. Each Nonemployee Director shall be granted
a Formula Option in respect of 15,000 Shares on the first business day after the
annual meeting of the stockholders of the Company in each year that the Plan is
in effect provided that the Nonemployee Director is a Director on such date.

All Formula Options shall be evidenced by an Agreement containing such other
terms and conditions not inconsistent with the provisions of this Plan as
determined by the Board; provided, however, that such terms shall not vary the
price, amount or timing of Formula Options provided under this Section 6,
including provisions dealing with vesting, forfeiture and termination of such
Formula Options.

              6.2 Purchase Price. The purchase price for Shares under each
Formula Option granted under Section 6.1(a) shall be equal to the initial public
offering price per Share on the date of the Initial Public Offering. The
purchase price for Shares under each Formula Option granted pursuant to Section
6.1(b) or 6.1(c) shall be equal to 100% of the Fair Market Value of such Shares
on the date the Formula Option is granted.

              6.3 Vesting and Exercisability. Subject to Sections 6.4 and 6.5,
each Formula Option shall become fully vested with respect to 25% of the Shares
subject thereto on each of the first, second, third and fourth anniversaries of
the date of grant; provided, however, that the Optionee continues to serve as a
Director as of such date; provided, further, however, that if a Director dies
prior to such date and while a Director, the Formula Option shall become fully
vested and exercisable with respect to 100% of the Shares on that date. If an
Optionee ceases to serve as a Director for any reason, the Optionee shall have
no rights with respect to any Formula Option which has not then vested pursuant
to the preceding sentence, and the Optionee shall automatically forfeit any
Formula Option which remains unvested. Subject to Section 19 hereof, a Formula
Option shall not become exercisable prior to the First Exercise Date.

              6.4 Duration. Each Formula Option shall terminate on the date
which is the tenth anniversary of the date of grant (or if later, the first
anniversary of the date of the

                                      -16-
<PAGE>
Director's death if such death occurs prior to such tenth anniversary), unless
terminated earlier as follows:

                   (a) Other than Disability, Death or Cause. Except as provided
in Section 6.5 below, and subject to Section 19 hereof, if an Optionee's service
as a Director terminates for any reason other than Disability, death or Cause,
the Optionee may, for a period of six (6) months after the later of the
termination of the Optionee's service and the First Exercise Date, but in no
event after the expiration of the stated term of the Option, exercise his or her
Option to the extent, and only to the extent, that such Option or portion
thereof was vested as of the date the Optionee's service as a Director
terminated, after which time the Option shall automatically terminate in full.

                   (b) Disability. Subject to Section 19 hereof, if an
Optionee's service as a Director terminates by reason of the Optionee's
resignation or removal from the Board due to Disability, the Optionee may, for a
period of one (1) year after the later of the termination of the Optionee's
service and the First Exercise Date, but in no event after the expiration of the
stated term of the Option, exercise his or her Option to the extent, and only to
the extent, that such Option or portion thereof was vested as of the date the
Optionee's service as a Director terminated, after which time the Option shall
automatically terminate in full.

                   (c) Cause. If an Optionee's service as a Director terminates
for Cause, any unexercised portion of an Option granted to the Optionee
hereunder shall immediately terminate in full and no rights thereunder may be
exercised.

                   (d) Death. Subject to Section 19 hereof, if an Optionee dies
while a Director or within the exercise period described in clause (a) or (b) of
this Section 6.4 or Section 6.5 hereof, the Option granted to the Optionee may
be exercised at any time within one (1) year after the later of the Optionee's
death and the First Exercise Date, but in no event after the expiration of the
stated term of the Option, by the person or persons to whom such rights under
the Option shall pass by will, or by the laws of descent or distribution, to the
extent, and only to the extent, that such Option or portion thereof was vested
as of the date of the Optionee's death or earlier termination (as applicable),
after which time the Option shall automatically terminate in full.

              6.5. Effect of Change in Control. The terms set forth in Section
5.10 shall apply to any Formula Options granted pursuant to this Section 6.

         7.   Stock Appreciation Rights.

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

                                      -17-
<PAGE>
determine) and shall, except as provided in this Section 7, be subject to the
same terms and conditions as the related Option.

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

              7.2 Stock Appreciation Right Related to an Option.

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

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

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

              7.3 Stock Appreciation Right Unrelated to an Option. The Committee
may grant to Eligible Individuals Stock Appreciation Rights unrelated to
Options. Subject to Section 7.7, Stock Appreciation Rights unrelated to Options
shall contain such terms and conditions as to exercisability, vesting and
duration as the Committee shall determine, but in no event shall they have a
term of greater than ten (10) years; provided, however, that the Committee may
provide that Stock Appreciation Rights may, upon the death of the Grantee, be
exercised for up to one (1) year following the date of the Grantee's death even
if such period extends beyond ten (10) years from the date the Stock
Appreciation Right is granted. Upon exercise of a Stock Appreciation Right
unrelated to

                                      -18-
<PAGE>
an Option, the Grantee shall be entitled to receive an amount determined by
multiplying (a) the excess of the Fair Market Value of a Share on the date of
exercise of such Stock Appreciation Right over the Fair Market Value of a Share
on the date the Stock Appreciation Right was granted, by (b) the number of
Shares as to which the Stock Appreciation Right is being exercised.
Notwithstanding the foregoing, the Committee may limit in any manner the amount
payable with respect to any Stock Appreciation Right by including such a limit
in the Agreement evidencing the Stock Appreciation Right at the time it is
granted.

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

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

              7.6 Form of Payment. Payment of the amount determined under
Section 7.2(b) or 7.3 may be made in the discretion of the Committee solely in
whole Shares in a number determined at their Fair Market Value on the date of
exercise of the Stock Appreciation Right, or solely in cash, or in a combination
of cash and Shares; provided, however, that (i) subject to Section 19 hereof,
payments made prior to the First Exercise Date shall be paid solely in the form
of cash, and (ii) where the Committee is otherwise permitted to make payment in
Shares and the amount payable results in a fractional Share, payment for the
fractional Share will be made in cash.

              7.7 Effect of Change in Control. Subject to Section 19 hereof, in
the event a Grantee's employment with the Company or ICN is terminated by the
Company or by ICN, as the case may be, without Cause following a Change in
Control, or in the case of a director of the Company or ICN, his or her services
as a director cease following a Change in Control, and in either case the
Grantee is not employed by, or otherwise does not provide services to, the
Company or ICN immediately following such termination of employment or cessation
of services, each Stock Appreciation Right held by the Grantee shall (a) become

                                      -19-
<PAGE>
immediately and fully vested, (b) become fully exercisable on the later of the
date of the Change in Control and the First Exercise Date and (c)
notwithstanding any shorter period set forth in the Agreement evidencing the
Stock Appreciation Right, remain exercisable for a period of six (6) months
after the later of the date of termination of the Grantee's employment or
service and the First Exercise Date, but in no event after the expiration of the
stated term of the Stock Appreciation Right. In addition, the Agreement
evidencing the grant of a Stock Appreciation Right unrelated to an Option may
provide for any other treatment of the Stock Appreciation Rights in the event of
a Change in Control.

         8.   Restricted Stock.

              8.1 Grant. The Committee may grant Awards to Eligible Individuals
of Restricted Stock, which shall be evidenced by an Agreement between the
Company and the Grantee; provided, however, that, subject to Section 19 hereof,
no such grants shall be made prior to the First Exercise Date. Each Agreement
shall contain such restrictions, terms and conditions as the Committee may, in
its discretion, determine and (without limiting the generality of the foregoing)
such Agreements may require that an appropriate legend be placed on Share
certificates. Awards of Restricted Stock shall be subject to the terms and
provisions set forth below in this Section 8.

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

              8.3 Non-transferability. Until all restrictions upon the Shares of
Restricted Stock awarded to a Grantee shall have lapsed in the manner set forth
in Section 8.4, such Shares shall not be sold, transferred or otherwise disposed
of and shall not be pledged or otherwise hypothecated.

              8.4 Lapse of Restrictions.

                                      -20-
<PAGE>
                   (a) Generally. Restrictions upon Shares of Restricted Stock
awarded hereunder shall lapse at such time or times and on such terms and
conditions as the Committee may determine. The Agreement evidencing the Award
shall set forth any such restrictions.

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

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

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

         9.   Performance Awards.

              9.1 Performance Units. The Committee, in its discretion, may grant
Awards of Performance Units to Eligible Individuals, the terms and conditions of
which shall be set forth in an Agreement between the Company and the Grantee.
Performance Units may be denominated in Shares or a specified dollar amount and,
contingent upon the attainment of specified Performance Objectives within the
Performance Cycle, represent the right to receive payment as provided in Section
9.3(c) of (1) in the case of Share-denominated Performance Units, the Fair
Market Value of a Share on the date the Performance Unit was granted, the date
the Performance Unit became vested or any other date specified by the Committee,
(2) in the case of dollar-denominated Performance Units, the specified dollar
amount or (3) a percentage (which may be more than 100%) of

                                      -21-
<PAGE>
the amount described in clause (1) or (2) depending on the level of Performance
Objective attainment; provided, however, that, the Committee may at the time a
Performance Unit is granted specify a maximum amount payable in respect of a
vested Performance Unit. Each Agreement shall specify the number of Performance
Units to which it relates, the Performance Objectives which must be satisfied in
order for the Performance Units to vest and the Performance Cycle within which
such Performance Objectives must be satisfied.

                   (a) Vesting and Forfeiture. Subject to Sections 9.3(c) and
9.4, a Grantee shall become vested with respect to the Performance Units to the
extent that the Performance Objectives set forth in the Agreement are satisfied
for the Performance Cycle.

