S-4

As filed with the Securities and Exchange Commission on February 17, 2004

Registration No. 333-                    

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Valeant Pharmaceuticals International

(Exact name of Registrant as Specified in Its Charter)

Delaware	2834	33-0628076
(State or Other Jurisdiction of Incorporation or Organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

3300 Hyland Avenue

Costa Mesa, California 92626

(714) 545-0100

(Address, Including Zip Code, and Telephone Number,

Including Area Code, of Registrant’s Principal Executive Offices)

(Additional Registrant Listed on Succeeding Page)

Eileen C. Pruette

Executive Vice President

and General Counsel

Valeant Pharmaceuticals International

(Name, Address, Including Zip Code, and Telephone Number,

Including Area Code, of Agent for Service)

Copies to:

William T. Manierre, Esq.

Sheppard Mullin Richter & Hampton LLP

Four Embarcadero Center, 17th Floor

San Francisco, California 94111

     Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective and all other conditions to the exchange offer pursuant to the registration rights agreement described in the enclosed prospectus have been satisfied or waived.

     If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.    o

     If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

     If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

CALCULATION OF REGISTRATION FEE

		Proposed Maximum	Proposed Maximum
Title of Each Class of	Amount to be	Offering	Aggregate	Amount of
Securities to be Registered	Registered	Price Per unit	Offering Price	Registration Fee
7.0% Senior Notes due 2011	$300,000,000	100%(1)	$300,000,000(1)	$38,010

(1)  Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(f)(2) of the Securities Act of 1933, as amended.

     The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

ADDITIONAL REGISTRANT

Ribapharm Inc.

(Exact name of Registrant as Specified in Its Charter)

Delaware	2834	95-4805655
(State or Other Jurisdiction of Incorporation or Organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

3300 Hyland Avenue

Costa Mesa, California 92626

(714) 545-0100

(Address, Including Zip Code, and Telephone Number,

Including Area Code, of Registrant’s Principal Executive Offices)

Eileen C. Pruette

Ribapharm Inc.

3300 Hyland Avenue

Costa Mesa, California 92626

(714) 545-0100

(Name, Address, Including Zip Code, and Telephone Number,

Including Area Code, of Agent for Service)

The information contained in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED FEBRUARY 17, 2004

$300,000,000

(Valeant Pharmaceuticals Logo)

Valeant Pharmaceuticals International

(formerly ICN Pharmaceuticals, Inc.)

Exchange Offer for

7.0% Senior Notes due 2011

         We are offering to exchange an aggregate principal amount of up to $300,000,000 of our new 7.0% Senior Notes due 2011 for a like amount of our old 7.0% Senior Notes due 2011. The form and terms of the new notes will be identical in all material respects to the form and terms of the old notes, except that the new notes:

         •  will have been registered under the Securities Act;

         •  will not bear restrictive legends restricting their transfer under the Securities Act;

         •  will not be entitled to the registration rights that apply to the old notes; and

         •  will not contain provisions relating to liquidated damages in connection with the old notes under circumstances related to the timing of the exchange offer.

         Our wholly owned subsidiary, Ribapharm Inc., is an obligor with respect to the old notes and will be an obligor with respect to the new notes, jointly and severally with us, but will be only for so long as Ribapharm shall have outstanding obligations under the 6 1/2% Convertible Subordinated Notes due 2008, originally issued under an indenture among Valeant, Ribapharm and the trustee. Unless otherwise indicated in this offering circular, “we,” “us” and “our” refer to both Valeant and Ribapharm.

         The exchange offer expires at 5:00 p.m., New York City time, on                    , 2004, unless we extend it.

         The new notes will not be listed on any national securities exchange or approved for quotation through any automated system.

         Each broker-dealer that receives new notes for its own account in exchange for old notes represents that the old notes to be exchanged for the new notes were acquired by it as a result of market-making activities or other trading activities (and not acquired directly from Valeant, any subsidiary of Valeant or any of their affiliates) and acknowledges that it will deliver a prospectus meeting the requirements of the Securities Act of 1933, or the Securities Act, in connection with any resale of the new notes; however, by so acknowledging and by delivering a prospectus, the participating broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. We and Valeant have agreed that, upon receiving prior written notice from a participating broker-dealer, during the period ending on the earlier of (1) 270 days from the effective date of the exchange offer registration statement, subject to extension in limited circumstances, and (2) the date on which participating broker-dealers are no longer required to deliver a prospectus in connection with any resale of new notes, we will use commercially reasonable efforts to keep the exchange offer registration statement effective to the extent necessary to ensure that this prospectus is available for sales of the new notes by participating broker-dealers. See “Plan of Distribution and Selling Restrictions.”

         For a discussion of risk factors that should be considered in connection with an investment in the new notes, see “ Risk Factors” beginning on page 7.

         Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus is February      , 2004.

TABLE OF CONTENTS

EXHIBIT 4.1

EXHIBIT 4.3

EXHIBIT 12

EXHIBIT 15

EXHIBIT 23.1

EXHIBIT 25

EXHIBIT 99.1

EXHIBIT 99.2

EXHIBIT 99.3

EXHIBIT 99.4

TABLE OF CONTENTS

	Page
Summary		1
Risk Factors		7
Special Note Regarding Forward-Looking Statements		19
Use Of Proceeds		22
Ratio of Earnings to Fixed Charges		23
Selected Consolidated Financial and Other Data		24
The Exchange Offer		27
Description of Other Indebtedness		37
Description of The Notes		38
Certain United States Federal Tax Consequences		72
Description of Capital Stock		75
Plan of Distribution and Selling Restrictions		81
Legal Matters		82
Experts		82
Independent Accountants		83
Where You Can Find More Information		83

      You should rely only on the information contained or incorporated or deemed to be incorporated by reference in this prospectus. We have not authorized anyone to provide you with different information. Neither the notes nor any shares of common stock issuable upon conversion of the notes are being offered in any jurisdiction where the offer or sale is not permitted. The information contained in this prospectus speaks only as of the date of this prospectus and the information in the documents incorporated or deemed to be incorporated by reference in this prospectus speaks only as of the respective dates those documents were filed with the Securities and Exchange Commission.

      This prospectus contains summaries of certain provisions contained in some of the documents described herein, but reference is made to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to herein have been filed or incorporated by reference as exhibits to the registration statement of which this prospectus is a part and you may obtain copies of those documents as described below under “Where You Can Find More Information.”

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SUMMARY

      This summary highlights selected information from this prospectus. It does not contain all the information that is important to understanding this offering or the terms of the notes. You should read carefully the entire prospectus and the documents incorporated by reference, including our consolidated financial statements and their related notes. Unless the context otherwise requires in this summary, ”we,” ”our” or ”us” refer to Valeant Pharmaceuticals International and its subsidiaries, including Ribapharm Inc., and ”Ribapharm” refers to our subsidiary Ribapharm Inc.

Valeant Pharmaceuticals International

      We are a global, publicly-traded, research-based specialty pharmaceutical company that discovers, develops, manufactures and markets a broad range of pharmaceutical products. Our products are currently sold in 128 markets around the world, and encompass a broad range of therapeutic areas, with a primary focus upon our three targeted areas: infectious disease, neurology and dermatology. Our research and new product development initiatives focus on innovative treatments for infectious diseases and cancer and are primarily conducted by our wholly-owned subsidiary, Ribapharm. We believe that this research and development capability, in conjunction with our worldwide capacity to commercialize our products, positions us as a leading, fully integrated specialty pharmaceutical company.

      We develop, manufacture and distribute a broad range of prescription and non-prescription pharmaceuticals. Our prescription pharmaceutical products treat, among other things, infectious diseases, diseases of the skin, neuromuscular disorders, cancer, cardiovascular disease, diabetes and psychiatric disorders. Our current product portfolio comprises more than 400 branded products, with over 2,000 stock-keeping units. We market our products globally through a sales force of over 1,250 representatives. Our products are sold globally, through four reportable pharmaceutical segments comprising: North America, Latin America, Europe and Asia, Africa and Australia.

      On February 12, 2004, we entered into an agreement with Amarin Corporation, plc to acquire its U.S.-based subsidiary, Amarin Pharmaceuticals, Inc. and all of its U.S. products. Under the terms of the transaction, we will pay $38.0 million in cash at the closing for the rights to Amarin’s product portfolio, which includes Permax and a primary care portfolio with a broad range of indications. We also acquired in the transaction the rights to Zelapar, a late-stage candidate for the treatment of Parkinson’s disease. Amarin has received an approvable letter from the U.S. Food and Drug Administration (FDA) for Zelapar, subject to the completion of two safety studies, which Amarin will fund and expects to complete in 2004. The agreement calls for Valeant to make additional milestone payments of up to $8 million to Amarin based on the successful completion of the studies and final approval by the FDA of Zelapar. In addition, Valeant will make a milestone payment of $10 million to the developer of Zelapar upon the attainment of specified sales thresholds.

      As of September 30, 2003, we had approximately 5,205 employees. Our principal executive offices are located at 3300 Hyland Avenue, Costa Mesa, California 92626. Our telephone number is (714) 545-0100. Our web site is www.valeant.com. The information contained on our web site is not incorporated by reference in this prospectus.

      We are incorporated under the laws of Delaware. Our name was changed from ICN Pharmaceuticals, Inc. to Valeant Pharmaceuticals International in 2003.

      You can get more information regarding our business by reading our Annual Report on Form 10-K for the fiscal year ended December 31, 2002, our Quarterly Reports on Form 10-Q and 10-Q/A for the quarters ended March 31, 2003, June 30, 2003, and September 30, 2003, and the other reports we file with the SEC. See “Where You Can Find More Information” on page 83.

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The Exchange Offer

      On December 12, 2003, we issued $300,000,000 principal amount of 7% Senior Notes due 2011, the old notes, to which the exchange offer applies, to initial purchasers in reliance on exemptions from, or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws.

The Exchange Offer	We are offering new 7% Senior Notes due 2011, which new notes will be registered under the Securities Act, in exchange for the old notes.
	To exchange your old notes, you must properly tender them and we must accept them. We will exchange all old notes that you validly tender and do not validly withdraw. We will cancel all old notes accepted for exchange and issue registered new notes promptly after the expiration of the exchange offer.
Resale of New Notes	We believe that, if you are not a broker-dealer, you may offer new notes (together with the subsidiary guarantees thereof) for resale, resell or otherwise transfer the new notes (and the related subsidiary guarantees) without complying with the registration and prospectus delivery requirements of the Securities Act if you:
	• are not an “affiliate,” as defined under the Securities Act, of Valeant or Ribapharm;
	• acquired the new notes in the ordinary course of business;
	• are not engaged in, do not intend to engage in and have no arrangement or understanding with any person to participate in a “distribution,” as defined under the Securities Act, of the new notes; and
	• are not acting on behalf of any person who could not truthfully make the foregoing representations.
	Our belief that resales and other transfers of new notes would be permitted without registration or prospectus delivery under the conditions described above is based on interpretations of the SEC given to other, unrelated issuers in transactions similar to the exchange offer. We cannot assure you that the SEC would take the same position with respect to the exchange offer. If any of the above conditions is not satisfied, you may not rely on the applicable interpretations of the staff of the SEC and you must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale or other transaction involving a transfer of the new notes. Failure to so comply may result in liability to you under the Securities Act. We will not be responsible for or indemnify you against any liability you may incur under the Securities Act.
	Notwithstanding the foregoing, any holder who acquired its old notes to be exchanged for new notes in the exchange offer directly from us or any of our affiliates, must acknowledge and agree that it:
	• may not rely on the interpretations of the staff of the SEC described above; and
	• must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a

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	secondary resale transaction and that such a secondary resale transaction must be covered by an effective registration statement containing the selling security holder information required by the securities laws.
	Any broker-dealer that receives new notes for its own account in exchange for old notes may be deemed to be an “underwriter” within the meaning of the Securities Act. Each broker-dealer that receives new notes for its own account in exchange for old notes must represent that the old notes to be exchanged for the new notes were acquired by it as a result of market-making activities or other trading activities (and not acquired directly from the issuer, any subsidiary guarantor or any of their affiliates) and acknowledge that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of the new notes; however, by so acknowledging and by delivering a prospectus, the participating broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. Valeant and Ribapharm have agreed that, upon receiving prior written notice from a participating broker-dealer, during the period ending on the earlier of (1) 270 days from the effective date of the exchange offer registration statement, subject to extension in limited circumstances, and (2) the date on which participating broker-dealers are no longer required to deliver a prospectus in connection with any resale of new notes, they will use commercially reasonable efforts to keep the exchange offer registration statement effective to the extent necessary to ensure that this prospectus is available for sales of the new notes by participating broker-dealers. See “Plan of Distribution and Selling Restrictions.”
Expiration Date	The exchange offer will expire at 5:00 p.m., New York City time, on                     , 2004, unless we extend it.
Withdrawal	You may withdraw your tender of old notes under the exchange offer at any time before the exchange offer expires. Any withdrawal must be in accordance with the procedures described in “The Exchange Offer — Withdrawal Rights.”
Procedures for Tendering Old Notes	Each holder of old notes that wishes to accept the exchange offer must, before the exchange offer expires, either:
	• transmit a properly completed and duly executed letter of transmittal, together with all other documents required by the letter of transmittal, including the old notes, to the exchange agent; or
	• if old notes are tendered in accordance with book-entry procedures, arrange with The Depository Trust Company, or DTC, to cause to be transmitted to the exchange agent an agent’s message indicating, among other things, the holder’s agreement to be bound by the letter of transmittal; or
	• comply with the procedures described below under “—Guaranteed Delivery.”

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	A holder of old notes that tenders old notes in the exchange offer must represent, among other things, that:
	• the holder is not an affiliate of ours;
	• the holder is acquiring the new notes in its ordinary course of business;
	• the holder is not engaged in, does not intend to engage in and has no arrangement or understanding with any person to participate in a distribution of the new notes; and
	• the holder is not acting on behalf of any person who could not truthfully make the foregoing representations.
	Do not send letters of transmittal, certificates representing old notes or other documents to us or DTC. Send these documents only to the exchange agent at the address given in this prospectus and in the letter of transmittal.
Special Procedures for Tenders by Beneficial Owners of Old Notes	If:
	• you beneficially own old notes;
	• those notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee or custodian; and
	• you wish to tender your old notes in the exchange offer,
	you should contact the registered holder as soon as possible and instruct it to tender the old notes on your behalf and comply with the instructions set forth in this prospectus and the letter of transmittal.
Guaranteed Delivery	If you hold old notes in certificated form or if you own old notes in the form of a book-entry interest in a global note deposited with the trustee, as custodian for DTC, and you wish to tender those old notes, but:
	• the certificates for your old notes are not immediately available or all required documents are unlikely to reach the exchange agent before the exchange offer expires; or
	• you cannot complete the procedure for book-entry transfer on time, you may tender your old notes in accordance with the procedures described in “The Exchange Offer — Procedures for Tendering Old Notes — Guaranteed Delivery.”
Consequences of Not Exchanging Old Notes	If you do not tender your old notes or we reject your tender, your old notes will remain outstanding and will continue to be subject to the provisions in the indenture regarding the transfer and exchange of the old notes and the existing restrictions on transfer set forth in the legends on the old notes. Holders of old notes will not be entitled to any further registration rights under the registration rights agreement with the initial purchaser of the old notes, or the registration rights agreement, except under limited circumstances with respect to specific types of holders of old notes.

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	You do not have any appraisal or dissenters’ rights in connection with the exchange offer.
U.S. Tax Considerations	Your exchange of old notes for new notes will not be treated as a taxable exchange for U.S. tax purposes. See “Certain United States Federal Tax Consequences.”
Conditions to the Exchange Offer	The exchange offer is subject to the condition that it not be prohibited by applicable federal law or any SEC policy.
Use of Proceeds	We will not receive any proceeds from the exchange offer. We intend to use a portion of the net proceeds from the offering of the old notes to retire outstanding indebtedness. The balance, if any, will be used for general corporate purposes.
	See “Use of Proceeds.”
Acceptance of Old Notes and Delivery of New Notes	We will accept for exchange any and all old notes properly tendered prior to the expiration of the exchange offer. We will complete the exchange offer and issue the new notes promptly after the expiration of the exchange offer.
Exchange Agent	The Bank of New York is serving as exchange agent for the exchange offer. The address and the facsimile and telephone numbers of the exchange agent are provided in this prospectus under “The Exchange Offer — Exchange Agent” and in the letter of transmittal.

The New Notes

      The form and terms of the new notes will be identical in all material respects to the form and terms of the old notes, except that the new notes:

	• will have been registered under the Securities Act;
	• will not bear restrictive legends restricting their transfer under the Securities Act;
	• will not be entitled to the registration rights that apply to the old notes; and
	• will not contain provisions relating to liquidated damages in connection with the old notes under circumstances related to the timing of the exchange offer.
Issuer	Valeant Pharmaceuticals International
Co-Obligor	Ribapharm Inc., but only so long as it has outstanding obligations under our 6 1/2% Convertible Subordinated Notes due 2008, originally issued under an indenture among Valeant, Ribapharm and the trustee.
Notes Offered	$300,000,000 aggregate principal amount 7.0% senior notes due 2011
Maturity	December 15, 2011.
Interest Payment Dates	June 15 and December 15 of each year, beginning on June 15, 2004.

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Ranking	The notes are senior unsecured obligations. They rank senior in right of payment to any existing and future subordinated indebtedness of ours and, so long as Ribapharm is a co-obligor on the notes, Ribapharm. The notes are effectively subordinated to the outstanding indebtedness and other liabilities of our other subsidiaries and to the outstanding indebtedness of Ribapharm when Ribapharm is no longer a co-obligor on the notes.
Optional Redemption	We may, at our option, redeem some or all of the notes at any time on or after December 15, 2007, at the redemption prices listed under “Description of the Notes — Optional Redemption.” In addition, on or prior to December 15, 2006, we may, at our option, redeem up to 35% of the notes with the proceeds of certain sales of our equity at the redemption price listed under “Description of the Notes — Optional Redemption.” We may make the redemption only if, after the redemption, at least 65% of the aggregate principal amount of the notes issued remains outstanding.
Mandatory Repurchase Offer	If we sell certain assets or experience specific kinds of changes in control, we must offer to repurchase all or a portion of the notes at the prices listed under “Description of the Notes — Repurchase at the Option of Holders.”
Certain Covenants	We will issue the new notes under an indenture with The Bank of New York, which will initially act as trustee on your behalf. The indenture will, among other things, restrict our ability and the ability of our restricted subsidiaries to:
	• incur more debt;
	• pay dividends and make distributions;
	• make certain investments;
	• repurchase stock;
	• create liens;
	• enter into transactions with affiliates;
	• enter into sale leaseback transactions;
	• merge or consolidate; and
	• transfer or sell assets.
	For more details, see “Description of the New Notes — Certain Covenants.”
	When the notes are issued, all our subsidiaries will be restricted subsidiaries, as defined in the indenture, except ICN Yugoslavia DD.
	These covenants will be subject to a number of important exceptions and qualifications as described under “Description of the Notes — Certain Covenants.”
Risk Factors	You should consider carefully all of the information set forth in this offering memorandum and, in particular, you should evaluate the specific factors under “Risk Factors.”

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RISK FACTORS

      Investing in the notes and underlying shares of common stock involves a high degree of risk. You should carefully consider the following factors, in addition to the other information contained in, or incorporated by reference into, this prospectus, in determining whether or not to purchase notes or underlying shares of our common stock.

Risks Relating To Our Business

If we cannot successfully develop or obtain future products, our growth may be delayed.

      Our future growth will depend, in large part, upon our ability to develop or obtain and commercialize new products and new formulations of, or indications for, current products. We are engaged in an active research and development program involving compounds owned by us or licensed from others which we may commercially develop in the future. The process of successfully commercializing products is time consuming, expensive and unpredictable. There can be no assurance that we will be able to develop or acquire new products, obtain regulatory approvals to use these products for proposed or new clinical indications, manufacture our potential products in compliance with regulatory requirements or in commercial volumes, or gain market acceptance for such products. It may be necessary for us to enter into other licensing arrangements, similar to our arrangements with Schering-Plough and F. Hoffman-LaRoche Ltd., or Roche, with other pharmaceutical companies in order to market effectively any new products or new indications for existing products. There can be no assurance that we will be successful in entering into such licensing arrangements on terms favorable to us or at all.

      On November 6, 2003, we announced that we were commencing Phase 3 clinical trials of Viramidine. There can be no assurance that our clinical trials for Viramidine will be successful, that we will be granted approval to market Viramidine for the indication we are seeking or that Viramidine will be a commercially successful product. Additionally, there is the potential for product liability claims from patients participating in the clinical trials in the event a participant is harmed by the product. We currently maintain clinical trial insurance. There is no assurance, however, that such insurance will be sufficient to cover all claims.

Likelihood of imminent introduction of generic products puts ribavirin royalties at risk and may impact our ability to finance research and development activities.

      Royalty revenues earned by Ribapharm under our ribavirin license agreements with Schering-Plough and Roche represent an important source of revenues to us. Schering-Plough markets ribavirin for use in combination with its interferon product under the trade name “Rebetol” as a therapy for the treatment of hepatitis C and Roche markets ribavirin for use in combination with its interferon product under the name “Copegus.” Under the terms of their license agreements, Schering-Plough and Roche each have sole discretion to determine the pricing of ribavirin and the amount and timing of resources devoted to their respective marketing of ribavirin.

      Competition from generic pharmaceutical companies could have a material negative impact on our future royalty revenue. With respect to Schering-Plough, royalties will be affected by the likelihood of reduced sales by Schering-Plough as well as a reduction in the effective royalty rate per the license agreement. With respect to Roche, under the license agreement, introduction of generics in any market will eliminate the obligation of Roche to pay royalties for net sales in that market. Our research and development activities are largely funded by the royalties received from Schering-Plough and Roche.

      Three generic pharmaceutical companies filed Abbreviated New Drug Applications, or ANDAs, with the FDA to market generic forms of ribavirin for use as part of a combination therapy for the treatment of hepatitis C. We commenced litigation to prevent the marketing of a generic form of ribavirin in the U.S. District Court for the Central District of California. In July 2003, the court issued a memorandum of decision and order granting the defendants their motion for summary judgment of non-infringement of the asserted patents in the suit brought by us.

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      This decision did not rule on the motion for summary judgment that the patents are invalid. This ruling permits the FDA to approve these generic companies’ ANDAs, in their discretion.

      Given the current status of filings with the FDA, including pending generic drug applications and a related Citizen Petition submitted by Ribapharm challenging those applications, generic competition in the United States may be imminent. Additionally, our royalty revenues have declined during 2003 due to increasing competition between Schering-Plough and Roche, Schering-Plough’s provision for estimated rebates on its U.S. sales of ribavirin and changes in trade inventory levels as reported to us by Schering-Plough. We expect this revenue trend to continue prior to the introduction of generic competition for the sale of ribavirin in the United States. Although our financial planning has included an expectation that generic competition for ribavirin in the United States would begin even prior to the date of this prospectus, a greater-than-expected erosion of royalties from the United States, or a significant decrease in royalties from expected levels for markets other than the United States, could require us to reduce research and development expenditures and other activities.

      Various parties are opposing Ribapharm’s ribavirin patents in actions before the European Patent Office, and Ribapharm is responding to these oppositions. While data exclusivity for the combination therapies marketed by Schering-Plough and Roche is scheduled to continue in the major markets of the European Union until 2009 for Schering-Plough and 2012 for Roche, regulatory approvals and schemes may change and/or studies regarding ribavirin in combination with interferon may be replicated, allowing earlier introduction of generics into such markets.

If our focus on the development of Viramidine does not result in an approved and commercially successful product, our business could be adversely affected.

      We focus our research and development activities on areas in which we have particular strengths, particularly antivirals. The outcome of any development program is highly uncertain. Although Viramidine appears promising and has advanced to Phase 3 clinical trials, it may yet fail to yield a commercial product. Success in preclinical and early stage clinical trials may not necessarily translate into success in large-scale clinical trials. Further, to be successful in clinical trials, increased investment will be necessary, which will adversely affect short-term profitability.

      In addition, we will need to obtain and maintain regulatory approval in order to market Viramidine. Even if Viramidine appears promising in large-scale Phase 3 clinical trials, regulatory approval may not be achieved. The results of clinical trials are susceptible to varying interpretations that may delay, limit or prevent approval or result in the need for post-marketing studies. In addition, changes in regulatory policy for product approval during the period of product development and FDA review of a new application may cause delays or rejection. Even if we receive regulatory approval, this approval may include limitations on the indications for which we can market the product. There is no guarantee that we will be able to satisfy the needed regulatory requirements, and we may suffer a significant variation from planned revenue as a result.

As we develop and commercialize new products, we will have to incur a sizeable amount of research and development expenses to advance such products through the clinical trial and regulatory approval process. Such expenditures may have the effect of causing our earnings and cash flows to decline.

      We currently are in clinical trials with two products, Viramidine and Hepavir B. On November 6, 2003, we announced that we will initiate Phase 3 trials of Viramidine. These clinical trials will require significant research and development expenditures. We expect that research and development expenses will increase in the fourth quarter of 2003 and in 2004, as compared to research and development expenses during the first nine months of 2003, as we initiate Phase 3 studies of Viramidine and progress continues with the clinical trials of Hepavir B. The increased amount of research and development expenses will negatively impact our earnings and cash flows.

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Third parties may be able to sell generic forms of our products or block our sales of our products if our intellectual property rights or data exclusivity rights do not sufficiently protect us; patent rights of third parties may also be asserted against us.

      Our success depends in part on our ability to obtain and maintain meaningful exclusivity protection for our products and product candidates throughout the world via patent protection and/or data exclusivity protection. The patent positions of pharmaceutical, biopharmaceutical and biotechnology companies can be highly uncertain and involve complex legal and factual questions. We will be able to protect our products from generic substitution by third parties only to the extent that our technologies are covered by valid and enforceable patents, effectively maintained as trade secrets or are protected by data exclusivity. However, our currently pending or future patent applications may not issue as patents. Any patent issued may be challenged, invalidated, held unenforceable or circumvented. Furthermore, our patents may not be sufficiently broad to prevent third parties from producing generic substitutes for our products. Lastly, data exclusivity schemes vary from country to country and may be limited or eliminated as governments seek to reduce pharmaceutical costs by increasing the speed and ease of approval of generic products.

      In order to protect or enforce patent and/or data exclusivity rights, we may initiate patent litigation against third parties, and we may be similarly sued by others. We may also become subject to interference proceedings conducted in the patent and trademark offices of various countries to determine the priority of inventions. The defense and prosecution, if necessary, of intellectual property and data exclusivity actions are costly and divert technical and management personnel from their normal responsibilities. We may not prevail in any of these suits. An adverse determination of any litigation or defense proceedings, resulting in a finding of non-infringement or invalidity of our patents, or a lack of protection via data exclusivity, may allow entry of generic substitutes for our products.

      Furthermore, because of the substantial amount of discovery required in connection with such litigation, there is a risk that some of our confidential information could be compromised by disclosure during such litigation. In addition, during the course of this kind of litigation, there could be public announcements of the results of hearings, motions or other interim proceedings or developments in the litigation. If securities analysts or investors perceive these results to be negative, it could have a substantial negative effect on the trading price of our securities.

      Ribapharm’s patents in the United States are the subject of litigation, and the most recent ruling by the court in the ribavirin-related litigation with generic drug companies was not in our favor. See “Likelihood of imminent introduction of generic products puts ribavirin royalties at risk and may impact our ability to finance research and development activities,” above.

      Ribapharm has limited patent rights in selected countries of the European Union, Switzerland and Japan relating to the antiviral use of ribavirin. These patents are currently scheduled to expire by 2005, although Ribapharm is seeking to extend these patents until 2010. Ribapharm may not be able to have these patents extended.

      The existence of a patent will not necessarily protect us from competition. Competitors may successfully challenge our patents, produce similar drugs that do not infringe our patents or produce drugs in countries that do not respect our patents.

      No patent can protect its holder from a claim of infringement of another patent. Therefore, our patent position cannot and does not provide an assurance that the manufacture, sale or use of products patented by us could not infringe a patent right of another.

      While we know of no actual or threatened claim of infringement that would be material to us, there can be no assurance that such a claim will not be asserted. If such a claim is asserted, there can be no assurance that the resolution of the claim would permit us to continue producing the relevant product on commercially reasonable terms.

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Obtaining necessary government approvals is time consuming and not assured.

      FDA approval must be obtained in the United States and approval must be obtained from comparable agencies in other countries prior to marketing or manufacturing new pharmaceutical products for use by humans. Obtaining FDA approval for new products and manufacturing processes can take a number of years and involves the expenditure of substantial resources. Numerous requirements must be satisfied, including preliminary testing programs on animals and subsequent clinical testing programs on humans, to establish product safety and efficacy. No assurance can be given that we will obtain approval in the United States, or any other country, of any application we may submit for the commercial sale of a new or existing drug or compound. Nor can any assurance be given that if such approval is secured, the approved labeling will not have significant labeling limitations that could affect profitability, or that those drugs or compounds will be commercially successful.

      The FDA and other regulatory agencies in other countries also periodically inspect manufacturing facilities both in the United States and abroad. Failure to comply with applicable regulatory requirements can result in, among other things, warning letters, sanctions, fines, delays or suspensions of approvals, seizures or recalls of products, operating restrictions, manufacturing interruptions, costly corrective actions, injunctions, adverse publicity against us and our products, refusal to renew marketing applications, and criminal prosecutions. Furthermore, changes in existing regulations or adoption of new regulations could prevent or delay us from obtaining future regulatory approvals or jeopardize existing approvals.

Difficulties with acquisitions could materially impact our future growth.

      We intend to pursue a strategy of targeted expansion through the acquisition of compatible businesses and product lines and the formation of strategic alliances, joint ventures and other business combinations. There can be no assurance that we will successfully complete or finance any future acquisition or investment or that any acquisitions that we do complete will be completed at prices or on terms that prove to be advantageous to us. The success or failure in integrating the operations of companies that we have acquired or may acquire in the future may have a material impact on our future growth and success.

If competitors develop vaccines or more effective or less costly drugs for our target indications, our business could be seriously harmed.

      The biotechnology and pharmaceutical industries are intensely competitive and subject to rapid and significant technological change. Ribavirin and many of the drugs that we are attempting to discover will be competing with new and existing therapies. Many companies in the United States and abroad are pursuing the development of pharmaceuticals that target the same diseases and conditions that we are targeting. For example, in December 2002, Roche received approval to sell Copegus, its version of ribavirin. In addition, Human Genome Sciences, Inc. submitted an investigational new drug application with the FDA in October 2000 to initiate Phase 1 human clinical trials of Albuferon for treatment of hepatitis C. If Albuferon or other therapies that do not incorporate the use of our products prove to be a more effective treatment for hepatitis C than the combination therapy involving ribavirin, then our royalty revenues from ribavirin could significantly decrease. In addition, there are institutions engaged in research on the development of a vaccine to prevent hepatitis C. The availability of such a vaccine could have a material adverse effect on our revenues from sales of products treating hepatitis C.

      Many of our competitors, particularly large pharmaceutical companies, have substantially greater financial, technical and human resources than we do. We believe that many of our competitors spend significantly more on research and development related activities than we do. Others may succeed in developing products that are more effective than those currently marketed or proposed for development by us. Progress by other researchers in areas similar to those being explored by us may result in further competitive challenges. In addition, academic institutions, government agencies, and other public and private organizations conducting research may seek patent protection with respect to potentially competitive products. They may also establish exclusive collaborative or licensing relationships with our competitors.

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      Competing therapies in development may include:

•  Infergen being developed by Amgen, Inc. and Intermune;

•  Omega interferon being developed by BioMedicines;

•  Thymosin alfa being developed by SciClone Pharmaceuticals, Inc.;

•  Albuferon being developed by Human Genome Sciences, Inc.; and

•  Protease inhibitors being developed by Boehringer Ingelheim, Eli Lilly and Company, Vertex Pharmaceuticals Incorporated, Viropharma Incorporated, Wyeth and Gilead Sciences, Inc.

      Other companies that engage in research activities similar to our and Ribapharm’s research activities include Abbott Laboratories, Pfizer, Inc., GlaxoSmithKline plc, Merck & Co., Inc. and Novartis AG.

If our products are alleged to be harmful, we may not be able to sell them and we may be subject to product liability claims not covered by insurance.

      The nature of our business exposes us to potential liability risks inherent in the testing, manufacturing and marketing of pharmaceutical products. Using our drug candidates in clinical trials may expose us to product liability claims. These risks will expand with respect to drugs, if any, that receive regulatory approval for commercial sale. Even if a drug were approved for commercial use by an appropriate governmental agency, there can be no assurance that users will not claim that effects other than those intended may result from our products. While to date no material adverse claim for personal injury resulting from allegedly defective products, including ribavirin, has been successfully maintained against us, a substantial claim, if successful, could have a material negative impact on us.

      In the event that anyone alleges that any of our products are harmful, we may experience reduced consumer demand for our products or our products may be recalled from the market. In addition, we may be forced to defend lawsuits and, if unsuccessful, to pay a substantial amount in damages. We do not currently have insurance against product liability risks for commercially developed products. Insurance is expensive and, if we seek such insurance in the future, it may not be available on acceptable terms. Even if obtained, insurance may not fully protect us against potential product liability claims.

We are involved in various legal proceedings that could adversely affect us.

      We are involved in several legal proceedings, including the following matters.

Securities Class Actions

      Since July 25, 2002, multiple class actions have been filed in the United States District Courts for the Eastern District of New York, the District of New Jersey and the Central District of California against us and certain of our former executive officers. The lawsuits allege that the defendants violated Sections 10(b) and 20(a) of the Exchange Act, and Rule 10b-5 promulgated thereunder, by issuing false and misleading financial results to the market during different class periods ranging from May 3, 2001 to July 10, 2002, thereby artificially inflating the price of our stock. The lawsuits generally claim that the defendants improperly inflated our sales volume and revenues through excess shipment of products to our distributors and improper recognition of revenue from certain royalty payments. The plaintiffs generally seek to recover compensatory damages, including interest. While we intend to defend this matter vigorously, an adverse result could have a material adverse effect on us.

      On May 9, 2003, a bondholder filed a class action lawsuit against us and some of our current and former directors and former executive officers. The lawsuit alleges that the defendants violated Sections 11 and 15 of the Securities Act by making false and misleading statements in connection with the offering of 6 1/2% Convertible Subordinated Notes due 2008. We have filed a motion to dismiss the complaint in this action. While we intend to defend this matter vigorously, an adverse result could have a material adverse effect on us.

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              Settlement with the Securities and Exchange Commission

      We are subject to the provisions of a settlement agreement with the Securities and Exchange Commission, which arose from a civil complaint brought against us by the Commission in 1999. We reached a settlement of the matter which was embodied in court orders entered in 2002. The material terms of the settlement with the Commission are as follows: we, without admitting or denying liability, consented to the entry of a consent judgment permanently enjoining us from violating Section 10(b) of the Exchange Act, and Rule 10b-5, promulgated thereunder. We paid a civil penalty in the amount of $1,000,000. We also consented to various corporate governance undertakings regarding FDA-related press releases. Because the settlement documents explicitly acknowledged that we incurred a “change of control” as of May 29, 2002, we can make an application for termination of the undertakings (upon a showing of “good cause”) 18 months after entry of the judgment, that is, May 2004. As a result of the settlement, we cannot take advantage of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and, therefore, may be hindered in the defense of any future allegations.

Export Control Matters

      In April 2003, we submitted a voluntary disclosure regarding potential violations of Cuban Asset Control Regulations to the Department of Treasury’s Office of Foreign Assets Controls, or OFAC. The subject transactions involved shipments to Cuba over the last five years of foreign-origin pharmaceutical products, specifically vitamins, antibiotics and other medicines, by our Mexican and Panamanian subsidiaries. We believe the sale of these pharmaceutical products would have been licensed had we and our non-U.S. subsidiaries recognized the need for and sought such licenses. We and our non-U.S. subsidiaries were granted a license by OFAC to engage in these transactions for the next one-year period (through mid-October 2004).

      In the course of our ongoing investigation into this matter, we discovered additional business activity with Cuba by our Mexican and Panamanian subsidiaries, including the purchase of Cuban-origin medical products from a Cuban company and certain financial transactions. Consequently, we updated our voluntary disclosure with OFAC on August 4, 2003. As of this writing, the voluntary disclosure is in the Civil Penalties Division of OFAC, which has a substantial backlog of similar cases.

Our flexibility in maximizing commercialization opportunities for our compounds may be limited by our obligations to Schering-Plough.

      In November 2000, we entered into an agreement that provides Schering-Plough with an option to acquire the rights to up to three of our products that they designate at an early stage of product development and a right for first/last refusal to license various compounds we may develop and elect to license to others. Viramidine was not subject to the option of Schering-Plough, but it would be subject to their right of first/last refusal if we elected to license it to a third party. The interest of potential collaborators in obtaining rights to our compounds or the terms of any agreements we ultimately enter into for these rights may be impacted by our agreement with Schering-Plough. A commercialization partner other than Schering-Plough might have otherwise been preferable due to that potential partner’s strength in a given disease area or geographic region or for other reasons.

We are subject to uncertainty related to health care reform measures and reimbursement policies.

      The levels at which government authorities, private health insurers, HMOs and other organizations reimburse the costs of drugs and treatments related to those drugs will have an effect on the successful commercialization of our drug candidates. We cannot be sure that reimbursement in the United States or elsewhere will be available for any drugs we may develop or, if already available, will not be decreased in the future. Also, we cannot be sure that reimbursement amounts will not reduce the demand for, or the price of, our drugs. If reimbursement is not available or is available only to limited levels, we may not be able to obtain a satisfactory financial return on the manufacture and commercialization of any future drugs. In addition, as a result of the trend towards managed health care in the United States, as well as legislative proposals to reduce government insurance programs, third party payors are increasingly attempting to contain health care costs by

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limiting both coverage and the level of reimbursement of new drug products. Consequently, significant uncertainty exists as to the reimbursement status of newly approved health care products. Third party payors may not establish and maintain price levels sufficient for us to realize an appropriate return on our investment in product development.

If our nucleoside analog library is destroyed because of an earthquake or other disaster, our research and development program may be seriously harmed.

      The laboratory books and the compounds that comprise our nucleoside analog library are all located at our headquarters in Costa Mesa, California, near areas where earthquakes have occurred in the past.

      There are no duplicate copies off-premises and there are no backup copies of the product candidates we are currently developing. No duplicate copies of our nucleoside analog library exist because making copies would be prohibitively expensive and the library has not been moved off-site because our scientific staff is currently in the process of screening it. Our ability to develop potential product candidates from our nucleoside analog library would be significantly impaired if these records were destroyed in an earthquake or other disaster. Any insurance we maintain may not be adequate to cover our losses.

Dependence on key personnel leaves us vulnerable to a negative impact if they leave.

      We believe that our continued success will depend to a significant extent upon the efforts and abilities of the key members of management. The loss of their services could have a negative impact on us.

      In addition, Ribapharm depends upon the principal members of its scientific staff. Ribapharm’s success depends upon its ability to attract, train, motivate and retain qualified scientific personnel. Qualified personnel are in great demand throughout the biotechnology and pharmaceutical industries. We may not be able to attract additional personnel or retain existing employees.

Our third party manufacturers’ failure to comply with FDA regulations could cause interruption of the manufacture of our products.

      Our manufacturers are required to adhere to regulations enforced by the FDA and similar regulatory agencies in other countries. Our dependence upon others to manufacture our products may adversely affect our profit margins and our ability to develop and commercialize products on a timely and competitive basis. Delays or difficulties with contract manufacturers in producing, packaging or distributing our products could adversely affect the sales of our current products or introduction of other products.

      Schering-Plough manufactures and sells ribavirin under license from us. In February 2001, Schering-Plough announced that the FDA has been conducting inspections of Schering-Plough’s manufacturing facility in Las Piedras, Puerto Rico that manufactures ribavirin, and has issued reports citing deficiencies concerning compliance with current Good Manufacturing Practices, primarily relating to production processes, controls and procedures. In June 2001, Schering-Plough announced that FDA inspections at this and one other Schering-Plough facility in May and June 2001 cited continuing and additional deficiencies in manufacturing practices. In May 2002, Schering-Plough signed a consent decree of permanent injunction with the FDA, agreeing to measures to assure that the drug products manufactured at their Puerto Rico plant are made in compliance with FDA’s current good manufacturing practice regulations. While Schering-Plough has advised us that the deficiencies were not specifically applicable to the production of ribavirin, the Consent Decree covers the facility producing ribavirin. Schering-Plough’s ability to manufacture and ship ribavirin could be affected by temporary interruption of some production lines to install system upgrades and further enhance compliance, and other technical production and equipment qualification issues.

      If the FDA is not satisfied with Schering-Plough’s compliance under the Consent Decree, the FDA could take further regulatory actions against Schering-Plough, including the seizure of products, an injunction against further manufacture, a product recall or other actions that could interrupt production of ribavirin. Interruption of ribavirin production for a sustained period of time could materially reduce our royalty receipts.

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Our business, financial condition and results of operations are subject to risks arising from the international scope of our operations.

      We conduct a significant portion of our business outside the United States. Approximately 54.4% and 63.1% of our revenue was generated outside the United States during the year ended December 31, 2002, and the nine months ended September 30, 2003, respectively. We sell our pharmaceutical products in 128 countries around the world and employ approximately 4,740 individuals in countries other than the United States. The international scope of our operations may lead to volatile financial results and difficulties in managing our operations because of, but not limited to, the following:

•  difficulties and costs of staffing, severance and benefit payments and managing international operations;

•  exchange controls, currency restrictions and exchange rate fluctuations;

•  unexpected changes in regulatory requirements;

•  the burden of complying with multiple and potentially conflicting laws;

•  the geographic, time zone, language and cultural differences between personnel in different areas of the world;

•  greater difficulty in collecting accounts receivables in and moving cash out of certain geographic regions;

•  the need for a significant amount of available cash from operations to fund our business in a number of geographic and economically diverse locations; and

•  political, social and economic instability in emerging markets in which we currently operate.

Many of our key processes, opportunities and expenses are a function of national and/or local government regulation. Significant changes in regulations could have a material adverse impact on our business.

      The process by which pharmaceutical products are approved is lengthy and highly regulated. We have developed expertise in managing this process in the many markets around the world. Our multi-year clinical trials programs are planned and executed to conform to these regulations, and once begun, can be difficult and expensive to change should the regulations regarding approval of pharmaceutical products significantly change.

      In addition, we depend on patent law and data exclusivity to keep generic products from reaching the market before we have adequately recouped our investment in the discovery and development of our products. In assessing whether we will invest in any development program, or license a product from a third party, we assess the likelihood of patent and/or data exclusivity under the laws and regulations then in effect. If those schemes significantly change in a large market, or across many smaller markets, our ability to protect our investment may be adversely affected.

      Appropriate tax planning requires that we consider the current and prevailing national and local tax laws and regulations, as well as international tax treaties and arrangements that we enter into with various government authorities. Changes in national/local tax regulations, or changes in political situations may limit or eliminate the effects of our tax planning.

Due to the large portion of our business conducted outside the United States, we have significant foreign currency risk.

      We sell products in many countries that are susceptible to significant foreign currency risk. In some of these markets we sell products for U.S. Dollars. While this eliminates our direct currency risk in such markets, it increases our credit risk because if a local currency is devalued significantly, it becomes more expensive for customers in that market to purchase our products in United States Dollars. While we currently do not enter into third party hedges to protect against foreign currency exposure, we continue to evaluate the possibility of entering into arrangements which would result in additional expenditures.

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We are subject to price control restrictions on our pharmaceutical products in the majority of countries in which we operate.