                   (b) Payment of Awards. Subject to Section 9.3(c), payment to
Grantees in respect of vested Performance Units shall be made as soon as
practicable after the last day of the Performance Cycle to which such Award
relates unless the Agreement evidencing the Award provides for the deferral of
payment, in which event the terms and conditions of the deferral shall be set
forth in the Agreement. Subject to Section 9.4, such payments may be made
entirely in Shares valued at their Fair Market Value, entirely in cash, or in
such combination of Shares and cash as the Committee in its discretion shall
determine at any time prior to such payment; provided, however, that (i) if the
Committee in its discretion determines to make such payment entirely or
partially in Shares of Restricted Stock, the Committee must determine the extent
to which such payment will be in Shares of Restricted Stock and the terms of
such Restricted Stock at the time the Award is granted, and (ii) subject to
Section 19 hereof, payments made prior to the First Exercise Date shall be paid
solely in the form of cash.

              9.2 Performance Shares. The Committee, in its discretion, may
grant Awards of Performance Shares to Eligible Individuals, the terms and
conditions of which shall be set forth in an Agreement between the Company and
the Grantee; provided, however, that, subject to Section 19 hereof, no such
grants shall be made prior to the First Exercise Date. Each Agreement may
require that an appropriate legend be placed on Share certificates. Awards of
Performance Shares shall be subject to the following terms and provisions:

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

                                      -22-
<PAGE>
agreement and any other documents which the Committee may require within the
time period prescribed by the Committee at the time the Award is granted, the
Award shall be null and void. At the discretion of the Committee, Shares issued
in connection with an Award of Performance Shares shall be deposited together
with the stock powers with an escrow agent (which may be the Company) designated
by the Committee. Except as restricted by the terms of the Agreement, upon
delivery of the Shares to the escrow agent, the Grantee shall have, in the
discretion of the Committee, all of the rights of a stockholder with respect to
such Shares, including the right to vote the Shares and to receive all dividends
or other distributions paid or made with respect to the Shares.

                   (b) Non-transferability. Until any restrictions upon the
Performance Shares awarded to a Grantee shall have lapsed in the manner set
forth in Section 9.2(c) or 9.4, such Performance Shares shall not be sold,
transferred or otherwise disposed of and shall not be pledged or otherwise
hypothecated, nor shall they be delivered to the Grantee. The Committee may also
impose such other restrictions and conditions on the Performance Shares, if any,
as it deems appropriate.

                   (c) Lapse of Restrictions. Subject to Sections 9.3(c) and
9.4, restrictions upon Performance Shares awarded hereunder shall lapse and such
Performance Shares shall become vested at such time or times and on such terms,
conditions and satisfaction of Performance Objectives as the Committee may, in
its discretion, determine at the time an Award is granted.

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

                                      -23-
<PAGE>
                   (e) Delivery of Shares. Upon the lapse of the restrictions on
Performance Shares awarded hereunder, the Committee shall cause a stock
certificate to be delivered to the Grantee with respect to such Shares, free of
all restrictions hereunder.

              9.3 Performance Objectives

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

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

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

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

              9.5 Non-transferability. Until the vesting of Performance Units or
the lapsing of any restrictions on Performance Shares, as the case may be, such
Performance

                                      -24-
<PAGE>
Units or Performance Shares shall not be sold, transferred or otherwise disposed
of and shall not be pledged or otherwise hypothecated.

         10.  Other Share Based Awards.

              10.1 Share Awards. The Committee may grant a Share Award to any
Eligible Individual on such terms and conditions as the Committee may determine
in its sole discretion; provided, however, that, subject to Section 19 hereof,
no such grants shall be made prior to the First Exercise Date. Share Awards may
be made as additional compensation for services rendered by the Eligible
Individual or may be in lieu of cash or other compensation to which the Eligible
Individual is entitled from the Company or ICN, as the case may be.

              10.2 Phantom Stock Awards.

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

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

         11.  Effect of a Termination of Employment.

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

         12.  Adjustment Upon Changes in Capitalization.

         12.1 Generally. In the event of a Change in Capitalization, the
Committee shall conclusively determine the appropriate adjustments, if any, to
(a) the maximum number and class of Shares or other stock or securities with
respect to which Options or Awards may be granted under the Plan, (b) the
number and class of Shares or other stock

                                      -25-
<PAGE>
or securities which are subject to outstanding Options or Awards granted under
the Plan and the exercise price therefor, if applicable, (c) the number and
class of Shares or other securities in respect of which Formula Options are to
be granted under Section 6 and (d) the Performance Objectives.

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

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

         13.  Effect of Certain Transactions.

              Subject to Sections 5.10, 7.7, 8.4(b) and 9.4 or as otherwise
provided in an Agreement, in the event of (a) the liquidation or dissolution of
the Company or (b) a merger or consolidation of the Company (a "Transaction"),
the Plan and the Options and Awards issued hereunder shall continue in effect in
accordance with their respective terms, except that following a Transaction
either (i) each outstanding Option or Award shall be treated as provided for in
the agreement entered into in connection with the Transaction or (ii) if not so
provided in such agreement, each Optionee and Grantee shall be entitled to
receive in respect of each Share subject to any outstanding Options or Awards,
as the case may be, upon exercise of any Option or payment or transfer in
respect of any Award, the same number and kind of stock, securities, cash,
property or other consideration that each holder of a Share was entitled to
receive in the Transaction in respect of a Share; provided, however, that such
stock, securities, cash, property, or other consideration shall remain subject
to all of the conditions, restrictions and performance criteria which were
applicable to the Options and Awards prior to such Transaction. The treatment of
any Option or Award as provided in this Section 13 shall be conclusively
presumed to be appropriate for purposes of Section 12.

                                      -26-
<PAGE>
         14.  Interpretation.

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

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

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

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

                                      -27-
<PAGE>
         15.  Termination and Amendment of the Plan or Modification of Options
              and Awards.

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

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

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

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

         16.  Non-Exclusivity of the Plan.

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

         17.  Limitation of Liability.

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

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

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

                                      -28-
<PAGE>
                   (c) limit in any way the right of the Company or ICN to
terminate the employment of any person at any time; or

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

         18.  Regulations and Other Approvals; Governing Law.

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

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

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

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

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

                                      -29-
<PAGE>
thereof and will not be sold or transferred other than pursuant to an effective
registration thereof under said Act or pursuant to an exemption applicable under
the Securities Act or the rules and regulations promulgated thereunder. The
certificates evidencing any of such Shares shall be appropriately amended or
have an appropriate legend placed thereon to reflect their status as restricted
securities as aforesaid.

         19.  Lapse of Restrictions on Exercise Prior to First Exercise Date.

              The restriction relating to the prohibition of exercise of an
Option or a Stock Appreciation Right prior to the First Exercise Date (set forth
in Sections 5, 6 and 7), and the restriction relating to granting of stock
awards and the payment of awards in stock prior to the First Exercise Date (set
forth in Sections 7, 8, 9 and 10), shall lapse if, prior to September 30, 2003,
ICN Pharmaceuticals, Inc. abandons its plans to proceed with or complete the
Spin-Off (as such abandonment is described in Section 3.4 of that certain
Affiliation and Distribution Agreement by and between ICN Pharmaceuticals, Inc.
and the Company (the "Distribution Agreement")). In the event of any such
lapse, any Option or Stock Appreciation Right shall become exercisable when
such Option or Stock Appreciation Right (or portion thereof) vests pursuant to
the terms of the Agreement or the Plan without regard to any such restriction
on exercise prior to the First Exercise Date. The effective date of any such
lapse of the restriction shall be the date of the written notice provided by
ICN Pharmaceuticals, Inc. to the Company indicating its determination to
abandon the Spin-Off, provided that no "Distribution Date" (as defined in the
Distribution Agreement) has occurred as of such date.

         20.  Miscellaneous.

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

              20.2 Withholding of Taxes.

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

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

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

                                      -30-
<PAGE>
securities of the Company entitled to vote thereon, in accordance with the
applicable laws within twelve (12) months of the adoption of the Plan, by the
Board.

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

                                      -31-<PAGE>
                                                                    Exhibit 10.3

                     AFFILIATION AND DISTRIBUTION AGREEMENT,
                       DATED AS OF ___________ ___, 2002,
                                 BY AND BETWEEN
                            ICN PHARMACEUTICALS, INC.
                                       AND
                                 RIBAPHARM INC.
<PAGE>
                    AFFILIATION AND DISTRIBUTION AGREEMENT

This AFFILIATION AND DISTRIBUTION AGREEMENT (the "Agreement") is made and
entered into as of _________ ___, 2002, by and between ICN Pharmaceuticals,
Inc., a Delaware corporation ("ICN"), and Ribapharm Inc., a Delaware corporation
and a wholly owned subsidiary of ICN ("Ribapharm"). Certain capitalized terms
used herein are defined in Section 1 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 separate certain assets and
businesses from ICN;

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

      WHEREAS, ICN has, pursuant to resolutions of its Board of Directors
adopted on August 7, 2000 and February 7, 2002 (the "ICN Contribution
Resolutions"), contributed to Ribapharm, certain assets (the "Contributed
Assets"), including its nucleoside analog library, and subject to certain
consents, the Exclusive License and Supply Agreement between ICN and
Schering-Plough Ltd. dated July 28, 1995, as amended (the "Schering-Plough
License");

      WHEREAS, Ribapharm has previously filed the IPO Registration Statement (as
herein defined) with the Securities and Exchange Commission but it has not yet
become effective;

      WHEREAS, immediately following the consummation of the Initial Public
Offering (as herein defined), ICN will own in excess of 80% of the outstanding
shares of Ribapharm Common Stock (as defined below);

      WHEREAS, ICN currently intends to divest itself, following the Initial
Public Offering, of its entire ownership of Ribapharm by distributing in the
Distribution (as herein defined) all of its shares of Ribapharm Common Stock to
holders of ICN Common Stock;

      WHEREAS, ICN and Ribapharm intend that the Distribution will be tax-free
to ICN and its stockholders under Section 355 and related provisions of the
Code (as defined in the  Tax Sharing Agreement);

      WHEREAS, in the Tax Sharing Agreement to be made and entered into by ICN
and Ribapharm concurrent with this Agreement, ICN and Ribapharm have provided
for and agreed upon the allocation between the parties of liabilities for Taxes
arising prior to, as a result of, and subsequent to the Distribution, and have
provided for and agreed upon other matters relating to Taxes; and

                                       1
<PAGE>
      WHEREAS, the parties hereto have determined that in order to accomplish
the objectives of the Initial Public Offering and the Distribution and to
facilitate the consummation thereof, it is necessary and desirable to
restructure certain intercompany relationships, provide working capital
financing to Ribapharm, allocate certain liabilities and provide for certain
indemnification, all as set forth herein;

      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:

1. DEFINITIONS.

      "Abandonment Notice" has the meaning set forth in Section 3.4.

      "Affiliate" means a Ribapharm Affiliate or an ICN Affiliate, as the case
may be.

      "Annual Financial Statements" has the meaning set forth in Section
5.1(v).

      "Bankruptcy Code" shall mean the United States Bankruptcy Code, as
amended, 11 U.S.C. Section 101, et seq. as amended from time to time, and any
successor act thereto.

      "Business Day" means any day other than a Saturday, a Sunday, or a day on
which banking institutions located in the State of California or London, England
are authorized or obligated by law or executive order to close.

      "Claim" has the meaning set forth in Section 6.5.

      "Commitment" means the obligation of ICN to make loans to Ribapharm from
time to time in an aggregate principal amount not to exceed $60,000,000
(Sixty Million dollars) at any time outstanding.

      "Contribution" means the transfer of certain assets by ICN to Ribapharm
pursuant to the ICN Contribution Resolutions.

      "Contributed Assets" has the meaning set forth in the recitals.

      "Control" means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.

      "Controlled" has the meaning correlative to the definition of "Control."

                                       2
<PAGE>
      "Disputes" has the meaning set forth in Section 7.1.

      "Dispute Notice" means written notice of any dispute between ICN and
Ribapharm arising out of or relating to this Agreement, which shall set forth,
in reasonable detail, the nature of the dispute.

      "Distribution" means the distribution after the Initial Public Offering
by ICN of all of ICN'S shares of Ribapharm Common Stock 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.

      "Event of Default" has the meaning set forth in Section 2.6(a).

      "Exchange Act" means the Securities Exchange Act of 1934, as amended,
together with the rules and regulations promulgated thereunder.

      "Expiration Date" means August 31, 2002.

      "GAAP" means generally accepted accounting principles, consistently
applied.

      "ICN Affiliate" means a Person that, directly or indirectly through one or
more intermediaries, is Controlled by ICN (other than Ribapharm and any
Subsidiary of Ribapharm).

      "ICN Annual Statements" has the meaning set forth in Section 5.1(v).

      "ICN Business" means the business or operations of ICN or any ICN
Affiliate, including, in all cases, any predecessor entities, but excluding the
Ribapharm Business.

      "ICN Public Filings" has the meaning set forth in Section 5.1(xiv).

      "ICN's Auditors" has the meaning set forth in Section 5.1(v).

      "ICN Transfer Agent" means the American Stock Transfer and Trust Company
or any other Person that acts as the transfer agent and registrar for the ICN
Common Stock.

      "Indemnifying Party" means a Person that is obligated to provide
indemnification under this Agreement.

                                       3
<PAGE>
      "Indemnitee" means a Person that is entitled to seek indemnification under
this Agreement.

      "Indemnity Payment" means an amount that an Indemnifying Party is required
to pay to an Indemnitee under this Agreement.

      "Initial Public Offering" means the initial public offering by ICN of
shares of Ribapharm Common Stock as contemplated by the IPO Registration
Statement.

      "Insurance Proceeds" means the payment received by an insured from an
insurance carrier or paid by an insurance carrier on behalf of the insured, net
of any applicable premium adjustment and tax effect.

      "IPO Registration Statement" means the Registration Statement on Form S-1,
Registration No. 333-39350, of Ribapharm, as supplemented and amended from time
to time.

      "IRS Private Letter Ruling" has the meaning set forth in the Tax Sharing
Agreement.

      "LIBOR Rate" means, for any day, the rate for six-month U.S. Dollar
deposits which appears on Telerate Page 3750 (as defined in the International
Swaps and Derivatives Association, Inc. 1991 Interest Rate and Currency Exchange
Definitions), or such page as may replace Telerate Page 3750, as of 11:00 a.m.
(London time) on such date, or, if such day is not a Business Day, then the
immediately preceding Business Day (or if not so reported then from another
recognized source or interbank quotation).

      "Loans" has the meaning set forth in Section 2.1.

      "Losses" means all losses, liabilities, claims, obligations, demands,
judgments, damages, dues, penalties, assessments, fines (civil or criminal),
costs, liens, expenses, forfeitures, settlements, or fees, reasonable attorneys'
fees and court costs, of any nature or kind, whether or not the same would
properly be reflected on a balance sheet, and "Loss" means any of these.

      "Notice" means any notice, request, claim, demand, or other communication
under this Agreement.

      "Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization or a governmental entity or any
department, agency or political subdivision thereof.

      "Pre-Distribution Period" means the period of time from the date hereof
until completion of the Distribution.

      "PwC" has the meaning set forth in Section 5.1(iii).

                                       4
<PAGE>
      "Qualified Options and Convertibles" means options to acquire Ribapharm
Capital Stock (which are not exercisable until after the earlier of (i)
September 30, 2003 or (ii) completion of the Distribution) and securities
convertible into Ribapharm Capital Stock (which are not convertible until
completion of the distribution).

      "Quarterly Financial Statements" has the meaning set forth in Section
5.1(iv).

      "Registration Rights Agreement" means that certain Registration Rights
Agreement dated as of the date hereof by and between Ribapharm and ICN.

      "Regulation S-K" means Regulation S-K of the General Rules and Regulations
promulgated by the SEC, as in effect from time to time, and any successor
thereto.

      "Regulation S-X" means Regulation S-X of the General Rules and Regulations
promulgated by the SEC, as in effect from time to time, and any successor
thereto.

      "Request" has the meaning set forth in Section 6.5.

      "Ribapharm Affiliate" means a Person that, directly or indirectly through
one or more intermediaries, is Controlled by Ribapharm.

      "Ribapharm Business" means any business or operations of Ribapharm or any
Ribapharm Affiliates, including, in all cases, any predecessor entities.

      "Ribapharm Capital Stock" means all classes or series of capital stock of
Ribapharm authorized by Ribapharm's Certificate of Incorporation.

      "Ribapharm Common Stock" means the Common Stock, par value $.01 per share,
of Ribapharm.

      "Ribapharm Public Filings" has the meaning set forth in Section
5.1(vii).

      "Ribapharm Subsidiary" means all direct or indirect subsidiaries of
Ribapharm.

      "Ribapharm's Auditors" has the meaning set forth in Section 5.1(a)(iii).

      "Ribapharm's Certificate of Incorporation" means Ribapharm's Amended and
Restated Certificate of Incorporation, as in effect upon the closing of the
Initial Public Offering.

      "Ribapharm Transfer Agent" means the American Stock Transfer and Trust
Company or any other Person that acts as the transfer agent and registrar for
the Ribapharm Common Stock.

      "SEC" means the United States Securities and Exchange Commission or any
successor agency.

                                       5
<PAGE>
      "Section 355(e) Event" has the meaning set forth in the Tax Sharing
Agreement.

      "Securities Act" means the Securities Act of 1933, together with the rules
and regulations promulgated thereunder, and any successor thereto.

      "Separate Counsel" has the meaning set forth in Section 6.4(b).

      "Service Agent" means (i) for ICN, The Corporation Trust Company, with
offices on the date hereof at 1209 Orange Street, Wilmington, County of New
Castle, Delaware 19801; and (ii) for Ribapharm, The Corporation Trust Company,
with offices on the date hereof at 1209 Orange Street, Wilmington, County of New
Castle, Delaware 19801.

      "Subsidiary" means with respect to any specified Person, any corporation
or other legal entity of which such Person or any of its Subsidiaries Controls
or owns, directly or indirectly, more than 50% of the stock or other equity
interest entitled to vote with respect to the election of members to the board
of directors or similar governing body; provided, however, that for the purposes
of this Agreement, neither Ribapharm nor any of the Subsidiaries of Ribapharm
shall be deemed to be Subsidiaries of ICN or of any of the Subsidiaries of ICN.

      "Tainting Event" has the meaning set forth in the Tax Sharing Agreement.

      "Tax" or "Taxes" has the meaning set forth in the Tax Sharing Agreement.

      "Tax Opinion" means a favorable opinion from ICN'S counsel regarding the
federal income tax consequences, under Section 355 and related provisions of
the Code (as defined in the Tax Sharing Agreement), of the Distribution.

      "Tax-Related Losses" means (i) all federal, state and local Taxes
(including interest and penalties thereon) imposed pursuant to any settlement,
final determination, judgment or otherwise; (ii) all accounting, legal and other
professional fees, and court costs incurred in connection with such taxes; and
(iii) all costs and expenses that may result from adverse tax consequences to
ICN payable by ICN or ICN Affiliates.

      "Tax Sharing Agreement" means the Tax Sharing Agreement between ICN and
Ribapharm dated as of the date hereof.

      "Third-Party Claim" means any claim, suit, arbitration, inquiry,
proceeding or investigation by or before any court, governmental or other
regulatory or administrative agency or commission or any arbitration tribunal
asserted by a Person other than ICN or any ICN Affiliate or Ribapharm or any
Ribapharm Affiliate which gives rise to a right of indemnification hereunder.

      "Underwriting Agreement" means the Underwriting Agreement, by and
among ICN, Ribapharm and the underwriters named therein relating to the Initial
Public Offering.

                                       6
<PAGE>
      "Voting Stock" means with respect to any Person, all classes and series of
the capital stock of such Person entitled to vote generally in the election of
directors.