      There is a risk that other jurisdictions may enact price control restrictions, and that the restrictions that currently exist may be increased. Our future sales and gross profit could be materially affected if we are unable to obtain appropriate price increases.

Our research and development activities involve the controlled use of potentially harmful biological materials as well as hazardous materials, chemicals and various radioactive compounds.

      We cannot completely eliminate the risk of accidental contamination or injury from the use, storage, handling or disposal of these materials. In the event of contamination or injury, we could be held liable for damages that result. Any liability could exceed our resources. We are subject to federal, state and local laws and regulations governing the use, storage, handling and disposal of these materials and specified waste products. The cost of compliance with, or any potential violation of, these laws and regulations could be significant. Any insurance we maintain may not be adequate to cover our losses.

Our stockholder rights plan and anti-takeover provisions of our charter documents could provide our board of directors with the ability to delay or prevent a change in control of us.

      Our stockholder rights plan, provisions of our certificate of incorporation and provisions of the Delaware General Corporation Law could provide our board of directors with the ability to deter hostile takeovers or delay, deter or prevent a change in control of us, including transactions in which stockholders might otherwise receive a premium for their shares over then current market prices.

Risks Relating to the Notes

Our subsidiaries’ creditors will get paid before you will get paid.

      We operate our businesses in part through our subsidiaries. Accordingly, we are dependent upon the cash flows of, and receipt of dividends and advances from, or repayments of advances by, our subsidiaries in order to meet our debt obligations, including the obligations under the notes. Our subsidiaries are separate and distinct legal entities and (other than Ribapharm, so long as Ribapharm is a co-obligor on the notes) have no obligation, contingent or otherwise, to pay any amounts due pursuant to the notes or to make any funds available therefor, whether by dividends, loans or other payments, and do not guarantee the payment of interest, premium, if any, or principal on the notes. Any of our rights to receive any assets of any subsidiaries upon any liquidation, dissolution, winding up, receivership, reorganization, assignment for the benefit of creditors, marshaling of assets and liabilities or any bankruptcy, insolvency or similar proceedings of us (and the consequent right of the holders of the notes to participate in the distribution of, or to realize proceeds from, those assets other than the assets of Ribapharm so long as Ribapharm is the co-obligor on the notes) will be effectively subordinated to the claims of any such subsidiary’s creditors (including trade creditors and holders of debt issued by such subsidiary). As a result, upon any distribution to the creditors of our subsidiaries in a bankruptcy, liquidation or reorganization or similar proceeding relating to our subsidiaries (other than Ribapharm so long as Ribapharm is the co-obligor on the notes) or their property, the holders of debt of our subsidiaries (other than Ribapharm, so long as Ribapharm is the co-obligor on the notes) will be entitled to be paid in full and in cash before any payment may be made with respect to these notes. Assuming this offering closed on September 30, 2003, these notes would have been effectively junior to $46.3 million of indebtedness including trade payables of our subsidiaries (excluding Ribapharm).

      As of September 30, 2003, Ribapharm had $417,000 of indebtedness outstanding, excluding Ribapharm’s indebtedness on the 6 1/2% Convertible Subordinated Notes due 2008 which are both our and Ribapharm’s obligations. Ribapharm will cease to be an obligor on the notes when the 6 1/2% Convertible Subordinated Notes due 2008 are no longer obligations of Ribapharm. After that occurs, the notes will be effectively subordinated to all the indebtedness and liabilities of Ribapharm as well, including its trade payables.

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Our level of indebtedness could limit cash flow available for our operations and could adversely affect our ability to service our respective debt or obtain additional financing, if necessary.

      As of September 30, 2003, on a pro forma basis after giving effect to the completion of this offering and the offering of the 3.0% Convertible Subordinated Notes due 2010 and the 4.0% Convertible Subordinated Notes due 2013, and the private repurchase, on November 24, 2003, of approximately $139.6 million of the 6 1/2% Convertible Subordinated Notes due 2008, our total indebtedness would have been approximately $1.1 billion. Our level of indebtedness could restrict our operations and make it more difficult for us to satisfy our obligations under the notes. Among other things, our substantial indebtedness may:

•  limit our ability to obtain additional financing for working capital, capital expenditures, acquisitions and general corporate purposes;

•  require us to dedicate all or a substantial portion of our respective cash flows to service our respective debt, which will reduce funds available for other business purposes, such as capital expenditures or acquisitions;

•  limit our flexibility in planning for or reacting to changes in the markets in which we compete;

•  place us at a competitive disadvantage relative to our competitors with less indebtedness;

•  render us more vulnerable to general adverse economic and industry conditions; and

•  make it more difficult for us to satisfy our financial obligations, including those relating to the notes.

      In addition, the indenture will contain restrictive covenants that will limit our ability to engage in activities that may be in our long-term best interests. Our failure to comply with those covenants could result in an event of default which, if not cured, could result in the acceleration of all of our debts.

Despite current indebtedness levels, we and our subsidiaries, including Ribapharm, may still be able to incur substantially more debt. This could further exacerbate the risks associated with our and Ribapharm’s substantial leverage.

      We and our subsidiaries, including Ribapharm, may be able to incur substantial additional indebtedness in the future. The terms of the indenture do not fully prohibit us or our subsidiaries, including Ribapharm, from doing so. If new debt is added to our and our subsidiaries’ current debt levels, the related risks that we and they now face could intensify.

Our ability to service our debt and meet our cash requirements depends on many factors, some of which are beyond our control.

      Although there can be no assurances, we believe that the level of borrowings available to us, combined with cash provided by our operations, will be sufficient to provide for our cash requirements for the foreseeable future. However, our ability to satisfy our obligations will depend on our future operating performance and financial results, which will be subject, in part, to factors beyond our control, including interest rates and general economic, financial and business conditions. Certain of our subsidiaries may become unrestricted subsidiaries under the indenture, in which case we may not have access to the cash flows of these subsidiaries which will not be subject to the restrictive covenants under the indenture. If we are unable to generate sufficient cash flow to service our debt, we may be required to:

•  refinance all or a portion of our debt, including the notes;

•  obtain additional financing;

•  sell some of our assets or operations;

•  reduce research and development expenditures;

•  reduce or delay capital expenditures and acquisitions; or

•  revise or delay our strategic plans.

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      If we are required to take any of these actions, it could have a material adverse effect on our business, financial condition and results of operations. In addition, we cannot assure you that we would be able to take any of these actions, that these actions would enable us to continue to satisfy our capital requirements or that these actions would be permitted under the terms of the indenture.

The covenants in the indenture governing the notes impose restrictions that limit our ability and the ability of most of our subsidiaries, including Ribapharm, to take certain actions.

      The covenants in the indenture restrict our ability and the ability of our restricted subsidiaries to, among other things:

•  incur more debt;

•  pay dividends and make distributions;

•  make certain investments;

•  repurchase stock;

•  create liens;

•  enter into transactions with affiliates;

•  enter into sale leaseback transactions;

•  merge or consolidate; and

•  transfer or sell assets.

      If we are unable to meet the terms of our financial covenants, or if we break any of these covenants, a default could occur under the indenture. A default could result in the acceleration of our outstanding indebtedness and cause our debt to become immediately due and payable. If acceleration occurs, we would not be able to repay our debt and it is unlikely that we would be able to borrow sufficient funds to refinance our debt. Even if new financing is made available to us, it may not be on terms acceptable to us.

The notes are unsecured and, therefore, are effectively subordinated to any of our or Ribapharm’s secured debt.

      The notes are not secured by any of our assets or those of our subsidiaries. In addition, except with regard to Ribapharm for so long as it is a co-obligor on the notes, the notes are not guaranteed by our subsidiaries. As a result, the notes will be effectively subordinated to any secured debt that we or Ribapharm may incur. In any liquidation, dissolution, bankruptcy or other similar proceeding, the holders of our or Ribapharm’s secured debt may assert rights against the secured assets in order to receive full payment of their debt before the assets may be used to pay the holders of the notes.

We or Ribapharm may not be able to purchase the notes upon a change in control.

      Upon the occurrence of certain specific kinds of change in control events, we and Ribapharm will be required to offer to repurchase all outstanding notes at a price equal to 101% of their principal amount plus accrued and unpaid interest, including interest on any unpaid interest, compounded semi-annually, if any, to but not including the date of repurchase. See “Description of the Notes — Purchase of Notes at Your Option Upon a Change in Control.” It is possible that neither we nor Ribapharm will have sufficient funds at the time of a change in control to make any required repurchase of notes. If we and Ribapharm are required to make a change in control offer, there can be no assurance that we or Ribapharm will be able to obtain all required consents from the holders of our and Ribapharm’s senior debt to allow repurchase of the notes. If we or Ribapharm fail to repurchase the notes when required following certain change in control events, we and Ribapharm will be in default under the indenture. In addition, we and Ribapharm have, and may in the future incur other indebtedness with similar change in control provisions permitting our and Ribapharm’s other

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creditors to accelerate or to require us or Ribapharm to purchase our respective indebtedness upon the occurrence of similar events or on some specific dates.

Risks Related to the Exchange Offer

Any outstanding old notes after the consummation of the exchange offer will continue to be subject to existing transfer restrictions, and the holders of old notes after the consummation of the exchange offer may not be able to sell their old notes.

      We did not register the old notes under the Securities Act or any state securities laws, nor do we intend to do so after the exchange offer. As a result, the old notes may only be transferred in limited circumstances under the securities laws. If you do not exchange your old notes in the exchange offer, you will lose your right to have the old notes registered under the Securities Act, subject to certain limitations. If you continue to hold old notes after the exchange offer, you may be unable to sell the old notes. Old notes that are not tendered or are tendered but not accepted will, following the exchange offer, continue to be subject to existing transfer restrictions.

Lack of an active market for the new notes may adversely affect the liquidity and market price of the new notes.

      While the old notes are presently eligible for trading in the PORTAL® Market, there is no existing market for the new notes. We do not know if an active public market for the new notes will develop or, if developed, will continue. If an active public market does not develop or is not maintained, the market price and liquidity of the new notes may be adversely affected. We cannot make any assurances regarding the liquidity of the market for the new notes, the ability of holders to sell their new notes or the price at which holders may sell their new notes. In addition, the liquidity and the market price of the notes may be adversely affected by changes in the overall market for securities similar to the notes, by changes in our business, financial condition or results of operations and by changes in conditions in our industry.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

      Some of the statements contained in this prospectus, including the documents incorporated herein by reference, are forward-looking statements, including but not limited to those specifically identified as such, that involve risks and uncertainties. The statements contained herein that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, including statements regarding our expectations, beliefs, intentions or strategies regarding the future. All forward-looking statements included in this prospectus are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. Examples of forward-looking statements include statements regarding, among other matters, our strategic review, our acquisition strategy, our repositioning plans, our expectations regarding sales of products by the North America pharmaceutical segment, expectations regarding research and development costs and other factors affecting our financial condition or results of operations. In some cases, forward-looking statements may be identified by terminology such as “may,” “will,” “intends,” “should,” “would,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of those terms or comparable terminology. Similarly, statements that describe our plans, strategies, intentions, expectations, objectives, goals or prospects are forward-looking. The forward-looking statements in this and other reports generally assume a stable economic climate in the United States and other countries in which we operate and assumes that losses will not result from any of the risks to which we are subject including the following:

•  A substantial portion of our revenues are royalties generated from sales of ribavirin by our licensees. The launch of generic versions of ribavirin in the United States is expected soon. Additionally, there is the potential for other of our products to face generic competition. Sales of generic versions of our products may reduce future revenues, and may impact our ability to finance future research and development activities.

•  The future growth of our business is based upon the development and approval of new products, including Viramidine. The process of developing new drugs has an inherent risk of failure. Although certain of our research compounds show promise at their current stages of development, we may fail to commercialize them for various reasons. For example, they may turn out to be ineffective or unsafe in clinical or pre-clinical testing; their patent position may become compromised; other therapies may prove more safe or effective; or the prevalence of the disease for which they are being developed may decrease. Accordingly, our inability to successfully develop our products may negatively impact future revenues.

•  We will be able to protect our products from generic substitution by third parties only to the extent that our technologies are covered by valid and enforceable patents, are effectively maintained as trade secrets or are protected by data exclusivity. However, our currently pending or future patent applications may not issue as patents. Any patent issued to us may be challenged, invalidated, held unenforceable or circumvented. Furthermore, our patents may not be sufficiently broad to prevent third parties’ competing products.

•  The scope of protection afforded by a patent can be highly uncertain. A pending claim or a result unfavorable to us in a patent dispute may preclude development or commercialization of products or impact sales of existing products, and result in payment of monetary damages. In addition, third parties may assert infringement claims against us, prohibiting the further sale of a product or increasing costs by requiring that we pay for a license.

•  Uncertainties and delays inherent in the drug approval process in the United States and other countries can preclude or delay development and commercialization of our products.

•  Our current business plan includes expansion through acquisitions in addition to the development of new products. If we are unable to successfully execute on our expansion plans, to find attractive acquisition candidates at appropriate prices, or to integrate successfully any acquired companies or products, the growth of our business will be impeded.

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•  The pharmaceutical industry is subject to substantial government regulation, including the approval of new pharmaceutical products, labeling, advertising and, in some countries, pricing.

•  We sell products in many countries that are susceptible to significant foreign currency risk. In some of these markets we sell products for U.S. Dollars. While this eliminates our direct currency risk in such markets, it increases our credit risk because if a local currency is devalued significantly it becomes more expensive for customers in that market to purchase our products in U.S. Dollars. While we currently do not enter into third party hedges to protect against foreign currency exposure, we continue to evaluate the possibility of entering into arrangements which would result in additional expenditures.

•  We and our competitors are always striving to develop products that are more effective, safer, more easily tolerated or less costly. If our competitors succeed in developing better alternatives to our current products before we do, we will lose sales and revenues to their alternative products.

•  If we are unsuccessful in the defense of current securities litigation, we may be ordered to pay significant monetary damages, which may have a material negative impact on our current financial position.

•  We have entered into an agreement granting Schering-Plough Ltd., or Schering-Plough, a limited right to commercialize our research compounds. The agreement could limit our own ability to commercially exploit some of our potential products. This could impede our plans for growth.

•  A significant part of our revenue derives from products manufactured by third parties. We rely on their quality level, compliance with United States Food and Drug Administration, or the FDA, regulations and continuity of supply. Any failure by them in these areas could disrupt our product supply and negatively impact our revenue.

•  To purchase our products many patients rely on reimbursement by third party payors such as insurance companies, HMOs and government agencies. These third party payors are increasingly attempting to contain costs by limiting both coverage and the level of reimbursement of new drug products. The reimbursement levels established by third party payors in the future may not be sufficient for us to realize an appropriate return on our investment in product development.

•  Some of our development programs are based on the library of nucleoside compounds we have developed. Our nucleoside library is at risk for loss in earthquakes, fires and other natural disasters.

•  We have announced plans to dispose of 10 manufacturing facilities and establish a new global manufacturing and supply chain network. If we are unsuccessful in our effort to execute on these plans we may not achieve anticipated cost savings. Additionally, there may be unforeseen costs and complications with this effort to rationalize our manufacturing operations.

•  All drugs have potential harmful side effects and can expose drug manufacturers and distributors to liability. We generally do not maintain product liability insurance. As a result, in the event one or more of our products is found to have harmed an individual or individuals, we may be responsible for paying all or substantially all damages awarded. Any product liability exposure and our lack of any insurance coverage may have a material negative impact on our financial position and results of operations.

•  Subject to the terms of our agreements with our existing lenders, we may incur additional indebtedness from time to time to finance working capital needs, acquisitions, capital expenditures or for other purposes. There can be no assurance that financing will continue to be available on terms acceptable to us or at all. The absence of such financing will reduce our ability to respond to changing business and economic conditions, to fund scheduled investments and capital expenditures, to make future acquisitions and to absorb negative operating results.

•  We are also subject to those risks and uncertainties described from time to time in our filings with the Commission.

      We are subject to a Consent Order with the Commission, which among other things requires us to preclear all FDA-related press releases with the FDA, and permanently enjoins us from violating securities

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laws and regulations. The Consent Order also precludes protection for forward-looking statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. The existence of the permanent injunction under the Consent Order, and the lack of protection under the Safe Harbor, may limit our ability to defend against future allegations.

      Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither we nor the initial purchasers nor any other person assumes responsibility for the accuracy and completeness of such statements.

      Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures we make in our Quarterly Reports on Form 10-Q, Annual Report on Form 10-K and Current Reports on Form 8-K filed with the Commission. See “Where You Can Find More Information.” We provide a cautionary discussion of selected risks and uncertainties regarding an investment in the notes under “Risk Factors” on page 7 of this prospectus. However, other factors besides those listed there could also adversely affect us.

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USE OF PROCEEDS

      We will not receive any proceeds from the exchange offer. Because we are exchanging the new notes for the old notes, which have substantially identical terms, the issuance of the new notes will not result in any increase in our indebtedness. The exchange offer is intended to satisfy our obligations under the registration rights agreement.

      The net proceeds from the offering of the old notes was approximately $293.0 million. We intend to use a portion of the net proceeds of that offering to retire, pursuant to privately negotiated transactions, open market purchases, or otherwise, all the 6 1/2% Convertible Subordinated Notes due 2008 that we do not retire with the net proceeds of the 3.0% Convertible Subordinated Notes due 2010 and the 4.0% Convertible Subordinated Notes due 2013 that we issued on November 19, 2003. Any remaining amount not used to retire the 6 1/2% Convertible Subordinated Notes due 2008 will be used for general corporate purposes, including potential acquisitions. The 6 1/2% Convertible Subordinated Notes due 2008 are not redeemable by us prior to July 21, 2004.

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RATIO OF EARNINGS TO FIXED CHARGES

      The following table presents the ratio of earnings to fixed charges (coverage deficiency in thousands) for Valeant and its consolidated subsidiaries for each of the periods indicated.

Years Ended December 31,															Nine Months
															Ended
1998			1999			2000			2001			2002			September 30, 2003
$	(305,052	)		3.7	x		3.3	x		3.1	x		5.1	x		5.1	x

      For the purpose of computing this ratio, “earnings” consist of income from continuing operations before income taxes plus and fixed charges. Fixed charges consist of interest expense. For the nine months ended September 30, 2003, non-cash charges of $117,609,000, related to acquired in-process research and development, were excluded from the calculation. There is a specific provision in the indenture for the notes which excludes acquired-in-process research and development from consolidated net income for purposes of calculating the ratio of earnings to fixed charges.

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SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

      The following table sets forth our selected historical and other financial data on a consolidated basis for each of the years in the five-year period ended December 31, 2002 and for the nine months ended September 30, 2002 and 2003. The selected historical and other financial data for each of the years in the five-year period ended December 31, 2002 were derived from our audited consolidated financial statements. The selected historical and other data for the nine months ended September 30, 2002 and 2003 were derived from our unaudited financial statements which, in the opinion of management, include the adjustments (consisting of normal recurring accruals) necessary for a fair presentation of our results of operations and financial position for such periods. The results of operations for the nine months ended September 30, 2003 are not necessarily indicative of the results that may be expected for the year ending December 31, 2003 or any other period. The trends in our sales and net income are affected by several business combinations completed in the fiscal years 1998 through 2002. The information contained in this table should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our historical consolidated financial statements, including the notes thereto, included elsewhere in this offering memorandum.

																	Nine Months Ended
		Year Ended December 31,															September 30,
		1998			1999			2000			2001			2002			2002			2003
		($ in thousands)															(Unaudited)
Statement of Operations — Consolidated
Product sales		$	539,345		$	433,105		$	441,557		$	483,834		$	466,809		$	351,100		$	372,956
Royalties			37,425			108,885			155,100			136,989			270,265			186,368			136,755
	Total revenue		576,770			541,990			596,657			620,823			737,074			537,468			509,711
Cost of product sales			204,814			128,390			143,303			149,554			157,013			113,360			131,295
	Gross profit — product sales		334,531			304,715			298,254			334,280			309,796			237,740			241,661
Selling, general & administrative expenses(1)			205,056			183,307			217,894			219,003			530,953			412,918			203,509
Research & development costs			16,479			8,212			16,383			28,706			49,531			35,526			29,701
Amortization expense			18,636			25,663			27,590			28,733			30,341			23,274			25,805
Eastern European charges(2)			428,403			—			—			—			—			—			—
Acquired in-process research and development(3)			—			—			—			—			—			—			117,609
	Income (loss) from operations		(296,618	)		196,418			191,487			194,827			(30,764	)		(47,610	)		1,792
Other income (loss), net including translation and exchange			(23,745	)		(2,739	)		(2,077	)		3,084			8,707			8,192			496
Gain on sale of subsidiary stock(4)			—			—			—			—			261,937			261,937			—
Loss on early extinguishment of debt(5)			—			—			(4,962	)		(32,916	)		(25,730	)		(25,730	)		—
Interest income			15,311			8,865			12,483			9,473			5,644			4,434			3,066
Interest expense			(37,757	)		(55,439	)		(60,248	)		(55,665	)		(42,856	)		(34,381	)		(23,892	)
	Income (loss) from continuing operations before income taxes and minority interest		(342,809	)		147,105			136,683			118,803			176,938			166,842			(18,538	)
Provision for income taxes			5,393			26,703			34,408			42,078			74,963			58,811			37,647
Minority interest			(41,300	)		(2,927	)		(509	)		174			17,730			10,670			11,667
	Income (loss) from continuing operations		(306,902	)		123,329			102,784			76,551			84,245			97,361			(67,852	)
Income (loss) from discontinued operations(6)			(45,172	)		(4,703	)		(12,604	)		(12,417	)		(197,288	)		(109,742	)		13,992
Cumulative effect of change in accounting principle(7)			—			—			—			—			(21,791	)		(21,791	)		—
	Net income (loss)	$	(352,074	)	$	118,626		$	90,180		$	64,134		$	(134,834	)	$	(34,172	)	$	(53,860	)

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																	Nine Months Ended
		Year Ended December 31,															September 30,
		1998			1999			2000			2001			2002			2002			2003
		($ in thousands)															(Unaudited)
Other Data — Consolidated
Depreciation & amortization		$	38,433		$	48,342		$	49,433		$	53,484		$	56,242		$	41,072		$	44,261
Capital expenditures			34,635			28,379			37,582			47,689			19,420			13,593			9,241
Gross profit margin — product sales(8)			62.0	%		70.4	%		67.5	%		69.1	%		66.4	%		67.7	%		64.8	%
Cash flow provided by (used in):
	Operating activities	$	9,624		$	87,123		$	181,684		$	138,112		$	22,530		$	(8,384	)	$	171,132
	Investing activities		(295,046	)		(50,360	)		(90,795	)		(119,065	)		222,053			242,230			(97,570	)
	Financing activities		186,019			36,399			(112,765	)		150,722			(318,074	)		(310,849	)		(26,277	)
Balance Sheet Data (at period end)
Cash		$	116,204		$	171,500		$	147,797		$	317,011		$	245,184		$	236,663		$	301,028
Working capital			162,177			318,533			317,356			509,601			397,070			365,046			379,836
Net assets of discontinued operations(2), (6)			216,587			265,146			240,939			267,482			153,762			215,423			7,956
Total assets(2), (6), (7)			1,356,396			1,472,261			1,477,072			1,754,365			1,488,549			1,509,570			1,404,997
Total debt(5)			508,463			604,435			511,106			739,377			485,471			492,149			479,955
Stockholders’ equity(1), (2), (3), (4), (5), (6), (7)			586,164			683,572			757,194			810,717			703,690			778,837			644,081

(1)	We recorded $4,034,000 and $241,543,000 of non-recurring and other unusual charges, which are included in selling, general and administrative expenses, for the years ended December 31, 2001 and 2002, respectively and $204,958,000 for the nine months ended September 30, 2002. The non-recurring and other unusual charges include compensation costs related to the change in control, severance costs, expenses incurred in connection with Ribapharm’s initial public offering, write-off of certain assets, environmental clean-up costs and costs incurred in our proxy contests in 2001 and 2002.
(2)	As a result of political and economic events in Eastern Europe, including the Yugoslavian government’s seizure of our Yugoslavian operations effective November 26, 1998, we recorded write-offs and provisions for losses related to Eastern Europe totaling $428,403,000 in the year ended December 31, 1998.
(3)	In August 2003, we repurchased the approximately 20% publicly held minority interest in our Ribapharm subsidiary for an aggregate total purchase price of $207,438,000. In connection with this acquisition, we expensed $117,609,000 associated with acquired IPR&D on projects that had not occurred.
(4)	In April 2002, we completed an underwritten public offering of 29,900,000 shares of common stock, par value $.01 per share, of Ribapharm, previously a wholly-owned subsidiary, representing 19.93% of the total outstanding common stock of Ribapharm. In connection with Ribapharm’s public offering, we recorded a gain on the sale of Ribapharm’s stock of $261,937,000, net of offering costs.
(5)	On April 17, 2002, we used the proceeds of the Ribapharm offering to complete our tender offer and consent solicitation for all of our outstanding 8 3/4% Senior Notes due 2008. The redemption of these notes resulted in a loss on extinguishment of debt of $43,268,000. In July and August 2002, we repurchased $59,410,000 principal amount of our 6 1/2% Convertible Subordinated Notes due 2008. In connection with these repurchases, we recorded a gain on early extinguishment of debt of $17,538,000. The net loss on extinguishment of debt was $25,730,000 for the nine months ended September 30, 2002 and the year ended December 31, 2002.

During 2001, we repurchased $117,559,000 aggregate principal amount of our outstanding 8 3/4% Senior Notes due 2008 and redeemed and repurchased $190,645,000 aggregate principal amount of our 9 1/4% Senior Notes due 2005, resulting in a loss on early extinguishment of debt of $32,916,000.

During 2000, we repurchased $84,355,000 of its outstanding 9 1/4% Senior Notes due 2005 and $12,830,000 of its outstanding 8 3/4% Senior Notes due 2008. The repurchases generated a loss on early extinguishment of debt of $4,962,000.

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In July 2001 we issued $525,000,000 aggregate principal amount of 6 1/2% Convertible Subordinated Notes due 2008.

(6)	During 2002, we made the decision to divest our Russian pharmaceuticals segment, biomedicals segment, raw materials businesses and manufacturing capability in Hungary and the Czech Republic, photonics business and Circe unit. This decision required us to evaluate the carrying value of the divested businesses in accordance with the Statement of Accounting Standard, or SFAS, No. 144, Accounting for the Impairment or Disposal of Long-lived Assets. As a result of this analysis, we recorded impairment charges of $160,010,000 (net of an income tax benefit of $48,193,000) in the year ended December 31, 2002. The results of operations and the financial position of the divested businesses have been reflected as discontinued operations. During 2002, we recorded a loss of $45,172,000 from discontinued operations reflecting the write-down of assets in Russia.
(7)	During 2002, we completed the transitional impairment test required by SFAS 142, Goodwill and Other Intangible Assets. As a result, we recorded an impairment loss of $25,332,000 offset by a benefit of $3,541,000 for the write-off of negative goodwill. The net amount of $21,791,000 has been recorded as a cumulative effect of change in accounting principle.
(8)	For further information on our gross profit margins reference is made to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Form 10-K and 10-Q filings incorporated by reference.

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THE EXCHANGE OFFER

Purpose of the Exchange Offer

      In connection with the issuance and sale of the old notes on December 12, 2003, we entered into the registration rights agreement with the initial purchasers of the old notes. Under the registration rights agreement, we agreed, among other things, to:

•  file with the SEC an exchange offer registration statement relating to the new notes on or prior to March 11, 2004;

•  use our commercially reasonable efforts to cause the registration statement to become effective on or prior to September 7, 2004; and

•  use our commercially reasonable efforts to consummate an exchange offer, in which new notes will be issued in exchange for old notes, within 30 business days after the exchange offer registration statement is declared effective.

We are conducting the exchange offer to satisfy these obligations under the registration rights agreement.

      Under some circumstances, we may be required to use our commercially reasonable efforts to file and cause to be declared effective, in addition to or in lieu of the exchange offer registration statement, a shelf registration statement covering resales of the old notes. If the issuer and the subsidiary guarantors fail to meet specified deadlines under the registration rights agreement, then we will be obligated to pay liquidated damages to holders of the old notes. See “— Registration Rights; Liquidated Damages.”

Terms of the Exchange Offer

      We are offering to exchange an aggregate principal amount of up to $300.0 million of new notes for a like aggregate principal amount of old notes. The new notes will evidence the same debt as the old notes for which they are exchanged and will, like the old notes, be issued under and be entitled to the benefits of the indenture. The form and terms of the new notes issued in the exchange offer will be identical in all material respects to the form and terms of the old notes, except that the new notes:

•  will have been registered under the Securities Act;

•  will not bear restrictive legends restricting their transfer under the Securities Act;

•  will not be entitled to the registration rights that apply to the old notes; and

•  will not contain provisions relating to liquidated damages in connection with the old notes under circumstances related to the timing of the exchange offer.

The exchange offer is not extended to holders of old notes in any jurisdiction where the exchange offer would not comply with the securities or blue sky laws of that jurisdiction.

      As of the date of this prospectus, $300.0 million aggregate principal amount of old notes is outstanding and registered in the name of Cede & Co., as nominee for DTC. Only registered holders of the old notes, or their legal representatives or attorneys-in-fact, as reflected on the records of the trustee under the indenture, may participate in the exchange offer. We will not set a fixed record date for determining registered holders of the old notes entitled to participate in the exchange offer. This prospectus, together with the letter of transmittal, is being sent to all registered holders of old notes and to others believed to have beneficial interests in the old notes.

      Upon the terms and subject to the conditions described in this prospectus and in the accompanying letter of transmittal, we will accept for exchange old notes which are properly tendered on or before the expiration date and not withdrawn as permitted below. The exchange offer expires at 5:00 p.m., New York City time, on                     , 2004 or such later date and time to which we may extend the exchange offer, such date referred to as the expiration date.

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      Old notes tendered in the exchange offer must be in denominations of the principal amount of $1,000 and any integral multiple of $1,000 in excess thereof.

      If you do not tender your old notes or if you tender old notes that are not accepted for exchange, your old notes will remain outstanding. Existing transfer restrictions would continue to apply to old notes that remain outstanding. See “— Consequences of Failure to Exchange Old Notes” for more information regarding old notes outstanding after the exchange offer. Holders of the old notes do not have any appraisal or dissenters’ rights in connection with the exchange offer.

      Neither Valeant, Ribapharm, their respective boards of directors or the management of either company recommends that you tender or not tender old notes in the exchange offer or has authorized anyone to make any recommendation. You must decide whether to tender old notes in the exchange offer and, if you decide to tender, the aggregate amount of old notes to tender.

      We have the right, in our reasonable discretion and in accordance with applicable law, at any time:

•  to extend the expiration date;

•  to delay the acceptance of any old notes;

•  to terminate the exchange offer and not accept any old notes for exchange if the issuer and the subsidiary guarantors determine that any of the conditions to the exchange offer described below under “— Conditions to the Exchange Offer” have not occurred or have not been satisfied; and

•  to amend the terms of the exchange offer in any manner.

      During an extension, all old notes previously tendered will remain subject to the exchange offer and may be accepted for exchange by us.

      We will give oral notice (promptly followed by written) or written notice of any extension, delay, non-acceptance, termination or amendment to the exchange agent as promptly as practicable and make a public announcement of the extension, delay, non-acceptance, termination or amendment. In the case of an extension, the announcement will be made no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date.

      If we amend the exchange offer in a manner that we consider material, we will as promptly as practicable distribute to the holders of the old notes a prospectus supplement or, if appropriate, an updated prospectus from a post-effective amendment to the registration statement of which this prospectus is a part. The prospectus supplement or updated prospectus will disclose the change and extend the exchange offer for a period of five to ten business days, depending upon the significance of the amendment and the manner of disclosure to the registered holders, if the exchange offer would otherwise expire during the five to ten business day period.

Procedures for Tendering Old Notes

Valid Tender

      When the holder of old notes tenders, and we accept, old notes for exchange, a binding agreement between us and the tendering holder is created, upon the terms and subject to the conditions set forth in this prospectus and the accompanying letter of transmittal.

      Except as described below under “— Guaranteed Delivery,” a holder of old notes who wishes to tender old notes for exchange must, on or prior to the expiration date:

•  transmit a properly completed and duly executed letter of transmittal, together with all other documents required by the letter of transmittal, to the exchange agent at the address provided below under “— Exchange Agent”; or

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•  if old notes are tendered in accordance with the book-entry procedures described below under “— Book-Entry Transfers,” arrange with DTC to cause an agent’s message to be transmitted to the exchange agent at the address provided below under “— Exchange Agent.”

The term “agent’s message” means a message transmitted to the exchange agent by DTC which states that DTC has received an express acknowledgment that the tendering holder agrees to be bound by the letter of transmittal and that the issuer and the subsidiary guarantors may enforce the letter of transmittal against that holder.

      In addition, on or prior to the expiration date:

•  the exchange agent must receive the certificates for the old notes being tendered; or

•  the exchange agent must receive a confirmation, referred to as a “book-entry confirmation,” of the book-entry transfer of the old notes being tendered into the exchange agent’s account at DTC, and the book-entry confirmation must include an agent’s message; or

•  the holder must comply with the guaranteed delivery procedures described below under “— Guaranteed Delivery.”

      If you beneficially own old notes and those notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee or custodian and you wish to tender your old notes in the exchange offer, you should contact the registered holder as soon as possible and instruct it to tender the old notes on your behalf and comply with the instructions set forth in this prospectus and the letter of transmittal.

      The method of delivery of the certificates for the old notes, the letter of transmittal and all other required documents is at your election and risk. If delivery is by mail, we recommend registered mail with return receipt requested, properly insured, or overnight delivery service. In all cases, you should allow sufficient time to assure delivery to the exchange agent before the expiration date. Delivery is complete when the exchange agent actually receives the items to be delivered. Delivery of documents to DTC in accordance with DTC’s procedures does not constitute delivery to the exchange agent. Do not send letters of transmittal or old notes to Valeant or Ribapharm.

      We will not accept any alternative, conditional or contingent tenders. Each tendering holder, by execution of a letter of transmittal or by causing the transmission of an agent’s message, waives any right to receive any notice of the acceptance of such tender.

Signature Guarantees

      Signatures on a letter of transmittal or a notice of withdrawal, as the case may be, must be guaranteed unless the old notes surrendered for exchange are tendered:

•  by a registered holder of old notes who has not completed the box entitled “Special Issuance Instructions” or “Special Delivery Instructions” on the letter of transmittal; or

•  for the account of an eligible institution.

An “eligible institution” is a firm or other entity which is identified as an “Eligible Guarantor Institution” in Rule 17Ad-15 under the Exchange Act, including:

•  a bank;

•  a broker, dealer, municipal securities broker or dealer or government securities broker or dealer;

•  a credit union;

•  a national securities exchange, registered securities association or clearing agency; or

•  a savings association.

If signatures on a letter of transmittal or notice of withdrawal are required to be guaranteed, the guarantor must be an eligible institution.

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      If old notes are registered in the name of a person other than the signer of the letter of transmittal, the old notes surrendered for exchange must be endorsed or accompanied by a written instrument or instruments of transfer or exchange, in satisfactory form as determined by us in our sole discretion, duly executed by the registered holder with the holder’s signature guaranteed by an eligible institution, and must also be accompanied by such opinions of counsel, certifications and other information as we or the trustee under the indenture for the old notes may require in accordance with the restrictions on transfer applicable to the old notes.

Book-Entry Transfers

      For tenders by book-entry transfer of old notes cleared through DTC, the exchange agent will make a request to establish an account at DTC for purposes of the exchange offer. Any financial institution that is a DTC participant may make book-entry delivery of old notes by causing DTC to transfer the old notes into the exchange agent’s account at DTC in accordance with DTC’s procedures for transfer. The exchange agent and DTC have confirmed that any financial institution that is a participant in DTC may use the Automated Tender Offer Program, or ATOP, procedures to tender old notes. Accordingly, any participant in DTC may make book-entry delivery of old notes by causing DTC to transfer those old notes into the exchange agent’s account at DTC in accordance with DTC’s ATOP procedures.

      Notwithstanding the ability of holders of old notes to effect delivery of old notes through book-entry transfer at DTC, either:

•  the letter of transmittal or an agent’s message in lieu of the letter of transmittal, with any required signature guarantees and any other required documents, such as endorsements, bond powers, opinions of counsel, certifications and powers of attorney, if applicable, must be transmitted to and received by the exchange agent prior to the expiration date at the address given below under “— Exchange Agent”; or

•  the guaranteed delivery procedures described below must be complied with.

Guaranteed Delivery

      If a holder wants to tender old notes in the exchange offer and (1) the certificates for the old notes are not immediately available or all required documents are unlikely to reach the exchange agent on or prior to the expiration date or (2) a book-entry transfer cannot be completed on a timely basis, the old notes may be tendered if:

•  the tender is made by or through an eligible institution;

•  the eligible institution delivers a properly completed and duly executed notice of guaranteed delivery, substantially in the form provided, to the exchange agent by hand, facsimile, mail or overnight delivery service on or prior to the expiration date:

•  stating that the tender is being made;

•  setting forth the name and address of the holder of the old notes being tendered and the amount of the old notes being tendered; and

•  guaranteeing that, within three New York Stock Exchange trading days after the date of execution of the notice of guaranteed delivery, the certificates for all physically tendered old notes, in proper form for transfer, or a book-entry confirmation, as the case may be, together with a properly completed and duly executed letter of transmittal, or an agent’s message in lieu thereof, with any required signature guarantees and any other documents required by the letter of transmittal, will be deposited by the eligible institution with the exchange agent; and

•  the exchange agent receives the certificates for the old notes, or a book-entry confirmation, and a properly completed and duly executed letter of transmittal, or an agent’s message in lieu thereof, with any required signature guarantees and any other documents required by the letter of transmittal

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within three New York Stock Exchange trading days after the date of execution of the notice of guaranteed delivery.

Determination of Validity

      We, in our sole discretion, will resolve all questions regarding the form of documents, validity, eligibility, including time of receipt, and acceptance for exchange of any tendered old notes. The determination of these questions by us, as well as our interpretation of the terms and conditions of the exchange offer, including the letter of transmittal, will be final and binding on all parties. A tender of old notes is invalid until all defects and irregularities have been cured or waived. Holders must cure any defects and irregularities in connection with tenders of old notes for exchange within such reasonable period of time as we will determine, unless we waive the defects or irregularities. None of us, any of our affiliates or assigns, the exchange agent or any other person is under any obligation to give notice of any defects or irregularities in tenders, nor will any of such persons be liable for failing to give any such notice.

      We reserve the absolute right, in our sole and absolute discretion:

•  to reject any tenders determined to be in improper form or unlawful;

•  to waive any of the conditions of the exchange offer; or

•  to waive any condition or irregularity in the tender of old notes by any holder, whether or not we waive similar conditions or irregularities in the case of other holders.

      If any letter of transmittal, certificate, endorsement, bond power, power of attorney or any other document required by the letter of transmittal is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, that person must indicate such capacity when signing. In addition, unless waived by the issuer, the person must submit proper evidence satisfactory to us, in our sole discretion, of the person’s authority to so act.

Acceptance of Old Notes for Exchange; Delivery of New Notes

      Upon satisfaction or waiver of all of the conditions to the exchange offer, we will, promptly after the expiration date, accept and cancel all old notes properly tendered and issue new notes registered under the Securities Act. See “— Conditions to the Exchange Offer” for a discussion of the conditions that must be satisfied or waived before old notes are accepted for exchange. The exchange agent might not deliver the new notes to all tendering holders at the same time. The timing of delivery depends upon when the exchange agent receives and processes the required documents.

      For purposes of the exchange offer, we will be deemed to have accepted properly tendered old notes for exchange when we give oral or written notice to the exchange agent of acceptance of the tendered old notes, with written confirmation of any oral notice to be given promptly thereafter. The exchange agent is our agent for receiving tenders of old notes, letters of transmittal and related documents.

      For each old note accepted for exchange and cancelled, the holder will receive a new note registered under the Securities Act having a principal amount equal to, and in the denomination of, that of the surrendered old note. Accordingly, registered holders of new notes issued in the exchange offer on the relevant record date for the first interest payment date following the consummation of the exchange offer will receive interest accruing from the most recent date to which interest has been paid on the old notes or, if no interest has been paid on the old notes, from December 12, 2003. Old notes accepted for exchange will cease to accrue interest from and after the date of consummation of the exchange offer and will be cancelled promptly after the expiration of the exchange offer.

      In all cases, we will issue new notes in the exchange offer for old notes that are accepted for exchange only after the exchange agent timely receives:

•  certificates for those old notes or a timely book-entry confirmation of the transfer of those old notes into the exchange agent’s account at DTC;

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•  a properly completed and duly executed letter of transmittal or an agent’s message; and

•  all other required documents, such as endorsements, bond powers, opinions of counsel, certifications and powers of attorney, if applicable.

      If for any reason under the terms and conditions of the exchange offer we do not accept any tendered old notes, or if a holder submits old notes for a greater principal amount than the holder desires to exchange, we will return the unaccepted or non-exchanged old notes without cost to the tendering holder promptly after the expiration or termination of the exchange offer. In the case of old notes tendered by book-entry transfer through DTC, any unexchanged old notes will be credited to an account maintained with DTC.

Resales of New Notes

      Based on interpretive letters issued by the SEC staff to other, unrelated issuers in transactions similar to the exchange offer, we believe that a holder of new notes, other than a broker-dealer, may offer new notes (together with the guarantees thereof) for resale, resell or otherwise transfer the new notes (and the related guarantees) without delivering a prospectus to prospective purchasers, if the holder:

•  is not an “affiliate,” as defined under the Securities Act, of the issuer or any subsidiary guarantor;

•  acquired the new notes in the ordinary course of business;

•  is not engaged in, does not intend to engage in and has no arrangement or understanding with any person to participate in a “distribution,” as defined under the Securities Act, of the new notes; and

•  is not acting on behalf of any person who could not truthfully make the foregoing representations.

      We will not seek our own interpretive letter. As a result, we cannot assure you that the SEC staff would take the same position with respect to this exchange offer as it did in interpretive letters to other parties in similar transactions.

      If any of the above conditions is not satisfied or you acquired your old notes to be exchanged for new notes in the exchange offer directly from the issuer or any affiliate thereof, you must acknowledge and agree that you:

•  may not, under SEC policy as in effect on July 1, 2003, rely on the position of the SEC enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted in the SEC’s letter to Shearman & Sterling dated July 2, 1993, and similar no-action letters; and

•  must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction and that such a secondary resale transaction must be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K.

      By tendering old notes, the holder of those old notes will represent to us that, among other things, the holder:

•  is not an affiliate of ours;

•  is acquiring the new notes in its ordinary course of business;

•  is not engaged in, does not intend to engage in and has no arrangement or understanding with any person to participate in a distribution of the new notes; and

•  is not acting on behalf of any person who could not truthfully make the foregoing representations.

      Any broker-dealer that receives new notes for its own account in exchange for old notes may be deemed to be an “underwriter” within the meaning of the Securities Act. Each broker-dealer that receives new notes for its own account in exchange for old notes must represent that the old notes to be exchanged for the new notes were acquired by it as a result of market-making activities or other trading activities (and not acquired

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directly from us or any of our affiliates) and acknowledge that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of the new notes; however, by so acknowledging and by delivering a prospectus, the participating broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. We have agreed that, upon receiving prior written notice from a participating broker-dealer, during the period ending on the earlier of (1) 270 days from the effective date of the exchange offer registration statement, subject to extension in limited circumstances, and (2) the date on which participating broker-dealers are no longer required to deliver a prospectus in connection with any resale of new notes, we will use commercially reasonable efforts to keep the exchange offer registration statement effective to the extent necessary to ensure that this prospectus is available for sales of the new notes by participating broker-dealers. See “Plan of Distribution and Selling Restrictions” for a discussion of the exchange and resale obligations of broker-dealers in connection with the exchange offer and the new notes.

Withdrawal Rights

      You can withdraw tenders of old notes at any time prior to the expiration date. For a withdrawal to be effective, you must deliver a written notice of withdrawal to the exchange agent or comply with the appropriate procedures of ATOP. Any notice of withdrawal must:

•  specify the name of the person that tendered the old notes to be withdrawn;

•  identify the old notes to be withdrawn, including the principal amount of those old notes; and

•  where certificates for old notes are transmitted, the name of the registered holder of the old notes if different from the person withdrawing the old notes.

      If you delivered or otherwise identified certificated old notes to the exchange agent, you must submit the serial numbers of the old notes to be withdrawn and the signature on the notice of withdrawal must be guaranteed by an eligible institution, except in the case of old notes tendered for the account of an eligible institution. See “— Procedures for Tendering Old Notes — Signature Guarantees” for further information on the requirements for guarantees of signatures on notices of withdrawal. If you tendered old notes in accordance with applicable book-entry transfer procedures, the notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawn old notes and you must deliver the notice of withdrawal to the exchange agent. You may not rescind withdrawals of tender; however, old notes properly withdrawn may again be tendered at any time on or prior to the expiration date in accordance with the procedures described under “— Procedures for Tendering Old Notes.”

      We will determine, in our sole discretion, all questions regarding the validity, form and eligibility, including time of receipt, of notices of withdrawal. Our determination of these questions as well as our interpretation of the terms and conditions of the exchange offer, including the letter of transmittal, will be final and binding on all parties. None of us, any of our affiliates or assigns, the exchange agent or any other person is under any obligation to give notice of any irregularities in any notice of withdrawal, nor will any of such persons be liable for failing to give any such notice.

      Withdrawn old notes will be returned to the holder as promptly as practicable after withdrawal without cost to the holder. In the case of old notes tendered by book-entry transfer through DTC, the old notes withdrawn will be credited to an account maintained with DTC.

Conditions to the Exchange Offer

      Notwithstanding any other provision of the exchange offer, we are not required to accept for exchange, or to issue new notes in exchange for, any old notes, and we may terminate or amend the exchange offer, if at any time prior to the expiration date, we determine that the exchange offer violates applicable federal law or SEC policy. In addition, with respect to any holder, the exchange offer is conditioned on the tender of the old notes to us by such holder in accordance with the terms and conditions set forth in this prospectus and the accompanying letter of transmittal.

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      The foregoing conditions are for our sole benefit, and we may assert them regardless of the circumstances giving rise to any such condition, or we may waive the conditions, completely or partially, whenever or as many times as we choose, in our reasonable discretion. The foregoing rights are not deemed waived because we fail to exercise them, but continue in effect, and we may still assert them whenever or as many times as we choose. If we determine that a waiver of conditions materially changes the exchange offer, the prospectus will be amended or supplemented, and the exchange offer extended, if appropriate, as described under “— Terms of the Exchange Offer.”

      In addition, at a time when any stop order is threatened or in effect with respect to the registration statement of which this prospectus constitutes a part or with respect to the qualification of the indenture under the Trust Indenture Act of 1939, as amended, we will not accept for exchange any old notes tendered, and no new notes will be issued in exchange for any such old notes.

      If we are not permitted to consummate the exchange offer because the exchange offer is not permitted by applicable law or SEC policy, the registration rights agreement requires that we use commercially reasonable efforts to file a shelf registration statement to cover resales of the old notes by the holders thereof who satisfy specified conditions relating to the provision of information in connection with the shelf registration statement. See “— Registration Rights; Liquidated Damages.”

Exchange Agent

      We have appointed The Bank of New York as exchange agent for the exchange offer. You should direct questions and requests for assistance, requests for additional copies of this prospectus or of the letter of transmittal and requests for notices of guaranteed delivery to the exchange agent. Holders of old notes seeking to tender old notes in the exchange offer should send certificates for old notes, letters of transmittal and any other required documents to the exchange agent by registered, certified or regular mail, hand delivery, overnight delivery service or facsimile, as follows:

The Bank of New York

Corporate Trust Operations

Reorganization Unit

101 Barclay Street, 7 East

New York, NY 10826

Attention: Ms. Diane Amoroso

Facsimile:

(212) 298-1915

For confirmation call

(212) 815-3738

      If you deliver the letter of transmittal or any other required documents to an address or facsimile number other than as indicated above, your tender of old notes will be invalid.

Fees and Expenses

      The registration rights agreement provides that we will bear all expenses in connection with the performance of our obligations relating to the registration of the new notes and the conduct of the exchange offer. These expenses include, among others, registration and filing fees, accounting and legal fees and printing costs. We will pay the exchange agent reasonable and customary fees for its services and reasonable out-of-pocket expenses. We will also reimburse brokerage houses and other custodians, nominees and fiduciaries for customary mailing and handling expenses incurred by them in forwarding this prospectus and related documents to their clients that are holders of old notes and for handling or tendering for those clients.

      We have not retained any dealer-manager in connection with the exchange offer and will not pay any fee or commission to any broker, dealer, nominee or other person, other than the exchange agent, for soliciting tenders of old notes pursuant to the exchange offer.

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Transfer Taxes

      Holders who tender their old notes for exchange will not be obligated to pay any transfer taxes in connection with the exchange. If, however, new notes issued in the exchange offer are to be delivered to, or are to be issued in the name of, any person other than the holder of the old notes tendered, or if a transfer tax is imposed for any reason other than the exchange of old notes in connection with the exchange offer, then any such transfer taxes, whether imposed on the registered holder or on any other person, will be payable by the holder or such other person. If satisfactory evidence of payment of, or exemption from, such taxes is not submitted with the letter of transmittal, the amount of such transfer taxes will be billed directly to the tendering holder.

Accounting Treatment

      The new notes will be recorded at the same carrying value as the old notes. Accordingly, we will not recognize any gain or loss for accounting purposes. We intend to amortize the expenses of the exchange offer and the issuance of the old notes over the term of the new notes.

Consequences of Failure to Exchange Old Notes

      Holders of the old notes do not have any appraisal or dissenters’ rights in the exchange offer. Old notes that are not tendered or are tendered but not accepted will, following the consummation of the exchange offer, remain outstanding and continue to be subject to the provisions in the indenture regarding the transfer and exchange of the old notes and the existing restrictions on transfer set forth in the legends on the old notes. In general, the old notes, unless registered under the Securities Act, may not be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. Following the consummation of the exchange offer, except in limited circumstances with respect to specific types of holders of old notes, we will have no further obligation to provide for the registration under the Securities Act of the old notes. See “— Registration Rights; Liquidated Damages.” We do not currently anticipate that we will take any action following the consummation of the exchange offer to register the old notes under the Securities Act or under any state securities laws.

      Consummation of the exchange offer may have adverse consequences to non-tendering old note holders, including that the reduced amount of outstanding old notes as a result of the exchange offer may adversely affect the trading market, liquidity and market price of the old notes.

      The new notes and any old notes which remain outstanding after consummation of the exchange offer will vote together for all purposes as a single class under the indenture.

Registration Rights; Liquidated Damages

      If:

•  we are not required to file the exchange offer registration statement or permitted to consummate the exchange offer because, in either case, the exchange offer is not permitted by applicable law or SEC policy; or

•  any holder of old notes notifies the issuer prior to the 20th day following consummation of the exchange offer that:

•  such holder was prohibited by applicable law or SEC policy from participating in the exchange offer;

•  such holder may not resell the new notes acquired by it in the exchange offer to the public without delivering a prospectus and this prospectus is not appropriate or available for such resales; or

•  such holder is a broker-dealer and owns old notes acquired directly from us or an affiliate of ours,

then we will be required under the registration rights agreement to use our commercially reasonable efforts to file with the SEC a shelf registration statement to cover resales of the old notes by the holders thereof who

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satisfy specified conditions relating to the provision of information in connection with the shelf registration statement.

      If a shelf registration statement is required, we must use our commercially reasonable efforts to:

•  file the shelf registration statement with the SEC on or prior to 60 days after the filing obligation arises;

•  cause the shelf registration statement to become effective on or prior to 120 days after the date we become obligated to file the shelf registration statement; and

•  keep the shelf registration statement continuously effective for a period of at least 18 months, subject to extension under certain circumstances, following the date of the registration rights agreement or for such shorter period that will terminate when all of the old notes covered by the shelf registration statement have been sold pursuant to the shelf registration statement.

      Each of the following events is referred to as a “registration default”:

•  we fail to file any of the registration statements required by the registration rights agreement on or before the date specified for such filing;

•  any of such registration statements is not declared effective by the SEC on or prior to the date specified for such effectiveness, referred to as the effectiveness target date;

•  we fail to consummate the exchange offer within 30 business days of effectiveness of the exchange offer registration statement; or

•  any registration statement required by the registration rights agreement is declared effective but thereafter ceases to be effective or usable in connection with resales of the old notes during the periods specified in the registration rights agreement.

If a registration default occurs, then we will be obligated to pay liquidated damages to each holder of the old notes, with respect to the first 90-day period immediately following the occurrence of the registration default, in an amount equal to $.05 per week per $1,000 principal amount of the old notes held by such holder.

      The amount of liquidated damages will increase by an additional $.05 per week per $1,000 principal amount of old notes with respect to each subsequent 90-day period until all registration defaults have been cured, up to a maximum amount of liquidated damages for all registration defaults of $.50 per week per $1,000 principal amount of old notes. Following the cure of all registration defaults, the accrual of liquidated damages will cease.

      All accrued liquidated damages will be paid to the holders of record of the old notes entitled to receive liquidated damages in the manner provided for the payment of interest in the indenture on each interest payment date. See “Description of the Notes — Methods of Receiving Payments on the Notes.”

      Holders of the old notes will be required to make specified representations to us in order to participate in the exchange offer. In order to have their old notes included in the shelf registration statement and to benefit from the provisions regarding liquidated damages set forth above, holders of the old notes will be required to deliver specified information to be used in the shelf registration statement. By acquiring old notes or new notes, a holder will be deemed to have agreed to indemnify us against certain losses arising out of information furnished by such holder in writing for inclusion in any shelf registration statement. Holders of old notes will also be required to suspend their use of the prospectus included in the shelf registration statement under specified circumstances upon receipt of written notice to that effect from us.

      For further information concerning the registration rights of holders of old notes, you should refer to the registration rights agreement, which is Exhibit 4.3 to the registration statement of which this prospectus is a part. See “Description of the Notes — Additional Information,” “Where You Can Find More Information” and “Incorporation by Reference.”

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DESCRIPTION OF OTHER INDEBTEDNESS

3.0% Convertible Subordinated Notes due 2010
4.0% Convertible Subordinated Notes due 2013

      On November 19, 2003, we issued $240.0 million aggregate principal amount of 3.0% Convertible Subordinated Notes due 2010 and $240.0 million aggregate principal amount of 4.0% Convertible Subordinated Notes due 2013, which were issued as two series of notes under a single indenture among us, Ribapharm and the trustee. Ribapharm is a co-obligor on both series of notes but only for so long as Ribapharm has outstanding obligations under the 6 1/2% Convertible Subordinated Notes due 2008, which were issued under an earlier indenture among us, Ribapharm and the trustee. We have no right to redeem the 3.0% Convertible Subordinated Notes due 2010. We will have the right to redeem the 4.0% Convertible Subordinated Notes due 2013, in whole or in part, at their principal amount on or after May 20, 2011. The notes of both series are convertible into our common stock at a conversion rate of 31.6336 shares per $1,000 principal amount of notes or approximately $31.61 per share, subject to adjustment. Upon conversion, we will have the right to satisfy our conversion obligations by delivery, at our option, of either shares of our common stock, cash or a combination thereof. The notes of both series are subordinated unsecured obligations of us and Ribapharm (for so long as Ribapharm has outstanding obligations under the 6 1/2% Convertible Subordinated Notes due 2008), ranking in right of payment behind our senior debt, including the notes.

      In connection with the offering of the 3.0% Convertible Subordinated Notes due 2010 and the 4.0% Convertible Subordinated Notes due 2013, we entered into convertible note hedge and written call option transactions with respect to our common stock. The written call options have a strike price per share of $39.515. The convertible note hedge is expected to reduce the potential dilution from conversion of the notes. The written call option is expected to offset, to some extent, the cost of the convertible note hedge.

6 1/2% Convertible Subordinated Notes due 2008

      As of November 24, 2003, we have $326.0 million aggregate principal amount of the 6 1/2% Convertible Subordinated Notes due 2008 outstanding. Ribapharm is a co-obligor on the notes. We will have the right to redeem the 6 1/2% Convertible Subordinated Notes due 2008, in whole or in part, at any time on or after July 21, 2004. We may redeem the notes at 103.714% of their principal amount between July 21, 2004, and July 15, 2005; at 102.786% of their principal amount between July 16, 2005, and July 15, 2006; at 101.857% of their principal amount between July 16, 2006, and July 15, 2007; and at 100.929% of their principal amount after July 16, 2007. The notes are convertible into shares of our common stock at a conversion price of approximately $34.25 per share, subject to adjustment. The notes are subordinated unsecured obligations of us and Ribapharm, ranking in right of payment behind our senior debt, including the notes. See “Use of Proceeds.”

Other Indebtedness

      As of September 30, 2003, we have $14.4 million of outstanding senior indebtedness which consists primarily of secured mortgages denominated in Swiss francs with an interest rate of LIBOR + 1.5%; interest and principal are payable semi-annually through 2030.

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DESCRIPTION OF THE NOTES

      You can find the definitions of certain terms used in this description under the subheading “Certain Definitions.” In this description, the word “Valeant” refers only to Valeant Pharmaceuticals International and not to any of its Subsidiaries.

      Valeant issued the old notes and will issue the new notes under an indenture among itself, Ribapharm and The Bank of New York, as trustee. The terms of the notes include those stated in the indenture and those made part of the indenture by reference to the Trust Indenture Act of 1939, as amended.

      The following description is a summary of the material provisions of the indenture. It does not restate the indenture in its entirety. We urge you to read the indenture because it, and not this description, defines your rights as holders of the notes. Copies of the indenture and the registration rights agreement are available as set forth below under “— Additional Information.” Certain defined terms used in this description but not defined below under “— Certain Definitions” have the meanings assigned to them in the indenture. Except as otherwise indicated, the following summary relates to both the old notes and the new notes to be issued in the exchange offer; the term “notes” refers to both the old notes and the new notes.

      The registered Holder of a note will be treated as the owner of it for all purposes. Only registered Holders will have rights under the indenture and the registration rights agreement.

Brief Description of the Notes

      The old notes are and the new notes will be:

•  general unsecured obligations of Valeant and, initially, of Ribapharm;

•  pari passu in right of payment to all existing and future unsecured senior indebtedness of Valeant and, for so long as Ribapharm is a co-obligor on the notes, Ribapharm;

•  senior in right of payment to any existing and future subordinated indebtedness of Valeant and, for so long as Ribapharm is a co-obligor on the notes, Ribapharm; and

•  effectively subordinated to the outstanding Indebtedness and other liabilities of our Restricted Subsidiaries, including Ribapharm when Ribapharm is no longer a co-obligor on the notes.

      Ribapharm is a co-obligor on the old notes and, initially, will be a co-obligor on the new notes. Ribapharm will remain a co-obligor on the notes, jointly and severally with Valeant, only for so long as it shall have outstanding obligations under the 6 1/2% Convertible Subordinated Notes due 2008, originally issued under an indenture among Valeant, Ribapharm and the trustee.

      As of the date of this prospectus, all of our Subsidiaries except ICN Yugoslavia DD (formerly ICN Galenika) are “Restricted Subsidiaries.” However, under the circumstances described below under the subheading “— Certain Covenants — Designation of Restricted and Unrestricted Subsidiaries,” we will be permitted to designate certain of our other Subsidiaries as “Unrestricted Subsidiaries.” Our Unrestricted Subsidiaries will not be subject to many of the restrictive covenants in the indenture.

Principal, Maturity and Interest

      Valeant issued old notes in the aggregate principal amount of $300.0 million. In addition to the new notes, Valeant may issue additional notes under the indenture from time to time after this offering. Any offering of additional notes is subject to the covenant described below under the caption “— Certain Covenants — Incurrence of Indebtedness and Issuance of Preferred Stock.” The notes and any additional notes subsequently issued under the indenture will be treated as a single class for all purposes under the indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase. Valeant will issue notes in denominations of $1,000 and integral multiples of $1,000. The notes will mature on December 15, 2011.

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      Interest on the notes will accrue at the rate of 7.0% per annum and will be payable semi-annually in arrears on June 15 and December 15, commencing on June 15, 2004. Valeant will make each interest payment to the Holders of record on the immediately preceding June 1 and December 1.

      Interest on the notes will accrue from the date of original issuance or, if interest has already been paid, from the date it was most recently paid. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.

Methods of Receiving Payments on the Notes

      If a Holder holding an aggregate principal amount of notes greater than $1 million has given wire transfer instructions to Valeant, Valeant will pay all principal, interest and premium and Liquidated Damages, if any, on that Holder’s notes in accordance with those instructions. All other payments on notes will be made at the office or agency of the Paying Agent and Registrar within the City and State of New York unless Valeant elects to make interest payments by check mailed to the Holders at their address set forth in the register of Holders.

Paying Agent and Registrar for the Notes

      The trustee will initially act as Paying Agent and Registrar. Valeant may change the Paying Agent or Registrar without prior notice to the Holders, and Valeant or any of its Subsidiaries may act as Paying Agent or Registrar.

Transfer and Exchange

      A Holder may transfer or exchange notes in accordance with the indenture. The Registrar and the trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents in connection with a transfer of notes. Holders will be required to pay all taxes due on transfer. Valeant is not required to transfer or exchange any note selected for redemption. Also, Valeant is not required to transfer or exchange any note for a period of 15 days before a selection of notes to be redeemed.

Subsidiary Guarantees

      As of the date of this prospectus, none of the Subsidiaries of Valeant have Guaranteed Valeant’s and Ribapharm’s obligations under the notes. However, if after the date of the indenture any Domestic Subsidiary of Valeant provides a Guarantee in connection with any Indebtedness of Valeant or Ribapharm (for so long as Ribapharm is a co-obligor on the notes), that in each case ranks pari passu in right of payment with the notes, then that Domestic Subsidiary will promptly execute a supplemental indenture pursuant to which it will Guarantee, on a senior unsecured basis, Valeant’s and Ribapharm’s obligations under the notes for so long as the Guarantee in connection with the applicable Indebtedness remains in place. The obligations of each Subsidiary Guarantor under its Guarantee will be limited as necessary to prevent such Guarantee from constituting a fraudulent conveyance under applicable law.

Optional Redemption

      At any time prior to December 15, 2006, Valeant may on any one or more occasions redeem up to 35% of the aggregate principal amount of notes issued under the indenture at a redemption price of 107.0% of the principal amount, plus accrued and unpaid interest and Liquidated Damages, if any, to the redemption date, with the net cash proceeds of one or more Equity Offerings; provided that:

      (1) at least 65% of the aggregate principal amount of notes issued under the indenture remains outstanding immediately after the occurrence of such redemption (excluding notes held by Valeant and its Subsidiaries); and

      (2) the redemption occurs within 90 days of the date of the closing of such Equity Offering.

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      Except pursuant to the preceding paragraph, the notes will not be redeemable at Valeant’s option prior to December 15, 2007.

      After December 15, 2007, Valeant may redeem all or a part of the notes upon not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Liquidated Damages, if any, on the notes redeemed, to the applicable redemption date, if redeemed during the twelve-month period beginning on December 15 of the years indicated below:

Year	Percentage
2007		103.500	%
2008		101.750	%
2009 and thereafter		100.000	%

Mandatory Redemption

      Valeant is not required to make mandatory redemption or sinking fund payments with respect to the notes.

Repurchase at the Option of Holders

Change of Control

      If a Change of Control occurs, each Holder of notes will have the right to require Valeant to repurchase all or any part (equal to $1,000 or an integral multiple of $1,000) of that Holder’s notes pursuant to a Change of Control Offer on the terms set forth in the indenture. In the Change of Control Offer, Valeant will offer a Change of Control Payment in cash equal to 101% of the aggregate principal amount of notes repurchased plus accrued and unpaid interest and Liquidated Damages, if any, on the notes repurchased, to the date of purchase. Within ten days following any Change of Control, Valeant will mail a notice to each Holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase notes on the Change of Control Payment Date specified in the notice, which date will be no earlier than 30 days and no later than 60 days from the date such notice is mailed, pursuant to the procedures required by the indenture and described in such notice. Valeant will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the notes as a result of a Change of Control. To the extent that the provisions of any securities laws or regulations conflict with the Change of Control provisions of the indenture, Valeant will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Change of Control provisions of the indenture by virtue of such conflict.

      On the Change of Control Payment Date, Valeant will, to the extent lawful:

      (1) accept for payment all notes or portions of notes properly tendered pursuant to the Change of Control Offer;

      (2) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all notes or portions of notes properly tendered; and

      (3) deliver or cause to be delivered to the trustee the notes properly accepted together with an officers’ certificate stating the aggregate principal amount of notes or portions of notes being purchased by Valeant.

      The Paying Agent will promptly mail to each Holder of notes properly tendered the Change of Control Payment for such notes, and the trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new note equal in principal amount to any unpurchased portion of the notes surrendered, if any; provided that each new note will be in a principal amount of $1,000 or an integral multiple of $1,000.

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      Valeant will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date.

      The provisions described above that require Valeant to make a Change of Control Offer following a Change of Control will be applicable whether or not any other provisions of the indenture are applicable.

      Except as described above with respect to a Change of Control, the indenture does not contain provisions that permit the Holders of the notes to require that Valeant repurchase or redeem the notes in the event of a takeover, recapitalization or similar transaction.

      Valeant will not be required to make a Change of Control Offer upon a Change of Control if (1) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the indenture applicable to a Change of Control Offer made by Valeant and purchases all notes properly tendered and not withdrawn under the Change of Control Offer, (2) notice of redemption has been given pursuant to the indenture as described above under the caption “— Optional Redemption,” unless and until there is a default in payment of the applicable redemption price, or (3) after giving effect to such Change of Control, (i) no Default or Event of Default has occurred and is continuing, (ii) the Change of Control transaction has been approved by the Board of Directors of Valeant, and (iii) the notes are rated Baa3 or better by Moody’s and BBB- or better by S&P.

      The definition of Change of Control includes a phrase relating to the direct or indirect sale, lease, transfer, conveyance or other disposition of “all or substantially all” of the properties or assets of Valeant and its Restricted Subsidiaries taken as a whole. Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law.

      Accordingly, the ability of a Holder of notes to require Valeant to repurchase its notes as a result of a sale, lease, transfer, conveyance or other disposition of less than all of the assets of Valeant and its Restricted Subsidiaries taken as a whole to another Person or group may be uncertain.

Asset Sales

      Valeant will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:

      (1) Valeant (or the Restricted Subsidiary, as the case may be) receives consideration at the time of the Asset Sale at least equal to the Fair Market Value (determined, for purposes of this clause (1), by Valeant or, in the case of any asset(s) valued in excess of $10 million, by the Board of Directors, in each case evidenced by an officers’ certificate delivered to the trustee) of the assets or Equity Interests issued or sold or otherwise disposed of; and

      (2) at least 75% of the consideration received in the Asset Sale by Valeant or such Restricted Subsidiary is in the form of cash or Cash Equivalents. For purposes of this provision, each of the following will be deemed to be cash:

      (a) any liabilities, as shown on Valeant’s most recent consolidated balance sheet, of Valeant or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the notes) that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases Valeant or such Restricted Subsidiary from further liability; and

      (b) any securities, notes or other obligations received by Valeant or any such Restricted Subsidiary from such transferee that are contemporaneously, subject to ordinary settlement periods, converted by Valeant or such Restricted Subsidiary into cash, to the extent of the cash received in that conversion.

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      Within 365 days after the receipt of any Net Proceeds from an Asset Sale, Valeant may apply those Net Proceeds:

      (1) to repay Indebtedness and other Obligations under a Credit Facility and, if the Indebtedness repaid is revolving credit Indebtedness, to correspondingly reduce commitments with respect thereto;

      (2) to acquire all or substantially all of the assets of, or a majority of the Voting Stock of, another Permitted Business;

      (3) to make a capital expenditure in or that is useful in a Permitted Business;

      (4) to retire notes pursuant to privately negotiated transactions, open market purchases or otherwise; or

      (5) to acquire other assets that are not classified as current assets (for the avoidance of doubt, including acquisitions of in-process research and development) under GAAP and that are used or useful in a Permitted Business.

      Pending the final application of any Net Proceeds, Valeant may temporarily reduce revolving credit borrowings or otherwise invest the Net Proceeds in any manner that is not prohibited by the indenture.

      Any Net Proceeds from Asset Sales that are not applied or invested as provided in the preceding paragraph will constitute “Excess Proceeds.” When the aggregate amount of Excess Proceeds exceeds $10.0 million, Valeant will make an Asset Sale Offer to all Holders of notes and all holders of other Indebtedness that is pari passu with the notes containing provisions similar to those set forth in the indenture with respect to offers to purchase or redeem with the proceeds of sales of assets to purchase the maximum principal amount of notes and such other pari passu Indebtedness that may be purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100% of principal amount plus accrued and unpaid interest and Liquidated Damages, if any, to the date of purchase, and will be payable in cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer, Valeant may use those Excess Proceeds for any purpose not otherwise prohibited by the indenture. If the aggregate principal amount of notes and other pari passu Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the notes and such other pari passu Indebtedness will be purchased on a pro rata basis. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds will be reset at zero.

      Valeant will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with each repurchase of notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the Asset Sale provisions of the indenture, Valeant will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Asset Sale provisions of the indenture by virtue of such compliance.

      The agreements governing Valeant’s other Indebtedness, including any future Credit Facilities, may contain prohibitions of certain events, including events that would constitute a Change of Control or an Asset Sale. In addition, the exercise by the Holders of notes of their right to require Valeant to offer to repurchase the notes upon a Change of Control or an Asset Sale may cause a default under these other agreements, even if the Change of Control or Asset Sale itself does not, due to the financial effect of such repurchases on Valeant. Finally, Valeant’s ability to pay cash to the Holders of notes upon a repurchase may be limited by Valeant’s then existing financial resources. See “Risk Factors — We may be unable to repurchase the notes if we experience a change of control.”

Selection and Notice

      If less than all of the notes are to be redeemed at any time, the trustee will select notes for redemption as follows:

      (1) if the notes are listed on any national securities exchange, in compliance with the requirements of the principal national securities exchange on which the notes are listed; or

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      (2) if the notes are not listed on any national securities exchange, on a pro rata basis, by lot or by such method as the trustee deems fair and appropriate.

      No notes of $1,000 or less can be redeemed in part. Notices of redemption will be mailed by first class mail at least 30 but not more than 60 days before the redemption date to each Holder of notes to be redeemed at its registered address, except that redemption notices may be mailed more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the notes or a satisfaction and discharge of the indenture. Notices of redemption may not be conditional.

      If any note is to be redeemed in part only, the notice of redemption that relates to that note will state the portion of the principal amount of that note that is to be redeemed. A new note in principal amount equal to the unredeemed portion of the original note will be issued in the name of the Holder of notes upon cancellation of the original note. Notes called for redemption become due on the date fixed for redemption.

      On and after the redemption date, interest ceases to accrue on notes or portions of them called for redemption.

Certain Covenants

Changes in Covenants when Notes Rated Investment Grade

      If on any date following the date of the indenture:

      (1) the notes are rated Baa3 or better by Moody’s and BBB– or better by S&P; and

      (2) no Default or Event of Default shall have occurred and be continuing.

then, beginning on that day and continuing at all times thereafter regardless of any subsequent changes in the rating of the notes, the covenants specifically listed under the following captions in this offering memorandum will no longer be applicable to the notes:

      (1) “— Repurchase at the Option of Holders — Asset Sales;”

      (2) “— Restricted Payments;”

      (3) “— Incurrence of Indebtedness and Issuance of Preferred Stock;”

      (4) “— Sale and Leaseback Transactions;”

      (5) “— Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries;”

      (6) “— Transactions with Affiliates;” and

      (7) clause (4) of the covenant listed under “— Merger, Consolidation or Sale of Assets.”

      We cannot assure you that the notes will ever achieve or maintain an investment grade rating.

Restricted Payments

      Valeant will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:

      (1) declare or pay any dividend or make any other payment or distribution on account of Valeant’s or any of its Restricted Subsidiaries’ Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving Valeant or any of its Restricted Subsidiaries) or to the direct or indirect holders of Valeant’s or any of its Restricted Subsidiaries’ Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of Valeant or to Valeant or a Restricted Subsidiary of Valeant);

      (2) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving Valeant) any Equity Interests of Valeant or any direct or indirect parent of Valeant;

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      (3) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness that is subordinated to the notes, except (i) payments of interest thereon, (ii) payments of principal at the Stated Maturity thereof and (iii) any payment on or with respect to the 6 1/2% Convertible Subordinated Notes due 2008; or

      (4) make any Restricted Investment;

(all such payments and other actions set forth in these clauses (1) through (4) above being collectively referred to as “Restricted Payments”), unless, at the time of and after giving effect to such Restricted Payment:

      (1) no Default or Event of Default has occurred and is continuing or would occur as a consequence of such Restricted Payment;

      (2) Valeant would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described below under the caption “— Incurrence of Indebtedness and Issuance of Preferred Stock;” and

      (3) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by Valeant and its Restricted Subsidiaries after the date of the indenture (excluding Restricted Payments permitted by clauses (2), (3), (4), (5) and (6) of the next succeeding paragraph), is less than the sum, without duplication, of:

      (a) 50% of the Consolidated Net Income of Valeant for the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing after the date of the indenture to the end of Valeant’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus

      (b) 100% of the aggregate net cash proceeds received by Valeant since the date of the indenture as a contribution to its common equity capital or from the issue or sale of Equity Interests of Valeant (other than Disqualified Stock) or from the issue or sale of convertible or exchangeable Disqualified Stock or convertible or exchangeable debt securities of Valeant that have been converted into or exchanged for such Equity Interests (other than Equity Interests (or Disqualified Stock or debt securities) sold to a Subsidiary of Valeant), plus

      (c) to the extent that any Restricted Investment that was made after the date of the indenture is sold for cash or otherwise liquidated or repaid for cash, the lesser of (i) the cash return of capital with respect to such Restricted Investment (less the cost of disposition, if any) or (ii) the initial amount of such Restricted Investment, plus

      (d) to the extent that any Unrestricted Subsidiary of Valeant is redesignated as a Restricted Subsidiary after the date of the indenture, the lesser of (i) the Fair Market Value of Valeant’s Investment in such Subsidiary as of the date of such redesignation or (ii) such Fair Market Value as of the date on which such Subsidiary was originally designated as an Unrestricted Subsidiary.

      So long as no Default or Event of Default has occurred and is continuing or would be caused thereby, the preceding provisions will not prohibit:

      (1) the payment of any dividend within 60 days after the date of declaration of the dividend, if at the date of declaration the dividend payment would have complied with the provisions of the indenture;

      (2) the declaration and payment of the Current Dividend; provided, that at the time of declaration of such dividend Valeant is able to incur at least an additional $1.00 of Indebtedness pursuant to the first paragraph of the covenant described below under the caption “—Incurrence of Indebtedness and Issuance of Preferred Stock;” provided further, that if in any successive quarterly period after the date of

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the indenture Valeant does not declare and pay the Current Dividend, Valeant shall no longer be permitted to pay any future Current Dividend under this clause (2);

      (3) the redemption, repurchase, retirement, defeasance or other acquisition of any subordinated Indebtedness of Valeant or the Co-Obligor or of any Equity Interests of Valeant in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Restricted Subsidiary of Valeant) of, Equity Interests of Valeant (other than Disqualified Stock); provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition will be excluded from clause (3)(b) of the preceding paragraph;

      (4) the defeasance, redemption, repurchase or other acquisition of subordinated Indebtedness of Valeant or the Co-Obligor with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness;

      (5) the payment of any dividend by a Restricted Subsidiary of Valeant to the holders of its Equity Interests on a pro rata basis;

      (6) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of Valeant or any Restricted Subsidiary of Valeant held by any employee of Valeant or any of its Restricted Subsidiaries pursuant to any equity subscription agreement, stock option agreement or similar agreement; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests may not exceed an aggregate of $5.0 million since the date of the indenture; and

      (7) other Restricted Payments in an aggregate amount not to exceed $20.0 million since the date of the indenture.

      The amount of all Restricted Payments (other than cash) will be the Fair Market Value (determined, for purposes of this covenant, by Valeant or, in the case of any asset(s) valued in excess of $10 million, by the Board of Directors, in each case evidenced by an officers’ certificate delivered to the trustee) on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by Valeant or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The Board of Directors’ determination must be based upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of national standing if the Fair Market Value exceeds $25.0 million. Not later than the date of making any Restricted Payment, Valeant will deliver to the trustee an officers’ certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by this “Restricted Payments” covenant were computed, together with a copy of any fairness opinion or appraisal required by the indenture.

Incurrence of Indebtedness and Issuance of Preferred Stock

      Valeant will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise (collectively, “incur”), with respect to any Indebtedness (including Acquired Debt), and Valeant will not issue any Disqualified Stock and will not permit any of its Restricted Subsidiaries to issue any Disqualified Stock or preferred stock; provided, however, that Valeant may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock if the Fixed Charge Coverage Ratio for Valeant’s most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock is issued would have been at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock had been issued, as the case may be, at the beginning of such four-quarter period.

      The first paragraph of this covenant will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):

      (1) the incurrence by Valeant of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1) (with letters of credit being

45

deemed to have a principal amount equal to the maximum potential liability of Valeant and its Restricted Subsidiaries thereunder) not to exceed the greater of (x) $150.0 million less the aggregate amount of all Net Proceeds of Asset Sales applied by Valeant or any of its Restricted Subsidiaries since the date of the indenture to repay any term Indebtedness under a Credit Facility or to repay any Indebtedness under a Credit Facility and effect a corresponding commitment reduction thereunder pursuant to the covenant described above under the caption “— Repurchase at the Option of Holders — Asset Sales” and (y) the amount of the Borrowing Base as of the date of such incurrence;

      (2) the incurrence by Valeant and its Restricted Subsidiaries of the Existing Indebtedness;

      (3) the incurrence by Valeant and the Co-Obligor of Indebtedness represented by the notes to be issued on the date of the indenture and the Exchange Notes to be issued pursuant to the registration rights agreement and Guarantees thereof, if any, by Domestic Subsidiaries of Valeant;

      (4) the incurrence by Valeant or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of property, plant or equipment used in the business of Valeant or such Restricted Subsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (4), not to exceed $25.0 million at any time outstanding;

      (5) the incurrence by Valeant or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace Indebtedness (other than intercompany Indebtedness) that was permitted by the indenture to be incurred under the first paragraph of this covenant or clauses (2), (3), (4), (5), (11) or (12) of this paragraph;

      (6) the incurrence by Valeant or any of its Restricted Subsidiaries of intercompany Indebtedness between or among Valeant and any of its Restricted Subsidiaries; provided, however, that:

      (a) if Valeant or the Co-Obligor is the obligor on such Indebtedness, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations with respect to the notes; and

      (b) (i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than Valeant or a Restricted Subsidiary of Valeant and (ii) any sale or other transfer of any such Indebtedness to a Person that is not either Valeant or a Restricted Subsidiary of Valeant will be deemed, in each case, to constitute an incurrence of such Indebtedness by Valeant or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);

      (7) the incurrence by Valeant or any of its Restricted Subsidiaries of Hedging Obligations that are incurred in the ordinary course of business and not for speculative purposes;

      (8) the Guarantee by Valeant or the Co-Obligor of Indebtedness of Valeant or a Restricted Subsidiary of Valeant that was permitted to be incurred by another provision of this covenant; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the notes, then the Guarantee shall be subordinated to the same extent as the Indebtedness guaranteed;

      (9) the accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this covenant; provided, in each such case, that the amount thereof is included in Fixed Charges of Valeant as accrued;

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      (10) Obligations in respect of performance and surety bonds and completion guarantees provided by Valeant or any Restricted Subsidiary in an aggregate principal amount at any time outstanding not to exceed $25.0 million;

      (11) the incurrence by Valeant or any of its Restricted Subsidiaries of Acquired Debt in an aggregate principal amount at any time outstanding not to exceed $25.0 million;

      (12) the incurrence by Valeant or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (12), not to exceed $25.0 million; and

      (13) the Guarantee by Domestic Subsidiaries of Valeant of Indebtedness of Valeant permitted to be incurred under another provision of this covenant.

      Valeant will not incur any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of Valeant unless such Indebtedness is also contractually subordinated in right of payment to the notes on substantially identical terms; provided, however, that no Indebtedness of Valeant will be deemed to be contractually subordinated in right of payment to any other Indebtedness of Valeant solely by virtue of being unsecured.

      For purposes of determining compliance with this “Incurrence of Indebtedness and Issuance of Preferred Stock” covenant, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (12) above, or is entitled to be incurred pursuant to the first paragraph of this covenant, Valeant will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this covenant. Indebtedness under Credit Facilities outstanding on the date on which notes are first issued and authenticated under the indenture will be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of the definition of Permitted Debt.

Sale and Leaseback Transactions

      Valeant will not, and will not permit any of its Restricted Subsidiaries to, enter into any sale and leaseback transaction (other than a sale leaseback transaction involving a lease, including any renewal period, optional or otherwise, not in excess of 24 months); provided that Valeant or any Restricted Subsidiary may enter into a sale and leaseback transaction if:

      (1) Valeant or that Restricted Subsidiary, as applicable, could have (a) incurred Indebtedness in an amount equal to the Attributable Debt relating to such sale and leaseback transaction under the Fixed Charge Coverage Ratio test in the first paragraph of the covenant described above under the caption “— Incurrence of Indebtedness and Issuance of Preferred Stock” and (b) incurred a Lien to secure such Indebtedness pursuant to the covenant described below under the caption “— Liens;”

      (2) the gross cash proceeds of that sale and leaseback transaction are at least equal to the Fair Market Value, as determined in good faith by Valeant, or, in the case of a sale leaseback transaction in excess of $10 million, the Board of Directors, in each case set forth in an officers’ certificate delivered to the trustee, of the property that is the subject of that sale and leaseback transaction; and

      (3) the transfer of assets in that sale and leaseback transaction is permitted by, and Valeant applies the proceeds of such transaction in compliance with, the covenant described above under the caption “— Repurchase at the Option of Holders — Asset Sales.”

Liens

      Valeant will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Lien of any kind on any asset now owned or hereafter acquired, except Permitted Liens.

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Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries

      Valeant will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to:

      (1) pay dividends or make any other distributions on its Capital Stock to Valeant or any of its Restricted Subsidiaries, or with respect to any other interest or participation in, or measured by, its profits, or pay any indebtedness owed to Valeant or any of its Restricted Subsidiaries;

      (2) make loans or advances to Valeant or any of its Restricted Subsidiaries; or

      (3) transfer any of its properties or assets to Valeant or any of its Restricted Subsidiaries.

      However, the preceding restrictions will not apply to encumbrances or restrictions existing under or by reason of:

      (1) agreements governing Existing Indebtedness as in effect on the date of the indenture and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of those agreements, provided that the amendments, modifications, restatements, renewals, increases, supplements, refundings, replacement or refinancings are no more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in those agreements on the date of the indenture;

      (2) the indenture and the notes;

      (3) any encumbrance or restriction pursuant to Credit Facilities incurred under clause (1) of the second paragraph of the covenant entitled “— Certain Covenants — Incurrence of Indebtedness and Issuance of Preferred Stock”;

      (4) applicable law, rule, regulation or order, approval, license, permit or similar restriction, including under contracts with foreign governments or agencies thereof entered into in the ordinary course of business;

      (5) any instrument governing Indebtedness or Capital Stock of a Person acquired by Valeant or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred, or such Capital Stock was issued, in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of the indenture to be incurred;

      (6) customary non-assignment provisions in leases, contracts and licenses entered into in the ordinary course of business and consistent with past practices;

      (7) purchase money obligations for property acquired in the ordinary course of business that impose restrictions on that property of the nature described in clause (3) of the preceding paragraph;

      (8) any agreement for the sale or other disposition of a Restricted Subsidiary that restricts distributions by that Restricted Subsidiary pending its sale or other disposition;

      (9) Permitted Refinancing Indebtedness, provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are no more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced;

      (10) Permitted Liens securing Indebtedness that limit the right of the debtor to dispose of the assets subject to such Liens;

      (11) customary provisions with respect to the disposition or distribution of assets or property in joint venture agreements, assets sale agreements, stock sale agreements and other similar agreements entered into in the ordinary course of business; and

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      (12) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business.

Merger, Consolidation or Sale of Assets

      Valeant may not, directly or indirectly: (1) consolidate or merge with or into another Person (whether or not Valeant is the surviving corporation); or (2) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of Valeant and its Restricted Subsidiaries taken as a whole, in one or more related transactions, to another Person; unless:

      (1) either: (a) Valeant is the surviving corporation; or (b) the Person formed by or surviving any such consolidation or merger (if other than Valeant) or to which such sale, assignment, transfer, conveyance or other disposition has been made is organized and validly existing under the laws of the United States, any state of the United States or the District of Columbia and expressly assumes our obligations under the notes and the indenture;

      (2) the Person formed by or surviving any such consolidation or merger (if other than Valeant) or the Person to which such sale, assignment, transfer, conveyance or other disposition has been made assumes all the obligations of Valeant under the notes, the indenture and the registration rights agreement pursuant to agreements reasonably satisfactory to the trustee;

      (3) immediately after such transaction, no Default or Event of Default exists; and

      (4) Valeant or the Person formed by or surviving any such consolidation or merger (if other than Valeant), or to which such sale, assignment, transfer, conveyance or other disposition has been made will, on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described above under the caption “— Incurrence of Indebtedness and Issuance of Preferred Stock.”

      In addition, Valeant may not, directly or indirectly, lease all or substantially all of its properties or assets, in one or more related transactions, to any other Person.

     Transactions with Affiliates

      Valeant will not, and will not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (each, an “Affiliate Transaction”), unless:

      (1) the Affiliate Transaction is on terms that are no less favorable to Valeant or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by Valeant or such Restricted Subsidiary with an unrelated Person; and

      (2) Valeant delivers to the trustee:

      (a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $10.0 million, a resolution of the Board of Directors set forth in an officers’ certificate certifying that such Affiliate Transaction complies with this covenant and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors; and

      (b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $25.0 million, an opinion as to the fairness to Valeant or such Restricted Subsidiary of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing.

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      The following items will not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of the prior paragraph:

      (1) any employment agreement entered into by Valeant or any of its Restricted Subsidiaries in the ordinary course of business and consistent with the past practice of Valeant or such Restricted Subsidiary;

      (2) transactions between or among Valeant and/or its Restricted Subsidiaries;

      (3) transactions with a Person that is an Affiliate of Valeant solely because Valeant owns, directly or through a Restricted Subsidiary, an Equity Interest in, or controls, such Person;

      (4) payment of reasonable directors’ fees to Persons who are not otherwise Affiliates of Valeant;

      (5) issuances or sales of Equity Interests (other than Disqualified Stock) of Valeant to Affiliates of Valeant;

      (6) Restricted Payments that are permitted by the provisions of the indenture described above under the caption “— Restricted Payments;”

      (7) transactions effected pursuant to agreements in effect on the date of the indenture and any amendment, modification, or replacement to such agreement (so long as the amendment, modification or replacement is not disadvantageous to the Holders of the notes in any respect);

      (8) advances to employees in the ordinary course of business not to exceed $1.0 million in the aggregate at any one time outstanding; and

      (9) transactions with a Permitted Joint Venture.