2. WORKING CAPITAL FACILITY

2.1. REVOLVING CREDIT.

      (a) Subject to the terms and conditions of this Section 2, and provided
that no Event of Default has occurred and is continuing, ICN agrees to make
loans (the "Loans") to Ribapharm from time to time prior to the Expiration Date
in an aggregate principal amount not to exceed at any time the Commitment. The
Loans shall be evidenced by a note in the form of Exhibit 1 to be executed and
delivered by Ribapharm upon the making of the initial Loan. Subject to the terms
and conditions of this Section 2, Ribapharm may borrow under this Section 2.1,
prepay any Loans as contemplated by Section 2.3(b) and reborrow under this
Section 2.1.

      (b) Ribapharm may borrow hereunder from ICN at any time prior to the
Expiration Date upon giving to ICN advance notice of the date of borrowing and
the amount to be borrowed.

2.2. INTEREST.

      (a) Ribapharm shall pay interest on the aggregate amount of the Loans
outstanding, calculated in accordance with the provisions of Section 2.2(b),
payable monthly in arrears on the last day of each calendar month.

      (b) The rate of interest payable on the aggregate amount of the Loans with
respect to each day the Loans are outstanding shall be at an annual rate of
LIBOR Rate plus 200 basis points. Interest shall be computed upon the actual
number of days elapsed.

2.3. REPAYMENT OF THE LOAN AND CANCELLATION.

      (a) Ribapharm undertakes to repay in full the amount of the Loans
outstanding hereunder, together with all interest accrued and outstanding
thereon, no later than December 31, 2003.

      (b) Ribapharm, without premium or penalty and on two (2) days prior notice
to ICN of its intention to do so, may, at any time and from time to time, prepay
to ICN part or all of the aggregate amount of the Loans outstanding, together
with all interest accrued and outstanding thereon, to the date of such
repayment. Except as contemplated by clause (c) of this Section 2.3, the
prepayment of the Loans shall not reduce the amount of the Commitment.

      (c) Ribapharm shall have the right at any time or from time to time to
terminate in whole or in part that part of the Commitment not drawn down by it
by giving prior notice thereof to ICN specifying the amount of the Commitment to
be terminated and the effective date thereof.

2.4. PAYMENT PROVISIONS.

                                       7
<PAGE>
      (a) If any payment due to be made by Ribapharm in accordance with this
Section 2 is to be made on a day which is not a Business Day, such payment shall
be made to ICN on the next succeeding Business Day, the sums to be paid being in
all instances calculated by reference to the actual date of payment.

      (b) Ribapharm shall not be entitled to deduct or set off any amounts which
may be owed or claimed to be owed to it by ICN from any amounts payable by
Ribapharm to ICN under this Section 2.

      (c) All payments by Ribapharm shall be made directly to ICN or as ICN
shall otherwise notify Ribapharm in writing.

2.5. NOTIFICATION. Ribapharm hereby covenants with ICN that from and after the
date hereof and for so long as any amount remains unpaid in respect of principal
of, or interest on, the outstanding borrowings or otherwise pursuant to this
Section 2, it will give ICN prompt notice in writing of the occurrence of any
Event of Default.

2.6. DEFAULT.

      (a) An "Event of Default" shall mean any of the following:

            (i) Ribapharm fails to pay when due any principal of, or interest
on, the Loans or any other amounts payable under this Section 2, and shall fail
to make such payments within fifteen (15) Business Days of written notification
thereof by ICN; or

            (ii) an order is made or an effective resolution is passed for
winding up Ribapharm other than for the sole purpose of a merger or
consolidation; or

            (iii) Ribapharm shall default in the payment when due of any
principal of or interest on any of its other indebtedness having an aggregate
principal amount of at least $3 million or any event specified in any note,
agreement, indenture or other document evidencing or relating to any such
indebtedness shall occur if the effect of such event is to cause, or (with the
giving of any notice or the lapse of time or both) to permit the holder or
holders of such indebtedness (or a trustee or agent on behalf of such holder or
holders) to cause, such indebtedness having an aggregate principal amount of at
least $3 million to become due, or to be prepaid in full (whether by redemption,
purchase or otherwise), prior to its stated maturity; or

            (iv) Ribapharm shall admit in writing its inability to, or be
generally unable to, pay its debts as such debts become due; or

            (v) Ribapharm shall (a) apply for or consent to the appointment of,
or the taking of possession by, a receiver, custodian, trustee or liquidator of
itself or of all or a substantial part of its property, (b) make a general
assignment for the benefit of its creditors, (c) commence a voluntary case under
the Bankruptcy Code, (d) file a petition seeking to take advantage of any

                                       8
<PAGE>
other law relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or readjustment of debts, (e) fail to controvert in a timely and
appropriate manner, or acquiesce in writing to, any petition filed against it in
an involuntary case under the Bankruptcy Code, or (f) take any corporate action
for the purpose of effecting any of the foregoing; or

            (vi) A proceeding or case shall be commenced, without the
application or consent of Ribapharm, in any court of competent jurisdiction,
seeking (a) its liquidation, reorganization, dissolution or winding-up, or the
composition or readjustment of its debts, (b) the appointment of a trustee,
receiver, custodian, liquidator or the like of Ribapharm or of all or any
substantial part of its assets, or (c) similar relief in respect of Ribapharm
under any law relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts, and such proceeding or case shall continue
undismissed, or an order, judgment or decree approving or ordering any of the
foregoing shall be entered and continue unstayed and in effect, for a period of
60 or more days; or an order for relief against Ribapharm shall be entered in an
involuntary case under the Bankruptcy Code.

      (b) Upon the occurrence of an Event of Default specified in Section
2.6(a)(v) or Section 2.6(a)(iv), or upon delivery of notice thereof in writing
by ICN after the occurrence of any other Event of Default, the Commitment shall
terminate (if then in existence) and the aggregate amount of the Loans at that
time outstanding shall be declared immediately due and payable with interest
thereon to the date of actual payment. Any such termination and declaration
shall be effective and binding on Ribapharm.

2.7 FACILITY COSTS. Ribapharm agrees to reimburse ICN for the actual costs and
expenses (including reasonable legal fees) reasonably incurred by ICN in
connection with the enforcement or attempted enforcement of, or the preservation
or attempted preservation of, any of its rights under this Section 2. These
costs and expenses shall become due as soon as notice thereof has been served on
Ribapharm and shall be paid by Ribapharm within fifteen (15) Business Days
thereof.

3. THE DISTRIBUTION.

3.1. THE DISTRIBUTION. ICN currently intends, following the consummation of the
Initial Public Offering, to complete the Distribution as promptly as
practicable after receipt of an IRS Private Letter Ruling. Notwithstanding the
foregoing, ICN may, in its sole discretion, complete the Distribution following
receipt of a Tax Opinion. ICN intends to complete the Distribution through
means of a distribution that qualifies as a tax-free spin-off under Section 355
and related provisions of the Code (as defined in the Tax Sharing Agreement).
ICN shall, in its sole and absolute discretion, determine whether to proceed
with the Distribution and the timing of and conditions to the consummation of
the Distribution. In addition, ICN may at any time and from time to time until
the completion of the Distribution modify or change the terms of the
Distribution by accelerating or delaying the timing of the consummation of the
Distribution. Ribapharm shall cooperate with ICN in all respects to accomplish
the Distribution and shall, at ICN's direction, promptly take any and all
actions necessary or desirable to effect the

                                       9

<PAGE>
Distribution, including, without limitation, the registration under the
Securities Act and the Exchange Act, as required under applicable law of
Ribapharm Common Stock on an appropriate registration form or forms to be
designated by ICN. ICN shall select in its sole discretion, in connection with
the Distribution, such investment banker(s) and manager(s), financial printer,
solicitation and/or exchange agent and outside counsel to effect the
Distribution as it deems necessary or desirable; provided that nothing herein
shall prohibit Ribapharm from engaging (at its own expense) its own financial,
legal, accounting and other advisors in connection with the Distribution.

3.2. CERTAIN STOCKHOLDER MATTERS. From and after the distribution of Ribapharm
Common Stock in connection with any transaction(s) included as part of the
Distribution and until such Ribapharm Common Stock is duly transferred in
accordance with applicable law, Ribapharm shall regard the Persons receiving
Ribapharm Common Stock in such transaction(s) as record holders of Ribapharm
Common Stock in accordance with the terms of such transaction(s) without
requiring any action on the part of such Persons. Ribapharm agrees that, subject
to any transfers of such stock, (a) each such holder shall be entitled to
receive all dividends payable on, and exercise voting rights and all other
rights and privileges with respect to, the shares of Ribapharm Common Stock then
held by such holder and (b) each such holder shall be entitled, without any
action on the part of such holder, to receive one or more certificates
representing, or other evidence of ownership of, the shares of Ribapharm Common
Stock then held by such holder. ICN shall cooperate, and shall instruct the ICN
Transfer Agent to cooperate, with Ribapharm and the Ribapharm Transfer Agent,
and Ribapharm shall cooperate, and shall instruct the Ribapharm Transfer Agent
to cooperate, with ICN and the ICN Transfer Agent, in connection with all
aspects of the Distribution and all other matters relating to the issuance and
delivery of certificates representing, or other evidence of ownership of, the
shares of Ribapharm Common Stock distributed to the holders of ICN Common Stock
in connection with any transaction(s) included as part of the Distribution.
Following the Distribution, ICN shall instruct the ICN Transfer Agent to deliver
to the Ribapharm Transfer Agent true, correct and complete copies of the stock
and transfer records reflecting the holders of ICN Common Stock receiving shares
of Ribapharm Common Stock in connection with any transaction(s) included as part
of the Distribution.

3.3. FURTHER ASSURANCES REGARDING THE DISTRIBUTION. In addition to the actions
specifically provided for elsewhere in this Agreement, Ribapharm shall, at ICN's
direction, use all commercially reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, all things commercially
reasonably necessary, proper or expeditious under applicable laws, regulations
and agreements in order to consummate and make effective the Distribution as
promptly as reasonably practicable. Without limiting the generality of the
foregoing, Ribapharm shall, at ICN's direction, cooperate with ICN, and execute
and deliver, or use all commercially reasonable efforts to cause to have
executed and delivered, all instruments, including instruments of conveyance,
assignment and transfer, and to make all filings with, and to obtain all
consents, approvals or authorizations of, any domestic or foreign governmental
or regulatory authority requested by ICN in order to consummate and make
effective the Distribution.