     Designation of Restricted and Unrestricted Subsidiaries

      The Board of Directors may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if that designation would not cause a Default. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate Fair Market Value of all outstanding Investments owned by Valeant and its Restricted Subsidiaries in the Subsidiary designated as an Unrestricted Subsidiary will be deemed to be an Investment made as of the time of the designation and will reduce the amount available for Restricted Payments under the first paragraph of the covenant described above under the caption “— Restricted Payments” or under one or more of the clauses of the definition of Permitted Investments, as determined by Valeant. That designation will only be permitted if the Investment would be permitted at that time and if the Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The Board of Directors may redesignate any Unrestricted Subsidiary to be a Restricted Subsidiary if the redesignation would not cause a Default.

     Business Activities

      Valeant will not, and will not permit any Restricted Subsidiary to, engage in any business other than Permitted Businesses, except to such extent as would not be material to Valeant and its Restricted Subsidiaries taken as a whole.

     Payments for Consent

      Valeant will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any Holder of notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the indenture or the notes unless such consideration is offered to be paid and is paid to all Holders of the notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement.

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Reports

      Whether or not required by the Commission’s rules and regulations, so long as any notes are outstanding, Valeant will furnish (to the extent not publicly available on the Commission’s EDGAR system) to the Holders of notes, within the time periods specified in the Commission’s rules and regulations:

      (1) all quarterly and annual reports that would be required to be filed with the Commission on Forms 10-Q and 10-K if Valeant were required to file such reports; and

      (2) all current reports that would be required to be filed with the Commission on Form 8-K if Valeant were required to file such reports.

      All such reports will be prepared in all material respects in accordance with all of the rules and regulations applicable to such reports. Each annual report on Form 10-K will include a report on Valeant’s consolidated financial statements by Valeant’s certified independent accountants. In addition, Valeant will file a copy of each of the reports referred to in clauses (1) and (2) above with the Commission for public availability within the time periods specified in the rules and regulations applicable to such reports (unless the Commission will not accept such a filing) and make such information available to securities analysts and prospective investors upon request.

      If, at any time, Valeant is no longer subject to the periodic reporting requirements of the Exchange Act for any reason, Valeant will nevertheless continue filing the reports specified in the preceding paragraph with the Commission within the time periods specified above unless the Commission will not accept such a filing.

      Valeant agrees that it will not take any action for the purpose of causing the Commission not to accept any such filings. If, notwithstanding the foregoing, the Commission will not accept Valeant’s filings for any reason, Valeant will post the reports referred to in the preceding paragraph on its website within the time periods that would apply if Valeant were required to file those reports with the Commission.

      In addition, Valeant agrees that, for so long as any notes remain outstanding, at any time it is not required to file the reports required by the preceding paragraphs with the Commission, it will furnish to the Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

      If Valeant has designated any of its Subsidiaries as Unrestricted Subsidiaries, other than ICN Yugoslavia DD, then the quarterly and annual financial information required by the preceding paragraphs will include a reasonably detailed presentation, either on the face of the financial statements or in the footnotes thereto, and in Management’s Discussion and Analysis of Financial Condition and Results of Operations, of the financial condition and results of operations of Valeant and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of Valeant.

Events of Default and Remedies

      Each of the following is an Event of Default:

      (1) default for 30 days in the payment when due of interest on, or Liquidated Damages with respect to, the notes;

      (2) default in payment when due of the principal of, or premium, if any, on the notes;

      (3) failure by Valeant or any of its Restricted Subsidiaries to comply with the provisions described under the captions “— Repurchase at the Option of Holders — Change of Control,” “— Repurchase at the Option of Holders — Asset Sales,” “— Certain Covenants — Restricted Payments,” “— Certain Covenants — Incurrence of Indebtedness and Issuance of Preferred Stock” or “— Certain Covenants — Merger, Consolidation or Sale of Assets;”

      (4) failure by Valeant or any of its Subsidiaries for 60 days after notice to comply with any of the other agreements in the indenture;

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      (5) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by Valeant or any of its Restricted Subsidiaries (or the payment of which is guaranteed by Valeant or any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists, or is created after the date of the indenture, if that default:

      (a) is caused by a failure to pay principal of, or interest or premium, if any, on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a “Payment Default”); or

      (b) results in the acceleration of such Indebtedness prior to its express maturity;

and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $10.0 million or more;

      (6) failure by Valeant or any of its Restricted Subsidiaries to pay final non-appealable judgments aggregating in excess of $10.0 million, which judgments are not paid, discharged or stayed for a period of 60 days; and

      (7) certain events of bankruptcy, administration, administrative receivership, composition, insolvency or liquidation described in the indenture with respect to Valeant, any Significant Subsidiary, or any group of Subsidiaries that, when taken together, would constitute a Significant Subsidiary or a Significant Subsidiary upon the occurrence of such events.

      In the case of an Event of Default arising from certain events of bankruptcy or insolvency with respect to Valeant, any Subsidiary that is a Significant Subsidiary or any group of Subsidiaries that, taken together, would constitute a Significant Subsidiary, all outstanding notes will become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, the trustee or the Holders of at least 25% in principal amount of the then outstanding notes may declare all the notes to be due and payable immediately.

      Holders of the notes may not enforce the indenture or the notes except as provided in the indenture.

      Subject to certain limitations, Holders of a majority in principal amount of the then outstanding notes may direct the trustee in its exercise of any trust or power. The trustee may withhold from Holders of the notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal, interest or Liquidated Damages) if it determines that withholding notice is in their interest.

      The Holders of a majority in aggregate principal amount of the notes then outstanding by notice to the trustee may on behalf of the Holders of all of the notes waive any existing Default or Event of Default and its consequences under the indenture except a continuing Default or Event of Default in the payment of interest or Liquidated Damages on, or the principal of, the notes.

      In the case of any Event of Default occurring by reason of any willful action or inaction taken or not taken by or on behalf of Valeant with the intention of avoiding payment of the premium that Valeant would have had to pay if Valeant then had elected to redeem the notes pursuant to the optional redemption provisions of the indenture, an equivalent premium will also become and be immediately due and payable to the extent permitted by law upon the acceleration of the notes. If an Event of Default occurs prior to December 15, 2007, by reason of any willful action (or inaction) taken (or not taken) by or on behalf of Valeant with the intention of avoiding the prohibition on redemption of the notes prior to December 15, 2007, then the premium specified in the indenture will also become immediately due and payable to the extent permitted by law upon the acceleration of the notes.

      Valeant is required to deliver to the trustee annually a statement regarding compliance with the indenture. Upon becoming aware of any Default or Event of Default, Valeant is required to deliver to the trustee a statement specifying such Default or Event of Default.

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No Personal Liability of Directors, Officers, Employees and Stockholders

      No director, officer, employee, incorporator or stockholder of Valeant, as such, will have any liability for any obligations of Valeant under the notes, the indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of notes by accepting a note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the notes. The waiver may not be effective to waive liabilities under the U.S. federal securities laws.

Legal Defeasance and Covenant Defeasance

      Valeant may, at its option and at any time, elect to have all of its and the Co-Obligor’s obligations discharged with respect to the outstanding notes (“Legal Defeasance”) except for:

      (1) the rights of Holders of outstanding notes to receive payments in respect of the principal of, or interest or premium and Liquidated Damages, if any, on, such notes when such payments are due from the trust referred to below;

      (2) Valeant’s obligations with respect to the notes concerning issuing temporary notes, registration of notes, mutilated, destroyed, lost or stolen notes and the maintenance of an office or agency for payment and money for security payments held in trust;

      (3) the rights, powers, trusts, duties and immunities of the trustee, and Valeant’s and the Co-Obligor’s obligations in connection therewith; and

      (4) the Legal Defeasance provisions of the indenture.

      In addition, Valeant may, at its option and at any time, elect to have the obligations of Valeant and the Co-Obligor released with respect to certain covenants that are described in the indenture (“Covenant Defeasance”) and thereafter any omission to comply with those covenants will not constitute a Default or Event of Default with respect to the notes. In the event Covenant Defeasance occurs, certain events (not including non-payment, bankruptcy, receivership, rehabilitation or insolvency events) described under “— Events of Default and Remedies” will no longer constitute an Event of Default with respect to the notes.

      In order to exercise either Legal Defeasance or Covenant Defeasance:

      (1) Valeant must irrevocably deposit with the trustee, in trust, for the benefit of the Holders of the notes, cash in U.S. Dollars, non-callable Government Securities, or a combination of cash in U.S. Dollars and non-callable Government Securities, in amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, or interest and premium and Liquidated Damages, if any, on, the outstanding notes on the stated maturity or on the applicable redemption date, as the case may be, and Valeant must specify whether the notes are being defeased to maturity or to a particular redemption date;

      (2) in the case of Legal Defeasance, Valeant must deliver to the trustee an opinion of counsel reasonably acceptable to the trustee confirming that (a) Valeant has received from, or there has been published by, the Internal Revenue Service a ruling or (b) since the date of the indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion of counsel will confirm that, the Holders of the outstanding notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;

      (3) in the case of Covenant Defeasance, Valeant must deliver to the trustee an opinion of counsel reasonably acceptable to the trustee confirming that the Holders of the outstanding notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

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      (4) no Default or Event of Default may have occurred and be continuing either: (a) on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit); or (b) insofar as Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 91st day after the date of deposit;

      (5) such Legal Defeasance or Covenant Defeasance must not result in a breach or violation of, or constitute a default under any material agreement or instrument (other than the indenture) to which Valeant or any of its Subsidiaries is a party or by which Valeant or any of its Subsidiaries is bound;

      (6) Valeant must deliver to the trustee an opinion of counsel reasonably acceptable to the trustee to the effect that after the 91st day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally;

      (7) Valeant must deliver to the trustee an officers’ certificate stating that the deposit was not made by Valeant with the intent of preferring the Holders of notes over the other creditors of Valeant with the intent of defeating, hindering, delaying or defrauding creditors of Valeant or others; and

      (8) Valeant must deliver to the trustee an officers’ certificate and an opinion of counsel, each stating that all conditions precedent relating to the Legal Defeasance or the Covenant Defeasance have been complied with.

Amendment, Supplement and Waiver

      Except as provided in the next two succeeding paragraphs, the indenture or the notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, notes), and any existing default or compliance with any provision of the indenture or the notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding notes (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, notes).

      Without the consent of each Holder affected, an amendment or waiver may not (with respect to any notes held by a non-consenting Holder):

      (1) reduce the principal amount of notes whose Holders must consent to an amendment, supplement or waiver;

      (2) reduce the principal of or change the fixed maturity of any note or alter the provisions with respect to the redemption of the notes (other than provisions relating to the covenants described above under the caption “— Repurchase at the Option of Holders”);

      (3) reduce the rate of or change the time for payment of interest on any note;

      (4) waive a Default or Event of Default in the payment of principal of, or interest or premium or Liquidated Damages, if any, on the notes (except a rescission of acceleration of the notes by the Holders of at least a majority in aggregate principal amount of the notes and a waiver of the payment default that resulted from such acceleration);

      (5) make any note payable in money other than U.S. Dollars;

      (6) make any change in the provisions of the indenture relating to waivers of past Defaults or the rights of Holders of notes to receive payments of principal of, or interest or premium or Liquidated Damages, if any, on the notes;

      (7) waive a redemption payment with respect to any note (other than a payment required by one of the covenants described above under the caption “— Repurchase at the Option of Holders”);

      (8) impair the right to institute suit for the enforcement of any payment on or with respect to the notes; or

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      (a) make any change in the preceding amendment and waiver provisions.

      Notwithstanding the preceding, without the consent of any Holder of notes, Valeant, the Co-Obligor and the trustee may amend or supplement the indenture or the notes:

      (1) to cure any ambiguity, defect or inconsistency;

      (2) to provide for uncertificated notes in addition to or in place of certificated notes;

      (3) to provide for the assumption of Valeant’s obligations to Holders of notes in the case of a consolidation or merger or sale of all or substantially all of Valeant’s assets;

      (4) to make any change that would provide any additional rights or benefits to the Holders of notes or that does not adversely affect the legal rights under the indenture of any such Holder;

      (5) to comply with requirements of the Commission in order to effect or maintain the qualification of the indenture under the Trust Indenture Act;

      (6) to conform the text of the indenture or the notes to any provision of this Description of the Notes to the extent that such provision in this Description of the Notes was intended to be a verbatim recitation of a provision of the indenture or the notes;

      (7) to provide for the issuance of additional notes in accordance with the limitations set forth in the indenture as of its date;

      (8) to allow any Person to execute a supplemental indenture and a Guarantee with respect to the notes; or

      (a) to remove Ribapharm as the Co-Obligor on the notes, in accordance with the terms of the indenture.

Satisfaction and Discharge

      The indenture will be discharged and will cease to be of further effect as to all notes issued thereunder, when:

      (1) either:

      (a) all notes that have been authenticated, except lost, stolen or destroyed notes that have been replaced or paid and notes for whose payment money has been deposited in trust and thereafter repaid to Valeant, have been delivered to the trustee for cancellation; or

      (b) all notes that have not been delivered to the trustee for cancellation have become due and payable by reason of the mailing of a notice of redemption or otherwise or will become due and payable within one year and Valeant has irrevocably deposited or caused to be deposited with the trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. Dollars, non-callable Government Securities, or a combination of cash in U.S. Dollars and non-callable Government Securities, in amounts as will be sufficient without consideration of any reinvestment of interest, to pay and discharge the entire indebtedness on the notes not delivered to the trustee for cancellation for principal, premium and Liquidated Damages, if any, and accrued interest to the date of maturity or redemption;

      (2) no Default or Event of Default has occurred and is continuing on the date of the deposit or will occur as a result of the deposit and the deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which Valeant or the Co-Obligor is a party or by which Valeant or the Co-Obligor is bound;

      (3) Valeant or the Co-Obligor has paid or caused to be paid all sums payable by it under the indenture; and

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      (4) Valeant has delivered irrevocable instructions to the trustee under the indenture to apply the deposited money toward the payment of the notes at maturity or the redemption date, as the case may be.

      In addition, Valeant must deliver an officers’ certificate and an opinion of counsel to the trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.

Concerning the Trustee

      If the trustee becomes a creditor of Valeant or the Co-Obligor, the indenture limits its right to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the Commission for permission to continue or resign.

      The Holders of a majority in principal amount of the then outstanding notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the trustee, subject to certain exceptions. The indenture provides that in case an Event of Default occurs and is continuing, the trustee will be required, in the exercise of its power, to use the degree of care of a prudent person in the conduct of such person’s own affairs. Subject to such provisions, the trustee will be under no obligation to exercise any of its rights or powers under the indenture at the request of any Holder of notes, unless such Holder has offered to the trustee security and indemnity satisfactory to it against any loss, liability or expense.

Governing Law

      The indenture and the notes will be governed by the laws of the State of New York.

Additional Information

      Anyone who receives this prospectus may obtain a copy of the indenture and registration rights agreement without charge by writing to Valeant Pharmaceuticals International, 3300 Hyland Avenue, Costa Mesa, CA 92626, Attention: Corporate Secretary.

Book-Entry, Delivery and Form

      The new notes will be represented by one or more notes in registered global form, without interest coupons attached. On the date of closing of the exchange offer, these global notes, or the Global Notes, will be deposited with The Depository Trust Company, or DTC, in New York, New York, or remain in the custody of the trustee pursuant to the FAST Balance Certificate Agreement between DTC and the trustee, and registered in the name of DTC or its nominee, in each case for credit to an account of a direct or indirect participant in DTC as described below.

      Except as set forth below, the Global Notes may be transferred, in whole and not in part, only to another nominee of DTC or to a successor of DTC or its nominee. In addition, transfers of beneficial interests in the Global Notes will be subject to the applicable rules and procedures of DTC and its direct or indirect participants, including, if applicable, those of Euroclear Bank S.A./ N.V., as operator of the Euroclear System, or Euroclear, and Clearstream Banking, société anonyme, or Clearstream, which may change from time to time. Beneficial interests in the Global Notes may not be exchanged for notes in certificated form except in the limited circumstances described below. See “—Exchange of Global Notes for Certificated Notes.”

Depository Procedures

      The following description of the operations and procedures of DTC, Euroclear and Clearstream are provided solely as a matter of convenience. These operations and procedures are solely within the control of the respective settlement systems and are subject to changes by them. Valeant takes no responsibility for these operations and procedures and urges investors to contact the system or their participants directly to discuss these matters.

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      DTC has advised Valeant that DTC is a limited-purpose trust company created to hold securities for its participating organizations, collectively, the participants, and to facilitate the clearance and settlement of transactions in those securities between participants through electronic book-entry changes in accounts of its participants. The participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. Access to DTC’s system is also available to other entities such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly, collectively, the indirect participants. Persons who are not participants may beneficially own securities held by or on behalf of DTC only through the participants or the indirect participants. The ownership interests in, and transfers of ownership interests in, each security held by or on behalf of DTC are recorded on the records of the participants and indirect participants.

      DTC has also advised Valeant that, pursuant to procedures established by it:

      (1) upon deposit of the Global Notes, DTC will credit the accounts of participants with portions of the principal amount of the Global Notes; and

      (2) ownership of these interests in the Global Notes will be shown on, and the transfer of ownership of these interests will be effected only through, records maintained by DTC (with respect to the participants) or by the participants and the indirect participants (with respect to other owners of beneficial interest in the Global Notes).

      Investors in the Global Notes who are participants in DTC’s system may hold their interests therein directly through DTC. Investors in the Global Notes who are not participants may hold their interests therein indirectly through organizations (including Euroclear and Clearstream) which are participants in such system. Euroclear and Clearstream will hold interests in the Global Notes on behalf of their participants through customers’ securities accounts in their respective names on the books of their respective depositories, which are Euroclear Bank S.A./ N.V., as operator of Euroclear, and Citibank, N.A., as operator of Clearstream. All interests in a Global Note, including those held through Euroclear or Clearstream, may be subject to the procedures and requirements of DTC.

      Those interests held through Euroclear or Clearstream may also be subject to the procedures and requirements of such systems. The laws of some states require that certain Persons take physical delivery in definitive form of securities that they own. Consequently, the ability to transfer beneficial interests in a Global Note to such Persons will be limited to that extent. Because DTC can act only on behalf of participants, which in turn act on behalf of indirect participants, the ability of a Person having beneficial interests in a Global Note to pledge such interests to Persons that do not participate in the DTC system, or otherwise take actions in respect of such interests, may be affected by the lack of a physical certificate evidencing such interests.

Except as described below, owners of interests in the Global Notes will not have notes registered in their names, will not receive physical delivery of notes in certificated form and will not be considered the registered owners or “Holders” thereof under the indenture for any purpose.

      Payments in respect of the principal of, and interest and premium and Liquidated Damages, if any, on a Global Note registered in the name of DTC or its nominee will be payable to DTC in its capacity as the registered Holder under the indenture. Under the terms of the indenture, Valeant and the trustee will treat the Persons in whose names the notes, including the Global Notes, are registered as the owners of the notes for the purpose of receiving payments and for all other purposes. Consequently, neither Valeant, the trustee nor any agent of Valeant or the trustee has or will have any responsibility or liability for:

      (1) any aspect of DTC’s records or any participant’s or indirect participant’s records relating to or payments made on account of beneficial ownership interest in the Global Notes or for maintaining, supervising or reviewing any of DTC’s records or any participant’s or indirect participant’s records relating to the beneficial ownership interests in the Global Notes; or

      (2) any other matter relating to the actions and practices of DTC or any of its participants or indirect participants.

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      DTC has advised Valeant that its current practice, upon receipt of any payment in respect of securities such as the notes (including principal and interest), is to credit the accounts of the relevant participants with the payment on the payment date unless DTC has reason to believe it will not receive payment on such payment date. Each relevant participant is credited with an amount proportionate to its beneficial ownership of an interest in the principal amount of the relevant security as shown on the records of DTC. Payments by the participants and the indirect participants to the beneficial owners of notes will be governed by standing instructions and customary practices and will be the responsibility of the participants or the indirect participants and will not be the responsibility of DTC, the trustee or Valeant. Neither Valeant nor the trustee will be liable for any delay by DTC or any of its participants in identifying the beneficial owners of the notes, and Valeant and the trustee may conclusively rely on and will be protected in relying on instructions from DTC or its nominee for all purposes.

      Transfers between participants in DTC will be effected in accordance with DTC’s procedures, and will be settled in same-day funds, and transfers between participants in Euroclear and Clearstream will be effected in accordance with their respective rules and operating procedures.

      Cross-market transfers between the participants in DTC, on the one hand, and DTC participants acting on behalf of Euroclear or Clearstream participants, on the other hand, will be effected through DTC in accordance with DTC’s rules on behalf of DTC participants acting on behalf of Euroclear or Clearstream, as the case may be; however, such cross-market transactions will require delivery of instructions to Euroclear or Clearstream, as the case may be, by the counterparty in such system in accordance with the rules and procedures and within the established deadlines (Brussels time) of such system. Euroclear or Clearstream, as the case may be, will, if the transaction meets its settlement requirements, deliver instructions to the DTC participant acting on its behalf to take action to effect final settlement on its behalf by delivering or receiving interests in the relevant Global Note in DTC, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Euroclear participants and Clearstream participants may not deliver instructions directly to the DTC participants acting on behalf of Euroclear or Clearstream.

      DTC has advised us that it will take any action permitted to be taken by a Holder of notes only at the direction of one or more participants to whose account DTC has credited the interests in the Global Notes and only in respect of such portion of the aggregate principal amount of the notes as to which such participant or participants has or have given such direction. However, if there is an Event of Default under the notes, DTC reserves the right to exchange the Global Notes for notes in certificated form, and to distribute such notes to its participants.

      Although DTC, Euroclear and Clearstream have agreed to the foregoing procedures to facilitate transfers of interests in the Global Notes among participants in DTC, Euroclear and Clearstream, they are under no obligation to perform or to continue to perform such procedures, and may discontinue such procedures at any time. Neither Valeant nor the trustee nor any of their respective agents will have any responsibility for the performance by DTC, Euroclear or Clearstream or their respective participants or indirect participants of their respective obligations under the rules and procedures governing their operations.

Exchange of Global Notes for Certificated Notes

      A Global Note is exchangeable for definitive notes in registered certificated form, or Certificated Notes, if:

      (1) DTC (a) notifies Valeant that it is unwilling or unable to continue as depositary for the Global Notes or (b) has ceased to be a clearing agency registered under the Exchange Act and, in either case, Valeant fails to appoint a successor depositary;

      (2) Valeant, at its option, notifies the trustee in writing that it elects to cause the issuance of the Certificated Notes; or

      (3) there has occurred and is continuing a Default or Event of Default with respect to the notes.

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      In all cases, Certificated Notes delivered in exchange for any Global Note or beneficial interests in Global Notes will be registered in the names, and issued in any approved denominations, requested by or on behalf of the depository (in accordance with its customary procedures).

Same Day Settlement and Payment

      Valeant will make payments in respect of the notes represented by the Global Notes (including principal, premium, if any, interest and Liquidated Damages, if any) by wire transfer of immediately available funds to the accounts specified by the Global Note Holder. Valeant will make all payments of principal, interest and premium and Liquidated Damages, if any, with respect to Certificated Notes by wire transfer of immediately available funds to the accounts specified by the Holders of the Certificated Notes, in the case of a Holder holding an aggregate principal amount of notes of $1 million or more, or, if no such account is specified or in the case of a Holder holding an aggregate principal amount of notes of less than $1 million, by mailing a check to each such Holder’s registered address. The notes represented by the Global Notes are expected to be eligible to trade in DTC’s Same-Day Funds Settlement System, and any permitted secondary market trading activity in such notes will, therefore, be required by DTC to be settled in immediately available funds. Valeant expects that secondary trading in any Certificated Notes will also be settled in immediately available funds.

      Because of time zone differences, the securities account of a Euroclear or Clearstream participant purchasing an interest in a Global Note from a participant in DTC will be credited, and any such crediting will be reported to the relevant Euroclear or Clearstream participant, during the securities settlement processing day (which must be a business day for Euroclear and Clearstream) immediately following the settlement date of DTC. DTC has advised Valeant that cash received in Euroclear or Clearstream as a result of sales of interests in a Global Note by or through a Euroclear or Clearstream participant to a participant in DTC will be received with value on the settlement date of DTC but will be available in the relevant Euroclear or Clearstream cash account only as of the business day for Euroclear or Clearstream following DTC’s settlement date.

Certain Definitions

      Set forth below are certain defined terms used in the indenture. Reference is made to the indenture for a full disclosure of all such terms, as well as any other capitalized terms used herein for which no definition is provided.

      “Acquired Debt” means, with respect to any specified Person:

      (1) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Subsidiary of, such specified Person; and

      (2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

      “Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control,” as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided, that beneficial ownership of 10% or more of the Voting Stock of a Person will be deemed to be control. For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” have correlative meanings.

      “Asset Sale” means:

      (1) the sale, lease, conveyance or other disposition of any assets or rights; provided, that the sale, conveyance or other disposition of all or substantially all of the assets of Valeant and its Restricted Subsidiaries taken as a whole will be governed by the provisions of the indenture described above under the caption “— Repurchase at the Option of Holders — Change of Control” and/or the provisions

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described above under the caption “— Certain Covenants — Merger, Consolidation or Sale of Assets” and not by the provisions of the Asset Sale covenant; and

      (2) the issuance of Equity Interests by any of Valeant’s Restricted Subsidiaries or the sale of Equity Interests in any of its Restricted Subsidiaries.

      Notwithstanding the preceding, none of the following items will be deemed to be an Asset Sale:

      (1) any single transaction or series of related transactions that involves assets having a Fair Market Value of less than $2.5 million;

      (2) a transfer of assets between or among Valeant and its Restricted Subsidiaries;

      (3) an issuance of Equity Interests by a Restricted Subsidiary to Valeant or to another Restricted Subsidiary;

      (4) the sale or lease of equipment, inventory or accounts receivable in the ordinary course of business;

      (5) the sale or other disposition of cash or Cash Equivalents;

      (6) a Restricted Payment or Permitted Investment that is permitted by the covenant described above under the caption “— Certain Covenants — Restricted Payments;”

      (7) the license of intellectual property to third persons on customary terms in the ordinary course of business as determined by the Board of Directors of Valeant in good faith;

      (8) the sale, exchange or other disposition of obsolete assets not integral to any Permitted Business;

      (9) sales, transfers or other dispositions of assets for consideration at least equal to the Fair Market Value of the assets sold or disposed of, but only if the consideration received consists of property or assets (other than cash, except to the extent used as a bona fide means of equalizing the value of the property or assets involved in the swap transaction; provided, however, that cash does not exceed 10% of the sum of the amount of the cash and the Fair Market Value of the assets received or given) of a nature or type that are used in, a business having property or assets of a nature or type or engaged in a Permitted Business (or Capital Stock of a Person whose assets consist of assets of the type described in this clause (9)); and

      (10) the sale, transfer or disposition of any investment in, or any assets of ICN Czech and ICN Hungary, in each case existing on the date of the indenture, or any Investment in any other entity that holds such investments or assets as its only assets.

      “Attributable Debt” in respect of a sale and leaseback transaction means, at the time of determination, the present value of the obligation of the lessee for net rental payments during the remaining term of the lease included in such sale and leaseback transaction including any period for which such lease has been extended or may, at the option of the lessor, be extended. Such present value shall be calculated using a discount rate equal to the rate of interest implicit in such transaction, determined in accordance with GAAP.

      “Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” will be deemed to have beneficial ownership of all securities that such “person” has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition. The terms “Beneficially Owns” and “Beneficially Owned” have a corresponding meaning.

      “Board of Directors” means:

      (1) with respect to a company or corporation, the board of directors of the company or corporation or any committee thereof duly authorized to act on behalf of such board;

      (2) with respect to a partnership, the Board of Directors of the general partner of the partnership or any committee thereof duly authorized to act on behalf of such board; and

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      (3) with respect to any other Person, the board or committee of such Person serving a similar function.

      “Borrowing Base” means, as of any date, an amount equal to:

      (1) 85% of the face amount of all accounts receivable owned by Valeant and its Restricted Subsidiaries as of the end of the most recent fiscal quarter preceding such date that were not more than 90 days past due; plus

      (2) 60% of the book value of all inventory, net of reserves, owned by Valeant and its Restricted Subsidiaries as of the end of the most recent fiscal quarter preceding such date; minus

      (3) the aggregate amount of trade payables of Valeant and its Restricted Subsidiaries outstanding as of the end of the most recent fiscal quarter preceding such date, all calculated on a consolidated basis and in accordance with GAAP.

      “Capital Lease Obligations” means, at the time any determination is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet in accordance with GAAP.

      “Capital Stock” means:

      (1) in the case of a corporation, corporate stock;

      (2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

      (3) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and

      (4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.

      “Cash Equivalents” means:

      (1) securities issued or directly and fully guaranteed or insured by the U.S. government or any agency or instrumentality thereof (provided, that the full faith and credit of the U.S. is pledged in support thereof) having repricings or maturities of not more than one year from the date of acquisition;

      (2) certificates of deposit and time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances with maturities not exceeding one year and overnight bank deposits, in each case, with any domestic commercial bank having capital and surplus in excess of $500.0 million and a Thomson Bank Watch Rating of “B” or better;

      (3) repurchase obligations with a term of not more than 14 days for underlying securities of the types described in clauses (1) and (2) above entered into with any financial institution meeting the qualifications specified in clause (2) above;

      (4) commercial paper having a rating of at least “P-2” or better from Moody’s or at least “A-2” or better from S&P, or carrying an equivalent rating by an internationally recognized rating agency and, in each case, maturing within one year after the date of acquisition;

      (5) Auction-rate, corporate and municipal securities, in each case (x) having either short-term debt ratings of at least “P-2” or better from Moody’s or at least “A-2” or better from S&P or long-term senior debt ratings of “A2” or better from Moody’s or at least “A” or better from S&P, or carrying an equivalent rating by an internationally recognized rating agency, (y) having repricings or maturities of not more than one year from the date of acquisition and (z) which are classifiable as cash and cash equivalents under GAAP;

      (6) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (1) through (5) of this definition; or

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      (7) in the case of any Foreign Subsidiary:

      (a) direct obligations of the sovereign nation, or any agency thereof, in which such Foreign Subsidiary is organized and is conducting business or in obligations fully and unconditionally guaranteed by such sovereign nation, or any agency thereof; provided, that such obligations are acquired and held by such Foreign Subsidiary in the ordinary course of business and have repricings or maturities of not more than one year from the date of acquisition; or

      (b) investments of the type and maturity described in clauses (1) through (5) above of foreign obligors, which investments or obligors have ratings described in such clauses or equivalent ratings from internationally recognized rating agencies; provided, that such investments are acquired and held by such Foreign Subsidiary in the ordinary course of business.

      “Change of Control” means the occurrence of any of the following:

      (1) any “person” (as that term is used in Section 13(d)(3) of the Exchange Act) becomes the Beneficial Owner of shares of Valeant’s Voting Stock representing (i) 50% or more of the total voting power of all of Valeant’s outstanding Voting Stock or (ii) the power, directly or indirectly, or elect a majority of the members of Valeant’s Board of Directors;

      (2) Valeant consolidates with, or merges with or into, another Person, or Valeant, directly or indirectly, sells, assigns, conveys, transfers, leases or otherwise disposes of all or substantially all of the properties or assets of Valeant and its Restricted Subsidiaries, taken as a whole (other than by way of merger or consolidation), in one or a series of related transactions, or any Person consolidates with, or merges with or into, Valeant, in any such event other than pursuant to a transaction in which the Persons that Beneficially Owned the shares of Valeant’s Voting Stock immediately prior to such transaction Beneficially Own at least a majority of the total voting power of all outstanding Voting Stock (other than Disqualified Stock) of the surviving or transferee Person;

      (3) the holders of Valeant’s Capital Stock approve any plan or proposal for the liquidation or dissolution of Valeant (whether or not otherwise in compliance with the indenture); or

      (4) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of Valeant (together with any new directors whose election by such Board of Directors or whose nomination for election by the shareholders of Valeant has been approved by a majority of the directors then still in office who either were directors at the beginning of such period or whose election or recommendation for election was previously so approved) cease to constitute a majority of the Board of Directors of Valeant.

      “Consolidated Cash Flow” means, with respect to any specified Person for any period, the Consolidated Net Income of such Person for such period plus:

      (1) an amount equal to any extraordinary loss plus any net loss realized by such Person or any of its Restricted Subsidiaries in connection with an Asset Sale, to the extent such losses were deducted in computing such Consolidated Net Income; plus

      (2) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was deducted in computing such Consolidated Net Income; plus

      (3) consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued and whether or not capitalized (including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers’ acceptance financings, and net of the effect of all payments made or received pursuant to Interest Rate Hedging Obligations), to the extent that any such expense was deducted in computing such Consolidated Net Income; plus

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      (4) depreciation, amortization (including amortization of intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Consolidated Net Income; minus

      (5) non-cash items increasing such Consolidated Net Income for such period, other than the accrual of revenue in the ordinary course of business, in each case, on a consolidated basis and determined in accordance with GAAP.

      Notwithstanding the preceding, the provision for taxes based on the income or profits of, and the depreciation and amortization and other non-cash expenses of, a Restricted Subsidiary of Valeant will be added to Consolidated Net Income to compute Consolidated Cash Flow of Valeant only to the extent that a corresponding amount would be permitted at the date of determination to be dividended to Valeant by such Restricted Subsidiary without prior governmental approval (that has not been obtained), and without direct or indirect restriction pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Restricted Subsidiary or its stockholders.

      “Consolidated Net Income” means, with respect to any specified Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that:

      (1) the Net Income (but not loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting will be included only to the extent of the amount of dividends or distributions paid in cash to the specified Person or a Restricted Subsidiary of the Person;

      (2) the Net Income of any Restricted Subsidiary will be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders;

      (3) the cumulative effect of a change in accounting principles will be excluded;

      (4) any extraordinary or nonrecurring gain or loss and any expense or charge in connection with acquired IP&RD will be excluded;

      (5) any extraordinary or nonrecurring gain or loss and any expense or charge attributable to the disposition of discontinued operations will be excluded;

      (6) charges incurred in connection with the retirement or redemption of the 6 1/2% Convertible Subordinated Notes due 2008 will be excluded; and

      (7) the Net Income (but not loss) of any Unrestricted Subsidiary will be excluded, whether or not distributed to the specified Person or one of its Subsidiaries.

      “Co-Obligor” means Ribapharm, for so long as Ribapharm has outstanding obligations under the 6 1/2% Convertible Subordinated Notes due 2008, originally issued under an indenture among Valeant, Ribapharm and the trustee.

      “Credit Facilities” means, one or more debt facilities or commercial paper facilities, in each case with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit or other borrowings, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced (including by means of sales of debt securities to institutional investors) in whole or in part from time to time.

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      “Current Dividend” means a quarterly dividend on Valeant’s common stock in an amount not to exceed $0.33 per share per annum, which amount will be reduced to reflect any subdivision of Valeant’s common stock by means of a stock split, stock dividend or otherwise.

      “Default” means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default.

      “Disqualified Stock” means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, on or prior to the date that is 91 days after the date on which the notes mature. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require Valeant to repurchase such Capital Stock upon the occurrence of a change of control or an asset sale will not constitute Disqualified Stock if the terms of such Capital Stock provide that Valeant may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with the covenant described above under the caption “— Certain Covenants — Restricted Payments.”

      “Domestic Subsidiary” means any Restricted Subsidiary that was formed under the laws of the United States or any state thereof or the District of Columbia or that guarantees or otherwise provides direct credit support for any Indebtedness of Valeant or the Co-Obligor.

      “Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).

      “Equity Offering” means a public or private offering of Equity Interests (other than Disqualified Stock).

      “Existing Indebtedness” means Indebtedness of Valeant and its Restricted Subsidiaries (other than Indebtedness, if any, under Credit Facilities incurred under clause (1) of the second paragraph of the covenant entitled “— Certain Covenants — Incurrence of Indebtedness and Issuance of Preferred Stock”) in existence on the date of the indenture, until such amounts are repaid.

      “Fair Market Value” means the price that could be negotiated in an arm’s-length transaction, for cash, between a willing seller and a willing and able buyer, neither of whom is under undue pressure or compulsion to complete the transaction, determined in good faith by the Board of Directors of Valeant (unless otherwise provided in the indenture).

      “Fixed Charge Coverage Ratio” means with respect to any specified Person for any period, the ratio of the Consolidated Cash Flow of such Person for such period to the Fixed Charges of such Person for such period.

      In the event that the specified Person or any of its Restricted Subsidiaries incurs, assumes, Guarantees, repays, repurchases or redeems any Indebtedness (other than ordinary working capital borrowings) or issues, repurchases or redeems preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated and on or prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the “Calculation Date”), then the Fixed Charge Coverage Ratio will be calculated giving pro forma effect to such incurrence, assumption, Guarantee, repayment, repurchase or redemption of Indebtedness, or such issuance, repurchase or redemption of preferred stock, and the use of the proceeds therefrom as if the same had occurred at the beginning of the applicable four-quarter reference period.

      In addition, for purposes of calculating the Fixed Charge Coverage Ratio:

      (1) acquisitions that have been made by the specified Person or any of its Restricted Subsidiaries, including through consolidations or mergers and including any related financing transactions, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date will be given pro forma effect as if they had occurred on the first day of the four-quarter reference

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period and Consolidated Cash Flow for such reference period will be calculated on a pro forma basis in accordance with Regulation S-X under the Securities Act;

      (2) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, will be excluded; and

      (3) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, will be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the specified Person or any of its Restricted Subsidiaries following the Calculation Date.

      “Fixed Charges” means, with respect to any specified Person for any period, the sum, without duplication, of:

      (1) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued, including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to Attributable Debt, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers’ acceptance financings, and net of the effect of all payments made or received pursuant to Interest Rate Hedging Obligations; plus

      (2) the consolidated interest of such Person and its Restricted Subsidiaries that was capitalized during such period; plus

      (3) any interest expense on Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries, whether or not such Guarantee or Lien is called upon; plus

      (4) the product of (a) all dividends, whether paid or accrued and whether or not in cash, on any series of preferred stock of such Person or any of its Restricted Subsidiaries, other than dividends on Equity Interests payable solely in Equity Interests of Valeant (other than Disqualified Stock) or to Valeant or a Restricted Subsidiary of Valeant, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP.

      “Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary.

      “GAAP” means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect from time to time.

      “Guarantee” means a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness.

      “Guarantors” means any Subsidiary that executes a Guarantee in accordance with the provisions of the indenture and its successors and assigns.

      “Hedging Obligations” means, with respect to any specified Person

      (1) Interest Rate Hedging Obligations; and

      (2) the obligations of such Person under agreements or arrangements designed to protect such Person against fluctuations in currency exchange rates.

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      “Indebtedness” means, with respect to any specified Person, any indebtedness of such Person, whether or not contingent:

      (1) in respect of borrowed money;

      (2) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof);

      (3) in respect of banker’s acceptances;

      (4) representing Capital Lease Obligations or Attributable Debt in respect of sale and leaseback transactions;

      (5) representing the balance deferred and unpaid of the purchase price of any property, except any such balance that constitutes an accrued expense or trade payable; or

      (6) representing any Hedging Obligations,

if and to the extent any of the preceding items (other than letters of credit, Attributable Debt and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term “Indebtedness” includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) and, to the extent not otherwise included, the Guarantee by the specified Person of any Indebtedness of any other Person.

      The amount of any Indebtedness outstanding as of any date will be:

      (1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount; and

      (2) the principal amount of the Indebtedness, together with any interest on the Indebtedness that is more than 30 days past due, in the case of any other Indebtedness.

      “Interest Rate Hedging Obligations” means, with respect to any specified Person, the obligations of such Person under:

      (1) interest rate swap agreements, interest rate cap agreements and interest rate collar agreements; and

      (2) other agreements or arrangements designed to protect such Person against fluctuations in interest rates.

      “Investments” means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans (including Guarantees or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If Valeant or any Restricted Subsidiary of Valeant sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of Valeant such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary of Valeant, Valeant will be deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value of Valeant’s Investments in such Subsidiary that were not sold or disposed of in an amount determined as provided in the final paragraph of the covenant described above under the caption “— Certain Covenants — Restricted Payments.” The acquisition by Valeant or any Restricted Subsidiary of Valeant of a Person that holds an Investment in a third Person will be deemed to be an Investment by Valeant or such Restricted Subsidiary in such third Person in an amount equal to the Fair Market Value of the Investments held by the acquired Person in such third Person in an amount determined as provided in the final paragraph of the covenant described above under the caption “— Certain Covenants — Restricted Payments.” For the avoidance of doubt, acquisitions of or licenses for products or assets used or useful in a Permitted Business do not constitute Investments.

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      “Lien” means, with respect to any asset, any mortgage, lien, pledge, charge (fixed and/or floating), security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.

      “Moody’s” means Moody’s Investors Service, Inc., or any successor to the rating agency business thereof.

      “Net Income” means, with respect to any specified Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however:

      (1) any gain (but not loss), together with any related provision for taxes on such gain (but not loss), realized in connection with: (a) any Asset Sale; or (b) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries; and

      (2) any extraordinary gain (but not loss), together with any related provision for taxes on such extraordinary gain (but not loss).

      “Net Proceeds” means the aggregate cash proceeds received by Valeant or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale, including, without limitation, legal, accounting and investment banking fees, and sales commissions, and any relocation expenses incurred as a result of the Asset Sale, taxes paid or payable as a result of the Asset Sale, in each case, after taking into account any available tax credits or deductions and any tax sharing arrangements, and amounts required to be applied to the repayment of Indebtedness, other than Indebtedness under a Credit Facility, secured by a Lien on the asset or assets that were the subject of such Asset Sale and any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP.

      “Non-Recourse Debt” means Indebtedness:

      (1) as to which neither Valeant nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (b) is directly or indirectly liable as a guarantor or otherwise, or (c) constitutes the lender;

      (2) no default with respect to which (including any rights that the holders of the Indebtedness may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of any other Indebtedness (other than the notes) of Valeant or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment of the Indebtedness to be accelerated or payable prior to its stated maturity; and

      (3) as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of Valeant or any of its Restricted Subsidiaries.

      “Obligations” means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness.

      “Permitted Business” means any business conducted by Valeant and its Restricted Subsidiaries on the date of the indenture and any business reasonably related, ancillary or complimentary to the business of Valeant and its Restricted Subsidiaries on the date of the indenture.

      “Permitted Investments” means:

      (1) any Investment in Valeant or in a Restricted Subsidiary of Valeant;

      (2) any Investment in cash and Cash Equivalents;

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      (3) any Investment by Valeant or any Subsidiary of Valeant in a Person, if as a result of such Investment:

      (a) such Person becomes a Restricted Subsidiary of Valeant; or

      (b) such Person is merged or consolidated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, Valeant or a Restricted Subsidiary of Valeant;

      (4) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with the covenant described above under the caption “— Repurchase at the Option of Holders — Asset Sales;”

      (5) any Investments made solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of Valeant;

      (6) any Investments received in compromise of obligations of such persons incurred in the ordinary course of trade creditors or customers that were incurred in the ordinary course of business, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer;

      (7) Investments represented by Hedging Obligations;

      (8) Investments in existence on the date of the indenture;

      (9) Investments in a Permitted Joint Venture, when taken together with all other Investments made pursuant to this clause (9) that are at the time outstanding not to exceed $25.0 million; and

      (10) other Investments in any Person having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (10) that are at the time outstanding not to exceed $25.0 million.

      “Permitted Joint Venture” means any joint venture (which may be in the form of a limited liability company, partnership, corporation or other entity) in which Valeant or any of its Restricted Subsidiaries is a joint venturer; provided, however, that (a) the joint venture is engaged solely in a Permitted Business and (b) the governing documents of the joint venture require the consent of Valeant or such Restricted Subsidiary with respect to any material decisions relating to the activities of the joint venture.

      “Permitted Liens” means:

       (1) Liens securing Indebtedness and other Obligations under Credit Facilities that were permitted by the terms of the indenture to be incurred under clause (1) of the second paragraph of the covenant entitled “— Certain Covenants — Incurrence of Indebtedness and Issuance of Preferred Stock”;

       (2) Liens in favor of Valeant;

       (3) Liens on property of a Person existing at the time such Person is merged with or into or consolidated with or is acquired by Valeant or any Subsidiary of Valeant; provided, that such Liens were not incurred in contemplation of such merger, consolidation or acquisition and do not extend to any assets other than those of the Person merged into, consolidated with or acquired by Valeant or the Subsidiary;

       (4) Liens on property existing at the time of acquisition of the property by Valeant or any Subsidiary of Valeant, provided, that such Liens were not incurred in contemplation of such acquisition;

       (5) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business;

       (6) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by clause (4) of the second paragraph of the covenant entitled “— Certain Covenants — Incurrence of Indebtedness and Issuance of Preferred Stock” covering only the assets acquired with such Indebtedness;

       (7) Liens existing on the date of the indenture;

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       (8) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded, provided, that any reserve or other appropriate provision as is required in conformity with GAAP has been made therefor;

       (9) Liens securing Hedging Obligations;

      (10) Liens arising by reason of deposits necessary to obtain standby letters of credit in the ordinary course of business (including deposits necessary to obtain standby letters of credit);

      (11) Liens to secure any Permitted Refinancing Indebtedness permitted to be incurred under the indenture; provided, however, that:

      (a) the new Lien shall be limited to all or part of the same property and assets that secured or, under the written agreements pursuant to which the original Lien arose, could secure the original Lien (plus improvements and accessions to, such property or proceeds or distributions thereof); and

      (b) the Indebtedness secured by the new Lien is not increased to any amount greater than the sum of (x) the outstanding principal amount or, if greater, committed amount, of the Permitted Refinancing Indebtedness and (y) an amount necessary to pay any fees and expenses, including premiums, related to such refinancings, refunding, extension, renewal or replacement;

      (12) Liens incurred in the ordinary course of business of Valeant or any Restricted Subsidiary of Valeant with respect to obligations that do not exceed $25.0 million at any one time outstanding;

      (13) survey title exceptions, title defects, encumbrances, easements, reservations of, or rights of others for, rights of way, sewers, electric lines, telegraph or telephone lines and other similar purposes or zoning or other restrictions as to the use of real property not materially interfering with the ordinary conduct of the business of Valeant and its Subsidiaries taken as a whole;

      (14) Liens arising by operation of law in favor of landlords, mechanics, carriers, warehousemen, materialmen, laborers, employees, suppliers or the like, incurred in the ordinary course of business for sums which are not yet delinquent or are being contested in good faith by negotiations or by appropriate proceedings which suspend the collection thereof; and

      (15) Liens arising out of judgments, decrees, orders or awards in respect of which Valeant shall in good faith be prosecuting an appeal or proceedings for review which appeal or proceedings shall not have been finally terminated, or if the period within which such appeal or proceedings may be initiated shall not have expired.

      “Permitted Refinancing Indebtedness” means any Indebtedness of Valeant or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of Valeant or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided, that:

      (1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness extended, refinanced, renewed, replaced, defeased or refunded (plus all accrued interest on the Indebtedness and the amount of all expenses and premiums incurred in connection therewith);

      (2) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded;

      (3) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the notes, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the notes on terms at least as favorable to the Holders of notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and

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      (4) such Indebtedness is incurred either by Valeant or by the Restricted Subsidiary who is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded.

      “Person” means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government or other entity.

      “Restricted Investment” means an Investment other than a Permitted Investment.

      “Restricted Subsidiary” of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary.

      “S&P” means Standard & Poor’s Ratings Group, Inc., or any successor to the rating agency business thereof.

      “Significant Subsidiary” means any Subsidiary that would be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the date hereof.

      “Stated Maturity” means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which the payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and will not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.

      “Subsidiary” means, with respect to any specified Person:

      (1) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees of the corporation, association or other business entity is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and

      (2) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are that Person or one or more Subsidiaries of that Person (or any combination thereof).

      “Unrestricted Subsidiary” means any Subsidiary of Valeant that is designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution, but only to the extent that such Subsidiary:

      (1) has no Indebtedness other than Non-Recourse Debt;

      (2) is not party to any agreement, contract, arrangement or understanding with Valeant or any Restricted Subsidiary of Valeant unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to Valeant or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of Valeant;

      (3) is a Person with respect to which neither Valeant nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results; and

      (4) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of Valeant or any of its Restricted Subsidiaries.

      Any designation of a Subsidiary of Valeant as an Unrestricted Subsidiary will be evidenced to the trustee by filing with the trustee a certified copy of the Board Resolution giving effect to such designation and an officers’ certificate certifying that such designation complied with the preceding conditions and was permitted by the covenant described above under the caption “— Certain Covenants — Restricted Payments.” If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary for purposes of the indenture and any Indebtedness of such Subsidiary will be deemed to be incurred by a Restricted Subsidiary of Valeant as of

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such date and, if such Indebtedness is not permitted to be incurred as of such date under the covenant described under the caption “— Certain Covenants — Incurrence of Indebtedness and Issuance of Preferred Stock,” Valeant will be in default of such covenant. The Board of Directors of Valeant may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation will be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of Valeant of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation will only be permitted if (1) such Indebtedness is permitted under the covenant described under the caption “— Certain Covenants — Incurrence of Indebtedness and Issuance of Preferred Stock,” calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period; and (2) no Default or Event of Default would be in existence following such designation.

      “Voting Stock” of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person.

      “Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing:

      (1) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (b) the number of years (calculated to the nearest one twelfth) that will elapse between such date and the making of such payment; by

      (2) the then outstanding principal amount of such Indebtedness.

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CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES

      The following summary describes the material U.S. federal income tax consequences, as of the date of this prospectus, of (i) the exchange of the outstanding old notes for the new notes in the exchange offer and (ii) the acquisition, ownership and disposition of the new notes for non-U.S. holders (as defined below). Except where noted, this summary deals only with notes held as capital assets and applies only to holders who purchased the old notes for cash at original issuance at their issue price. This summary does not deal with special situations, such as:

•  tax consequences to holders who may be subject to special tax treatment, such as dealers in securities or currencies, banks, thrifts, regulated investment companies, or other financial institutions or financial service companies, regulated investment companies, real estate investment trusts, tax-exempt entities, insurance companies, or traders in securities that elect to use a mark-to-market method of accounting for their securities holdings;

•  tax consequences to persons holding notes as a part of a hedging, integrated, conversion or constructive sale transaction or a straddle;

•  tax consequences to holders of notes whose functional currency is not the U.S. dollar;

•  investors in pass-through entities;

•  alternative minimum tax consequences, if any; and

•  any state, local or foreign tax consequences.

      The discussion below is based upon the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), and regulations, rulings and judicial decisions thereunder as of the date hereof, and such authorities may be repealed, revoked or modified so as to result, prospectively or retroactively, in U.S. federal income tax consequences different from those discussed below.

      If a partnership holds notes, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. If you are a partner in a partnership that holds the notes, you should consult your tax advisors.

      You should consult your tax advisors concerning the U.S. federal income tax consequences to you in light of your particular situation as well as any consequences arising under the laws of any state, local, foreign or other taxing jurisdiction.

      As used herein, the term “non-U.S. holder” means a holder of notes that is not, for U.S. federal income tax purposes a “U.S. holder.” A “U.S. holder” means a holder of notes that is, for federal income tax purposes:

•  a citizen or resident of the U.S., including an alien individual who is a lawful permanent resident of the U.S. or who meets the substantial presence residency test under the U.S. federal income tax laws;

•  a corporation or partnership (or other entity classified as a corporation or partnership for these purposes) created or organized in or under the laws of the U.S. or any state or the District of Columbia;

•  an estate the income of which is subject to U.S. federal income taxation regardless of its source; or

•  a trust if it (i) is subject to the primary supervision of a court within the U.S. and one or more U.S. persons have the authority to control all substantial decisions of the trust or (ii) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

      Special rules may apply to certain non-U.S. holders such as “controlled foreign corporations,” “passive foreign investment companies” and “foreign personal holding companies,” as defined under the Code. Each such entity should consult its tax advisors to determine the U.S. federal, state, local and other tax consequences that may be relevant to it.

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The Exchange Offer

      The exchange of old notes for new notes pursuant to the exchange offer will not be a taxable event for U.S. federal income tax purposes. Consequently, you will not recognize taxable gain or loss as a result of exchanging notes pursuant to the exchange offer. Your holding period for the new notes will include your holding period of your old notes surrendered in the exchange, and your tax basis in your new notes will be the same as your tax basis in your old notes immediately before the exchange. There will be no U.S. federal income tax consequences of the exchange offer to a holder who does not tender the old notes pursuant to the exchange offer.

Non-U.S. Holders

     Payments of Interest

      The 30-percent U.S. federal withholding tax will not apply to any payment to you of interest on a note under the “portfolio interest rule” provided that:

•  you do not actually or constructively own ten percent or more of the total combined voting power of all classes of our stock that are entitled to vote within the meaning of section 871(h)(3) of the Code;

•  you are not a “controlled foreign corporation” within the meaning of section 957(a) of the Code with respect to which we are a “related person” within the meaning of section 864(d)(4) of the Code;

•  you are not a bank whose receipt of interest on a note is described in section 881(c)(3)(A) of the Code;

•  (a) you provide your name and address, and certify, under penalties of perjury, that you are not a U.S. person within the meaning of the Code (which certification may be made on an Internal Revenue Service Form W-8BEN (or successor form) ) or (b) you hold your notes through certain foreign intermediaries or certain foreign partnerships, and you satisfy the certification requirements of applicable Treasury regulations. Special “look-through” rules apply to non U.S. holders that are pass-through entities.

      If you cannot satisfy the requirements described above, payments of interest will be subject to the 30-percent U.S. federal withholding tax, unless you provide us with a properly executed (i) Internal Revenue Service Form W-8BEN (or successor form) claiming an exemption from or reduction in withholding under the benefit of a tax treaty or (ii) Internal Revenue Service Form W-8ECI (or successor form) stating that interest paid on the note is not subject to withholding tax because it is effectively connected with your conduct of a trade or business in the U.S.

      If you are engaged in a trade or business in the U.S. and interest on the notes is effectively connected with the conduct of that trade or business, and, if an income tax treaty applies, you maintain a U.S. “permanent establishment” to which the interest is generally attributable, then, although exempt from the withholding tax discussed above (provided that you provide a properly executed applicable IRS form on or before any payment date to claim the exemption), you will be subject to U.S. federal income tax on that interest on a net income basis in generally the same manner as if you were a U.S. holder. In addition, if you are a foreign corporation, you may be subject to a branch profits tax equal to 30 percent (or lesser rate under an applicable income tax treaty) of your earnings and profits for the taxable year, subject to adjustments, that are effectively connected with your conduct of a trade or business in the U.S.

     Sale, Exchange, Redemption or Other Disposition of Notes

      Any gain realized upon the sale, exchange, redemption or other disposition of a note generally will not be subject to U.S. federal income tax unless:

•  that gain is effectively connected with your conduct of a trade or business in the U.S., and, if an income tax treaty applies, is attributable to a permanent establishment in the U.S.; or

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•  you are an individual who is present in the U.S. for 183 days or more in the taxable year of that disposition, and certain other conditions are met.

     U.S. Federal Estate Tax

      Your estate will not be subject to U.S. federal estate tax on notes beneficially owned by you at the time of your death, provided that, at the time of your death, (i) you did not actually or constructively own ten percent or more of the total combined voting power of all classes of our stock that are entitled to vote within the meaning of section 871(h)(3) of the Code and (ii) payments with respect to the note would not have been effectively connected with the conduct by you of a trade or business in the U.S.

Information Reporting and Backup Withholding

      We must report annually to the Internal Revenue Service and to you the amount of interest paid to you and the amount of tax, if any, withheld with respect to those payments. In the case of non-U.S. holders, copies of the information returns reporting such interest, dividends and withholding may also be made available to the tax authorities in the country in which you reside under the provisions of an applicable income tax treaty.

      In the case of a non-U.S. holder, in general you will not be subject to backup withholding with respect to payments of interest that we make to you, provided the statement described above in the last bullet point under “NON-U.S. HOLDERS — Payments of Interest” has been received (and we do not have actual knowledge or reason to know that you are a U.S. person that is not an exempt recipient). In addition, you will be subject to information reporting and, depending on the circumstances, backup withholding with respect to payments of the proceeds of the sale of a note within the U.S. or conducted through certain U.S.-related financial intermediaries, unless the statement described above has been received (and we do not have actual knowledge or reason to know that you are a U.S. person that is not an exempt recipient) or you otherwise establish an exemption.

      In the case of a U.S. holder, backup withholding at the applicable rate (currently, 28 percent) will apply with respect to these payments if you fail to provide an accurate taxpayer identification number, or fail to certify that you are not subject to backup withholding or fail to report all interest and dividends required to be shown on your U.S. federal income tax returns.

      Certain U.S. holders (including, among others, corporations) and non-U.S. holders that comply with certain certification requirements are not subject to backup withholding. You should consult your tax advisor as to your qualification for exemption from backup withholding and the procedure for obtaining such exemption.

      Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against your U.S. federal income tax liability provided the required information is timely furnished to the Internal Revenue Service.

      THE PRECEDING DISCUSSION OF CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. THIS DISCUSSION DOES NOT ADDRESS ALL ASPECTS OF UNITED STATES FEDERAL INCOME TAXATION THAT MAY BE RELEVANT TO HOLDERS OF NOTES IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, AND IT DOES NOT ADDRESS ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF ACQUIRING, HOLDING DISPOSING OF THE NOTES.

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DESCRIPTION OF CAPITAL STOCK

      Valeant’s authorized capital stock consists of 200,000,000 shares of common stock, par value $0.01 per share, and 10,000,000 shares of preferred stock, par value $0.01 per share. The transfer agent and registrar for Valeant common stock is American Stock Transfer & Trust Company. On December 31, 2003, 83,184,625 shares of common stock and no shares of preferred stock were outstanding. The following summary of Valeant’s capital stock is qualified in its entirety by reference to its certificate of incorporation, by-laws and the Rights Agreement (as defined below) and Valeant encourages you to review its certificate of incorporation, by-laws and the Rights Agreement, which Valeant has filed with the Commission.

Common Stock

      Holders of shares of Valeant common stock are entitled to one vote for each share of common stock held of record on all matters on which stockholders are generally entitled to vote. The vote of the holders of a majority of the stock represented at a meeting at which a quorum is present is generally required to take stockholder action, unless a greater vote is required by Valeant’s certificate of incorporation, by-laws or law. Directors are elected by a plurality of the votes cast at any election and there is no cumulative voting of shares.

      Holders of shares of Valeant common stock have no preemptive rights. Subject to applicable law and the rights of the holders of preferred stock, holders of shares of common stock are entitled to such dividends as may be declared by Valeant’s board of directors. The common stock is not entitled to any sinking fund, redemption or conversion provisions. Upon Valeant’s dissolution, liquidation or winding up, the holders of shares of Valeant common stock are entitled to share ratably in Valeant’s net assets remaining after the payment of all creditors and liquidation preferences of preferred stock. The outstanding shares of common stock are duly authorized, validly issued, fully paid and nonassessable.

Preferred Stock

      We are authorized to issue 10,000,000 shares of preferred stock of which 1,000,000 shares shall consist of Series A Participating preferred stock. 50,000 shares have been designated Series B Convertible preferred stock. 3,00 shares have been designated Series C Convertible preferred stock and 3,000 shares have been designated Series D Convertible preferred stock. Presently, we have no shares of preferred stock outstanding.

      Subject to the provisions of its certificate of incorporation and limitations prescribed by law, Valeant’s board of directors, is authorized to provide for the issuance of shares of preferred stock in one or more series, to establish the number of shares to be included in each such series, and to fix the designations, voting powers, preferences and rights of the shares of each such series and any qualifications, limitations or restrictions thereof. The ability of the board of directors to issue preferred stock, while providing flexibility in connection with financing, acquisitions and other corporate purposes, could have the effect of discouraging, deferring or preventing a change in control or an unsolicited acquisition proposal, since the issuance of preferred stock could be used to dilute the share ownership of a person or entity seeking to obtain control of us. In addition, because the board of directors has the power to establish the preferences, powers and rights of the shares of any of these series of preferred stock, it may afford the holders of any preferred stock preferences, powers and rights (including voting rights) senior to the rights of the holders of common stock, which could adversely affect the rights of holders of common stock.

Stockholders Rights Agreement

      Valeant’s board of directors declared and paid a dividend of one preferred stock purchase right (a “Right”) for each outstanding share of Valeant common stock to the stockholders of record on the record date. Each right entitles the registered holder to purchase from us one one-hundredth of a share of Valeant’s Series A Participating preferred stock, par value $0.01 per share, at a purchase price of $125.00 per one one-hundredth of a preferred share, subject to adjustment. The description and terms of the rights are set forth in a rights agreement between us and the American Stock Transfer & Trust Company (the “Rights Agreement”).

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      Until the earlier to occur of (i) the first date of a public announcement that a person has become an Acquiring Person (as defined in the Rights Agreement) which generally means that a person or group of affiliated or associated persons has acquired beneficial ownership of 15% or more of the outstanding shares of common stock or (ii) the close of business on the tenth day (or such later day as may be determined by action of Valeant’s board of directors) following the commencement of, or announcement of an intention to make, a tender offer or exchange offer the consummation of which would result in any person becoming an Acquiring Person (the earlier of such dates being called the Distribution Date), the Rights will be evidenced, by such common stock and the right to receive Rights certificates will be transferable only in connection with the transfer of the underlying shares of common stock.

      Until the distribution date (or earlier redemption or expiration of the rights), the rights will be transferred with and only with the shares of common stock. The rights are not exercisable until the distribution date. The rights will expire on November 1, 2004, unless otherwise extended or the rights are earlier redeemed or exchanged by Valeant.

      Unless otherwise provided in the Rights Agreement, the registered holder of any Right certificate may exercise the Rights evidenced thereby in whole or in part at any time after the Distribution Date upon, among other things, surrender of the Right certificate, together with payment of the aggregate Purchase Price (as defined in the Rights Agreement) for the total number of one one-hundredths of a share of preferred stock (or other securities, as the case may be) as to which such surrendered Rights are exercised, at or prior to the earlier of (i) the close of business on November 1, 2004 and (ii) the time at which the Rights are redeemed.

      The purchase price payable, and the number of preferred shares or other securities or property issuable, upon exercise of the rights are subject to adjustment from time to time to prevent dilution. In the event that at any time prior to the Distribution Date, Valeant shall (i) declare or pay any dividend on its common stock payable in shares of common stock or (ii) effect a subdivision, combination or consolidation of its common stock (by reclassification or otherwise than by payment of dividends in shares of common stock) into a greater or lesser number of shares of common stock, then in any such case, each share of common stock outstanding following such subdivision, combination or consolidation shall continue to have a Right associated therewith and the Purchase Price following any such event shall be proportionately adjusted to equal the result obtained by multiplying the Purchase Price immediately prior to such event by a fraction the numerator of which shall be the total number of shares of common stock outstanding immediately prior to the occurrence of the event and the denominator of which shall be the total number of shares of common stock outstanding immediately following the occurrence of such event. This adjustment shall be made successively whenever such a dividend is declared or paid or such a subdivision, combination or consolidation is effected. In the event Valeant (i) declares a dividend on the shares of preferred stock payable in preferred stock, (ii) subdivides the outstanding shares of preferred stock, (iii) combines the outstanding shares of preferred stock into a smaller number of shares of preferred stock or (iv) issues any shares of its capital stock in a reclassification of the preferred stock (including any such reclassification in connection with a consolidation or merger in which Valeant is the continuing or surviving corporation), except as otherwise provided in the Rights Agreement, the Purchase Price in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination or reclassification, and the number and kind of shares of capital stock issuable on such date, shall be proportionately adjusted so that the holder of any Right exercised after such time shall be entitled to receive the aggregate number and kind of shares of capital stock which, if such Right had been exercised immediately prior to such date and at a time when the preferred stock transfer books of Valeant were open, such holder would have owned upon such exercise and been entitled to receive by virtue of such dividend, subdivision, combination or reclassification; provided, however, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of capital stock of Valeant issuable upon exercise of one Right.

      In the event any Person, alone or together with its Affiliates and Associates (as each term is defined in the Rights Agreement), becomes an Acquiring Person then proper provision will be made so that each holder of a Right (except as provided in the Rights Agreement) will, for a period of 60 days after the later of the occurrence of any such event or the effective date of an appropriate registration statement under the Securities Act, have a right to receive, upon exercise of such Right at a price equal to the then current Purchase Price, in

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accordance with the terms of the Rights Agreement, such number of shares of common stock (or, in the discretion of Valeant’s board of directors, one one-hundredth of a share of preferred stock) as shall equal the result obtained by (x) multiplying the then current Purchase Price by the then number of one one-hundredths of a share of preferred stock for which a Right was exercisable immediately prior to the first occurrence of a Section 11(a)(ii) Event (as defined in the Rights Agreement) and dividing that product by (y) 50% of the then current per share market price of Valeant’s common stock on the date of such first occurrence. There are also certain other circumstances that trigger adjustments to the Purchase Price and therefore the Rights Agreement should be read in its entirety.

      With certain exceptions, no adjustment in the Purchase Price will be required until cumulative adjustments require an adjustment of at least 1% in such Purchase Price. No fractional preferred shares will be issued (other than fractions which are one one-hundredth or integral multiples of one one-hundredth of a preferred share, which may, at Valeant’s election, be evidenced by depositary receipts) and in lieu thereof, an adjustment in cash will be paid based on the market price of the preferred shares on the last trading day prior to the date of exercise.

      In the event that, directly or indirectly, (x) Valeant consolidates with, or merges with and into, any Person, (y) Valeant consolidates with, or merges with, any Person, and Valeant is the continuing or surviving corporation of such consolidation or merger (other than, in a case of any transaction described in (x) or (y), a merger or consolidation which would result in all of the securities generally entitled to vote in the election of directors (“voting securities”) of Valeant outstanding immediately prior thereto, continuing to represent (either by remaining outstanding or by being converted into securities of the surviving entity) all of the voting securities of Valeant or such surviving entity outstanding immediately after such merger or consolidation and the holders of such securities not having changed as a result of such merger or consolidation) or (z) Valeant sells or otherwise transfers (or one or more of its subsidiaries sells or otherwise transfers), in one transaction or a series of related transactions, assets or earning power aggregating more than 50% of the assets or earning power of Valeant and its subsidiaries (taken as a whole) to any Person, (collectively, an “Event”) then, and in each such case (except as provided in the Rights Agreement), proper provision will be made so that (i) each holder of a Right, except as provided in the Rights Agreement, will thereafter have the right to receive, upon the exercise thereof at a price equal to the then current Purchase Price, in accordance with the terms of the Rights Agreement and in lieu of shares of preferred stock, such number of freely tradeable shares of common stock of the Principal Party (as defined in the Rights Agreement), not subject to any liens, encumbrances, rights of first refusal or other adverse claims, as shall equal the result obtained by (A) multiplying the then current Purchase Price by the number of one one-hundredths of a share of preferred stock for which a Right is then exercisable (without taking into account any adjustment previously made pursuant to a section of the Rights Agreement and dividing that product by (B) 50% of the then current per share market price of the common stock of such Principal Party (determined pursuant to the Rights Agreement) on the date of consummation of such Event; (ii) such Principal Party shall thereafter be liable for, and shall assume, by virtue of such Event, all the obligations and duties of Valeant pursuant to the Rights Agreement.

      At any time prior to the time any Person becomes an Acquiring Person or the expiration date of the Rights, Valeant’s board of directors may, at its option, redeem all but not less than all the then outstanding Rights at a redemption price of $.01 per Right, as such amount may be appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date of the Rights Agreement (such redemption price being hereinafter referred to as the “Redemption Price”).

      In addition, at any time following the time any Person becomes an Acquiring Person and the expiration of any period during which the holder of Rights may exercise the rights under certain provisions of the Rights Agreement, the board of directors of Valeant may, at its option, prior to any Event, redeem all but not less than all of the then outstanding Rights at the Redemption Price (x) in connection with any merger, consolidation or sale or other transfer (in one transaction or in a series of related transactions) of assets or earning power aggregating 50% or more of the earning power of Valeant and its subsidiaries (taken as a whole) in which all holders of shares of common stock are treated alike and not involving (other than as a holder of shares of common stock being treated like all other such holders) an Interested Stockholder (as defined in the Rights Agreement) or (y)(aa) if and for so long as the Acquiring Person is not thereafter the

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beneficial owner of 15% of the shares of common stock and (bb) at the time of redemption no other Persons are Acquiring Persons. Immediately upon any redemption of the rights, the right to exercise the Rights will terminate and the only right of the holders of Rights will be to receive the Redemption Price.

      Until a right is exercised, the holder thereof, as such, will have no rights as a Valeant stockholder, including, without limitation, the right to vote or to receive dividends.

      The Rights have certain anti-takeover effects. The Rights will cause substantial dilution to a person or group that attempts to acquire Valeant on terms not approved by Valeant’s board of directors, except pursuant to an offer conditioned on a substantial number of Rights being acquired. The rights should not interfere with any merger or other business combination approved by the board of directors since the rights may be redeemed by Valeant at the Redemption Price prior to the time that a person or group has acquired beneficial ownership of 10% or more of the shares of common stock.

Anti-Takeover Considerations

      Valeant’s certificate of incorporation and by-laws contain a number of provisions that may have the effect of making it more difficult for a third party to acquire, or of discouraging a third party from acquiring, Valeant.

     Classified Board of Directors

      Valeant’s certificate of incorporation and by-laws divide its board of directors into three classes, as nearly equal in size as possible, with staggered three year terms, and provide that:

•  directors may be removed only for cause by the affirmative vote of the holders of at least 66 2/3% of the voting power of all then outstanding shares of capital stock entitled to vote generally in the election of directors, voting together as a single class; and

•  any vacancy on Valeant’s board of directors may be filled by vote of a majority of the directors then in office.

     Stockholder Action, Special Meeting of Stockholders

      Valeant’s certificate of incorporation and by-laws eliminate the ability of Valeant’s stockholders to act by written consent. Valeant’s certificate of incorporation and by-laws further provide that special meetings of its stockholders may be called only by its board of directors or the corporation’s Chairman of the Board, unless otherwise prescribed by statute.

     Advance Notice Requirements for Stockholder Proposals and Director Nominations

      Valeant’s certificate of incorporation provides that stockholders seeking to bring business before an annual meeting of stockholders, or to nominate candidates for election as directors at an annual meeting of stockholders, must provide timely notice in writing. To be timely, a stockholder’s notice must be delivered to or mailed and received at Valeant’s principal executive offices not less than 60 days nor more than 90 days prior to the scheduled date of the annual meeting, regardless of any postponement, deferral or adjournment of that meeting to a later date; provided, however, that if less than 70 days’ prior notice or public disclosure of the date of the annual meeting is given or made to stockholders, notice by the stockholder to be timely must be so delivered or received not later than the close of business on the tenth day following the earlier of the date on which such notice of the date of the annual meeting was mailed to stockholders or the day on which such public disclosure was made. Valeant’s certificate of incorporation also specifies requirements regarding the form and content of a stockholder’s notice. These provisions may preclude stockholders from bringing matters before an annual meeting of stockholders or from making nominations for directors at an annual meeting of stockholders.

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     Business Combinations and Limitations in Valeant’s Certificate of Incorporation

      In addition to any other vote required by Valeant’s certificate of incorporation or Delaware law, the affirmative vote of the holders of not less than 85% of the outstanding Voting Stock (as defined in Valeant’s certificate of incorporation) held by stockholders other than a Related Person (as defined below) by or with whom or on whose behalf, directly or indirectly, a Business Combination (as defined below) is proposed, voting as a single class, shall be required for the approval or authorization of such Business Combination; provided, however, that the 85% voting requirement shall not be applicable and such Business Combination may be approved by the vote required by law, if any, or by any other provision of the certificate of incorporation if either: the Business Combination is approved by the board of directors of Valeant by the affirmative vote of at least 66 2/3% of the Continuing Directors (as defined in Valeant’s certificate of incorporation), or certain conditions set forth in Valeant’s certificate of incorporation are satisfied.

      Any amendment, addition, alteration, change or repeal of the provisions regarding Business Combinations, or any other amendment of the certificate of incorporation inconsistent with or modifying or permitting circumvention of these provisions, must first be proposed by the board of directors of Valeant, upon the affirmative vote of at least two-thirds of the directors then in office at a duly constituted meeting of the board of directors called for such purpose, and thereafter approved by the affirmative vote of the holders of not less than 85% of the then outstanding Voting Stock held by stockholders other than a Related Person by or with whom or on whose behalf, directly or indirectly, a Business Combination is proposed, voting as a single class; provided, however, that such requirement will not apply to, and such 85% vote will not be required for, any such amendment, addition, alteration, change or repeal recommended to stockholders of Valeant by the affirmative vote of not less than 66 2/3% of the Continuing Directors.

      In Valeant’s certificate of incorporation a “Business Combination” is defined as (a) any merger or consolidation of Valeant or a subsidiary with a Related Person, (b) any sale, lease, exchange, mortgage, pledge, transfer or other disposition other than in the ordinary course of business to or with a Related Person of any assets of Valeant or a subsidiary having an aggregate fair market value of $25,000,000 or more, (c) the issuance or transfer by Valeant of any shares of Voting Stock or securities convertible into or exercisable for such shares (other than by way of pro rata distribution to all stockholders) to a Related Person, (d) any recapitalization, merger or consolidation that would have the effect of increasing the voting power of a Related Person, (e) the adoption of any plan or proposal for the liquidation or dissolution of Valeant or a subsidiary proposed, directly or indirectly, by or on behalf of a Related Person, (f) any merger or consolidation of the corporation with another Person (as defined in Valeant’s certificate of incorporation) proposed, directly or indirectly, by or on behalf of a Related Person unless the entity surviving or resulting from such merger or consolidation has a provision in its governing instrument which is substantially identical to the provisions regarding Business Combinations set forth in Valeant’s certificate of incorporation, or (g) any agreement, contract or other arrangement or understanding providing, directly or indirectly, for any of the transactions described above.

      In Valeant’s certificate of incorporation, a “Related Person” is defined as any individual, partnership, corporation, trust or other Person which, together with its “affiliates” and “associates,” as defined in Rule 12b-2 under the Exchange Act as in effect on January 1, 1993, and together with any other individual, partnership, corporation, trust or other Person with which it or they have any agreement, contract or other arrangement or understanding with respect to acquiring, holding, voting or disposing of Voting Stock, “beneficially owns” (within the meaning of Rule 13d-3 under the Exchange Act on said date) an aggregate of 10% or more of the outstanding Voting Stock. A Related Person, its affiliates and associates and all such other individuals, partnerships, corporations and other Persons with whom it or they have any such agreement, contract or other arrangement or understanding, shall be deemed a single Related Person for purposes of the provisions regarding Business Combinations set forth in Valeant’s certificate of incorporation; provided, however, that the members of the board of directors of Valeant shall not be deemed to be associates or otherwise to constitute a Related Person solely by reason of their board membership. A person who is a Related Person as of (i) the time any definitive agreement relating to a Business Combination is entered into, (ii) the record date for the determination of stockholders entitled to notice of and to vote on a Business

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Combination or (iii) immediately prior to the consummation of a Business Combination, shall be deemed a Related Person.

     Amendments; Supermajority Vote Requirements

      Valeant’s certificate of incorporation requires the affirmative vote of not less than 75% of the voting power of all shares of Valeant entitled to vote generally in the election of directors, to amend certain provisions of Valeant’s certificate of incorporation, including those provisions relating to the classified board of directors, action by written consent and the ability of stockholders to call special meetings. Valeant’s certificate of incorporation expressly authorizes the board of directors to amend its by-laws; however, the certificate of incorporation requires that the by-laws shall not be amended by its stockholders without the affirmative vote of the holders of at least 75% of the voting power of all shares of the corporation entitled to vote generally in the election of directors voting together as a single class.

     Delaware Anti-Takeover Law

      Section 203 of the Delaware General Corporation Law prohibits certain “business combination” transactions between a Delaware corporation and any “interested stockholder” owning 15% or more of the corporation’s outstanding voting stock for a period of three years after the date on which the stockholder became an interested stockholder, unless:

•  prior to such time, the board of directors approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;

•  upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation, excluding those shares held by (i) directors who are also officers and (ii) certain employee stock plans; or

•  on or subsequent to the date on which the stockholder became an interested stockholder, the business combination with the interested stockholder is approved by the board of directors and also authorized at a stockholder’s meeting, and not by written consent, by the affirmative vote of at least 66 ?% of the outstanding shares of the corporation’s voting stock which is not owned by the interested stockholder.

      Under Delaware law, a “business combination” with an interested stockholder includes a merger, asset sale or other transaction resulting in a financial benefit to the interested stockholder.

      (3) Although a corporation may elect not to be governed by Section 203, Valeant has made no such election.

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PLAN OF DISTRIBUTION AND SELLING RESTRICTIONS

      The exchange offer is not being made to, nor will we accept surrenders of old notes for exchange from, holders of old notes in any jurisdiction in which the exchange offer or the acceptance thereof would not be in compliance with the securities or blue sky laws of such jurisdiction.

      The distribution of this prospectus and the offer and sale of the new notes may be restricted by law in certain jurisdictions. Persons who come into possession of this prospectus or any of the new notes must inform themselves about and observe any such restrictions. You must comply with all applicable laws and regulations in force in any jurisdiction in which you purchase, offer or sell the new notes or possess or distribute this prospectus and, in connection with any purchase, offer or sale by you of the new notes, must obtain any consent, approval or permission required under the laws and regulations in force in any jurisdiction to which you are subject or in which you make such purchase, offer or sale.

      We have not authorized the new notes to be offered to the public in the United Kingdom, within the meaning of the Public Offers of Securities Regulations 1995, as amended, and neither this prospectus nor any other document issued in connection with this offering, together the offering document, may be passed on to any person in the United Kingdom unless that person is of a kind described in Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 or is a person to whom the document may otherwise lawfully be issued or passed on. The offering document is only directed at persons having professional experience in matters relating to investments and the offering described in the offering document is only available to such persons and only such persons will be permitted to participate in the offering. Persons who do not have professional experience in matters relating to investments should not rely on the offering document. All applicable provisions of the Financial Services and Markets Act 2000 (as amended) must be complied with in respect of anything done in relation to the new notes in, from or otherwise involving the United Kingdom.

      Based on interpretive letters issued by the SEC staff to third parties in transactions similar to the exchange offer, we believe that a holder of new notes, other than a broker-dealer, may offer new notes (together with the guarantees thereof) for resale, resell or otherwise transfer the new notes (and the related guarantees) without complying with the registration and prospectus delivery requirements of the Securities Act, if the holder:

•  is not an “affiliate,” as defined under the Securities Act, of ours;

•  acquired the new notes in the ordinary course of business;

•  is not engaged in, does not intend to engage in and has no arrangement or understanding with any person to participate in a “distribution,” as defined under the Securities Act, of the new notes; and

•  is not acting on behalf of any person who could not truthfully make the foregoing representations.

      If any of the above conditions is not satisfied or the holder acquired its old notes to be exchanged for new notes in the exchange offer directly from us or any of our affiliates, the holder must acknowledge and agree that it:

•  may not, under SEC policy as in effect on July 1, 2003, rely on the position of the SEC enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted in the SEC’s letter to Shearman & Sterling dated July 2, 1993, and similar no-action letters; and

•  must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction and that such a secondary resale transaction must be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K.

      Any broker-dealer that receives new notes for its own account in exchange for old notes may be deemed to be an “underwriter” within the meaning of the Securities Act. Each broker-dealer that receives new notes for its own account in exchange for old notes must represent that the old notes to be exchanged for the new

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notes were acquired by it as a result of market-making activities or other trading activities (and not acquired directly from the issuer, any subsidiary guarantor or any of their affiliates) and acknowledge that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of the new notes; however, by so acknowledging and by delivering a prospectus, the participating broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. To date, the SEC has taken the position that broker-dealers may use a prospectus such as this one to fulfill their prospectus delivery requirements with respect to resales of new notes received in an exchange such as the exchange pursuant to the exchange offer, if the old notes for which the new notes were received in the exchange were acquired for their own accounts as a result of market-making or other trading activities (and not acquired directly from the issuer, any subsidiary guarantor or any of their affiliates). Any profit on these resales of new notes and any commissions or concessions received by a broker-dealer in connection with these resales may be deemed to be underwriting compensation under the Securities Act.

      We have agreed that, upon receiving prior written notice from a participating broker-dealer, during the period ending on the earlier of (1) 270 days from the effective date of the exchange offer registration statement, subject to extension in limited circumstances, and (2) the date on which participating broker-dealers are no longer required to deliver a prospectus in connection with any resale of new notes, we will use commercially reasonable efforts to keep the exchange offer registration statement effective to the extent necessary to ensure that this prospectus is available for sales of the new notes by participating broker-dealers.

      A broker-dealer desiring that the exchange offer registration statement be kept continuously effective for resales of new notes must notify us in writing that such broker-dealer acquired new notes as a result of market-making or other trading activities and that such new notes were not received in exchange for old notes (in the exchange offer) that were acquired directly from us or any of our affiliates, such that the broker-dealer would be required to deliver a prospectus under the Securities Act upon a subsequent sale or other disposition of the new notes. A broker-dealer making dispositions of new notes pursuant to the exchange offer registration statement will be required to suspend its use of the prospectus included in the exchange offer registration statement, as amended or supplemented, under specified circumstances upon receipt of written notice to that effect from us.

      We will not receive any proceeds from any sale of the new notes by broker-dealers. Broker-dealers acquiring new notes for their own accounts may sell the notes in one or more transactions in the over-the-counter market, in negotiated transactions, through writing options on the new notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or at negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such selling broker-dealer and/or the purchasers of such new notes.

      We have agreed to pay all expenses incident to our participation in the exchange offer, including the reasonable fees and disbursements of one counsel for the holders of old notes and the initial purchaser, other than underwriting discounts and commissions, and will indemnify holders of the old notes, including any broker-dealers selling new notes in accordance with this “Plan of Distribution and Selling Restrictions” section, against specified types of liabilities, including liabilities under the Securities Act.

LEGAL MATTERS

      The validity of the new notes offered hereby is being passed upon for us by Sheppard Mullin Richter & Hampton LLP, San Francisco, California.

EXPERTS

      The financial statements incorporated in this Registration Statement on Form S-4 by reference to the Annual Report on Form 10-K of Valeant Pharmaceuticals, Inc. for the year ended December 31, 2002 and by reference to the Annual Report on Form 10-K of Ribapharm Inc. for the year ended December 31, 2002 have

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been so incorporated in reliance on the reports of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting.

INDEPENDENT ACCOUNTANTS

      With respect to the unaudited financial information of Valeant Pharmaceuticals, Inc. for the three month periods ended March 31, 2003 and 2002, the six month periods ended June 30, 2003 and 2002 and the nine month periods ended September 30, 2003 and 2002, incorporated by reference in this Registration Statement on Form S-4, PricewaterhouseCoopers LLP reported that they have applied limited procedures in accordance with professional standards for a review of such information. However, their separate reports dated May 15, 2004, August 14, 2004 and November 12, 2004, respectively, incorporated by reference herein state that they did not audit and they do not express an opinion on that unaudited financial information. Accordingly, the degree of reliance on their reports on such information should be restricted in light of the limited nature of the review procedures applied. PricewaterhouseCoopers LLP is not subject to the liability provisions of Section 11 of the Securities Act of 1933 for their report on the unaudited financial information because that report is not a “report” or a “part” of the registration statement prepared or certified by PricewaterhouseCoopers LLP within the meaning of Sections 7 and 11 of the Act.

WHERE YOU CAN FIND MORE INFORMATION

      Valeant is subject to the informational requirements of the Securities Exchange Act of 1934 and files reports, proxy statements and other information with the Securities and Exchange Commission, or the Commission. Such reports, proxy statements and other information filed by us may be inspected and copied at the Public Reference Section of the Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549-1004. Information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-800-SEC-0330. Reports, proxy and information statements and other information filed electronically by us with the Commission are available at the Commission’s website at http://www.sec.gov.

      The Commission allows us to “incorporate by reference” into this offering circular the information we file with the Commission. This means that we can disclose important information by referring you to those documents. The information incorporated by reference is considered to be a part of this offering circular. Information that we file later with the Commission will automatically update and supersede this information. We incorporate by reference the documents listed below and any future filings made by us with the Commission under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act until our offering is complete:

•  Valeant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002;

•  Valeant’s Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2003, June 30, 2003 and September 30, 2003 (as amended on Form 10-Q/ A dated November 13, 2003 and February 17, 2004);

•  Valeant’s Current Reports on Form 8-K dated August 27, 2003, July 16, 2003, June 13, 2003, and January 28, 2003;

•  Valeant’s Proxy Statement relating to our Annual Meeting of Stockholders held on May 22, 2003;

•  The description of the common stock in Valeant’s Registration Statement on Form 8-A filed with the Commission on October 24, 1994, as amended by Form 8-A/ A filed on October 25, 1994;

•  The description of Valeant’s Rights Agreement in Valeant’s Registration Statement on Form 8-A/ A filed with the Commission on November 10, 1994;

•  The audited financial statements of Ribapharm, the notes thereto and the report of independent accountants thereon contained in Item 8 of Ribapharm’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002; and

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•  The unaudited financial statements of Ribapharm and the notes thereto contained in Item 1 of Ribapharm’s Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2003 (as amended on Form 10-Q/ A dated May 22, 2003), June 30, 2003 and September 30, 2002.

      Certain financial information concerning Ribapharm as a separate entity is contained in Note 11 to the financial statements of Valeant contained in its Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2003.

      You may request a copy of these filings at no cost, by writing or telephoning us at:

Corporate Secretary

Valeant Pharmaceuticals International

3300 Hyland Avenue

Costa Mesa, CA 92626

(714) 545-0100

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PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 20. Indemnification of Directors and Officers

      Section 145 (“Section 145”) of the General Corporation Law of the state of Delaware (the “DGCL”) empowers a corporation to indemnify any person who was or is a party or is threatened to be made a party to any action or suit by reason of the fact that he or she is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise. Depending on the character of the proceeding, a corporation may indemnify against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding if the person indemnified acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. In the case of an action by or in the right of the corporation, no indemnification may be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless, and only to the extent that, the Court of Chancery of the state of Delaware (the “Chancery Court”) or the court in which such action or suit was brought, shall determine that despite the adjudication of liability, such person is fairly and reasonably entitled to indemnity for the expenses that the Chancery Court or such other court deems proper.

      Section 145 further provides that to the extent a director or officer of a corporation has been successful in the defense of any action, suit or proceeding referred to above or in the defense of any claim, issue or matter therein, he or she shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him or her in connection therewith. However, if the director or officer is not successful in the defense of any action, suit or proceeding referred to above or in the defense of any claim, issue or matter therein, he or she shall only be indemnified by the corporation as authorized in the specific case upon a determination that indemnification is proper because he or she met the applicable standard of conduct, as determined by a majority of the disinterested board of directors, or otherwise as described in Section 145.