                                       10
<PAGE>
3.4. ABANDONMENT OF THE DISTRIBUTION. The parties expressly acknowledge and
agree that ICN is not obligated in any respect to proceed with or complete the
Distribution and that ICN may, in its sole and absolute discretion, at any time
abandon its plans to proceed with or complete the Distribution. In the event
that ICN so determines that it no longer intends to proceed with or complete the
Distribution, ICN shall provide to Ribapharm a written notification of such
determination (an "Abandonment Notice"). Effective as of the date of the
Abandonment Notice, (a) provided that no Distribution Date has yet occurred,
Sections 3.3, 5.2 and 5.3 of this Agreement shall terminate, become null and
void and have no further force and effect (it being expressly understood and
agreed by the parties that such sections shall remain in full force and effect
in the event that a Distribution Date has occurred on or prior to the date of
the Abandonment Notice) and (b) ICN's rights, and Ribapharm's obligations, set
forth in the Registration Rights Agreement shall immediately become effective.

4. EXPENSES AND PRIOR RELATIONSHIP.

4.1. EXPENSES GENERALLY. Except as otherwise provided in this Agreement, all
costs and expenses of either party hereto in connection with this Agreement
shall be paid by the party that incurs such costs and expenses.

4.2. CERTAIN EXPENSES RELATING TO THE INITIAL PUBLIC OFFERING. ICN shall be
liable for all costs, fees and expenses relating to the Initial Public Offering,
including the costs and expenses of financial, legal, accounting and other
advisers.

4.3. CERTAIN EXPENSES RELATING TO THE DISTRIBUTION. ICN shall liable for all
costs, fees and expenses relating to the Distribution; provided that Ribapharm
shall be responsible for the payment of (a) the costs, fees and expenses of all
of Ribapharm's financial, legal, accounting and other advisors incurred in
connection with the Distribution if such financial, legal, accounting and other
advisors are not concurrently engaged by ICN and (b) any internal fees, costs
and expenses incurred by Ribapharm or any Ribapharm Affiliate in connection with
the Distribution.

4.4 PRIOR RELATIONSHIP. Ribapharm, with respect to Ribapharm and all of the
Ribapharm Affiliates, and ICN, with respect to ICN and all of the ICN
Affiliates, agree to take all commercially reasonable action to discontinue
their respective uses as promptly as is commercially reasonable of any printed
material that indicates an ownership or other relationship between or among ICN
and Ribapharm or any of their respective Affiliates that has changed as a result
of the Initial Public Offering, the Distribution or any other transactions
contemplated hereby; provided that this Section 4.4 shall not prohibit the use
of printed material containing appropriate and accurate references to such
relationship.

5. ADDITIONAL COVENANTS.

      5.1. FINANCIAL STATEMENTS COVENANTS. For so long as ICN is required to
include in its consolidated financial statements Ribapharm's results of
operations, (determined in accordance with GAAP):

                                       11
<PAGE>
            (i) Ribapharm shall, and shall cause each Ribapharm Affiliate to,
maintain a fiscal year which commences on January 1 and ends on December 31 of
each calendar year.

            (ii) Ribapharm shall deliver to ICN all schedules consistent with
ICN's corporate closing requirements and in a time consistent with ICN's
corporate closing schedule.

            (iii) Except to the extent required by law (including SEC rules and
regulations), Ribapharm shall cause PricewaterhouseCoopers, LLP ("PwC") to be
retained as the independent certified public accountants to audit its
consolidated financial statements ("Ribapharm's Auditors") unless (x) Ribapharm
receives the prior written consent of ICN (which consent will not be
unreasonably withheld if Ribapharm has demonstrated to ICN that it is justified
in not retaining PwC by reason of any action or inaction of PwC), (y) ICN no
longer uses PwC to audit its consolidated financial statements or (z) PwC
resigns as Ribapharm's Auditors. If PwC ceases to be Ribapharm's Auditors, then
Ribapharm shall retain independent certified public accountants of nationally
recognized standing as Ribapharm's Auditors.

            (iv) As soon as practicable, and in any event within 35 days after
the end of each of the first three fiscal quarters in each fiscal year of
Ribapharm (but in no event later than five days before Ribapharm intends to file
its Quarterly Financial Statements (as defined below) with the SEC), Ribapharm
shall deliver to ICN drafts of (A) the consolidated financial statements of
Ribapharm (and notes thereto) for such periods and for the period from the
beginning of the current fiscal year to the end of such quarter, setting forth
in each case in comparative form for each such fiscal quarter of Ribapharm the
consolidated figures (and notes thereto) for the corresponding quarter and
periods of the previous fiscal year and all in reasonable detail and prepared in
accordance with Regulation S-X, and (B) a discussion and analysis by management
of Ribapharm's consolidated financial condition and results of operations for
such fiscal period, including, without limitation, an explanation of any
material adverse change from the immediately preceding fiscal quarter, all in
reasonable detail and prepared in accordance with Item 303(b) of Regulation S-K.
The information set forth in (A) and (B) above is herein referred to as the
"Quarterly Financial Statements." No later than the earlier of (x) two Business
Days prior to the date Ribapharm files its Quarterly Report on Form 10-Q with
the SEC or otherwise makes its Quarterly Financial Statements publicly available
or (y) two Business Days prior to the date on which ICN has notified Ribapharm
that it intends to file its Quarterly Report on Form 10-Q with the SEC (but in
no event earlier than the 5th day before ICN's Quarterly Report on Form 10-Q is
required to be filed with the SEC), Ribapharm shall deliver to ICN the final
form of the Quarterly Financial Statements certified by the chief financial
officer of Ribapharm as presenting fairly, in all material respects, the
consolidated financial condition and results of operations of Ribapharm;
provided that ICN and Ribapharm financial representatives shall actively consult
with each other regarding any changes (whether or not substantive) which
Ribapharm may consider making to its Quarterly Financial Statements and related
disclosures prior to the actual filing of its Quarterly Report on Form 10-Q with
the SEC.

            (v) Ribapharm shall use its reasonable best efforts to enable
Ribapharm's Auditors to complete their audit such that they will date their
opinion on Ribapharm's audited annual financial statements on the same date that
ICN's independent certified public accountants ("ICN's

                                       12
<PAGE>
Auditors") date their opinion on ICN's audited annual financial statements (the
"ICN Annual Statements"), and to enable ICN to meet its timetable for the
printing, filing and public dissemination of the ICN Annual Statements. To this
end, Ribapharm shall deliver to ICN as soon as practicable, and in any event
within 75 days after the end of each fiscal year of Ribapharm (but in no event
later than ten days before Ribapharm intends to file its Annual Financial
Statements (as defined below) with the SEC), (A) drafts of the consolidated
financial statements of Ribapharm (and notes thereto) for such year, setting
forth in each case in comparative form the consolidated figures (and notes
thereto) for the previous fiscal year and all in reasonable detail and prepared
in accordance with Regulation S-X and (B) a discussion and analysis by
management of Ribapharm's consolidated financial condition and results of
operations for such year, including, without limitation, an explanation of any
material adverse change from the immediately preceding fiscal year, all in
reasonable detail and prepared in accordance with Item 303(a) of Regulation S-K.
The information set forth in (A) and (B) above is herein referred to as the
"Annual Financial Statements." Ribapharm shall deliver to ICN all revisions to
such drafts as soon as any such revisions are prepared or made. No later than
the earlier of (1) five Business Days prior to the date Ribapharm files its
Annual Report on Form 10-K with the SEC or otherwise makes its Annual Financial
Statements publicly available or (2) five Business Days prior to the date on
which ICN has notified Ribapharm that it intends to file its Annual Report on
Form 10-K with the SEC (but in no event earlier than the 5th day before ICN's
Annual Report on Form 10-K is required to be filed with the SEC), Ribapharm
shall deliver to ICN the final form of the Annual Financial Statements certified
by the chief financial officer of Ribapharm as presenting fairly, in all
material respects, the financial condition and results of operations of
Ribapharm and its Subsidiaries; provided that ICN and Ribapharm financial
representatives shall actively consult with each other regarding any changes
(whether or not substantive) which Ribapharm may consider making to its Annual
Financial Statements and related disclosures prior to the actual filing of its
Annual Report on Form 10-K with the SEC. The Annual Financial Statements shall
also be accompanied by an opinion thereon by Ribapharm's independent certified
public accountants.

            (vi) Ribapharm shall deliver to ICN all Quarterly and Annual
Financial Statements of each Ribapharm Affiliate (which (a) Ribapharm
consolidates for financial accounting purposes and (b) is itself required to
file financial statements with the SEC or otherwise make such financial
statements publicly available) with such financial statements to be provided in
the same manner and detail and on the same time schedule as those financial
statements of Ribapharm required to be delivered to ICN pursuant to this Section
5.1.

            (vii) Ribapharm shall, and shall cause each Ribapharm Affiliate
which files information with the SEC, to deliver to ICN: (A) as soon as the same
are prepared, substantially final drafts of: (x) all reports, notices and proxy
and information statements to be sent or made available by Ribapharm or any
Ribapharm Affiliate to their security holders, (y) all regular, periodic and
other reports to be filed under Sections 13, 14 and 15 of the Exchange Act
(including Reports on Forms 10-K, 10-Q and 8-K and Annual Reports to
Shareholders), and (z) all registration statements and prospectuses to be filed
by Ribapharm or any Ribapharm Affiliate with the SEC or any securities exchange
pursuant to the listed company manual (or similar requirements) of such exchange
(collectively, the documents identified in clauses (x), (y) and (z)

                                       13
<PAGE>
are referred to herein as "Ribapharm Public Filings"), and (B) as soon as
practicable, but in no event later than one Business Day prior to the date the
same are printed, sent or filed, whichever is earliest, final copies of all such
Ribapharm Public Filings; provided that Ribapharm may continue to revise such
Ribapharm Public Filings prior to the filing thereof in order to make
corrections and changes which corrections and changes shall be delivered by
Ribapharm to ICN as soon as practicable; and, provided, further, that ICN and
Ribapharm financial representatives shall actively consult with each other
regarding any changes (whether or not substantive) which Ribapharm may consider
making to any of its Ribapharm Public Filings and related disclosures prior to
any anticipated filing with the SEC.

            (viii) With reasonable promptness, Ribapharm shall deliver to ICN
such additional financial and other information and data with respect to
Ribapharm and its Subsidiaries and their business, properties, financial
positions, results of operations and prospects as from time to time may be
reasonably requested by ICN.

            (ix) ICN agrees to provide to Ribapharm all information relating to
ICN or any ICN Affiliate that Ribapharm reasonably requests in connection with
any Ribapharm Public Filings or that, in the judgment of Ribapharm's legal
staff, is required to be disclosed or incorporated by reference therein under
any law, rule or regulation. ICN agrees that such information shall be provided
by ICN in a timely manner on the dates reasonably requested by Ribapharm (which
may be earlier than the dates on which ICN otherwise would be required hereunder
to have such information available) to enable Ribapharm to prepare, print and
release all Ribapharm Public Filings on such dates as Ribapharm shall determine.
If and to the extent reasonably requested by Ribapharm, ICN agrees that it shall
diligently and promptly review all drafts of such Ribapharm Public Filings and
prepare in a diligent and timely fashion any portion of such Ribapharm Public
Filing pertaining to ICN or any ICN Affiliate.

            (x) Ribapharm shall authorize Ribapharm's Auditors to make available
to ICN's Auditors both the personnel who performed or are performing the annual
audit of Ribapharm and work papers related to the annual audit of Ribapharm, in
all cases within a reasonable time prior to the date of Ribapharm's Auditors'
opinion on Ribapharm's audited financial statements, so that ICN's Auditors are
able to perform the procedures they consider necessary to take responsibility
for the work of Ribapharm's Auditors as it relates to ICN's Auditors' report on
ICN's statements, all within sufficient time to enable ICN to meet its timetable
for the printing, filing and public dissemination of the ICN Annual Statements.

            (xi) Ribapharm shall provide ICN's internal auditors access to
Ribapharm's and its Subsidiaries, books and records so that ICN may conduct
reasonable audits relating to the financial statements provided by Ribapharm
pursuant hereto as well as to the internal accounting controls and operations of
Ribapharm and its Subsidiaries.

            (xii) Ribapharm shall give ICN as much prior notice as reasonably
practical of any proposed determination of, or any significant changes in, its
accounting estimates or accounting principles from those in effect on the date
hereof. Ribapharm will consult with ICN and, if

                                       14
<PAGE>
requested by ICN, Ribapharm will consult with ICN's independent public
accountants with respect thereto.

            (xiii) Ribapharm shall, and shall cause each Ribapharm Affiliate to,
maintain a system of internal accounting controls that will provide reasonable
assurance that (A) Ribapharm's and such Ribapharm Affiliate's books, records and
accounts fairly reflect all transactions and dispositions of assets and (B) the
specific objectives of accounting control are achieved.

            (xiv) Ribapharm shall cooperate fully, and cause its accountants to
cooperate, with ICN to the extent reasonably requested by ICN in the preparation
of ICN's public earnings releases, Quarterly Reports on Form 10-Q, Annual
Reports to Shareholders, Annual Reports on Form 10-K, any Current Reports on
Form 8-K and any other proxy, information and registration statements, reports,
notices, prospectuses and any other filings made by ICN with the SEC, any
national securities exchange or otherwise made publicly available (collectively,
"ICN Public Filings"). Ribapharm agrees to provide to ICN all information
relating to Ribapharm or any Ribapharm Affiliate that ICN reasonably requests in
connection with any ICN Public Filings or that, in the judgment of ICN's legal
staff, is required to be disclosed or incorporated by reference therein under
any law, rule or regulation. Such information shall be provided by Ribapharm in
a timely manner on the dates reasonably requested by ICN (which may be earlier
than the dates on which Ribapharm otherwise would be required hereunder to have
such information available) to enable ICN to prepare, print and release all ICN
Public Filings on such dates as ICN shall determine. Ribapharm shall cause its
accountants to consent to any reference to them as experts in any ICN Public
Filings required under any law, rule or regulation. If and to the extent
reasonably requested by ICN, Ribapharm shall diligently and promptly review all
drafts of such ICN Public Filings and prepare in a diligent and timely fashion
any portion of such ICN Public Filing pertaining to Ribapharm or any Ribapharm
Affiliate. Prior to any printing or public release of any ICN Public Filing, an
appropriate executive officer of Ribapharm shall, if requested by ICN, certify
that the information relating to Ribapharm, any Ribapharm Affiliate or the
Ribapharm Business in such ICN Public Filing is accurate, true and correct in
all material respects. Unless required by law, rule or regulation, Ribapharm
shall not publicly release any financial or other information which conflicts
with the information with respect to Ribapharm, any Ribapharm Affiliate or the
Ribapharm Business that is included in any ICN Public Filing without ICN's prior
written consent. Prior to the release or filing thereof, ICN shall provide
Ribapharm with a draft of any portion of a ICN Public Filing containing
information relating to Ribapharm, any Ribapharm Affiliate or the Ribapharm
Business and shall give Ribapharm an opportunity to review such information and
comment thereon; provided that ICN shall determine in its sole discretion the
final form and content of all ICN Public Filings.

            (xv) ICN agrees that it shall cooperate fully, and cause its
accountants to cooperate fully, with Ribapharm to the extent reasonably
requested by Ribapharm in the preparation of any Ribapharm Public Filings.

            (xvi) Prior to the release or filing thereof, Ribapharm shall
provide ICN with a draft of any portion of a Ribapharm Public Filing containing
information relating to ICN or any

                                       15
<PAGE>
ICN Affiliate and shall give ICN an opportunity to review such information and
comment thereon; provided that Ribapharm shall determine in its sole discretion
the final form and content of all Ribapharm Public Filings.

Nothing in this Section 5.1 shall require Ribapharm to violate any agreement
with any of its customers regarding the confidentiality of commercially
sensitive information relating to that customer or its business; provided that
in the event that Ribapharm would otherwise be required under this Section 5.1,
but for such agreement, to disclose any such information, Ribapharm shall use
all commercially reasonable efforts to seek to obtain such customer's consent to
the disclosure of such information.

      5.2. OTHER COVENANTS.

           (a) Ribapharm hereby covenants and agrees that, for so long as ICN
beneficially owns at least 10% of the outstanding shares of Ribapharm Common
Stock, Ribapharm shall not, without the prior written consent of ICN (which it
may withhold in its sole and absolute discretion), take, or cause to be taken,
directly or indirectly, any action, including making or failing to make any
election under the law of any state, which has the effect, directly or
indirectly, of restricting or limiting the ability of ICN to freely sell,
transfer, assign, pledge or otherwise dispose of shares of Ribapharm Common
Stock or would restrict or limit the rights of any transferee of ICN as a holder
of Ribapharm Common Stock. Without limiting the generality of the foregoing,
Ribapharm shall not, without the prior written consent of ICN (which it may
withhold in its sole and absolute discretion), take any action, or take any
action to recommend to its stockholders any action, which would among other
things, limit the legal rights of, or deny any benefit to, ICN as a Ribapharm
stockholder in a manner not applicable to Ribapharm stockholders generally.

           (b) Ribapharm hereby covenants and agrees that, following the
Distribution, Ribapharm will be solely responsible for issuing and delivering
any shares of Ribapharm Common Stock due upon conversion of ICN's 6 1/2%
convertible subordinated notes due 2008.

           (c)  ICN hereby covenants and agrees that, for so long as it shall be
the majority stockholder of Ribapharm, to observe any fiduciary obligations that
it may have under applicable law to Ribapharm's other stockholders.

      5.3 TAX-FREE SPIN-OFF. Ribapharm hereby covenants and agrees until the
earlier of (i) September 30, 2003 and (ii) completion of the Distribution,
Ribapharm shall not, without the prior written consent of ICN (which ICN may
withhold in its sole and absolute discretion), (A) issue any shares of Ribapharm
Capital Stock if, after giving effect to such issuances, ICN would cease to own
stock possessing at least 80% of the total combined voting power of all classes
of Ribapharm Capital Stock entitled to vote and at least 80% of the total number
of shares of each class of outstanding non-voting Ribapharm Capital Stock or (B)
take, or cause to be taken, any action, or do, or cause to be done, anything
which will prevent the Distribution from qualifying, or will cause the
Distribution to fail to qualify, as a tax-free spin-off under Section 355 of the
Code (as defined in the Tax Sharing Agreement). ICN and Ribapharm agree that ICN
may apply to any court of law or equity of competent jurisdiction (without
posting any bond or deposit) for specific performance and/or other injunctive
relief to prevent any breach of this Section 5.3. This Section 5.3 shall
terminate, become null and void and have no further force and effect if ICN
takes any action that has the effect that ICN ceases to beneficially own at
least 80% of the outstanding shares of Ribapharm Capital Stock (excluding
Qualified Options and Convertibles) and at least 80% of the number of shares of
each class of outstanding non-voting Ribapharm Capital Stock or otherwise
becomes ineligible under US tax laws from being able to affect the
Distribution on a tax-free basis.

                                       16

<PAGE>
      5.4 ALLOCATION OF BENEFITS COVENANT. In connection with the Distribution,
Ribapharm understands that ICN is considering various adjustments to ICN's
existing stock option plans. To the extent that ICN determines, in its sole
discretion, to equitably allocate existing employee and director options to
acquire shares of ICN Common Stock between new options to acquire ICN Common
Stock and options to acquire Ribapharm Common Stock, ICN and Ribapharm hereby
agree to enter into an agreement, prior to the completion of the Distribution,
to reflect such allocation.