      The certificate of incorporation and bylaws of both Registrants, as amended, provide indemnification to the Registrants’ officers and directors against liabilities they may incur in their capacities as such, which indemnification is similar to that provided by Section 145. Valeant Pharmaceuticals International has also entered into agreements with certain of its officers indemnifying them against liability they may incur in their capacity as such consistent with the DGCL and the certificate of incorporation and bylaws of Valeant Pharmaceuticals International. Valeant Pharmaceuticals International also carries directors’ and officers’ liability insurance, covering losses up to $50,000,000 (subject to a $2,500,000 deductible on the first $10,000,000 of losses and no deductible thereafter).

      Section 102(b)(7) of the DGCL permits a corporation to include in its certificate of incorporation a provision eliminating or limiting the personal liability of a director to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided that such provision shall not eliminate or limit the liability of a director (i) for any breach of the directors’ duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL (relating to unlawful payment of dividend and unlawful stock purchase and redemption) or (iv) for any transaction from which the director derived an improper personal benefit. Each of the Registrants has provided in its certificate of incorporation, as amended, that its directors shall be exculpated from liability as provided under Section 102(b)(7) of the DGCL and to the fullest extent permitted by the DGCL.

      The foregoing summaries are qualified in their entirety by reference to the complete text of the DGCL, the Registrants’ certificates of incorporation and bylaws and the agreements referred to above.

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Item 21. Exhibits and Financial Statement Schedules

      (a) The following exhibits are filed as part of this registration statement or incorporated by reference herein:

3.1	Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2003)
3.2	Bylaws (incorporated by reference to Exhibit 3.2 to our Registration Statement No. 33-84534)
3.3	Amended and Restated Certificate of Incorporation of Ribapharm (incorporated by reference to Exhibit 3.1 to Ribapharm’s Registration Statement No. 333-39350)
3.4	Amended and Restated Bylaws of Ribapharm (incorporated by reference to Exhibit 3.2 to Ribapharm’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002)
4.1	Indenture, dated as of December 12, 2003, among Valeant Pharmaceuticals International as issuer, Ribapharm Inc. as co-obligor and The Bank of New York as Trustee
4.2	Form of 7.0% Senior Note (provided as Exhibit A-1 to Exhibit 4.1 to this registration statement)
4.3	Registration Rights Agreement, dated December 12, 2003, between Valeant Pharmaceuticals, International and Ribapharm Inc., on the one hand, and Bear Stearns & Co. on the other hand
5	Opinion of Sheppard Mullin Richter & Hampton LLP*
12	Statement re: Computation of Ratios
15	Awareness Letter of Independent Accountants
23.1	Consent of PricewaterhouseCoopers LLP
23.2	Consent of Sheppard Mullin Richter & Hampton LLP (to be included in Exhibit 5 hereof)
24	Powers of Attorney (included in the signature page hereof)
25	Statement of Eligibility of the Trustee on Form T-1
99.1	Form of Letter of Transmittal
99.2	Form of Notice of Guaranteed Delivery
99.3	Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees
99.4	Form of Letter to Clients

*  To be filed by amendment

Item 22. Undertakings

      (a) The undersigned hereby undertakes:

      (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

      (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

      (ii) To reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement.

      (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

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      (2) That, for the purpose of determining liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

      (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

      (b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, as amended (the “Act”), each filing of the registrant’s annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

      (c) Insofar as indemnification for liabilities arising under the Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

      (d) The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.

      (e) The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.

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SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Costa Mesa, California on the 17th day of February, 2004.

VALEANT PHARMACEUTICALS INTERNATIONAL

By:  /s/ ROBERT W. O’LEARY

Robert W. O’Leary

Chairman of the Board, Chief Executive Officer

POWER OF ATTORNEY

      Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed on February 17, 2004 by the following persons in the capacities indicated. Each person whose signature appears below constitutes and appoints Bary G. Bailey and Eileen C. Pruette, and each of them acting individually, with full power of substitution, our true and lawful attorneys-in-fact and agents to do any and all acts and things in our name and on our behalf in our capacities indicated below which they or either of them may deem necessary or advisable to enable Valeant Pharmaceuticals International to comply with the Securities Act of 1933, as amended, and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement including specifically, but not limited to, power and authority to sign for us or any of us in our names in the capacities stated below, any and all amendments (including post-effective amendments) thereto, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in such connection, as fully to all intents and purposes as we might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or his substitute or substitutes, may lawfully do or cause to be done by virtue thereof.

Signature	Title
/s/ ROBERT W. O’LEARY Robert W. O’Leary	Chairman of the Board, Chief Executive Officer (Principal Executive Officer)
/s/ BARY G. BAILEY Bary G. Bailey	Executive Vice President and Chief Financial Officer (Principal Financial Officer)
/s/ TIMOTHY C. TYSON Timothy C. Tyson	President and Chief Operating Officer
/s/ EDWARD A. BURKHARDT Edward A. Burkhardt	Director
/s/ RONALD R. FOGLEMAN Ronald R. Fogleman	Director
/s/ ROBERT A. INGRAM Robert A. Ingram	Director

II-4

Signature	Title
/s/ RICHARD H. KOPPES Richard H. Koppes	Director
/s/ LAWRENCE N. KUGELMAN Lawrence N. Kugelman	Director
/s/ STEVEN J. LEE Steven J. Lee	Director
/s/ THEODOSE MELAS-KYRIAZI Theodose Melas-Kyriazi	Director
/s/ RANDY H. THURMAN Randy H. Thurman	Director

II-5

SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Costa Mesa, California on the 17th day of February, 2004.

RIBAPHARM INC.

By:  /s/ KIM D. LAMON

Kim D. Lamon

President and Chief Scientific Officer

POWER OF ATTORNEY

      Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed on February 17, 2004 by the following persons in the capacities indicated. Each person whose signature appears below constitutes and appoints Bary G. Bailey and Eileen C. Pruette, and each of them acting individually, with full power of substitution, our true and lawful attorneys-in-fact and agents to do any and all acts and things in our name and on our behalf in our capacities indicated below which they or either of them may deem necessary or advisable to enable Ribapharm Inc. to comply with the Securities Act of 1933, as amended, and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement including specifically, but not limited to, power and authority to sign for us or any of us in our names in the capacities stated below, any and all amendments (including post-effective amendments) thereto, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in such connection, as fully to all intents and purposes as we might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or his substitute or substitutes, may lawfully do or cause to be done by virtue thereof.

Signature	Title
/s/ KIM D. LAMON Kim D. Lamon	President and Chief Executive Officer, (Principal Executive Officer)
/s/ WILLIAM M. COMER, JR. William M. Comer, Jr.	Vice President and Chief Financial Officer (Principal Financial Officer)
/s/ ROBERT W. O’LEARY Robert W. O’Leary	Director
/s/ BARY G. BAILEY Bary G. Bailey	Director
/s/ TIMOTHY C. TYSON Timothy C. Tyson	Director
/s/ EILEEN C. PRUETTE Eileen C. Pruette	Director

II-6

EXHIBIT INDEX

3	.1	Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2003)
3	.2	Bylaws (incorporated by reference to Exhibit 3.2 to our Registration Statement No. 33-84534)
3	.3	Amended and Restated Certificate of Incorporation of Ribapharm (incorporated by reference to Exhibit 3.1 to Ribapharm’s Registration Statement No. 333-39350)
3	.4	Amended and Restated Bylaws of Ribapharm (incorporated by reference to Exhibit 3.2 to Ribapharm’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002)
4	.1	Indenture, dated as of December 12, 2003, among Valeant Pharmaceuticals International as issuer, Ribapharm Inc. as co-obligor and The Bank of New York as Trustee
4	.2	Form of 7.0% Senior Note (provided as Exhibit A-1 to Exhibit 4.1 to this registration statement)
4	.3	Registration Rights Agreement, dated December 12, 2003, between Valeant Pharmaceuticals, International and Ribapharm Inc., on the one hand, and Bear Stearns & Co. on the other hand
5		Opinion of Sheppard Mullin Richter & Hampton LLP*
12		Statement re: Computation of Ratios
15		Awareness Letter of Independent Accountants
23	.1	Consent of PricewaterhouseCoopers LLP
23	.2	Consent of Sheppard Mullin Richter & Hampton LLP (to be included in Exhibit 5 hereof)
24		Powers of Attorney (included in the signature page hereof)
25		Statement of Eligibility of the Trustee on Form T-1
99	.1	Form of Letter of Transmittal
99	.2	Form of Notice of Guaranteed Delivery
99	.3	Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees
99	.4	Form of Letter to Clients

*  To be filed by amendment

EX-4.1 3 a96405orexv4w1.txt EXHIBIT 4.1 Exhibit 4.1 - -------------------------------------------------------------------------------- VALEANT PHARMACEUTICALS INTERNATIONAL AND RIBAPHARM INC. 7.0% SENIOR NOTES DUE 2011 -------------------- INDENTURE DATED AS OF DECEMBER 12, 2003 -------------------- THE BANK OF NEW YORK, AS TRUSTEE - -------------------------------------------------------------------------------- CROSS-REFERENCE TABLE*

TIA INDENTURE SECTION SECTION - ------- -------------- Section 310(a)(1)............................................ 7.10 (a)(2)............................................... 7.10 (a)(3)............................................... N.A.** (a)(4)............................................... N.A. (a)(5)............................................... 7.10 (b).................................................. 7.8; 7.10 (c).................................................. N.A. Section 311(a).............................................. 7.11 (b).................................................. 7.11 (c).................................................. N.A. Section 312(a)............................................... 2.5 (b).................................................. 11.3 (c).................................................. 11.3 Section 313(a)............................................... 7.6 (b)(1)............................................... N.A. (b)(2)............................................... 7.6 (c).................................................. 7.6; 11.2 (d).................................................. 7.6 Section 314(a)............................................... 4.3; 4.5; 11.2 (b).................................................. N.A. (c)(1)............................................... 11.4(a) (c)(2)............................................... 11.4(a) (c)(3)............................................... N.A. (d).................................................. N.A. (e).................................................. 11.4(b) (f).................................................. N.A. Section 315(a)............................................... 7.1(b) (b).................................................. 7.5; 11.2 (c).................................................. 7.1(a) (d).................................................. 7.1(c) (e).................................................. 8.11 Section 316(a)(last sentence)................................ 2.9 (a)(1)(A)............................................ 8.5 (a)(1)(B)............................................ 8.4 (a)(2)............................................... N.A. (b).................................................. 8.7 (c).................................................. 11.5 Section 317(a)(1)............................................ 8.8 (a)(2)............................................... 8.9 (b).................................................. 2.4

- ---------- * This Cross-Reference Table shall not, for any purpose, be deemed a part of this Indenture. ** N.A. means Not Applicable. i TABLE OF CONTENTS

Page ---- ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE..............................................1 Section 1.1 Definitions....................................................................1 Section 1.2 Other Definitions.............................................................22 Section 1.3 Trust Indenture Act Provisions................................................23 Section 1.4 Rules of Construction.........................................................23 ARTICLE 2 THE SECURITIES.........................................................................24 Section 2.1 Form and Dating...............................................................24 Section 2.2 Execution and Authentication..................................................26 Section 2.3 Registrar and Paying Agent....................................................26 Section 2.4 Paying Agent to Hold Money in Trust...........................................27 Section 2.5 Securityholder Lists..........................................................27 Section 2.6 Transfer and Exchange.........................................................28 Section 2.7 Replacement Securities........................................................28 Section 2.8 Outstanding Securities........................................................29 Section 2.9 Treasury Securities...........................................................29 Section 2.10 Temporary Securities..........................................................30 Section 2.11 Cancellation..................................................................30 Section 2.12 Legend; Additional Transfer and Exchange Requirements.........................30 Section 2.13 CUSIP and ISIN Numbers........................................................34 ARTICLE 3 REDEMPTION AND PURCHASES...............................................................34 Section 3.1 Right to Redeem...............................................................34 Section 3.2 Selection of Securities to be Redeemed........................................34 Section 3.3 Notice of Redemption..........................................................35 Section 3.4 Effect of Notice of Redemption................................................36 Section 3.5 Deposit of Redemption Price...................................................36 Section 3.6 Securities Redeemed in Part...................................................36 Section 3.7 Optional Redemption...........................................................36 Section 3.8 Purchase of Securities at Option of the Holder Upon Change of Control.........37 Section 3.9 Effect of Change of Control Purchase Notice...................................39 Section 3.10 Deposit of Change of Control Purchase Price...................................40 Section 3.11 Securities Purchased in Part..................................................40 Section 3.12 Compliance With Securities Laws Upon Purchase of Securities...................40 Section 3.13 Repayment to the Obligors.....................................................40 Section 3.14 Offer to Purchase by Application of Excess Proceeds...........................41 ARTICLE 4 COVENANTS..............................................................................43 Section 4.1 Payment of Securities.........................................................43 Section 4.2 Maintenance of Office or Agency...............................................43 Section 4.3 Reports.......................................................................44

ii Section 4.4 Compliance Certificates.......................................................45 Section 4.5 Further Instruments and Acts..................................................45 Section 4.6 Maintenance of Corporate Existence............................................45 Section 4.7 Changes in Covenants when Securities Rated Investment Grade...................45 Section 4.8 Restricted Payments...........................................................46 Section 4.9 Incurrence of Indebtedness and Issuance of Preferred Stock....................48 Section 4.10 Sale and Leaseback Transactions...............................................51 Section 4.11 Liens.........................................................................52 Section 4.12 Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries.....52 Section 4.13 Transactions with Affiliates..................................................53 Section 4.14 Asset Sales...................................................................55 Section 4.15 Designation of Restricted and Unrestricted Subsidiaries.......................56 Section 4.16 Business Activities...........................................................56 Section 4.17 Payments for Consent..........................................................57 Section 4.18 Stay, Extension and Usury Laws................................................57 Section 4.19 Payment of Additional Interest................................................57 Section 4.20 Notice of Default.............................................................57 ARTICLE 5 MERGER, CONSOLIDATION OR SALE OF ASSETS................................................57 Section 5.1 Merger, Consolidation or Sale of Assets.......................................57 Section 5.2 Successor Substituted.........................................................58 ARTICLE 6 DEFAULT AND REMEDIES...................................................................59 Section 6.1 Events of Default.............................................................59 Section 6.2 Acceleration..................................................................61 Section 6.3 Other Remedies................................................................62 Section 6.4 Waiver of Defaults and Events of Default......................................62 Section 6.5 Control by Majority...........................................................62 Section 6.6 Limitations on Suits..........................................................62 Section 6.7 Rights of Holders to Receive Payment..........................................63 Section 6.8 Collection Suit by Trustee....................................................63 Section 6.9 Trustee May File Proofs of Claim..............................................63 Section 6.10 Priorities....................................................................64 Section 6.11 Undertaking for Costs.........................................................64 ARTICLE 7 TRUSTEE................................................................................64 Section 7.1 Duties of Trustee.............................................................64 Section 7.2 Rights of Trustee.............................................................65 Section 7.3 Individual Rights of Trustee..................................................66 Section 7.4 Trustee's Disclaimer..........................................................67 Section 7.5 Notice of Default or Events of Default........................................67 Section 7.6 Reports by Trustee to Holders.................................................67 Section 7.7 Compensation and Indemnity....................................................67 Section 7.8 Replacement of Trustee........................................................68 Section 7.9 Successor Trustee by Merger, Etc..............................................69 Section 7.10 Eligibility; Disqualification.................................................69 iii Section 7.11 Preferential Collection of Claims Against Obligors............................69 ARTICLE 8 DEFEASANCE; SATISFACTION AND DISCHARGE OF INDENTURE; RELEASE OF RIBAPHARM..............70 Section 8.1 Satisfaction and Discharge of Indenture.......................................70 Section 8.2 Legal Defeasance..............................................................70 Section 8.3 Covenant Defeasance...........................................................72 Section 8.4 Application of Trust Money....................................................73 Section 8.5 Repayment to Obligors.........................................................74 Section 8.6 Reinstatement.................................................................74 Section 8.7 Release of Ribapharm as Obligor...............................................74 Section 8.8 Reinstatement of Ribapharm as Obligor.........................................74 ARTICLE 9 AMENDMENTS, SUPPLEMENTS AND WAIVERS....................................................75 Section 9.1 Without Consent of Holders....................................................75 Section 9.2 With Consent of Holders.......................................................75 Section 9.3 Compliance With Trust Indenture Act...........................................77 Section 9.4 Revocation and Effect of Consents.............................................77 Section 9.5 Notation On or Exchange of Securities.........................................77 Section 9.6 Trustee to Sign Amendments, Etc...............................................77 Section 9.7 Effect of Supplemental Indentures.............................................77 ARTICLE 10 SUBSIDIARY GUARANTEES.................................................................78 Section 10.1 Future Guarantees.............................................................78 Section 10.2 Terms of Guarantees...........................................................78 Section 10.3 Limitation on Guarantor Liability.............................................80 Section 10.4 Merger and Consolidation of Guarantors........................................80 Section 10.5 Release.......................................................................81 ARTICLE 11 MISCELLANEOUS.........................................................................81 Section 11.1 Trust Indenture Act Controls..................................................81 Section 11.2 Notices.......................................................................82 Section 11.3 Communications by Holders With Other Holders..................................83 Section 11.4 Certificate and Opinion of Counsel as to Conditions Precedent.................83 Section 11.5 Record Date for Vote or Consent of Holders....................................83 Section 11.6 Rules by Trustee, Paying Agent and Registrar..................................84 Section 11.7 Legal Holidays................................................................84 Section 11.8 Governing Law; Submission to Jurisdiction.....................................84 Section 11.9 No Adverse Interpretation of Other Agreements.................................84 Section 11.10 No Recourse Against Others....................................................84 Section 11.11 Successors....................................................................85 Section 11.12 Multiple Counterparts.........................................................85 Section 11.13 Separability..................................................................85 Section 11.14 Table of Contents, Headings, etc..............................................85 Section 11.15 Calculations in Respect of the Securities.....................................85 iv EXECUTION COPY THIS INDENTURE dated as of December 12, 2003 is among Valeant Pharmaceuticals International, a corporation duly organized under the laws of the State of Delaware (the "Company"), Ribapharm Inc., a corporation duly organized under the laws of the State of Delaware ("Ribapharm"), and The Bank of New York, a banking corporation duly organized under the laws of the State of New York, as Trustee (the "Trustee"). In consideration of the premises and the purchase of the Securities by the Holders thereof, all parties agree as follows for the benefit of the other and for the equal and ratable benefit of the registered Holders of the Company's, as issuer, and Ribapharm's, as co-obligor, 7.0% Senior Notes due 2011. ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.1 Definitions. "Acquired Debt" means, with respect to any specified Person: (1) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Subsidiary of, such specified Person; and (2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "Additional Interest" means "liquidated damages" as defined in Section 5 of the Registration Rights Agreement. All references herein to interest accrued or payable as of any date shall include any Additional Interest accrued or payable as of such date as provided in the Registration Rights Agreement. "Additional Securities" means any additional 7.0% Senior Notes due 2011 that the Obligors may issue from time to time under this Indenture in accordance with Section 2.1(c) of this Indenture as part of the same series of Securities issued on the date hereof. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control," as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided, that beneficial ownership of 10% or more of the Voting Stock of a Person will be deemed to be control. For purposes of this definition, the terms "controlling," "controlled by" and "under common control with" have correlative meanings. "Agent" means any Registrar or Paying Agent. "Applicable Procedures" means, with respect to any transfer or exchange of beneficial ownership interests in the Global Securities, the rules and procedures of the Depositary, to the extent applicable to such transfer or exchange. "Asset Sale" means: (1) the sale, lease, conveyance or other disposition of any assets or rights; provided, that the sale, conveyance or other disposition of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole will be governed by Section 3.8 and/or Section 5.1 hereof and not by the provisions of Section 4.14; and (2) the issuance of Equity Interests by any of the Company's Restricted Subsidiaries or the sale of Equity Interests in any of its Restricted Subsidiaries. Notwithstanding the preceding, none of the following items will be deemed to be an Asset Sale: (1) any single transaction or series of related transactions that involves assets having a Fair Market Value of less than $2.5 million; (2) a transfer of assets between or among the Company and its Restricted Subsidiaries; (3) an issuance of Equity Interests by a Restricted Subsidiary to the Company or to another Restricted Subsidiary; (4) the sale or lease of equipment, inventory or accounts receivable in the ordinary course of business; (5) the sale or other disposition of cash or Cash Equivalents; (6) a Restricted Payment or Permitted Investment that is permitted by Section 4.8 hereof (7) the license of intellectual property to third persons on customary terms in the ordinary course of business as determined by the Board of Directors of the Company in good faith; (8) the sale, exchange or other disposition of obsolete assets not integral to any Permitted Business; (9) sales, transfers or other dispositions of assets for consideration at least equal to the Fair Market Value of the assets sold or disposed of, but only if the consideration received consists of property or assets (other than cash, except to the extent used as a bona fide means of equalizing the value of the property or assets involved in the swap transaction; provided, however, that cash does not exceed 10% of the sum of the amount of the cash and the Fair Market Value of the assets received or given) of a nature or type that are used in, a business having property or assets of 2 a nature or type or engaged in a Permitted Business (or Capital Stock of a Person whose assets consist of assets of the type described in this clause (9)); and (10) the sale, transfer or disposition of any investment in, or any assets of ICN Czech and ICN Hungary, in each case existing on the date of this Indenture, or any Investment in any other entity that holds such investments or assets as its only assets. "Attributable Debt" in respect of a sale and leaseback transaction means, at the time of determination, the present value of the obligation of the lessee for net rental payments during the remaining term of the lease included in such sale and leaseback transaction including any period for which such lease has been extended or may, at the option of the lessor, be extended. Such present value shall be calculated using a discount rate equal to the rate of interest implicit in such transaction, determined in accordance with GAAP. "Bankruptcy Law" means Title 11 of the United States Code (or any successor thereto) or any similar federal or state law for the relief of debtors. "Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular "person" (as that term is used in Section 13(d)(3) of the Exchange Act), such "person" will be deemed to have beneficial ownership of all securities that such "person" has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition. The terms "Beneficially Owns" and "Beneficially Owned" have corresponding meanings. "Board of Directors" means: (1) with respect to a company or corporation, the board of directors of the company or corporation or any committee thereof duly authorized to act on behalf of such board; (2) with respect to a partnership, the Board of Directors of the general partner of the partnership or any committee thereof duly authorized to act on behalf of such board; and (3) with respect to any other Person, the board or committee of such Person serving a similar function. "Borrowing Base" means, as of any date, an amount equal to: (1) 85% of the face amount of all accounts receivable owned by the Company and its Restricted Subsidiaries as of the end of the most recent fiscal quarter preceding such date that were not more than 90 days past due; plus (2) 60% of the book value of all inventory, net of reserves, owned by the Company and its Restricted Subsidiaries as of the end of the most recent fiscal quarter preceding such date; minus 3 (3) the aggregate amount of trade payables of the Company and its Restricted Subsidiaries outstanding as of the end of the most recent fiscal quarter preceding such date, all calculated on a consolidated basis and in accordance with GAAP. "Business Day" means each day that is not a Legal Holiday. "Capital Lease Obligations" means, at the time any determination is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet in accordance with GAAP. "Capital Stock" means: (1) in the case of a corporation, corporate stock; (2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; (3) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and (4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. "Cash Equivalents" means: (1) securities issued or directly and fully guaranteed or insured by the U.S. government or any agency or instrumentality thereof (provided, that the full faith and credit of the U.S. is pledged in support thereof) having repricings or maturities of not more than one year from the date of acquisition; (2) certificates of deposit and time deposits with maturities of one year or less from the date of acquisition, bankers' acceptances with maturities not exceeding one year and overnight bank deposits, in each case, with any domestic commercial bank having capital and surplus in excess of $500.0 million and a Thomson Bank Watch Rating of "B" or better; (3) repurchase obligations with a term of not more than 14 days for underlying securities of the types described in clauses (1) and (2) above entered into with any financial institution meeting the qualifications specified in clause (2) above; (4) commercial paper having a rating of at least "P-2" or better from Moody's or at least "A-2" or better from S&P, or carrying an equivalent rating by an internationally recognized rating agency and, in each case, maturing within one year after the date of acquisition; (5) Auction-rate, corporate and municipal securities, in each case (x) having either short-term debt ratings of at least "P-2" or better from Moody's or at least "A-2" or better from S&P or long-term senior debt ratings of "A2" or better from 4 Moody's or at least "A" or better from S&P, or carrying an equivalent rating by an internationally recognized rating agency, (y) having repricings or maturities of not more than one year from the date of acquisition and (z) which are classifiable as cash and cash equivalents under GAAP; (6) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (1) through (5) of this definition; (7) in the case of any Foreign Subsidiary: (a) direct obligations of the sovereign nation, or any agency thereof, in which such Foreign Subsidiary is organized and is conducting business or in obligations fully and unconditionally guaranteed by such sovereign nation, or any agency thereof; provided, that such obligations are acquired and held by such Foreign Subsidiary in the ordinary course of business and have repricings or maturities of not more than one year from the date of acquisition; or (b) investments of the type and maturity described in clauses (1) through (5) above of foreign obligors, which investments or obligors have ratings described in such clauses or equivalent ratings from internationally recognized rating agencies; provided, that such investments are acquired and held by such Foreign Subsidiary in the ordinary course of business. "Change of Control" means the occurrence of any of the following: (1) any "person" (as that term is used in Section 13(d)(3) of the Exchange Act) becomes the Beneficial Owner of shares of the Company's Voting Stock representing (i) 50% or more of the total voting power of all of the Company's outstanding Voting Stock or (ii) the power, directly or indirectly, or elect a majority of the members of the Company's Board of Directors; (2) the Company consolidates with, or merges with or into, another Person, or the Company, directly or indirectly, sells, assigns, conveys, transfers, leases or otherwise disposes of all or substantially all of the properties or assets of the Company and its Restricted Subsidiaries, taken as a whole (other than by way of merger or consolidation), in one or a series of related transactions, or any Person consolidates with, or merges with or into, the Company, in any such event other than pursuant to a transaction in which the Persons that Beneficially Owned the shares of the Company's Voting Stock immediately prior to such transaction Beneficially Own at least a majority of the total voting power of all outstanding Voting Stock (other than Disqualified Stock) of the surviving or transferee Person; (3) the holders of the Company's Capital Stock approve any plan or proposal for the liquidation or dissolution of the Company (whether or not otherwise in compliance with this Indenture); or 5 (4) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of the Company (together with any new directors whose election by such Board of Directors or whose nomination for election by the shareholders of the Company has been approved by a majority of the directors then still in office who either were directors at the beginning of such period or whose election or recommendation for election was previously so approved) cease to constitute a majority of the Board of Directors of the Company. "Clearstream" means Clearstream Banking, societe anonyme, Luxembourg. "Common Stock" means the common stock of the Company, $.01 par value per share, as it exists on the date of this Indenture and any shares of any class or classes of capital stock of the Company resulting from any reclassification or reclassifications thereof and which have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Company and which are not subject to redemption by the Company. "Company" means the party named as such in the first paragraph of this Indenture until a successor replaces it pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Company. "Consolidated Cash Flow" means, with respect to any specified Person for any period, the Consolidated Net Income of such Person for such period plus: (1) an amount equal to any extraordinary loss plus any net loss realized by such Person or any of its Restricted Subsidiaries in connection with an Asset Sale, to the extent such losses were deducted in computing such Consolidated Net Income; plus (2) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was deducted in computing such Consolidated Net Income; plus (3) consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued and whether or not capitalized (including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net of the effect of all payments made or received pursuant to Interest Rate Hedging Obligations), to the extent that any such expense was deducted in computing such Consolidated Net Income; plus (4) depreciation, amortization (including amortization of intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or 6 amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Consolidated Net Income; minus (5) non-cash items increasing such Consolidated Net Income for such period, other than the accrual of revenue in the ordinary course of business, in each case, on a consolidated basis and determined in accordance with GAAP. Notwithstanding the preceding, the provision for taxes based on the income or profits of, and the depreciation and amortization and other non-cash expenses of, a Restricted Subsidiary of the Company will be added to Consolidated Net Income to compute Consolidated Cash Flow of the Company only to the extent that a corresponding amount would be permitted at the date of determination to be dividended to the Company by such Restricted Subsidiary without prior governmental approval (that has not been obtained), and without direct or indirect restriction pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Restricted Subsidiary or its stockholders. "Consolidated Net Income" means, with respect to any specified Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that: (1) the Net Income (but not loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting will be included only to the extent of the amount of dividends or distributions paid in cash to the specified Person or a Restricted Subsidiary of the Person; (2) the Net Income of any Restricted Subsidiary will be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders; (3) the cumulative effect of a change in accounting principles will be excluded; (4) any extraordinary or nonrecurring gain or loss and any expense or charge in connection with acquired in-process research and development will be excluded; (5) any extraordinary or nonrecurring gain or loss and any expense or charge attributable to the disposition of discontinued operations will be excluded; (6) charges incurred in connection with the retirement or redemption of the 6-1/2% Notes will be excluded; and 7 (7) the Net Income (but not loss) of any Unrestricted Subsidiary will be excluded, whether or not distributed to the specified Person or one of its Subsidiaries. "Co-Obligor" means Ribapharm, for so long as Ribapharm has outstanding obligations under the 6-1/2% Notes, originally issued under an indenture among the Company, Ribapharm and the trustee. "Corporate Trust Office" means the principal office of the Trustee at which at any particular time its corporate trust business shall be administered which office at the date of the execution of this Indenture is located at 101 Barclay Street - 8W, New York, NY 10286, Attention: Corporate Trust Administration or at any other time at such other address as the Trustee may designate from time to time by notice to the Obligors. "Credit Facilities" means, one or more debt facilities or commercial paper facilities, in each case with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit or other borrowings, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced (including by means of sales of debt securities to institutional investors) in whole or in part from time to time. "Current Dividend" means a quarterly dividend on the Common Stock in an amount not to exceed $0.33 per share per annum, which amount will be reduced to reflect any subdivision of the Common Stock by means of a stock split, stock dividend or otherwise. "Custodian" means any receiver, trustee, assignee, liquidator, sequestrator or similar official under any Bankruptcy Law. "Default" means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default. "Definitive Securities" means Securities that are in substantially the form attached hereto as Exhibit A and that do not include the information to which footnotes 1, 6 and 7 thereof apply. "Disqualified Stock" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, on or prior to the date that is 91 days after the date on which the Securities mature. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require the Company to repurchase such Capital Stock upon the occurrence of a change of control or an asset sale will not constitute Disqualified Stock if the terms of such Capital Stock provide that the Company may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with Section 4.8 hereof 8 "Domestic Subsidiary" means any Restricted Subsidiary that was formed under the laws of the United States or any state thereof or the District of Columbia or that guarantees or otherwise provides direct credit support for any Indebtedness of the Company or the Co-Obligor. "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "Equity Offering" means a public or private offering of Equity Interests (other than Disqualified Stock). "Euroclear" means Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear System. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, as in effect from time to time. "Exchange Securities" means the 7.0% Senior Notes due 2011 to be issued by the Company and Ribapharm pursuant to this Indenture in the Exchange Offer. "Exchange Offer" means the exchange and issuance by the Company and Ribapharm of a principal amount of Exchange Securities (which shall be registered pursuant to the Exchange Offer Registration Statement) equal to the outstanding principal amount of Securities that are properly tendered and not subsequently withdrawn by such Holders in connection with such exchange and issuance. "Exchange Offer Registration Statement" means the Registration Statement relating to the Exchange Offer, including the related Prospectus. "Existing Indebtedness" means Indebtedness of the Company and its Restricted Subsidiaries (other than Indebtedness, if any, under Credit Facilities incurred under Section 4.9(b)(i) hereof) in existence on the date of this Indenture, until such amounts are repaid. "Fair Market Value" means the price that could be negotiated in an arm's-length transaction, for cash, between a willing seller and a willing and able buyer, neither of whom is under undue pressure or compulsion to complete the transaction, determined in good faith by the Board of Directors of the Company (unless otherwise provided in this Indenture). "Final Maturity Date," means December 15, 2011. "Fixed Charge Coverage Ratio" means with respect to any specified Person for any period, the ratio of the Consolidated Cash Flow of such Person for such period to the Fixed Charges of such Person for such period. In the event that the specified Person or any of its Restricted Subsidiaries incurs, assumes, Guarantees, repays, repurchases or redeems any Indebtedness (other than ordinary working capital borrowings) or issues, repurchases or redeems preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated and on or prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "CALCULATION DATE"), then the 9 Fixed Charge Coverage Ratio will be calculated giving pro forma effect to such incurrence, assumption, Guarantee, repayment, repurchase or redemption of Indebtedness, or such issuance, repurchase or redemption of preferred stock, and the use of the proceeds therefrom as if the same had occurred at the beginning of the applicable four-quarter reference period. In addition, for purposes of calculating the Fixed Charge Coverage Ratio: (1) acquisitions that have been made by the specified Person or any of its Restricted Subsidiaries, including through consolidations or mergers and including any related financing transactions, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date will be given pro forma effect as if they had occurred on the first day of the four-quarter reference period and Consolidated Cash Flow for such reference period will be calculated on a pro forma basis in accordance with Regulation S-X under the Securities Act; (2) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, will be excluded; and (3) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, will be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the specified Person or any of its Restricted Subsidiaries following the Calculation Date. "Fixed Charges" means, with respect to any specified Person for any period, the sum, without duplication, of: (1) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued, including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to Attributable Debt, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net of the effect of all payments made or received pursuant to Interest Rate Hedging Obligations; plus (2) the consolidated interest of such Person and its Restricted Subsidiaries that was capitalized during such period; plus (3) any interest expense on Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries, whether or not such Guarantee or Lien is called upon; plus 10 (4) the product of (a) all dividends, whether paid or accrued and whether or not in cash, on any series of preferred stock of such Person or any of its Restricted Subsidiaries, other than dividends on Equity Interests payable solely in Equity Interests of the Company (other than Disqualified Stock) or to the Company or a Restricted Subsidiary of the Company, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP. "Foreign Subsidiary" means any Subsidiary that is not a Domestic Subsidiary. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect from time to time. "Global Securities" means Securities that are substantially in the form attached hereto as Exhibit A and that include the information called for by footnotes 1, 6 and 7 thereof, and which are deposited with the Depositary or its custodian and registered in the name of the Depositary or its nominee. "Guarantee" means a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness. "Guarantors" means any Subsidiary that executes a Guarantee in accordance with the provisions of this Indenture and its successors and assigns. "Hedging Obligations" means, with respect to any specified Person (1) Interest Rate Hedging Obligations; and (2) the obligations of such Person under agreements or arrangements designed to protect such Person against fluctuations in currency exchange rates. "Holder" or "Securityholder" means the person in whose name a Security is registered on the Primary Registrar's books. "Indebtedness" means, with respect to any specified Person, any indebtedness of such Person, whether or not contingent: (1) in respect of borrowed money; (2) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof); 11 (3) in respect of banker's acceptances; (4) representing Capital Lease Obligations or Attributable Debt in respect of sale and leaseback transactions; (5) representing the balance deferred and unpaid of the purchase price of any property, except any such balance that constitutes an accrued expense or trade payable; or (6) representing any Hedging Obligations, if and to the extent any of the preceding items (other than letters of credit, Attributable Debt and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term "Indebtedness" includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) and, to the extent not otherwise included, the Guarantee by the specified Person of any Indebtedness of any other Person. The amount of any Indebtedness outstanding as of any date will be: (1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount; and (2) the principal amount of the Indebtedness, together with any interest on the Indebtedness that is more than 30 days past due, in the case of any other Indebtedness. "Indenture" means this Indenture as amended or supplemented from time to time pursuant to the terms of this Indenture. "Interest" on any Security shall refer to interest and Additional Interest thereon, unless the context otherwise requires. "Interest Rate Hedging Obligations" means, with respect to any specified Person, the obligations of such Person under: (1) interest rate swap agreements, interest rate cap agreements and interest rate collar agreements; and (2) other agreements or arrangements designed to protect such Person against fluctuations in interest rates. "Investments" means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans (including Guarantees or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Company or any Restricted Subsidiary of the Company sells or otherwise 12 disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of the Company such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary of the Company, the Company will be deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value of the Company's Investments in such Subsidiary that were not sold or disposed of in an amount determined as provided in Section 4.8(c) hereof. The acquisition by the Company or any Restricted Subsidiary of the Company of a Person that holds an Investment in a third Person will be deemed to be an Investment by the Company or such Restricted Subsidiary in such third Person in an amount equal to the Fair Market Value of the Investments held by the acquired Person in such third Person in an amount determined as provided in Section 4.8(c) hereof. For the avoidance of doubt, acquisitions of or licenses for products or assets used or useful in a Permitted Business do not constitute Investments. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge (fixed and/or floating), security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction. "Moody's" means Moody's Investors Service, Inc., or any successor to the rating agency business thereof. "Net Income" means, with respect to any specified Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however: (1) any gain (but not loss), together with any related provision for taxes on such gain (but not loss), realized in connection with: (a) any Asset Sale; or (b) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries; and (2) any extraordinary gain (but not loss), together with any related provision for taxes on such extraordinary gain (but not loss). "Net Proceeds" means the aggregate cash proceeds received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale, including, without limitation, legal, accounting and investment banking fees, and sales commissions, and any relocation expenses incurred as a result of the Asset Sale, taxes paid or payable as a result of the Asset Sale, in each case, after taking into account any available tax credits or deductions and any tax sharing arrangements, and amounts required to be applied to the repayment of Indebtedness, other than Indebtedness under a Credit Facility, secured by a Lien on the asset or assets that were the subject of such Asset Sale and any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP. 13 "Non-Recourse Debt" means Indebtedness: (1) as to which neither the Company nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (b) is directly or indirectly liable as a guarantor or otherwise, or (c) constitutes the lender; (2) no default with respect to which (including any rights that the holders of the Indebtedness may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of any other Indebtedness (other than the Securities) of the Company or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment of the Indebtedness to be accelerated or payable prior to its stated maturity; and (3) as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of the Company or any of its Restricted Subsidiaries. "Non-U.S. Person" means a Person who is not a U.S. Person. "Obligations" means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. "Obligors" means the Company and Ribapharm; provided that at such time as Ribapharm is no longer the Co-Obligor pursuant to the applicable provisions of this Indenture, and thereafter "Obligors" shall mean the Company. "Officer" means the Chairman of the Board, the Chief Executive Officer, the President, any Vice President, the Chief Financial Officer, the Controller, Treasurer, the Secretary or any Assistant Controller, Assistant Treasurer or Assistant Secretary of each of the Obligors. "Officers' Certificate" means a certificate signed by two Officers; provided, however, that for purposes of Section 4.4 hereof, "Officers' Certificate" means a certificate signed by the principal executive officer, principal financial officer or principal accounting officer of each of the Obligors and by one other Officer. "Opinion of Counsel" means a written opinion from legal counsel. The counsel may be an employee of or counsel to each of the Obligors or the Trustee. "Participant" means, with respect to the Depositary, Euroclear or Clearstream, a person who has an account with the Depositary, Euroclear or Clearstream, respectively, and, with respect to the Depository Trust Company, shall include Euroclear and Clearstream. "Permitted Business" means any business conducted by the Company and its Restricted Subsidiaries on the date of this Indenture and any business reasonably related, ancillary or 14 complimentary to the business of the Company and its Restricted Subsidiaries on the date of this Indenture. "Permitted Investments" means: (1) any Investment in the Company or in a Restricted Subsidiary of the Company; (2) any Investment in cash and Cash Equivalents; (3) any Investment by the Company or any Subsidiary of the Company in a Person, if as a result of such Investment: (a) such Person becomes a Restricted Subsidiary of the Company; or (b) such Person is merged or consolidated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company; (4) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with Section 4.14 hereof; (5) any Investments made solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company; (6) any Investments received in compromise of obligations of such persons incurred in the ordinary course of trade creditors or customers that were incurred in the ordinary course of business, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer; (7) Investments represented by Hedging Obligations; (8) Investments in existence on the date of this Indenture; (9) Investments in a Permitted Joint Venture, when taken together with all other Investments made pursuant to this clause (9) that are at the time outstanding not to exceed $25.0 million; and (10) other Investments in any Person having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (10) that are at the time outstanding not to exceed $25.0 million. "Permitted Joint Venture" means any joint venture (which may be in the form of a limited liability company, partnership, corporation or other entity) in which the Company or any of its Restricted Subsidiaries is a joint venturer; provided, however, that (a) the joint venture is engaged solely in a Permitted Business and (b) the governing documents of the joint venture 15 require the consent of the Company or such Restricted Subsidiary with respect to any material decisions relating to the activities of the joint venture. "Permitted Liens" means: (1) Liens securing Indebtedness and other Obligations under Credit Facilities that were permitted by the terms of this Indenture to be incurred under Section 4.9(b)(i) hereof; (2) Liens in favor of the Company; (3) Liens on property of a Person existing at the time such Person is merged with or into or consolidated with or is acquired by the Company or any Subsidiary of the Company; provided, that such Liens were not incurred in contemplation of such merger, consolidation or acquisition and do not extend to any assets other than those of the Person merged into, consolidated with or acquired by the Company or the Subsidiary; (4) Liens on property existing at the time of acquisition of the property by the Company or any Subsidiary of the Company, provided, that such Liens were not incurred in contemplation of such acquisition; (5) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business; (6) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by Section 4.9(b)(iv) hereof, covering only the assets acquired with such Indebtedness; (7) Liens existing on the date of this Indenture; (8) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded, provided, that any reserve or other appropriate provision as is required in conformity with GAAP has been made therefor; (9) Liens securing Hedging Obligations; (10) Liens arising by reason of deposits necessary to obtain standby letters of credit in the ordinary course of business (including deposits necessary to obtain standby letters of credit); (11) Liens to secure any Permitted Refinancing Indebtedness permitted to be incurred under the Indenture; provided, however, that: 16 (a) the new Lien shall be limited to all or part of the same property and assets that secured or, under the written agreements pursuant to which the original Lien arose, could secure the original Lien (plus improvements and accessions to, such property or proceeds or distributions thereof); and (b) the Indebtedness secured by the new Lien is not increased to any amount greater than the sum of (x) the outstanding principal amount or, if greater, committed amount, of the Permitted Refinancing Indebtedness and (y) an amount necessary to pay any fees and expenses, including premiums, related to such refinancings, refunding, extension, renewal or replacement; (12) Liens incurred in the ordinary course of business of the Company or any Restricted Subsidiary of the Company with respect to obligations that do not exceed $25.0 million at any one time outstanding; (13) survey title exceptions, title defects, encumbrances, easements, reservations of, or rights of others for, rights of way, sewers, electric lines, telegraph or telephone lines and other similar purposes or zoning or other restrictions as to the use of real property not materially interfering with the ordinary conduct of the business of the Company and its Subsidiaries taken as a whole; (14) Liens arising by operation of law in favor of landlords, mechanics, carriers, warehousemen, materialmen, laborers, employees, suppliers or the like, incurred in the ordinary course of business for sums which are not yet delinquent or are being contested in good faith by negotiations or by appropriate proceedings which suspend the collection thereof; and (15) Liens arising out of judgments, decrees, orders or awards in respect of which the Company shall in good faith be prosecuting an appeal or proceedings for review which appeal or proceedings shall not have been finally terminated, or if the period within which such appeal or proceedings may be initiated shall not have expired. "Permitted Refinancing Indebtedness" means any Indebtedness of the Company or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the Company or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided, that: (1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness extended, refinanced, renewed, replaced, defeased or refunded (plus all accrued interest on the Indebtedness and the amount of all expenses and premiums incurred in connection therewith); (2) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; 17 (3) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Securities, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the Securities on terms at least as favorable to the Holders of Securities as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and (4) such Indebtedness is incurred either by the Company or by the Restricted Subsidiary who is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government or other entity. "Principal" or "principal" of a debt security, including the Securities, means the principal of the security plus, when appropriate, the premium, if any, on the security. "Prospectus" means the prospectus included in a Registration Statement at the time such Registration Statement is declared effective, as amended or supplemented by any prospectus supplement and by all other amendments thereto, including post-effective amendments, and all material incorporated by reference into such Prospectus. "Purchase Agreement" means the Purchase Agreement, dated December 9, 2003, among the Company, Ribapharm and Bear, Stearns & Co., Inc., as representative of the initial purchasers named in Schedule I thereto. "Redemption Date" or "redemption date" means the date specified for redemption of the Securities in accordance with the terms thereof and this Indenture. "Registration Rights Agreement" means the Registration Rights Agreement, dated as of December 12, 2003, among the Company, Ribapharm and Bear, Stearns & Co., Inc., as representative of the initial purchasers referred to therein. "Registration Statement" means any registration statement of the Company and Ribapharm (if Ribapharm is, at the time of the filing of such registration statement, a co-obligor on the Securities) under the Securities Act relating to an offering of Exchange Securities pursuant to the Exchange Offer, including the Prospectus included therein, all amendments and supplements thereto (including post-effective amendments) and all exhibits and material incorporated by reference therein. "Regulation S" means Regulation S under the Securities Act or any successor to such regulation. "Regulation S Global Security" means a Regulation S Temporary Global Security or Regulation S Permanent Global Security, as appropriate. 18 "Regulation S Permanent Global Security" means a permanent Global Security in substantially the form of Exhibit A hereto that includes the information called for by footnotes 1, 6 and 7 thereof and that is deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Regulation S Temporary Global Security upon expiration of the Restricted Period. "Regulation S Temporary Global Security" means a temporary Global Security in substantially the form of Exhibit A hereto that includes the information called for by footnotes 1, 5, 6 and 7 thereof and that is deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Securities initially sold in reliance on Rule 903 of Regulation S. "Restricted Global Security" means a permanent Global Security in substantially the form of Exhibit A attached hereto that bears the Global Security Legend and that has the "Schedule of Exchanges of Interests in the Global Security" attached thereto, and that is deposited with or on behalf of and registered in the name of the Depositary or a nominee of the Depositary, representing Securities that bear the Legend. "Restricted Investment" means an Investment other than a Permitted Investment. "Restricted Period" means the 40-day distribution compliance period as defined in Regulation S. "Restricted Definitive Security" means a Definitive Security that is a Restricted Security. "Restricted Global Security" means a Global Security that is a Restricted Security. "Restricted Security" means a Security required to bear the restricted legend set forth in the form of Securities set forth in Exhibit A of this Indenture. "Restricted Subsidiary" of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary. "Ribapharm" means the party named as such in the first paragraph of this Indenture until a successor replaces it pursuant to the applicable provisions of this Indenture, and thereafter "Ribapharm" shall mean such successor. "Rule 144" means Rule 144 promulgated under the Securities Act or any successor to such rule. "Rule 144A" means Rule 144A promulgated under the Securities Act or any successor to such rule. "Rule 903" means Rule 903 promulgated under the Securities Act. "Rule 904" means Rule 904 promulgated under the Securities Act. 19 "S&P" means Standard & Poor's Ratings Group, Inc., or any successor to the rating agency business thereof. "SEC" means the Securities and Exchange Commission. "Securities" means any of the 7.0% Senior Notes due 2011 (each, a "Security"), as amended or supplemented from time to time, that are issued under this Indenture. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, as in effect from time to time. "Securities Custodian" means the Trustee, as custodian with respect to the Securities in global form, or any successor thereto. "Significant Subsidiary" means any Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such regulation is in effect on the date hereof. "6 1/2% Indenture" means the indenture, dated July 18, 2001, among the Company, Ribapharm and The Bank of New York under which the 6 1/2% Notes were originally issued. "6 1/2% Notes" means any of the 6 1/2% Convertible Subordinated Notes due July 15, 2008, originally issued under the 6 -1/2% Indenture. "Stated Maturity" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which the payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and will not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. "Subsidiary" means, with respect to any specified Person: (1) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees of the corporation, association or other business entity is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and (2) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are that Person or one or more Subsidiaries of that Person (or any combination thereof). "TIA" means the Trust Indenture Act of 1939, as amended, and the rules and regulations thereunder as in effect on the date of this Indenture, except as provided in Section 9.3 hereof, and except to the extent any amendment to the Trust Indenture Act expressly provides for application of the Trust Indenture Act as in effect on another date. 20 "Trustee" means the party named as such in the first paragraph of this Indenture until a successor replaces it in accordance with the provisions of this Indenture, and thereafter means the successor. "Trust Officer" means, with respect to the Trustee, any officer assigned to the Corporate Trust Office, and also, with respect to a particular matter, any other officer to whom such matter is referred because of such officer's knowledge of and familiarity with the particular subject. "Unrestricted Definitive Security" means a Definitive Security that is not a Restricted Security. "Unrestricted Global Security" means a Global Security that is not a Restricted Security. "Unrestricted Subsidiary" means: (1) any Subsidiary of the Company that is designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution, and (2) ICN Yugoslavia DD (formerly ICN Galenika), in each case only to the extent that such Subsidiary: (a) has no Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company; (c) is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results; and (d) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Company or any of its Restricted Subsidiaries. Any designation of a Subsidiary of the Company as an Unrestricted Subsidiary (other than the foregoing designation of ICN Yugoslavia DD as an Unrestricted Subsidiary) will be evidenced to the Trustee by filing with the Trustee a certified copy of the Board Resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the preceding conditions and was permitted by Section 4.8 hereof. If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of such Subsidiary will be deemed to be incurred by a Restricted Subsidiary of the Company as of such date, and, if such Indebtedness is not permitted to be incurred as of such date under Section 4.9 hereof, the Company will be in default of such 21 covenant. The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation will be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation will only be permitted if (1) such Indebtedness is permitted under Section 4.9 hereof, calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period; and (2) no Default or Event of Default would be in existence following such designation. "U.S. Government Obligations" means direct obligations (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged and which are not callable at the issuer's option. "Vice President" when used with respect to either of the Obligors or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president." "Voting Stock" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing: (1) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (2) the then outstanding principal amount of such Indebtedness. Section 1.2 Other Definitions.