      5.5. TAX SHARING AGREEMENT COVENANT. ICN and Ribapharm hereby covenant and
agree to enter into a Tax Sharing Agreement, concurrent with this Agreement, 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.

      5.6. NOTICES UNDER SCHERING-PLOUGH LICENSE AGREEMENT COVENANT. For so long
as ICN has any obligations under the Exclusive License and Supply Agreement
between ICN and Schering-Plough Ltd. dated July 28, 1995, as amended, Ribapharm
covenants to promptly provide copies of any notices received by Ribapharm
to ICN.

6. INDEMNIFICATION.

      6.1. INDEMNIFICATION BY RIBAPHARM. Subject to Section 6.3, Ribapharm shall
indemnify, defend and hold harmless ICN, all ICN Affiliates and each of their
respective directors, officers and employees (in their capacities as such), from
and against:

      (a) all Losses relating to, arising out of, or due to, directly or
indirectly, any breach by Ribapharm or any Ribapharm Affiliate of any of the
provisions of this Agreement;

      (b) all Losses relating to, arising out of, or due to, directly or
indirectly, any incorrect, inaccurate or incomplete financial and other
information provided by Ribapharm or any Ribapharm Affiliate to ICN pursuant to
Section 5.1 of this Agreement; and

      (c) all Losses that result from any Third-Party Claim arising out of the
business or operation of the Ribapharm Business.

      6.2. INDEMNIFICATION BY ICN. Subject to Section 6.3, ICN shall indemnify,
defend, and hold harmless Ribapharm, all Ribapharm Affiliates, and each of their
respective directors, officers and employees (in their capacities as such), from
and against:

      (a) all Losses relating to, arising out of, or due to, directly or
indirectly, any breach by ICN or any ICN Affiliate of any of the provisions of
this Agreement;

      (b) all Losses relating to, arising out of, or due to, directly or
indirectly, any incorrect, inaccurate or incomplete financial and other
information provided by ICN or any ICN Affiliate to Ribapharm pursuant to
Section 5.1 of this Agreement;

      (c) all Losses relating to, arising out of, or due to, directly or
indirectly, any expenses, monetary judgment or settlement incurred in connection
with the pending civil lawsuit by the SEC against ICN and related parties in the
United States District Court for the Central District of California,  the plea
settling the US Attorney's Office investigation in the United States District
Court for the Central

                                       17
<PAGE>
District of California or the litigation involving the Republic of Serbia, the
Federal Republic of Yugoslavia and the State Health Fund of Serbia relating to
ICN's interest in ICN Yugoslavia; and

      (d) all Losses that result from any Third-Party Claim arising out of the
business or operation of the ICN Business.

      6.3. OTHER LIABILITIES.

      (a) Except as provided in Section 6.4, this Section 6 shall not be
applicable to any Tax-Related Losses, which shall be governed by the Tax Sharing
Agreement.

      (b) This Section 6 shall not be applicable to any Losses relating to,
arising out of, or due to any breach of the provisions of any other contract,
agreement or understanding between ICN or any ICN Affiliate, on the one hand,
and Ribapharm or any Ribapharm Affiliate, on the other hand, which Losses shall
be governed by the terms of such contract, agreement or understanding.

      6.4. PROCEDURE FOR INDEMNIFICATION INVOLVING THIRD-PARTY CLAIMS.

      (a) Notice of Claim. If any Indemnitee receives notice of the assertion of
any Third-Party Claim with respect to which an Indemnifying Party is obligated
under this Agreement to provide indemnification, such Indemnitee shall give such
Indemnifying Party notice thereof (together with a copy of such Third-Party
Claim, process or other legal pleading) promptly after becoming aware of such
Third-Party Claim; provided, however, that the failure of any Indemnitee to give
notice as provided in this Section shall not relieve any Indemnifying Party of
its obligations under this Section 6, except to the extent that such
Indemnifying Party is actually prejudiced by such failure to give notice. Such
notice shall describe such Third-Party Claim in reasonable detail.

      (b) Obligation of Indemnifying Party. An Indemnifying Party, at such
Indemnifying Party's own expense and through counsel chosen by such Indemnifying
Party (which counsel shall be reasonably acceptable to the Indemnitee), may
elect to defend any Third-Party Claim. If an Indemnifying Party elects to defend
a Third-Party Claim, then, within ten Business Days after receiving notice of
such Third-Party Claim (or sooner, if the nature of such Third-Party Claim so
requires), such Indemnifying Party shall notify the Indemnitee of its intent to
do so, and such Indemnitee shall cooperate in the defense of such Third-Party
Claim. Such Indemnifying Party shall pay such Indemnitee's reasonable
out-of-pocket expenses incurred in connection with such cooperation. Such
Indemnifying Party shall keep the Indemnitee reasonably informed as to the
status of the defense of such Third-Party Claim. After notice from an
Indemnifying Party to an Indemnitee of its election to assume the defense of a
Third-Party Claim, such Indemnifying Party shall not be liable to such
Indemnitee under this Section 6 for any legal or other expenses subsequently
incurred by such Indemnitee in connection with the defense thereof other than
those expenses referred to in the preceding sentence; provided, however, that
such Indemnitee shall have the right to employ one law firm as counsel, together
with a separate local law firm in each applicable jurisdiction ("Separate
Counsel"), to represent such Indemnitee in any action or group

                                       18
<PAGE>
of related actions (which firm or firms shall be reasonably acceptable to the
Indemnifying Party) if, in such Indemnitee's reasonable judgment at any time,
either a conflict of interest between such Indemnitee and such Indemnifying
Party exists in respect of such claim, or there may be defenses available to
such Indemnitee which are different from or in addition to those available to
such Indemnifying Party and the representation of both parties by the same
counsel would be inappropriate, and in that event the reasonable fees and
expenses of such Separate Counsel shall be paid by such Indemnifying Party (it
being understood, however, that the Indemnifying Party shall not be liable for
the expenses of more than one Separate Counsel (excluding local counsel) with
respect to any Third-Party Claim (even if against multiple Indemnitees)). If an
Indemnifying Party elects not to defend against a Third-Party Claim, or fails to
notify an Indemnitee of its election as provided in this Section 6.4 within the
period of ten Business Days described above, the Indemnitee may defend,
compromise, and settle such Third-Party Claim and shall be entitled to
indemnification hereunder (to the extent permitted hereunder) on an as incurred
basis; provided, however, that no such Indemnitee may compromise or settle any
such Third-Party Claim without the prior written consent of the Indemnifying
Party, which consent shall not be unreasonably withheld or delayed.
Notwithstanding the foregoing, the Indemnifying Party shall not, without the
prior written consent of the Indemnitee, (i) settle or compromise any
Third-Party Claim or consent to the entry of any judgment which does not include
as an unconditional term thereof the delivery by the claimant or plaintiff to
the Indemnitee of a written release from all liability in respect of such
Third-Party Claim or (ii) settle or compromise any Third-Party Claim in any
manner that would be reasonably likely to have a material adverse effect on the
Indemnitee.

      (c) Joint Defense of Certain Claims. Notwithstanding the provisions of
Section 6.4(b), ICN and Ribapharm shall jointly control the defense of, and
cooperate with each other with respect to defending, any Third-Party Claim with
respect to which each party is claiming that it is entitled to indemnification
under Section 6.1 or 6.2. If either ICN or Ribapharm fails to defend jointly any
such Third-Party Claim, the other party shall solely defend such Third-Party
Claim and the party failing to defend jointly shall use all commercially
reasonable efforts to cooperate with the other party in its defense of such
Third-Party Claim; provided, however, that neither party may compromise or
settle any such Third-Party Claim without the prior written consent of the other
party, which consent shall not be unreasonably withheld or delayed. All costs
and expenses of either party in connection with, and during the course of, the
joint control of the defense of any such Third-Party Claim shall be initially
paid by the party that incurs such costs and expenses. Such costs and expenses
shall be reallocated and reimbursed in accordance with the respective
indemnification obligations of the parties on a periodic basis (but in no event
later than the conclusion of the defense of such Third-Party Claim).

      6.5. PROCEDURE FOR INDEMNIFICATION NOT INVOLVING THIRD-PARTY CLAIMS. If
any Indemnitee desires to assert against an Indemnifying Party any claim for
indemnification under this Section 6 other than a Third-Party Claim (a "Claim"),
the Indemnitee shall deliver to the Indemnifying Party notice of its demand for
satisfaction of such Claim (a "Request"), specifying in reasonable detail the
amount of such Claim and the basis for asserting such Claim. Within 30 days
after the Indemnifying Party has been given a Request, the Indemnifying Party
shall either (i) satisfy the Claim requested to be satisfied in such Request by

                                       19
<PAGE>
delivering to the Indemnitee payment by wire transfer or a certified or bank
cashier's check payable to the Indemnified Party in immediately available funds
in an amount equal to the amount of such Claim, or (ii) notify the Indemnitee
that the Indemnifying Party contests such Claim by delivering to the Indemnitee
a Dispute Notice, stating that the Indemnifying Party objects to such Claim and
specifying in reasonable detail the basis for contesting such Claim. Any dispute
described in clause (ii) of this Section 6.5 shall be subject to the provisions
of Section 7.1.

      6.6. EXCLUSIVE REMEDIES. Except for the right to pursue equitable
remedies, the remedies provided in this Section 6 shall be deemed the sole and
exclusive remedies of the parties with respect to the subject matters of the
indemnification provisions of this Section 6.

7. MISCELLANEOUS.

      7.1. DISPUTE RESOLUTION. Resolution of any and all disputes arising from
or in connection with this Agreement other than the provisions of Section 5.3,
whether based on contract, tort, or otherwise (collectively, "Disputes"), shall
be exclusively governed by and settled in accordance with the provisions of this
Section 7.1. 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 litigation proceedings for the resolution thereof. No Party shall be
entitled to consequential, special, exemplary or punitive damages.

      7.2. AUTHORITY. Each of the parties hereto represents and warrants 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 terms subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and general equity principles. The representations and warranties
contained in this Section 7.2 shall survive the execution and delivery hereof
until the expiration of all applicable statutes of limitations.