TERM DEFINED IN SECTION - ------------------------------------------------------------------------------------- ------------------------ "Affiliate Transaction".............................................................. 4.13(a) "Agent Members"...................................................................... 2.1(b) "Asset Sale Offer"................................................................... 4.14(c)/3.14 "Benefited Party".................................................................... 10.2(b) "Change of Control Offer ............................................................ 3.8(b) "Change of Control Purchase Date".................................................... 3.8(b) "Change of Control Purchase Notice".................................................. 3.8(c) "Change of Control Purchase Price"................................................... 3.8(a) "Covenant Defeasance"................................................................ 8.3 "DTC"................................................................................ 2.1(a) "Depositary"......................................................................... 2.1(a) "Event of Default"................................................................... 6.1 "Excess Proceeds".................................................................... 4.14(c)

22

TERM DEFINED IN SECTION - ------------------------------------------------------------------------------------- ------------------------ "incur".............................................................................. 4.9(a) "Legal Defeasance"................................................................... 8.2 "Legal Holiday"...................................................................... 11.7 "Legend" ............................................................................ 2.12(a) "Notice of Default".................................................................. 6.1 "Obligors Notice".................................................................... 3.8(b) "Obligors Order"..................................................................... 2.2 "Offer Amount"....................................................................... 3.14 "Offer Period"....................................................................... 3.14 "Parity Indebtedness"................................................................ 3.14 "Paying Agent"....................................................................... 2.3 "Payment Default".................................................................... 6.1(e) "Permitted Debt"..................................................................... 4.9(b) "Primary Registrar".................................................................. 2.3 "Purchase Date"...................................................................... 3.14 "QIB"................................................................................ 2.1 "Registrar".......................................................................... 2.3 "Restricted Payments"................................................................ 4.8(a)

Section 1.3 Trust Indenture Act Provisions. Whenever this Indenture refers to a provision of the TIA, that provision is incorporated by reference in and made a part of this Indenture. The Indenture shall also include those provisions of the TIA required to be included herein by the provisions of the Trust Indenture Reform Act of 1990. The following TIA terms used in this Indenture have the following meanings: "indenture securities" means the Securities; "indenture security holder" means a Securityholder; "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; "obligor" on the indenture securities means the Obligors or any other obligor on the Securities. All other terms used in this Indenture that are defined in the TIA, defined by TIA reference to another statute or defined by any SEC rule and not otherwise defined herein have the meanings assigned to them therein. Section 1.4 Rules of Construction. Unless the context otherwise requires: (A) a term has the meaning assigned to it; 23 (B) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (C) words in the singular include the plural, and words in the plural include the singular; (D) provisions apply to successive events and transactions; (E) the term "merger" includes a statutory share exchange and the term "merged" has a correlative meaning; (F) the masculine gender includes the feminine and the neuter; (G) references to agreements and other instruments include subsequent amendments thereto; (H) "herein," "hereof" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; and (I) references to ratings by Moody's or S&P shall include any successor equivalent ratings if either Moody's or S&P changes its ratings scale subsequent to the date of this Indenture. ARTICLE 2 THE SECURITIES Section 2.1 Form and Dating. The Securities and the Trustee's certificate of authentication shall be substantially in the form set forth in Exhibit A, which is incorporated in and made part of this Indenture. The Securities may have notations, legends or endorsements required by law, stock exchange rule or usage. The Obligors shall provide any such notations, legends or endorsements to the Trustee in writing. The Securities shall be in denominations of $1,000 and integral multiples thereof. Each Security shall be dated the date of its authentication. The Securities are being offered and sold by the Obligors pursuant to the Purchase Agreement, in transactions exempt from, or not subject to, the registration requirements of the Securities Act. (a) Restricted Global Securities. All of the Securities are initially being offered and sold to (i) qualified institutional buyers as defined in Rule 144A (collectively, "QIBS" or individually, each a "QIB") in reliance on Rule 144A under the Securities Act or (ii) outside the United States to persons other than U.S. persons in reliance upon Regulation S under the Securities Act, and shall be issued initially in the form of one or more Restricted Global Securities, which shall be deposited on behalf of the purchasers of the Securities represented thereby with the Trustee, as custodian for the depositary, The Depository Trust Company ("DTC") (such depositary, or any successor thereto, being hereinafter referred to as the "DEPOSITARY"), and registered in the name of its nominee, Cede & Co., duly executed by the 24 Obligors and authenticated by the Trustee as hereinafter provided. The aggregate principal amount of the Restricted Global Securities may from time to time be increased or decreased by adjustments made on the records of the Securities Custodian as hereinafter provided, subject in each case to compliance with the Applicable Procedures. (b) Form of Securities. Global Securities shall be substantially in the form of Exhibit A attached hereto (including the Global Security Legend thereon and the "Schedule of Exchanges of Interests in the Global Security" attached thereto). Definitive Securities shall be substantially in the form of Exhibit A attached hereto (but without the Global Security Legend thereon and without the "Schedule of Exchanges of Interests in the Global Security" attached thereto). Each Global Security shall represent such of the outstanding Securities as shall be specified therein and each shall provide that it shall represent the aggregate principal amount of outstanding Securities from time to time endorsed thereon and that the aggregate principal amount of outstanding Securities represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Security to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Securities represented thereby shall be made by the Trustee or the Securities Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.12 hereof and shall be made on the records of the Trustee and the Depositary. Members of, or participants in, the Depositary ("AGENT MEMBERS") shall have no rights under this Indenture with respect to any Global Security held on their behalf by the Depositary or under the Global Security, and the Depositary (including, for this purpose, its nominee) may be treated by the Obligors, the Trustee and any agent of the Obligors or the Trustee as the absolute owner and Holder of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall (A) prevent the Obligors, the Trustee or any agent of the Obligors or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or (B) impair, as between the Depositary and its Agent Members, the operation of customary practices governing the exercise of the rights of a Holder of any Security. (c) Additional Securities. Subject to compliance with the provisions of Section 4.9 hereof, the Obligors may issue Additional Securities in an unlimited amount under this Indenture. (d) Temporary Global Securities. Securities offered and sold in reliance on Regulation S shall be issued initially in the form of the Regulation S Temporary Global Security, which shall be deposited on behalf of the purchasers of the Securities represented thereby with the Trustee, at its New York office, as custodian for the Depositary, and registered in the name of the Depositary or the nominee of the Depositary for the accounts of designated agents holding on behalf of Euroclear or Clearstream, duly executed by the Obligors and authenticated by the Trustee as hereinafter provided. Following the termination of the Restricted Period, beneficial interests in the Regulation S Temporary Global Security shall be exchanged for beneficial interests in Regulation S Permanent Global Securities pursuant to the Applicable Procedures. Simultaneously with the authentication of Regulation S Permanent Global Securities, the Trustee shall cancel the Regulation S Temporary Global Security. The aggregate principal amount of the 25 Regulation S Temporary Global Security and the Regulation S Permanent Global Securities may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interest as hereinafter provided. (e) Book Entry Provisions. The Obligors shall execute and the Trustee shall, in accordance with this Section 2.1(e), authenticate and deliver initially one or more Global Securities that (i) shall be registered in the name of the Depositary or its nominee, (ii) shall be delivered by the Trustee to the Depositary or pursuant to the Depositary's instructions and (iii) shall bear legends substantially in the form of the first paragraph of Exhibit A hereto. Section 2.2 Execution and Authentication. An Officer of each of the Obligors shall sign the Securities for the Obligors by manual or facsimile signature. Typographic and other minor errors or defects in any such facsimile signature shall not affect the validity or enforceability of any Security which has been authenticated and delivered by the Trustee. If an Officer whose signature is on a Security no longer holds that office at the time the Trustee authenticates the Security, the Security shall be valid nevertheless. A Security shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Security. The signature shall be conclusive evidence that the Security has been authenticated under this Indenture. The Trustee shall authenticate and make available for delivery Securities for original issue in an initial aggregate principal amount of $300,000,000 upon receipt of a written order or orders of the Obligors signed by an Officer of the Obligors (an "OBLIGORS ORDER"). The Obligors Order shall specify the amount of Securities to be authenticated and shall provide that all such Securities will be represented by a Restricted Global Security and the date on which each original issue of Securities is to be authenticated. The aggregate principal amount of Securities outstanding at any time may not exceed the amounts in the foregoing sentence, except as provided in Sections 2.1(c), 2.1(d) and 2.7 hereof. The Trustee shall act as the initial authenticating agent. Thereafter, the Trustee may appoint an authenticating agent acceptable to the Obligors to authenticate Securities. An authenticating agent may authenticate Securities whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent shall have the same rights as an Agent to deal with the Obligors or an Affiliate of the Obligors. The Securities shall be issuable only in registered form without coupons and only in denominations of $1,000 principal amount and any integral multiple thereof. Section 2.3 Registrar and Paying Agent. The Obligors shall maintain one or more offices or agencies where Securities may be presented for registration of transfer or for exchange (each, a "REGISTRAR"), one or more offices 26 or agencies where Securities may be presented for payment (each, a "PAYING AGENT") and one or more offices or agencies where notices and demands to or upon the Obligors in respect of the Securities and this Indenture may be served. The Obligors will at all times maintain a Paying Agent, Registrar and an office or agency where notices and demands to or upon the Obligors in respect of the Securities and this Indenture may be served in the Borough of Manhattan, The City of New York. One of the Registrars (the "PRIMARY REGISTRAR") shall keep a register of the Securities and of their transfer and exchange. The Obligors shall enter into an appropriate agency agreement with any Agent not a party to this Indenture. The agreement shall implement the provisions of this Indenture that relate to such Agent. The Obligors shall notify the Trustee of the name and address of any Agent not a party to this Indenture. If the Obligors fail to maintain a Registrar, Paying Agent or agent for service of notices and demands in any place required by this Indenture, or fail to give the foregoing notice, the Trustee shall act as such. The Obligors or any Affiliate of the Obligors may act as Paying Agent (except for the purposes of Section 4.1 and Article 8). The Obligors hereby initially designate the Trustee as Paying Agent, Registrar and Securities Custodian, and the office or agency of the Trustee in the Borough of Manhattan, The City of New York (which shall initially be the office of the Trustee located at 101 Barclay Street - 8W, New York, NY 10286) as one such office or agency of the Obligors for each of the aforesaid purposes. Section 2.4 Paying Agent to Hold Money in Trust. Prior to 11:00 a.m., New York City time, on each due date of the principal of, interest or Additional Interest, if any, on any Securities, the Obligors shall deposit with a Paying Agent a sum sufficient to pay such principal, interest or Additional Interest, if any, so becoming due. A Paying Agent shall hold in trust for the benefit of Securityholders or the Trustee all money held by the Paying Agent for the payment of principal of, interest or Additional Interest, if any, on the Securities, and shall notify the Trustee of any default by the Obligors (or any other obligor on the Securities) in making any such payment. If the Obligors or an Affiliate of the Obligors act as Paying Agent, the Obligors or such Affiliate shall, before 11:00 a.m., New York City time, on each due date of the principal of, interest or Additional Interest, if any, on any Securities, segregate the money and hold it as a separate trust fund. The Obligors at any time may require a Paying Agent to pay all money held by it to the Trustee, and the Trustee may at any time during the continuance of any default, upon written request to a Paying Agent, require such Paying Agent to pay forthwith to the Trustee all sums so held in trust by such Paying Agent. Upon doing so, the Paying Agent (other than the Obligors) shall have no further liability for the money. Section 2.5 Securityholder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Securityholders. If the Trustee is not the Primary Registrar, the Obligors shall furnish to the Trustee on or before each interest payment date, and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Securityholders. 27 Section 2.6 Transfer and Exchange. (a) Subject to compliance with any applicable additional requirements contained in Section 2.12 hereof, when a Security is presented to a Registrar with a request to register a transfer thereof or to exchange such Security for an equal principal amount of Securities of other authorized denominations, the Registrar shall register the transfer or make the exchange as requested; provided, however, that every Security presented or surrendered for registration of transfer or exchange shall be duly endorsed or accompanied by an assignment form and, if applicable, a transfer certificate in the form(s) included in Exhibit A and Exhibit B, as applicable, and in form satisfactory to the Registrar, duly executed by the Holder thereof or its attorney duly authorized in writing. To permit registration of transfers and exchanges, upon surrender of any Security for registration of transfer or exchange at an office or agency maintained pursuant to Section 2.3 hereof, the Obligors shall execute and the Trustee shall authenticate Securities of a like aggregate principal amount at the Registrar's request. Any exchange or transfer shall be without charge, except that the Obligors or the Registrar may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto, and provided, that this sentence shall not apply to any exchange pursuant to Section 2.10, 2.12(a), 3.6, 3.11 or 9.5 hereof. Neither the Obligors, any Registrar nor the Trustee shall be required to exchange or register a transfer of any Securities or portions thereof in respect of which a Change of Control Purchase Notice or a notice in connection with an Asset Sale Offer has been delivered and not withdrawn by the Holder thereof (except, in the case of the purchase of a Security in part, the portion thereof not to be purchased). All Securities issued upon any transfer or exchange of Securities shall be valid obligations of the Obligors, evidencing the same debt and entitled to the same benefits under this Indenture, as the Securities surrendered upon such transfer or exchange. (b) Any Registrar appointed pursuant to Section 2.3 hereof shall provide to the Trustee such information as the Trustee may reasonably require in connection with the delivery by such Registrar of Securities upon transfer or exchange of Securities. (c) Each Holder of a Security agrees to indemnify the Obligors and the Trustee against any liability that may result from the transfer, exchange or assignment of such Holder's Security in violation of any provision of this Indenture and/or applicable United States federal or state securities law. Section 2.7 Replacement Securities. If any mutilated Security is surrendered to the Obligors, a Registrar or the Trustee, or the Obligors, a Registrar and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Security, and there is delivered to the Obligors, the applicable Registrar and the Trustee such security or indemnity as will be required by them to save each of them harmless, then, in the absence of notice to the Obligors, such Registrar or the Trustee that such Security has been acquired by a bona fide purchaser, the Obligors shall execute, and upon its written request the Trustee shall authenticate and deliver, in exchange for any such mutilated Security or in lieu 28 of any such destroyed, lost or stolen Security, a new Security of like tenor and principal amount, bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, or is about to be purchased by the Obligors pursuant to Article 3, the Obligors in their discretion may, instead of issuing a new Security, pay or purchase such Security, as the case may be. Upon the issuance of any new Securities under this Section 2.7, the Obligors may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other reasonable expenses (including the reasonable fees and expenses of the Trustee or the Registrar) in connection therewith. Every new Security issued pursuant to this Section 2.7 in lieu of any mutilated, destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Obligors, whether or not the mutilated, destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder. The provisions of this Section 2.7 are (to the extent lawful) exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. Section 2.8 Outstanding Securities. Securities outstanding at any time are all Securities authenticated by the Trustee, except for those canceled by it, those delivered to it for cancellation or surrendered for transfer or exchange and those described in this Section 2.8 as not outstanding. If a Security is replaced pursuant to Section 2.7 hereof, it ceases to be outstanding unless the Obligors receive proof satisfactory to them that the replaced Security is held by a bona fide purchaser. If a Paying Agent (other than the Obligors or an Affiliate of the Obligors) holds on a Redemption Date, Change of Control Purchase Date or the Final Maturity Date money sufficient to pay the principal of (including premium, if any), interest and Additional Interest, if any, on Securities (or portions thereof) payable on that date, then on and after such Redemption Date, Change of Control Purchase Date or the Final Maturity Date, as the case may be, such Securities (or portions thereof, as the case may be) shall cease to be outstanding and interest and Additional Interest, if any, on them shall cease to accrue. Subject to the restrictions contained in Section 2.9 hereof, a Security does not cease to be outstanding because the Obligors or an Affiliate of the Obligors hold the Security. Section 2.9 Treasury Securities. In determining whether the Holders of the required principal amount of Securities have concurred in any notice, direction, waiver or consent, Securities owned by the Obligors or any 29 other obligor on the Securities or by any Affiliate of the Obligors or of such other obligor shall be disregarded, except that, for purposes of determining whether the Trustee shall be protected in relying on any such notice, direction, waiver or consent, only Securities which a Trust Officer of the Trustee actually knows are so owned shall be so disregarded. Securities so owned which have been pledged in good faith shall not be disregarded if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to the Securities and that the pledgee is not the either of Obligors or any other obligor on the Securities or any Affiliate of the Obligors or of such other obligor. Section 2.10 Temporary Securities. Until Definitive Securities are ready for delivery, the Obligors may prepare and execute, and, upon receipt of a Obligors Order, the Trustee shall authenticate and deliver, temporary Securities. Temporary Securities shall be substantially in the form of Definitive Securities but may have variations that the Obligors with the consent of the Trustee considers appropriate for temporary Securities. Without unreasonable delay, the Obligors shall prepare and the Trustee shall authenticate and deliver definitive Securities in exchange for temporary Securities. Section 2.11 Cancellation. The Obligors at any time may deliver Securities to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee or its agent any Securities surrendered to them for transfer, exchange, payment or conversion. The Trustee and no one else shall cancel, in accordance with its standard procedures, all Securities surrendered for transfer, exchange, payment, conversion or cancellation and shall deliver the canceled Securities to the Obligors. All Securities which are purchased or otherwise acquired by the Obligors or any of their Subsidiaries prior to the Final Maturity Date may be delivered to the Trustee for cancellation or, if permitted by the Purchase Agreement, be resold. The Obligors may not hold or resell such Securities or issue any new Securities to replace any Securities delivered for cancellation Section 2.12 Legend; Additional Transfer and Exchange Requirements. (a) If Securities are issued upon the transfer, exchange or replacement of Securities subject to restrictions on transfer and bearing the legends set forth on the form of Securities attached hereto as Exhibit A (collectively, the "LEGEND"), or if a request is made to remove the Legend on a Security, the Securities so issued shall bear the Legend, or the Legend shall not be removed, as the case may be, unless there is delivered to the Obligors and the Registrar such satisfactory evidence, which shall include an opinion of counsel if requested by the Obligors or such Registrar, as may be reasonably required by the Obligors and the Registrar, that neither the Legend nor the restrictions on transfer set forth therein are required to ensure that transfers thereof comply with the provisions of Rule 144 under the Securities Act or that such Securities are not "restricted" within the meaning of Rule 144 under the Securities Act; provided that no such evidence need be supplied in connection with the sale of such Security pursuant to a registration statement that is effective at the time of such sale. Upon (i) provision of such satisfactory evidence if requested, or (ii) notification by the Obligors to the Trustee and Registrar of the sale of such Security pursuant to a registration statement that is effective at the time of 30 such sale, the Trustee, at the written direction of the Obligors, shall authenticate and deliver a Security that does not bear the Legend. If the Legend is removed from the face of a Security and the Security is subsequently held by an Affiliate of the Obligors, the Legend shall be reinstated. (b) A Global Security may not be transferred, in whole or in part, to any Person other than the Depositary or a nominee or any successor thereof, and no such transfer to any such other Person may be registered; provided that the foregoing shall not prohibit any transfer of a Security that is issued in exchange for a Global Security but is not itself a Global Security; provided further that in no event shall (x) the Regulation S Temporary Global Security be exchanged by the Obligors for a Regulation S Permanent Global Security or (y) a beneficial interest in a Regulation S Global Security be transferred to a U.S. Person, prior to (A) the expiration of the Restricted Period and (B) the receipt by the Registrar of any certificates required pursuant to Regulation S, as determined by the Obligors. No transfer of a Security to any Person shall be effective under this Indenture or the Securities unless and until such Security has been registered in the name of such Person. Notwithstanding any other provisions of this Indenture or the Securities, transfers of a Global Security, in whole or in part, shall be made only in accordance with this Section 2.12. (c) Subject to the succeeding paragraph, every Security shall be subject to the restrictions on transfer provided in the Legend. Whenever any Restricted Security is presented or surrendered for registration of transfer or for exchange for a Security registered in a name other than that of the Holder, such Security must be accompanied by a certificate in substantially the form set forth in Exhibit A, dated the date of such surrender and signed by the Holder of such Security, as to compliance with such restrictions on transfer. The Registrar shall not be required to accept for such registration of transfer or exchange any Security not so accompanied by a properly completed certificate. (d) The restrictions imposed by the Legend upon the transferability of any Security shall cease and terminate when such Security has been exchanged for an Exchange Security in the Exchange Offer, sold pursuant to an effective registration statement under the Securities Act or transferred in compliance with Rule 144 under the Securities Act (or any successor provision thereto) or, if earlier, upon the expiration of the holding period applicable to sales thereof under Rule 144(k) under the Securities Act (or any successor provision). Any Security as to which such restrictions on transfer shall have expired in accordance with their terms or shall have terminated may, upon a surrender of such Security for exchange to the Registrar in accordance with the provisions of this Section 2.12 (accompanied, in the event that such restrictions on transfer have terminated by reason of a transfer in compliance with Rule 144 or any successor provision, by, if requested by the Obligors or the Registrar, an opinion of counsel reasonably acceptable to the Obligors and addressed to the Obligors to the effect that the transfer of such Security has been made in compliance with Rule 144 or such successor provision), be exchanged for a new Security, of like tenor and aggregate principal amount, which shall not bear the restrictive Legend. The Obligors shall inform the Trustee of the consummation of the Exchange Offer and the effective date of any registration statement registering the Securities under the Securities Act. The Trustee shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the aforementioned opinion of counsel or registration statement. 31 (e) As used in this Section 2.12, the term "transfer" encompasses any sale, pledge, transfer, hypothecation or other disposition of any Security. (f) The provisions of clauses (iii), (iv) and (v) below shall apply only to Global Securities: (i) Notwithstanding any other provisions of this Indenture or the Securities, a Global Security shall not be exchanged in whole or in part for a Security registered in the name of any Person other than the Depositary or one or more nominees thereof, provided that a Global Security may be exchanged for Securities registered in the names of any person designated by the Depositary in the event that (A) the Depositary (x) has notified the Obligors that it is unwilling or unable to continue as Depositary for such Global Security or (y) such Depositary has ceased to be a "clearing agency" registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Obligors within 90 days after receipt of such notice or the Obligors become aware of such failure of registration, (B) the Obligors have provided the Depositary with written notice that they have elected to cause the issuance of the Definitive Securities or (C) an Event of Default has occurred and is continuing with respect to the Securities. Any Global Security exchanged pursuant to clause (A) above shall be so exchanged in whole and not in part, and any Global Security exchanged pursuant to clause (B) or (C) above may be exchanged in whole or from time to time in part as directed by the Depositary. Any Security issued in exchange for a Global Security or any portion thereof shall be a Global Security; provided that any such Security so issued that is registered in the name of a Person other than the Depositary or a nominee thereof shall not be a Global Security. (ii) Securities issued in exchange for a Global Security or any portion thereof shall be issued in definitive, fully registered form, without interest coupons, shall have an aggregate principal amount equal to that of such Global Security or portion thereof to be so exchanged, shall be registered in such names and be in such authorized denominations as the Depositary shall designate and shall bear the applicable legends provided for herein. Any Global Security to be exchanged in whole shall be surrendered by the Depositary to the Trustee, as Registrar. With regard to any Global Security to be exchanged in part, either such Global Security shall be so surrendered for exchange or, if the Trustee is acting as custodian for the Depositary or its nominee with respect to such Global Security, the principal amount thereof shall be reduced, by an amount equal to the portion thereof to be so exchanged, by means of an appropriate adjustment made on the records of the Trustee. Upon any such surrender or adjustment, the Trustee shall authenticate and deliver the Security issuable on such exchange to or upon the order of the Depositary or an authorized representative thereof. (iii) Subject to the provisions of clause (v) below, the registered Holder may grant proxies and otherwise authorize any Person, including Agent Members and persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Securities. (iv) In the event of the occurrence of any of the events specified in clause (i) above, the Obligors will promptly make available to the Trustee a reasonable 32 supply of Definitive Securities in definitive, fully registered form, without interest coupons. (v) Neither Agent Members nor any other Persons on whose behalf Agent Members may act shall have any rights under this Indenture with respect to any Global Security registered in the name of the Depositary or any nominee thereof, or under any such Global Security, and the Depositary or such nominee, as the case may be, may be treated by the Obligors, the Trustee and any agent of the Obligors or the Trustee as the absolute owner and holder of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Obligors, the Trustee or any agent of the Obligors or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or such nominee, as the case may be, or impair, as between the Depositary, its Agent Members and any other Person on whose behalf an Agent Member may act, the operation of customary practices of such Persons governing the exercise of the rights of a holder of any Security. (vi) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Security (including any transfers between or among Agent Members or beneficial owners in any Global Security) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so as and when expressly required by, the terms or this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof. (g) Euroclear and Clearstream Procedures Applicable. The provisions of the "Operating Procedures of the Euroclear System" and "Terms and Conditions Governing Use of Euroclear" and the equivalent procedures of Clearstream shall be applicable to transfers of beneficial interests in Global Securities that are held by Participants through Euroclear or Clearstream. (h) Exchange Offer. Upon the consummation of the Exchange Offer in accordance with the Registration Rights Agreement, the Obligors shall issue and, upon receipt of an Obligors Order, and any documents required by Section 11.4 hereof, the Trustee shall authenticate (i) one or more Unrestricted Global Securities in an aggregate principal amount equal to the principal amount of the beneficial interests in the Restricted Global Securities accepted for exchange in the Exchange Offer and (ii) Unrestricted Definitive Securities in an aggregate principal amount equal to the principal amount of the applicable Restricted Definitive Securities accepted for exchange in the Exchange Offer. Concurrently with the issuance of such Securities, the Trustee shall cause the aggregate principal amount of the applicable Restricted Global Securities to be canceled or reduced accordingly, and the Trustee shall deliver to the Persons designated by the Holders of the Definitive Securities so accepted Unrestricted Definitive Securities in the appropriate principal amount. 33 Section 2.13 CUSIP and ISIN Numbers. The Obligors in issuing the Securities may use one or more "CUSIP" and "ISIN" numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP" and "ISIN" numbers in notices of purchase as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a purchase and that reliance may be placed only on the other identification numbers printed on the Securities, and any such purchase shall not be affected by any defect in or omission of such numbers. The Obligors will promptly notify the Trustee of any change in the "CUSIP" and "ISIN" numbers. ARTICLE 3 REDEMPTION AND PURCHASES Section 3.1 Right to Redeem. The Obligors, at their option, may redeem the Securities, in whole or in part, on or after December 15, 2007, in accordance with the provisions of Section 3.7 hereof. The Obligors may not redeem the Securities if they have failed to pay any interest or premium on the Securities and such failure to pay is continuing. If the Obligors elect to redeem the Securities, they shall notify the Trustee at least 45 days prior to the Redemption Date (unless a shorter notice period shall be satisfactory to the Trustee) of the Redemption Date, the aggregate principal amount of the Securities to be redeemed and the Section of this Indenture pursuant to which the Securities are being redeemed. Section 3.2 Selection of Securities to be Redeemed. If less than all the outstanding Securities are to be redeemed, the Trustee shall select the Securities for redemption as follows: (1) if the Securities are listed on any securities exchange, in compliance with the requirements of the principal securities exchange on which the Securities are listed; or (2) if the Notes are not listed on any securities exchange, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate. In the event of partial redemption by lot, the particular Securities to be redeemed will be selected, unless otherwise provided herein, not less than 30 nor more than 60 days prior to the redemption date by the Trustee from the outstanding Securities not previously called for redemption. The Trustee will promptly notify the Company in writing of the Securities selected for redemption and, in the case of any Security selected for partial redemption, the principal amount thereof to be redeemed. Securities and portions of Securities selected will be in amounts of 34 $1,000 or whole multiples of $1,000; except that if all of the Securities of a Holder are to be redeemed, the entire outstanding amount of Securities held by such Holder, even if not a multiple of $1,000, shall be redeemed. Except as provided in the preceding sentence, provisions of this Indenture that apply to Securities called for redemption also apply to portions of Securities called for redemption. Section 3.3 Notice of Redemption. At least 30 days but not more than 60 days before a Redemption Date, the Obligors shall mail, or shall cause to be mailed, a notice of redemption by first-class mail, postage prepaid, to the Trustee and to each Holder of Securities to be redeemed. The notice shall identify the Securities to be redeemed and shall state: - the aggregate principal amount of the Securities to be redeemed; - the Redemption Date (which shall be a Business Day); - the redemption price; - the name and address of the Paying Agent; - that Securities called for redemption must be surrendered to the Paying Agent to collect the redemption price; - if fewer than all the outstanding Securities are to be redeemed, the certificate numbers, if any, and principal amounts of the particular Securities to be redeemed; - that, unless the Obligors default in the deposit of the redemption price, interest on Securities called for redemption will cease to accrue on and after the Redemption Date; - the Section of this Indenture pursuant to which the Securities are being redeemed; and - the CUSIP numbers of the Securities. At the Obligors' request, the Trustee shall give the notice of redemption in the Obligors' name and at the Obligors' expense, provided that the Obligors make such request at least three Business Days prior to the date by which such notice of redemption must be given to Holders in accordance with this Section 3.3. Concurrently with the mailing of any such notice of redemption, the Obligors shall issue a press release announcing such redemption, the form and content of which shall be determined by the Obligors. A notice of redemption may not be conditioned. 35 Section 3.4 Effect of Notice of Redemption. Once notice of redemption is given, Securities called for redemption become due and payable on the Redemption Date and at the redemption price stated in the notice. Upon surrender to the Paying Agent, such Securities shall be paid at the redemption price stated in the notice. If the Redemption Date falls during a period starting after the close of business on an interest payment record date and ending on the opening of business on the first Business Day after the next interest payment date, or if this interest payment date is not a Business Day, the second Business Day after the interest payment date, then the interest payment will be payable to the Holders who present the Securities for redemption. On and after the Redemption Date, unless the Obligors default in the deposit of the redemption price, interest will cease to accrue on the Securities or any portion of the Securities called for redemption, and all other rights of the Holder will terminate other than the right to receive the redemption price, without interest from the Redemption Date, on surrender of the Securities. Section 3.5 Deposit of Redemption Price. Prior to 11:00 a.m. (New York City time) on the Redemption Date, the Obligors shall deposit with the Paying Agent (or the Trustee) money sufficient to pay the redemption price on all Securities to be redeemed on that date. Section 3.6 Securities Redeemed in Part. Upon surrender of a Security that is redeemed in part, the Obligors shall execute and the Trustee shall authenticate and deliver to the Holder, without service charge, a new Security in an authorized denomination equal in principal amount to, and in exchange for, the unredeemed portion of the Security surrendered. Section 3.7 Optional Redemption. (a) At any time prior to December 15, 2006, the Company may, on any one or more occasions, redeem, in whole or in part, up to 35% of the aggregate principal amount of Securities, including Additional Securities, if any, issued under this Indenture at a redemption price of 107.0% of the principal amount of the Securities redeemed, plus accrued and unpaid interest and Additional Interest, if any, on the Securities redeemed to the applicable redemption date, with the net cash proceeds of one or more Equity Offerings; provided that; (1) at least 65% of the aggregate principal amount of Securities, including Additional Securities, if any, issued under this Indenture remains outstanding immediately after the occurrence of such redemption, excluding Securities held by the Company and its Subsidiaries; and (2) the redemption occurs within 90 days of the date of the closing of such Equity Offerings. 36 Except pursuant to the preceding paragraph, the Securities will not be redeemable at the Company's option prior to December 15, 2007. (b) On or after December 15, 2007, the Company may, at its option, redeem all or a part of the Securities upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Additional Interest, if any, on the Securities redeemed, to the applicable redemption date, if redeemed during the twelve-month period beginning on December 15 of the years indicated below:

Year Percentage ---- ---------- 2007 ................................................... 103.500% 2008 ................................................... 101.750% 2009 and thereafter .................................... 100.000%