      7.3. COMPLETE AGREEMENT. Except as otherwise set forth in this Agreement,
this Agreement and the exhibits hereto shall constitute the entire agreement
between the parties hereto with respect to the subject matter hereof and shall
supersede all prior agreements and understandings, whether written or oral,
between the parties with respect to such subject matter.

      7.4. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California (without giving effect to
the conflict of laws principles thereof) as to all matters, including matters of
validity, construction, effect, performance and remedies.

                                       20
<PAGE>
      7.5. 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:  Gregory Keever, Esq.

      (b)   If to Ribapharm, to:

            Ribapharm Inc.
            3300 Hyland Avenue
            Costa Mesa, CA  92626
            Attention:  Roger D. Loomis, Jr., 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.

      7.6. AMENDMENT AND MODIFICATION. This Agreement may not be amended or
modified in any respect except by a written agreement signed by both of the
parties hereto.

      7.7. 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 with another Person, 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.

      7.8. THIRD PARTY BENEFICIARIES. The Indemnitees and their respective
successors shall be third party beneficiaries of the indemnification provisions
of Section 6, as applicable, and shall be entitled to enforce those provisions
and in connection with such enforcement shall be subject to Section 7.1, in each
such case as fully and to the same extent as if they were parties to this
Agreement. Except as provided in the previous sentence, nothing in this
Agreement, express or implied, is intended to or shall confer upon any Person
any legal or equitable right, benefit or remedy of any nature whatsoever under
or by reason of this Agreement, and no Person (other than as provided in the
previous sentence) shall be deemed a third party beneficiary under or by reason
of this Agreement.

                                       21
<PAGE>
      7.9. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. The Agreement may be
executed by facsimile signature.

      7.10. 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.

      7.11. 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.

      7.12. REMEDIES. Each of ICN and Ribapharm shall be entitled to enforce its
rights under this Agreement specifically, to recover damages and costs
(including reasonable attorneys' fees) caused by any breach of any provision of
this Agreement (including, without limitation, Section 5.3) and to exercise all
other rights existing in its favor. Each of ICN and Ribapharm acknowledges and
agrees that under certain circumstances the breach by ICN or any of its
Affiliates or Ribapharm or any of its Affiliates of a term or provision of this
Agreement will materially and irreparably harm the other party, that money
damages will accordingly not be an adequate remedy for such breach and that the
non-defaulting party, in its sole discretion and in addition to its rights under
this Agreement and any other remedies it may have at law or in equity, may apply
to any court of law or equity of competent jurisdiction (without posting any
bond or deposit) for specific performance and/or other injunctive relief in
order to enforce or prevent any breach of the provisions of this Agreement.

      7.13. PERFORMANCE. Each of the parties hereto shall use all commercially
reasonable efforts to cause to be performed all actions, agreements and
obligations set forth herein to be performed by any Affiliate of such party.

      7.14. REFERENCES; CONSTRUCTION. The section and other headings and
subheadings contained in this Agreement and the exhibits hereto are solely for
the purpose of reference, are not part of the agreement of the parties hereto,
and shall not in any way affect the

                                       22
<PAGE>
meaning or interpretation of this Agreement or any exhibit hereto. All
references to days or months shall be deemed references to calendar days or
months. Unless the context otherwise requires, any reference to a "Section"
"Exhibit" shall be deemed to refer to a section of this Agreement. The words
"hereof," "herein" and "hereunder" and words of similar import referring to this
Agreement refer to this Agreement as a whole and not to any particular provision
of this Agreement. Whenever the words "include," or "including" are used in this
Agreement, unless otherwise specifically provided, they shall be deemed to be
followed by the words "without limitation." This Agreement shall be construed
without regard to any presumption or rule requiring construction or
interpretation against the party drafting or causing the document to be drafted.

7.15 EFFECTIVENESS. This Agreement shall become effective upon the time of
purchase of the Firm Shares, as defined in the Underwriting Agreement, by and
among ICN, Ribapharm and the underwriters named therein relating to the Initial
Public Offering.

8. ROYALTY PAYMENTS

Ribapharm and ICN hereby agree as follows regarding Ribapharm's and ICN's
respective rights to royalties under the Exclusive License and Supply Agreement
between ICN Pharmaceuticals, Inc. and Schering-Plough Ltd., dated July 28, 1995,
as amended (the "Schering-Plough License"):

(a)  ICN will be entitled to the royalty payment pursuant to the Schering-Plough
License for sales of ribavirin in the first quarter of 2002;

(b) Ribapharm and ICN will divide between them on a pro rata basis, based on the
closing date of the Initial Public Offering, the royalty payment pursuant to the
Schering-Plough License for sales of ribavirin in the second quarter of 2002;

(c) Ribapharm will be entitled to all royalty payments pursuant to the
Schering-Plough License Agreement for sales of ribavirin after the second
quarter of 2002;

(d) Ribapharm will be entitled to any royalty payments pursuant to the
Schering-Plough License Agreement withheld by Schering-Plough Ltd. related to
sales under indigent patient marketing programs; and

(e) to the extent that one party hereto receives all or any part of a royalty
payment pursuant to the Schering-Plough License Agreement to which it is not
entitled pursuant to sections (a) through (d) hereof, including any advance
royalty payments received from Schering-Plough Ltd., that party shall promptly
remit the amount that it received but was not entitled to pursuant to sections
(a) through (d) hereof to the other party in immediately available funds.

9. THIRD PARTY DISPUTES RELATING TO RIBAVIRIN. Ribapharm and ICN hereby agree
that as of and from the closing date of the Initial Public Offering until the
Distribution Date, Ribapharm, acting through its board of directors, and ICN
will have joint control over the management and direction of all disputes with
third parties related to Ribapharm's rights to ribavirin, including without
limitation, ICN's existing patent litigation against Geneva Pharmaceuticals,
Inc. and Geneva Pharmaceuticals Technology Corporation and Teva Pharmaceuticals
USA and the dispute with Schering-Plough related to royalty payments on sales
under indigent patient marketing programs pursuant to the Schering-Plough
License. As of and after the Distribution Date, Ribapharm will assume sole
control over the management and direction of all disputes with third parties
related to Ribapharm's rights to ribavirin, including without limitation, ICN's
existing patent litigation against Geneva Pharmaceuticals, Inc. and Geneva
Pharmaceuticals Technology Corporation and Teva Pharmaceuticals USA and the
dispute with Schering-Plough related to royalty payments on sales under indigent
patient marketing programs pursuant to the Schering-Plough License.

                                       23
<PAGE>
      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date and year first written above.

                                        RIBAPHARM INC.

                                        By:
                                           -------------------------------------
                                        Name:
                                        Title:

                                        ICN PHARMACEUTICALS, INC.

                                        By:
                                           -------------------------------------
                                        Name:
                                        Title:

                                       24
<PAGE>
                                                                       EXHIBIT I

                                 [FORM OF NOTE]

                              REVOLVING CREDIT NOTE

                                                          Costa Mesa, California

$___________                                                     _________, 2002

      FOR VALUE RECEIVED, the undersigned, Ribapharm Inc., a Delaware
corporation ("Ribapharm"), hereby unconditionally promises to pay to the order
of ICN Pharmaceuticals, Inc., a Delaware corporation ("ICN"), in lawful money of
the United States of America and in immediately available funds, the principal
amount of ___________ DOLLARS ($__________), or such lesser amount as shall
equal the aggregate unpaid principal amount of all loans made by ICN to
Ribapharm pursuant to Section 2 of the Affiliation Agreement (as hereinafter
defined), on the dates and in the amounts specified in the Affiliation
Agreement. Ribapharm further agrees to pay interest in like money at ICN's
principal office on the unpaid principal amount hereof from time to time
outstanding at the rates and on the dates specified in the Affiliation
Agreement.

      The holder of this note is authorized to endorse on the schedule annexed
hereto and made a part hereof or on a continuation thereof which shall be
attached hereto and made a part hereof the date and amount of each loan of ICN
to Ribapharm pursuant to Section 2 of the Affiliation Agreement and the date and
amount of each payment or prepayment of principal thereof. Each such endorsement
shall constitute prima facie evidence of the accuracy of the information
endorsed. The failure to make any such endorsement (or any error therein) shall
not affect the obligations of Ribapharm in respect of any Loan under the
Affiliation Agreement.

      This note (a) is the note referred to in the Affiliation and Distribution
Agreement dated as of __________ __, 2002 (as amended, restated, supplemented or
otherwise modified from time to time, the "Affiliation Agreement"), by and
between Ribapharm and ICN, (b) is subject to the provisions of the Affiliation
Agreement and (c) is subject to optional and mandatory prepayment in whole or in
part as provided in the Affiliation Agreement.

      Upon the occurrence of any one or more Events of Default, all amounts then
remaining unpaid on this note shall become, or may be declared to be,
immediately due and payable, all as provided in the Affiliation Agreement.

      All parties now and hereafter liable with respect to this note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest, notice of acceleration and intent to accelerate,
and all other notices of any kind.

                                       25
<PAGE>
      Unless otherwise defined herein, terms defined in the Affiliation
Agreement and used herein shall have the meanings given to them in the
Affiliation Agreement.

      THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF CALIFORNIA (WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS
PRINCIPALS THEREOF) AS TO ALL MATTERS, INCLUDING MATTERS OF VALIDITY,
CONSTRUCTION, EFFECT, PERFORMANCE AND REMEDIES.

                                        RIBAPHARM INC.

                                        By:
                                           -------------------------------------

                                        Name:
                                             -----------------------------------

                                        Title:
                                              ----------------------------------

                                       26
<PAGE>
                                Schedule to Note

<TABLE>
<CAPTION>
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    Date Loan        Principal         Amount of         Unpaid         Notation
      Made             Amount       Principal Paid      Principal        Made By
     or Paid          of Loan                            Balance
                                                         of Note
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<S>                  <C>            <C>                 <C>             <C>
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</TABLE>

                                        1

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