(c) Any redemption pursuant to this Section 3.7 shall be made pursuant to the provisions of Section 3.1 through 3.6 hereof. Section 3.8 Purchase of Securities at Option of the Holder Upon Change of Control. (a) If at any time that Securities remain outstanding there shall occur a Change of Control, Securities shall be purchased by the Obligors at the option of the Holders, as of the Change of Control Purchase Date at a purchase price equal to 101% of the principal amount of the Securities, together with accrued and unpaid interest, including interest on any unpaid overdue interest, compounded semi-annually, and Additional Interest, if any, to, but excluding, the Change of Control Purchase Date (the "CHANGE OF CONTROL PURCHASE PRICE"), subject to satisfaction by or on behalf of any Holder of the requirements set forth in subsection (c) of this Section 3.8. (b) Within 10 days after the occurrence of a Change of Control, the Obligors shall mail a written notice ("OBLIGORS NOTICE") of the Change of Control to the Trustee and to each Holder (and to beneficial owners as required by applicable law) pursuant to which the Obligors shall make an offer (a "CHANGE OF CONTROL OFFER") to each Holder to repurchase all or any part (equal to $1,000 or an integral multiple of $1,000) of each Holder's Securities at the Change of Control Purchase Price. The notice shall include the form of a Change of Control Purchase Notice to be completed by the Holder, shall describe the transaction or transactions that constitute the Change of Control and shall state: (i) that the Change of Control Offer is being made pursuant to this Section 3.8 and that all Securities tendered will be accepted for payment; (ii) the date by which the Change of Control Purchase Notice pursuant to this Section 3.8 must be given; 37 (iii) the purchase date, which date shall be no earlier than 30 days and no later than 60 days after the date the Obligors Notice is mailed (the "CHANGE OF CONTROL PURCHASE DATE"); (iv) the Change of Control Purchase Price; (v) the Holder's right to require the Obligors to purchase the Securities; (vi) the name and address of the Paying Agent; (vii) that, unless the Obligors default in making such payment, any Security accepted for payment pursuant to the Change of Control Offer will cease to accrue interest after the Change of Control Purchase Date; (viii) the procedures that the Holder must follow to exercise rights under this Section 3.8; and (ix) the procedures for withdrawing a Change of Control Purchase Notice, including a form of notice of withdrawal. If any of the Securities is in the form of a Global Security, then the Obligors shall modify such notice to the extent necessary to accord with the procedures of the Depositary applicable to the repurchase of Global Securities. (c) A Holder may exercise its rights specified in subsection (a) of this Section 3.8 upon delivery of a written notice (which shall be in substantially the form included in Exhibit A hereto, as applicable, and which may be delivered by letter, overnight courier, hand delivery, facsimile transmission or in any other written form and, in the case of Global Securities, may be delivered electronically or by other means in accordance with the Depositary's customary procedures) of the exercise of such rights (a "CHANGE OF CONTROL PURCHASE NOTICE") to any Paying Agent at any time prior to the close of business on the Business Day next preceding the Change of Control Purchase Date. The delivery of such Security to any Paying Agent (together with all necessary endorsements) at the office of such Paying Agent shall be a condition to the receipt by the Holder of the Change of Control Purchase Price therefor. The Obligors shall purchase from the Holder thereof, pursuant to this Section 3.8, a portion of a Security if the principal amount of such portion is $1,000 or an integral multiple of $1,000. Provisions of the Indenture that apply to the purchase of all of a Security pursuant to Sections 3.8 through 3.13 also apply to the purchase of such portion of such Security. Notwithstanding anything herein to the contrary, any Holder delivering to a Paying Agent the Change of Control Purchase Notice contemplated by this subsection (c) shall have the right to withdraw such Change of Control Purchase Notice in whole or in a portion thereof that is a principal amount of $1,000 or in an integral multiple thereof at any time prior to the close of business on the Business Day next preceding the Change of Control Purchase Date by delivery of a written notice of withdrawal to the Paying Agent in accordance with Section 3.9 hereof 38 A Paying Agent shall promptly notify the Obligors of the receipt by it of any Change of Control Purchase Notice or written withdrawal thereof. Anything herein to the contrary notwithstanding, in the case of Global Securities, any Change of Control Purchase Notice may be delivered or withdrawn and such Securities may be surrendered or delivered for purchase in accordance with the Applicable Procedures as in effect from time to time. If the Change of Control Purchase Date falls after an interest payment record date and on or before the date that is one Business Day after the next interest payment date, then the interest payment will be payable to the Holder who presents a Security for purchase. (d) The Obligors will not be required to make a Change of Control Offer upon a Change of Control if (1) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements applicable to a Change of Control Offer made by the Obligors set forth in subsection (b) of this Section 3.8 and purchases all Securities properly tendered and not withdrawn under the Change of Control Offer, (2) notice of redemption has been given pursuant to Section 3.1 or 3.7 hereof, unless and until there is a default in payment of the applicable redemption price, or (3) after giving effect to such Change of Control, (i) no Default or Event of Default has occurred and is continuing, (ii) the Change of Control transaction has been approved by the Board of Directors of the Company, and (iii) the Securities are rated Baa3 or better by Moody's and BBB- or better by S&P. (e) The Obligors will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. Section 3.9 Effect of Change of Control Purchase Notice. Upon receipt by any Paying Agent of the Change of Control Purchase Notice specified in Section 3.8(c) hereof, the Holder of the Security in respect of which such Change of Control Purchase Notice was given shall (unless such Change of Control Purchase Notice is withdrawn as specified below) thereafter be entitled to receive the Change of Control Purchase Price with respect to such Security. Such Change of Control Purchase Price shall be paid to such Holder promptly following the later of (a) the Change of Control Purchase Date with respect to such Security (provided the conditions in Section 3.8(c) hereof have been satisfied) and (b) the time of delivery of such Security to a Paying Agent by the Holder thereof in the manner required by Section 3.8(c) hereof. A Change of Control Purchase Notice may be withdrawn by means of a written notice (which may be delivered by mail, overnight courier, hand delivery, facsimile transmission or in any other written form and, in the case of Global Securities, may be delivered electronically or by other means in accordance with the Depositary's customary procedures) of withdrawal delivered by the Holder to a Paying Agent at any time prior to the close of business on the Business Day immediately preceding the Change of Control Purchase Date, specifying the principal amount of the Security or portion thereof (which must be a principal amount of $1,000 or an integral multiple of $1,000 in excess thereof) with respect to which such notice of withdrawal is being submitted. 39 Section 3.10 Deposit of Change of Control Purchase Price. On or before 11:00 a.m. New York City time on the Change of Control Purchase Date, the Obligors shall deposit with the Trustee or with a Paying Agent (other than the Obligors or an Affiliate of the Obligors) an amount of money (in immediately available funds if deposited on such Change of Control Purchase Date) sufficient to pay the aggregate Change of Control Purchase Price of all the Securities or portions thereof that are to be purchased as of such Change of Control Purchase Date. The manner in which the deposit required by this Section 3.10 is made by the Obligors shall be at the option of the Obligors, provided that such deposit shall be made in a manner such that the Trustee or a Paying Agent shall have immediately available funds on the Change of Control Purchase Date. If a Paying Agent holds, in accordance with the terms hereof, money sufficient to pay the Change of Control Purchase Price of any Security for which a Change of Control Purchase Notice has been tendered and not withdrawn in accordance with this Indenture then, on the Change of Control Purchase Date, interest will cease to accrue on such Securities or any portion of the Securities as to which a Change of Control Purchase Notice has been tendered and not withdrawn in accordance with this Indenture and all other rights of the Holder will terminate other than the right to receive the Change of Control Purchase Price, without interest from the Change of Control Purchase Date, on surrender of the Securities. Section 3.11 Securities Purchased in Part. Any Security that is to be purchased only in part shall be surrendered at the office of a Paying Agent, and promptly after the Change of Control Purchase Date the Obligors shall execute and the Trustee shall authenticate and deliver to the Holder of such Security, without service charge, a new Security or Securities, of such authorized denomination or denominations as may be requested by such Holder, in aggregate principal amount equal to, and in exchange for, the portion of the principal amount of the Security so surrendered that is not purchased. Section 3.12 Compliance With Securities Laws Upon Purchase of Securities. In connection with any offer to purchase or purchase of Securities under Section 3.8 hereof, the Obligors shall (a) comply with Rule 14e-1 (or any successor to such Rule), if applicable, under the Exchange Act, and (b) otherwise comply with all federal and state securities laws in connection with such offer to purchase or purchase of Securities, all so as to permit the rights of the Holders and obligations of the Obligors under Sections 3.8 through 3.11 hereof to be exercised in the time and in the manner specified therein. Section 3.13 Repayment to the Obligors. To the extent that the aggregate amount of cash deposited by the Obligors pursuant to Section 3.10 hereof exceeds the aggregate Change of Control Purchase Price (including interest and Additional Interest, if any, thereon) of the Securities or portions thereof that the Obligors are obligated to purchase, then promptly after the Change of Control Purchase Date the Trustee or a Paying Agent, as the case may be, shall return any such excess cash to the Obligors. 40 Section 3.14 Offer to Purchase by Application of Excess Proceeds. In the event that, pursuant to Section 4.14 hereof, the Company is required to commence an offer to all Holders to purchase Securities ("ASSET SALE OFFER"), it shall follow the procedures specified below. The Asset Sale Offer shall be made to all Holders of Securities and all holders of other Indebtedness that is pari passu with the Securities containing provisions similar to those set forth in this Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets ("PARITY INDEBTEDNESS"). The Asset Sale Offer shall remain open for a period of at least 20 Business Days following its commencement and not more than 30 Business Days, except to the extent that a longer period is required by applicable law (the "OFFER PERIOD"). No later than three Business Days after the termination of the Offer Period (the "PURCHASE DATE"), the Company shall apply a portion of the Excess Proceeds as calculated pursuant to the Section 4.14 hereof (the "OFFER AMOUNT") to the purchase of Securities and such other Parity Indebtedness (on a pro rata basis, if applicable) or, if less than the Offer Amount has been tendered, all Securities and other Parity Indebtedness tendered in response to the Asset Sale Offer. Payment for any Securities so purchased shall be made in the same manner as interest payments are made. Upon the commencement of an Asset Sale Offer, the Company shall send, by first class mail, a notice to the Trustee and each of the Holders. The notice will contain all instructions and materials necessary to enable such Holders to tender Securities pursuant to the Asset Sale Offer. The notice, which will govern the terms of the Asset Sale Offer, will state: (1) that the Asset Sale Offer is being made pursuant to this Section 3.14 and Section 4.14 hereof and the length of time the Asset Sale Offer will remain open; (2) the Offer Amount, the purchase price and the Purchase Date; (3) that any Security not tendered or accepted for payment will continue to accrue interest and Additional Interest, if any; (4) that, unless the Company defaults in making such payment, any Security accepted for payment pursuant to the Asset Sale Offer shall cease to accrue interest and Additional Interest, if any, after the Purchase Date; (5) that Holders electing to have a Security purchased pursuant to an Asset Sale Offer may elect to have Securities purchased in integral multiples of $1,000 only; (6) that Holders electing to have a Security purchased pursuant to any Asset Sale Offer shall be required to surrender the Security, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Security completed, or transfer by book-entry transfer, to the Company, a Depositary, if appointed by the Company, or a Paying Agent at the address specified in the notice at least three days before the Purchase Date; (7) that Holders shall be entitled to withdraw their election if the Company or the Paying Agent, as the case may be, receives, not later than the expiration of the Offer Period, a telegram, telex, facsimile transmission or letter setting forth the name of the 41 Holder, the principal amount of the Security the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Security purchased; (8) that, if the aggregate principal amount of Securities and other Parity Indebtedness surrendered in connection with the Asset Sale Offer exceeds the Offer Amount, the Company shall select the Securities and other Parity Indebtedness to be purchased on a pro rata basis based on the principal amount of Securities and such other Parity Indebtedness surrendered (with such adjustments as may be deemed appropriate by the Company so that only Securities in denominations of $1,000, or integral multiples thereof, will be purchased); and (9) that Holders whose Securities were purchased only in part will be issued new Securities equal in principal amount to the unpurchased portion of the Securities surrendered (or transferred by book-entry transfer). On or before the Purchase Date, the Company shall, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary, the Offer Amount of Securities or portions thereof tendered pursuant to the Asset Sale Offer, or if less than the Offer Amount has been tendered, all Securities tendered, and shall deliver to the Trustee an Officer's Certificate stating that such Securities or portions thereof were accepted for payment by the Company in accordance with the terms of this Section 3.14. The Company, the Depositary or the Paying Agent, as the case may be, shall promptly (but in any case not later than five days after the Purchase Date) mail or deliver to each tendering Holder an amount equal to the purchase price of the Securities tendered by such Holder and accepted by the Company for purchase, and the Company shall promptly issue a new Security, and the Trustee, upon written request from the Company shall authenticate and mail or deliver such new Security to such Holder, in a principal amount equal to any unpurchased portion of the Security surrendered. Any Security not so accepted shall be promptly mailed or delivered by the Company to the Holder thereof. The Company shall publicly announce the results of the Asset Sale Offer on or as soon as practicable after the Purchase Date. Other than as specifically provided in this Section 3.14, any purchase pursuant to this Section 3.14 shall be made pursuant to the provisions of Sections 3.1 through 3.6 hereof. 42 ARTICLE 4 COVENANTS Section 4.1 Payment of Securities. The Obligors shall promptly make all payments in respect of the Securities on the dates and in the manner provided in the Securities and this Indenture. An installment of principal, interest or Additional Interest, if any, shall be considered paid on the date it is due if the Paying Agent (other than the Obligors) holds by 11:00 a.m., New York City time, on that date money, deposited by the Obligors or an Affiliate thereof, sufficient to pay the installment. Except in the case of a redemption, a Change of Control Offer or an Asset Sale Offer, accrued and unpaid interest or Additional Interest, if any, on any Security that is payable, and is punctually paid or duly provided for, on any interest payment date shall be paid to the Person in whose name that Security is registered at the close of business on the record date for such interest or Additional Interest, if any, at the office or agency of the Obligors maintained for such purpose. The Obligors shall, (in immediately available funds) to the fullest extent permitted by law, pay interest on overdue principal (including premium, if any) and overdue installments of interest from the original due date to the date paid, at the rate applicable to the Security plus 1% per annum, which interest shall be payable on demand. Additional Interest, if any, shall accrue at the rates provided for in the Registration Rights Agreement and shall be paid at the same time and in the same manner as regular interest. Payment of the principal of, premium, if any, and interest (including Additional Interest, if any) on the Securities shall be made at the office or agency of the Paying Agent and Registrar within the City and State of New York in immediately available funds in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided that the Obligors may elect to make payment of interest or Additional Interest, if any, by check mailed to the address of the Person entitled thereto as such address appears in the Register. Payment of the principal of, premium, if any, and interest (including Additional Interest, if any) on the Securities held by a Holder holding an aggregate principal amount of Securities in excess of $1,000,000 shall be made by wire transfer in immediately available funds to an account maintained by such Holder in the United States, if such Holder has provided wire transfer instructions to the Obligors at least 10 Business Days prior to the payment date. Any wire transfer instructions received by the Trustee will remain in effect until revoked by the Holder. Section 4.2 Maintenance of Office or Agency. (a) The Obligors shall maintain in the Borough of Manhattan, The City of New York, an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co registrar) where Securities may be surrendered for payment, registration of transfer or for exchange and where notices and demands to or upon the Obligors in respect of the Securities and this Indenture may be served. The Obligors shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any 43 time the Obligors shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee. (b) The Obligors may also from time to time designate one or more other offices or agencies where the Securities may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Obligors of its obligation to maintain an office or agency in the Borough of Manhattan, The City of New York for such purposes. The Obligors shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. (c) The Obligors hereby designate the Corporate Trust Office of the Trustee as one such office or agency of the Obligors in accordance with Section 2.3 hereof. Section 4.3 Reports. (a) Whether or not required by the SEC's rules and regulations, so long as any Securities are outstanding, the Company shall furnish (to the extent not publicly available on the SEC's EDGAR system) to the Holders of Securities, within the time periods specified in the SEC's rules and regulations: (i) all quarterly and annual reports that would be required to be filed with the SEC on Forms 10-Q and 10-K if the Company were required to file such reports; and (ii) all current reports that would be required to be filed with the SEC on Form 8-K if the Company were required to file such reports. All such reports shall be prepared in all material respects in accordance with all of the rules and regulations applicable to such reports. Each annual report on Form 10-K shall include a report on the Company's consolidated financial statements by the Company's certified independent accountants. In addition, the Company shall file a copy of each of the reports referred to in clauses (i) and (ii) above with the SEC for public availability within the time periods specified in the rules and regulations applicable to such reports (unless the SEC will not accept such a filing) and make such information available to securities analysts and prospective investors upon request. (b) If, at any time, the Company is no longer subject to the periodic reporting requirements of the Exchange Act for any reason, the Company shall nevertheless continue filing the reports specified in Section 4.3(a) hereof with the SEC within the time periods specified above unless the SEC will not accept such a filing. The Company agrees that it shall not take any action for the purpose of causing the SEC not to accept any such filings. If, notwithstanding the foregoing, the SEC will not accept the Company's filings for any reason, the Company shall post the reports referred to in Section 4.3(a) hereof on its website within the time periods that would apply if the Company were required to file those reports with the SEC. 44 (c) The Company further agrees that, for so long as any Securities remain outstanding, at any time it is not required to file the reports required by Section 4.3(a) or (b) hereof with the SEC, it shall furnish to the Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. (d) If the Company has designated any of its Subsidiaries as Unrestricted Subsidiaries (other than ICN Yugoslavia DD), then the quarterly and annual financial information required by Section 4.3 (a), (b) and (c) hereof shall include a reasonably detailed presentation, either on the face of the financial statements or in the footnotes thereto, and in Management's Discussion and Analysis of Financial Condition and Results of Operations, of the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Company. Section 4.4 Compliance Certificates. The Obligors shall deliver to the Trustee, within 90 days after the end of each fiscal year of the Obligors (beginning with the fiscal year ending December 31, 2003), an Officers' Certificate as to the signer's knowledge of the Obligors' compliance with all conditions and covenants on their part contained in this Indenture and stating whether or not the signer knows of any Default or Event of Default. If such signer knows of such a Default or Event of Default, the Officers' Certificate shall describe the Default or Event of Default and the efforts to remedy the same. For the purposes of this Section 4.4, compliance shall be determined without regard to any grace period or requirement of notice provided pursuant to the terms of this Indenture. Section 4.5 Further Instruments and Acts. Upon request of the Trustee, the Obligors will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purposes of this Indenture. Section 4.6 Maintenance of Corporate Existence. Subject to Article 5 hereof, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and the corporate existence of each Restricted Subsidiary; provided, however, that the Company shall not be required to preserve the corporate existence of any Restricted Subsidiary if (a) the Board of Directors of the Company shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and the Restricted Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any material respect to the Holders of the Securities or (b) if a Subsidiary is to be dissolved, such Subsidiary has no assets. Section 4.7 Changes in Covenants when Securities Rated Investment Grade. If on any date following the date of this Indenture: 45 (a) the Securities are rated Baa3 or better by Moody's and BBB- or better by S&P; and (b) no Default or Event of Default shall have occurred and be continuing, then, beginning on that day and continuing at all times thereafter regardless of any subsequent changes in the rating of the Securities, the provisions of Sections 4.8, 4.9, 4.10, 4.12, 4.13, 4.14 hereof and clause (iv) of Section 5.1(a) hereof will no longer be applicable to the Securities. Section 4.8 Restricted Payments. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make any other payment or distribution on account of the Company's or any of its Restricted Subsidiaries' Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Company or any of its Restricted Subsidiaries) or to the direct or indirect holders of the Company's or any of its Restricted Subsidiaries' Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Company or to the Company or a Restricted Subsidiary of the Company); (ii) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Company) any Equity Interests of the Company or any direct or indirect parent of the Company; (iii) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness that is subordinated to the Securities, except (i) payments of interest thereon, (ii) payments of principal at the Stated Maturity thereof and (iii) any payment on or with respect to the 6-1/2% Notes; or (iv) make any Restricted Investment; (all such payments and other actions set forth in these clauses (i) through (iv) above being collectively referred to as "RESTRICTED PAYMENTS"), unless, at the time of and after giving effect to such Restricted Payment: (1) no Default or Event of Default has occurred and is continuing or would occur as a consequence of such Restricted Payment; (2) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.9(a) hereof and 46 (3) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the date of the indenture (excluding Restricted Payments permitted by clauses (ii) through (vi) of Section 4.8(b) hereof), is less than the sum, without duplication, of: (A) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing after the date of this Indenture to the end of the Company's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus (B) 100% of the aggregate net cash proceeds received by the Company since the date of this Indenture as a contribution to its common equity capital or from the issue or sale of Equity Interests of the Company (other than Disqualified Stock) or from the issue or sale of convertible or exchangeable Disqualified Stock or convertible or exchangeable debt securities of the Company that have been converted into or exchanged for such Equity Interests (other than Equity Interests (or Disqualified Stock or debt securities) sold to a Subsidiary of the Company), plus (C) to the extent that any Restricted Investment that was made after the date of the indenture is sold for cash or otherwise liquidated or repaid for cash, the lesser of (i) the cash return of capital with respect to such Restricted Investment (less the cost of disposition, if any) or (ii) the initial amount of such Restricted Investment, plus (D) to the extent that any Unrestricted Subsidiary of the Company is redesignated as a Restricted Subsidiary after the date of this Indenture, the lesser of (i) the Fair Market Value of the Company's Investment in such Subsidiary as of the date of such redesignation or (ii) such Fair Market Value as of the date on which such Subsidiary was originally designated as an Unrestricted Subsidiary. (b) So long as no Default or Event of Default has occurred and is continuing or would be caused thereby, the preceding provisions shall not prohibit: (i) the payment of any dividend within 60 days after the date of declaration of the dividend, if at the date of declaration the dividend payment would have complied with the provisions of this Indenture; (ii) the declaration and payment of the Current Dividend; provided, that at the time of declaration of such dividend the Company is able to incur at least an additional $1.00 of Indebtedness pursuant to Section 4.9(a) hereof; provided further, that if in any successive quarterly period after the date of this Indenture the Company does not declare and pay the Current Dividend, the Company shall no longer be permitted to pay any future Current Dividend under this clause (ii); 47 (iii) the redemption, repurchase, retirement, defeasance or other acquisition of any subordinated Indebtedness of the Company or the Co-Obligor or of any Equity Interests of the Company in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Restricted Subsidiary of the Company) of, Equity Interests of the Company (other than Disqualified Stock); provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition will be excluded from clause (3)(B) of Section 4.8(a) hereof; (iv) the defeasance, redemption, repurchase or other acquisition of subordinated Indebtedness of the Company or the Co-Obligor with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness; (v) the payment of any dividend by a Restricted Subsidiary of the Company to the holders of its Equity Interests on a pro rata basis; (vi) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company or any Restricted Subsidiary of the Company held by any employee of the Company or any of its Restricted Subsidiaries pursuant to any equity subscription agreement, stock option agreement or similar agreement; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests may not exceed an aggregate of $5.0 million since the date of this Indenture; and (vii) other Restricted Payments in an aggregate amount not to exceed $20.0 million since the date of this Indenture. (c) The amount of all Restricted Payments (other than cash) shall be the Fair Market Value (determined, for purposes of this covenant, by the Company or, in the case of any asset(s) valued in excess of $10 million, by the Board of Directors of the Company, in each case evidenced by an Officers' Certificate delivered to the Trustee) on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Company or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The Board of Directors' determination shall be based upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of national standing if the Fair Market Value exceeds $25.0 million. Not later than the date of making any Restricted Payment, the Company shall deliver to the Trustee an Officers' Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by this Section 4.8 were computed, together with a copy of any fairness opinion or appraisal required by this subsection (c). Section 4.9 Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise (collectively, "INCUR"), with respect to any Indebtedness (including Acquired Debt), and the Company shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any Disqualified Stock or 48 preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock if the Fixed Charge Coverage Ratio for the Company's most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock is issued would have been at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock had been issued, as the case may be, at the beginning of such four-quarter period. (b) Subsection (a) of this Section 4.9 shall not prohibit the incurrence of any of the following items of Indebtedness (collectively, "PERMITTED DEBT"): (i) the incurrence by the Company of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (i) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Company and its Restricted Subsidiaries thereunder) not to exceed the greater of (x) $150.0 million less the aggregate amount of all Net Proceeds of Asset Sales applied by the Company or any of its Restricted Subsidiaries since the date of this Indenture to repay any term Indebtedness under a Credit Facility or to repay any Indebtedness under a Credit Facility and effect a corresponding commitment reduction thereunder pursuant to Section 4.14 hereof and (y) the amount of the Borrowing Base as of the date of such incurrence; (ii) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness; (iii) the incurrence by the Company and the Co-Obligor of Indebtedness represented by the Securities to be issued on the date of this Indenture and the Exchange Securities to be issued pursuant to the Registration Rights Agreement and Guarantees thereof, if any, by Domestic Subsidiaries of the Company; (iv) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of property, plant or equipment used in the business of the Company or such Restricted Subsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (iv), not to exceed $25.0 million at any time outstanding; (v) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.9(a) hereof or clauses (ii), (iii), (iv), (v), (xi) or (xii) of this Section 4.9(b); 49 (vi) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that: (A) if the Company or the Co-Obligor is the obligor on such Indebtedness, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations with respect to the Securities; and (B) (i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (vi); (vii) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations that are incurred in the ordinary course of business and not for speculative purposes; (viii) the Guarantee by the Company or the Co-Obligor of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred under this Section 4.9; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Securities, then the Guarantee shall be subordinated to the same extent as the Indebtedness guaranteed; (ix) the accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this covenant; provided, in each such case, that the amount thereof is included in Fixed Charges of the Company as accrued; (x) Obligations in respect of performance and surety bonds and completion guarantees provided by the Company or any Restricted Subsidiary in an aggregate principal amount at any time outstanding not to exceed $25.0 million; (xi) the incurrence by the Company or any of its Restricted Subsidiaries of Acquired Debt in an aggregate principal amount at any time outstanding not to exceed $25.0 million; (xii) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (xii), not to exceed $25.0 million; and 50 (xiii) the Guarantee by Domestic Subsidiaries of the Company of Indebtedness of the Company permitted to be incurred under another provision of this Section 4.9. (c) The Company shall not incur any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company unless such Indebtedness is also contractually subordinated in right of payment to the Securities on substantially identical terms; provided, however, that no Indebtedness of the Company shall be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured. (d) For purposes of determining compliance with this Section 4.9, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (i) through (xii) of Section 4.9(b) hereof, or is entitled to be incurred pursuant to subsection (a) of this Section 4.9, the Company shall be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.9. Indebtedness under Credit Facilities outstanding on the date on which Securities are first issued and authenticated under this Indenture will be deemed to have been incurred on such date in reliance on the exception provided by clause (i) of Section 4.9(b) hereof. Section 4.10 Sale and Leaseback Transactions. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, enter into any sale and leaseback transaction (other than a sale leaseback transaction involving a lease, including any renewal period, optional or otherwise, not in excess of 24 months); provided that the Company or any Restricted Subsidiary may enter into a sale and leaseback transaction if: (i) the Company or that Restricted Subsidiary, as applicable, could have (x) incurred Indebtedness in an amount equal to the Attributable Debt relating to such sale and leaseback transaction under the Fixed Charge Coverage Ratio test in Section 4.9(a) hereof, and (y) incurred a Lien to secure such Indebtedness pursuant to Section 4.11 hereof; (ii) the gross cash proceeds of that sale and leaseback transaction are at least equal to the Fair Market Value, as determined in good faith by the Company, or, in the case of a sale leaseback transaction in excess of $10 million, the Board of Directors of the Company, in each case set forth in an Officers' Certificate delivered to the Trustee, of the property that is the subject of that sale and leaseback transaction; and (iii) the transfer of assets in that sale and leaseback transaction is permitted by, and the Company applies the proceeds of such transaction in compliance with, Section 4.14 hereof. 51 Section 4.11 Liens. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Lien of any kind on any asset now owned or hereafter acquired, except Permitted Liens. Section 4.12 Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to: (i) pay dividends or make any other distributions on its Capital Stock to the Company or any of its Restricted Subsidiaries, or with respect to any other interest or participation in, or measured by, its profits, or pay any indebtedness owed to the Company or any of its Restricted Subsidiaries; (ii) make loans or advances to the Company or any of its Restricted Subsidiaries; or (iii) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries. (b) The restrictions set forth in Section 4.12(a) hereof shall not apply to encumbrances or restrictions existing under or by reason of: (i) agreements governing Existing Indebtedness as in effect on the date of this Indenture and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of those agreements, provided that the amendments, modifications, restatements, renewals, increases, supplements, refundings, replacement or refinancings are no more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in those agreements on the date of this Indenture; (ii) this Indenture and the Securities; (iii) any encumbrance or restriction pursuant to Credit Facilities incurred under clause (i) of Section 4.9(b) hereof; (iv) applicable law, rule, regulation or order, approval, license, permit or similar restriction, including under contracts with foreign governments or agencies thereof entered into in the ordinary course of business; (v) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred, or such Capital Stock was issued, in connection with or in contemplation of such acquisition), 52 which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, provided that, in the case of Indebtedness, such Indebtedness was permitted to be incurred under Section 4.9 hereof; (vi) customary non-assignment provisions in leases, contracts and licenses entered into in the ordinary course of business and consistent with past practices; (vii) purchase money obligations for property acquired in the ordinary course of business that impose restrictions on that property of the nature described in clause (iii) of Section 4.12(a) hereof; (viii) any agreement for the sale or other disposition of a Restricted Subsidiary that restricts distributions by that Restricted Subsidiary pending its sale or other disposition; (ix) Permitted Refinancing Indebtedness, provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are no more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced; (x) Permitted Liens securing Indebtedness that limit the right of the debtor to dispose of the assets subject to such Liens; (xi) customary provisions with respect to the disposition or distribution of assets or property in joint venture agreements, assets sale agreements, stock sale agreements and other similar agreements entered into in the ordinary course of business; and (xii) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business. Section 4.13 Transactions with Affiliates. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (each, an "AFFILIATE TRANSACTION"), unless: (i) the Affiliate Transaction is on terms that are no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person; and (ii) the Company delivers to the Trustee: 53 (A) respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $10.0 million, a resolution of the Board of Directors of the Company set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with this Section 4.13(a) and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors of the Company; and (B) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $25.0 million, an opinion as to the fairness to the Company or such Restricted Subsidiary of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing. (b) The following items shall not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of Section 4.13(a) hereof: (i) any employment agreement entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business and consistent with the past practice of the Company or such Restricted Subsidiary; (ii) transactions between or among the Company and/or its Restricted Subsidiaries; (iii) transactions with a Person that is an Affiliate of the Company solely because the Company owns, directly or through a Restricted Subsidiary, an Equity Interest in, or controls, such Person; (iv) payment of reasonable directors' fees to Persons who are not otherwise Affiliates of the Company; (v) issuances or sales of Equity Interests (other than Disqualified Stock) of the Company to Affiliates of the Company; (vi) Restricted Payments that are permitted by the provisions of Section 4.8 hereof; (vii) transactions effected pursuant to agreements in effect on the date of this Indenture and any amendment, modification, or replacement to such agreement (so long as the amendment, modification or replacement is not disadvantageous to the Holders of the Securities in any respect); (viii) advances to employees in the ordinary course of business not to exceed $1.0 million in the aggregate at any one time outstanding; and (ix) transactions with a Permitted Joint Venture. 54 Section 4.14 Asset Sales. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless: (i) the Company (or the Restricted Subsidiary, as the case may be) receives consideration at the time of the Asset Sale at least equal to the Fair Market Value (determined, for purposes of this clause (i), by the Company or, in the case of any asset(s) valued in excess of $10 million, by the Board of Directors of the Company, in each case evidenced by an Officers' Certificate delivered to the Trustee) of the assets or Equity Interests issued or sold or otherwise disposed of; and (ii) at least 75% of the consideration received in the Asset Sale by the Company or such Restricted Subsidiary is in the form of cash or Cash Equivalents. For purposes of this provision, each of the following will be deemed to be cash: (A) any liabilities, as shown on the Company's most recent consolidated balance sheet, of the Company or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the Securities) that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases the Company or such Restricted Subsidiary from further liability; and (B) any securities, notes or other obligations received by the Company or any such Restricted Subsidiary from such transferee that are contemporaneously, subject to ordinary settlement periods, converted by the Company or such Restricted Subsidiary into cash, to the extent of the cash received in that conversion. (b) Within 365 days after the receipt of any Net Proceeds from an Asset Sale, the Company may apply those Net Proceeds: (i) to repay Indebtedness and other Obligations under a Credit Facility and, if the Indebtedness repaid is revolving credit Indebtedness, to correspondingly reduce commitments with respect thereto; (ii) to acquire all or substantially all of the assets of, or a majority of the Voting Stock of, another Permitted Business; (iii) to make a capital expenditure in or that is useful in a Permitted Business; (iv) to retire Securities pursuant to privately negotiated transactions, open market purchases or otherwise; or (v) to acquire other assets that are not classified as current assets (for the avoidance of doubt, including acquisitions of in-process research and development) under GAAP and that are used or useful in a Permitted Business. 55 Pending the final application of any Net Proceeds, the Company may temporarily reduce revolving credit borrowings or otherwise invest the Net Proceeds in any manner that is not prohibited by this Indenture. (c) Any Net Proceeds from Asset Sales that are not applied or invested as provided in Section 4.14(b) hereof shall constitute "EXCESS PROCEEDS." When the aggregate amount of Excess Proceeds exceeds $10.0 million, the Company shall make an offer (an "ASSET SALE OFFER") to all Holders of Securities and all holders of Parity Indebtedness to purchase the maximum principal amount of Securities and such other Parity Indebtedness that may be purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer shall be equal to 100% of principal amount plus accrued and unpaid interest and Additional Interest, if any, to the date of purchase, and shall be payable in cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use those Excess Proceeds for any purpose not otherwise prohibited by this Indenture. If the aggregate principal amount of Securities and other Parity Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the Company shall select the Securities and such other Parity Indebtedness to be purchased on a pro rata basis. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero. (d) The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with each repurchase of Securities pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the Asset Sale provisions of this Indenture, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under the Asset Sale provisions of this Indenture by virtue of such compliance. Section 4.15 Designation of Restricted and Unrestricted Subsidiaries. The Board of Directors of the Company may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if that designation would not cause a Default. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate Fair Market Value of all outstanding Investments owned by the Company and its Restricted Subsidiaries in the Subsidiary designated as an Unrestricted Subsidiary shall be deemed to be an Investment made as of the time of the designation and will reduce the amount available for Restricted Payments under Section 4.8(a) hereof or under one or more of the clauses of the definition of Permitted Investments, as determined by the Company. That designation will only be permitted if the Investment would be permitted at that time and if the Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The Board of Directors may redesignate any Unrestricted Subsidiary to be a Restricted Subsidiary if the redesignation would not cause a Default. Section 4.16 Business Activities. The Company shall not, and shall not permit any Restricted Subsidiary to, engage in any business other than Permitted Businesses, except to such extent as would not be material to the Company and its Restricted Subsidiaries taken as a whole. 56 Section 4.17 Payments for Consent. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any Holder of Securities for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Securities unless such consideration is offered to be paid and is paid to all Holders of the Securities that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. Section 4.18 Stay, Extension and Usury Laws. The Obligors covenant (to the extent that they may lawfully do so) that they shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Obligors from paying all or any portion of the principal of, premium, if any, interest or Additional Interest, if any, on the Securities as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture, and the Obligors (to the extent they may lawfully do so) hereby expressly waive all benefit or advantage of any such law and covenant that they will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. Section 4.19 Payment of Additional Interest. If Additional Interest is payable by the Obligors pursuant to the Registration Rights Agreement, the Obligors shall deliver to the Trustee a certificate to that effect stating (i) the amount of such Additional Interest that is payable, (ii) the reason why such Additional Interest is payable and (iii) the date on which such Additional Interest is payable. Unless and until a Trust Officer of the Trustee receives such a certificate, the Trustee may assume without inquiry that no such Additional Interest is payable. Section 4.20 Notice of Default. In the event that any Default or Event of Default under Section 6.1 hereof shall occur, the Obligors shall give prompt written notice of such Default or Event of Default to the Trustee. ARTICLE 5 MERGER, CONSOLIDATION OR SALE OF ASSETS Section 5.1 Merger, Consolidation or Sale of Assets. (a) The Company shall not, directly or indirectly, consolidate or merge with or into another Person (whether or not the Company is the surviving corporation) or sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company and its Restricted Subsidiaries taken as a whole, in one or more related transactions, to another Person, unless: 57 (i) either: (x) the Company is the surviving corporation; or (y) the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, conveyance or other disposition has been made is organized and validly existing under the laws of the United States, any state of the United States or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of, (premium, if any), interest and Additional Interest, if any, on all the Securities and the performance or observance of every covenant of this Indenture on the part of the Obligors to be performed or observed; (ii) the Person formed by or surviving any such consolidation or merger (if other than the Company) or the Person to which such sale, assignment, transfer, conveyance or other disposition has been made assumes all the obligations of the Company under the Securities, this Indenture and the Registration Rights Agreement pursuant to agreements reasonably satisfactory to the Trustee; (iii) immediately after such transaction, no Default or Event of Default exists; (iv) the Company or the Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, conveyance or other disposition has been made shall, on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.9(a) hereof; and (v) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture complies with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with. (b) The Company may not, directly or indirectly, lease all or substantially all of its properties or assets, in one or more related transactions, to any other Person. Section 5.2 Successor Substituted. Upon any consolidation of the Company with, or merger of the Company into, any other Person or any conveyance, transfer or lease of all or substantially all of the properties and assets of the Company in accordance with Section 5.1 hereof, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein, and thereafter, except in the case of a lease, the 58 predecessor Person shall be relieved of all obligations and covenants under this Indenture and the Securities. ARTICLE 6 DEFAULT AND REMEDIES Section 6.1 Events of Default. An "EVENT OF DEFAULT" shall occur if: (a) the Obligors default in the payment of any principal of (including, without limitation, any premium, if any, on) any Security when the same becomes due and payable (whether at maturity, upon a Redemption Date, Change of Control Purchase Date, Purchase Date or otherwise); (b) the Obligors default in the payment of any interest or Additional Interest, if any, payable on any Security when the same becomes due and payable and the default continues for a period of 30 days; (c) the Company or any of its Restricted Subsidiaries fails to comply with any of the provisions of Sections 3.8, 4.8, 4.9, 4.14 and 5.1 of this Indenture; (d) the Company or any of its Restricted Subsidiaries fails to comply with any of the other covenants contained in the Securities or this Indenture and the default continues for 60 days after notice to the Company from the Trustee or the Holders of at least 25% in aggregate principal amount of Securities then outstanding; (e) the Company or any of its Restricted Subsidiaries default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists, or is created after the date of this Indenture, if that default: (i) is caused by a failure to pay principal of, or interest or premium, if any, on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a "PAYMENT DEFAULT"); or (ii) results in the acceleration of such Indebtedness prior to its express maturity, and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $10.0 million or more; 59 (f) the Company or any of its Restricted Subsidiaries fails to pay final non-appealable judgments aggregating in excess of $10.0 million, which judgments are not paid, discharged or stayed for a period of 60 days; (g) the Company, any Subsidiary that is a Significant Subsidiary or any group of Subsidiaries that, taken together, would constitute a Significant Subsidiary, pursuant to or within the meaning of any Bankruptcy Law: (i) commences a voluntary case or proceeding; (ii) consents to the entry of an order for relief against it in an involuntary case or proceeding; (iii) consents to the appointment of a Custodian of it or for all or substantially all of its property; (iv) makes a general assignment for the benefit of its creditors; (h) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (i) is for relief against the Company, any Subsidiary that is a Significant Subsidiary or any group of Subsidiaries that, taken together, would constitute a Significant Subsidiary in an involuntary case or proceeding; (ii) appoints a Custodian of the Company, any Subsidiary that is a Significant Subsidiary or any group of Subsidiaries that, taken together, would constitute a Significant Subsidiary or for all or substantially all of the property of the Company, any Subsidiary that is a Significant Subsidiary or any group of Subsidiaries that, taken together, would constitute a Significant Subsidiary; or (iii) orders the liquidation of the Company, any Subsidiary that is a Significant Subsidiary or any group of Subsidiaries that, taken together, would constitute a Significant Subsidiary; and in each case the order or decree described in this clause (h) remains unstayed and in effect for 60 consecutive days. Any notice given pursuant to Section 6.1(d) hereof must be in writing and must specify the Default, demand that it be remedied and state that the notice is a "NOTICE OF DEFAULT." When any Default under this Section 6.1 is cured, it ceases. The Trustee shall not be charged with knowledge of any Default or Event of Default unless written notice thereof shall have been given to a Trust Officer at the Corporate Trust Office of the Trustee by the Obligors, a Paying Agent, any Holder or any agent of any Holder. 60 Section 6.2 Acceleration. If an Event of Default (other than an Event of Default specified in clause (g) or (h) of Section 6.1 hereof) occurs and is continuing, the Trustee may, by notice to the Obligors, or the Holders of at least 25% in aggregate principal amount of the Securities then outstanding may, by notice to the Obligors and the Trustee, declare all unpaid principal to the date of acceleration on the Securities then outstanding (if not then due and payable) to be due and payable upon any such declaration, and the same shall become and be immediately due and payable. If an Event of Default specified in clause (g) or (h) of Section 6.1 hereof occurs, all unpaid principal (including, without limitation, any premium, in any), and accrued interest and additional amounts, if any on the Securities then outstanding shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. The Holders of a majority in aggregate principal amount of the Securities then outstanding by notice to the Trustee may rescind an acceleration and its consequences if (a) all existing Events of Default, other than the nonpayment of the principal of the Securities which has become due solely by such declaration of acceleration, have been cured or waived; (b) to the extent the payment of such interest is lawful, interest at a rate of 1% per annum over the amount of interest otherwise payable on such Security on overdue installments of interest and Additional Interest, if any, and overdue principal, which has become due otherwise than by such declaration of acceleration, has been paid; (c) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction; and (d) all payments due to the Trustee and any predecessor Trustee under Section 7.7 hereof have been made. No such rescission shall affect any subsequent default or impair any right consequent thereto. If an Event of Default occurs on or after December 15, 2007, by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company in bad faith with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the Securities pursuant to Section 3.7 hereof, then, upon acceleration of the Securities, an equivalent premium shall also become and be immediately due and payable, to the extent permitted by law, anything in this Indenture or in the Securities to the contrary notwithstanding. If an Event of Default occurs prior to December 15, 2007, by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company in bad faith with the intention of avoiding the prohibition on redemption of the Securities prior to December 15, 2007, then, upon acceleration of the Securities, an additional premium shall also become and be immediately due and payable in an amount, for each of the years beginning on each of the years set forth below, as set forth below (expressed as a percentage of the aggregate principal amount to the date of payment that would otherwise be due but for the provisions of this sentence):

Year Percentage ---- ---------- 2004................................................. 107.000% 2005................................................. 105.833% 2006................................................. 104.666% 2007................................................. 103.500%

61 Section 6.3 Other Remedies. If an Event of Default occurs and is continuing, the Trustee may, but shall not be obligated to, pursue any available remedy by proceeding at law or in equity to collect the payment of the principal of or interest or Additional Interest, if any, on the Securities or to enforce the performance of any provision of such Securities or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Securities or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Securityholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative to the extent permitted by law. Section 6.4 Waiver of Defaults and Events of Default. Subject to Sections 6.7 and 9.2 hereof, the Holders of a majority in aggregate principal amount of the Securities then outstanding by notice to the Trustee may waive an existing Default or Event of Default and its consequence, except a Default or Event of Default in the payment of the principal of, premium, if any, or interest or Additional Interest, if any, on any Security when due or any Default or Event of Default in respect of any provision of this Indenture or the Securities which, under Section 9.2 hereof, cannot be modified or amended without the consent of the Holder of each Security affected. When a Default or Event of Default is waived, it is cured and ceases. Section 6.5 Control by Majority. The Holders of a majority in principal amount of all Securities then outstanding may direct the time, method and place of conducting any proceeding for exercising any remedy or power available to the Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture, that the Trustee determines may be unduly prejudicial to the rights of another Holder or the Trustee, or that may involve the Trustee in personal liability unless the Trustee is offered indemnity satisfactory to it; provided, however, that the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. Section 6.6 Limitations on Suits. A Holder may not pursue any remedy with respect to this Indenture or the Securities (except actions for payment of overdue principal, premium, if any, or interest or Additional Interest, if any) unless: (a) the Holder gives to the Trustee written notice of a continuing Event of Default; (b) the Holders of at least 25% in aggregate principal amount of the then outstanding Securities make a written request to the Trustee to pursue the remedy; 62 (c) such Holder or Holders offer to the Trustee reasonable indemnity to the Trustee against any loss, liability or expense; (d) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of indemnity; and (e) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in aggregate principal amount of the Securities. A Securityholder may not use this Indenture to prejudice the rights of another Securityholder or to obtain a preference or priority over such other Securityholder. Section 6.7 Rights of Holders to Receive Payment. Notwithstanding any other provision of this Indenture, the right of any Holder of a Security to receive payment of the principal of, interest and Additional Interest, if any, on the Security, on or after the respective due dates expressed in the Security and this Indenture and to bring suit for the enforcement of any such payment on or after such respective dates, is absolute and unconditional and shall not be impaired or affected without the consent of the Holder. Section 6.8 Collection Suit by Trustee. If an Event of Default in the payment of principal, interest or Additional Interest, if any, specified in clause (a) or (b) of Section 6.1 hereof occurs and is continuing with respect to any Securities, the Trustee may recover judgment in its own name and as trustee of an express trust against the Obligors or another obligor on the Securities for the whole amount of principal and accrued interest or Additional Interest, if any, remaining unpaid, together with, to the extent that payment of such interest is lawful, interest on overdue principal and overdue installments of interest or Additional Interest, if any, in each case at a rate equal to the interest rate then in effect on such Security plus 1% per annum and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. Section 6.9 Trustee May File Proofs of Claim. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders allowed in any judicial proceedings relative to the Obligors (or any other obligor on the Securities), its creditors or its property and shall be entitled and empowered to collect and receive any money or other property payable or deliverable on any such claims and to distribute the same, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.7 hereof, and to the extent that such payment of the reasonable compensation, expenses, disbursements and advances 63 in any such proceedings shall be denied for any reason, payment of the same shall be secured by a lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other property which the Holders may be entitled to receive in such proceedings, whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to, or, on behalf of any Holder, to authorize, accept or adopt any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. Section 6.10 Priorities. If the Trustee collects any money pursuant to this Article 6, it shall pay out the money in the following order: First, to the Trustee for amounts due under Section 7.7 hereof; Second, to Holders for amounts due and unpaid on the Securities for principal, interest and Additional Interest, if any, ratably, without preference or priority of any kind, according to the amounts due and payable on the Securities for principal, interest and Additional Interest, if any, respectively; and Third, the balance, if any, to the Obligors. The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 6.10. Section 6.11 Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit made by the Trustee, a suit by a Holder pursuant to Section 6.7 hereof, or a suit by Holders of more than 10% in aggregate principal amount of the Securities then outstanding. ARTICLE 7 TRUSTEE Section 7.1 Duties of Trustee. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and use the same degree of care and skill in its exercise as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. 64 (b) Except during the continuance of an Event of Default: (A) the Trustee need perform only those duties as are specifically set forth in this Indenture and no others; and (B) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. The Trustee, however, shall examine any certificates and opinions which by any provision hereof are specifically required to be delivered to the Trustee to determine whether or not they conform to the requirements of this Indenture. (c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except (subject to the TIA) that: (A) this paragraph does not limit the effect of subsection (b) of this Section 7.1; (B) the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (C) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.5 hereof. (d) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers unless the Trustee shall have received satisfactory indemnity in its opinion against potential costs and liabilities incurred by it relating thereto. (e) Every provision of this Indenture that in any way relates to the Trustee is subject to subsections (a), (b), (c) and (d) of this Section 7.1. (f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Obligors. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. Section 7.2 Rights of Trustee. Subject to Section 7.1 hereof: (a) The Trustee may rely conclusively on any document believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document. 65 (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel, which shall conform to Section 11.4(b) hereof. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate or Opinion of Counsel. (c) The Trustee may act through its agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers. (e) The Trustee may consult with counsel of its selection, and the advice or opinion of such counsel as to matters of law shall be full and complete authorization and protection in respect of any such action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel. (f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee security or indemnity satisfactory to the Trustee against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction. (g) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Obligors, personally or by agent or attorney at the sole cost of the Obligors and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation. (h) The Trustee shall not be deemed to have notice of any Default or Event of Default unless a Trust Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a default is received by the Trustee at the Corporate Trust Office, and such notice references the Securities and this Indenture. (i) The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and to each agent, custodian and other Person employed to act hereunder. Section 7.3 Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Obligors or an Affiliate of the Obligors with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. However, the Trustee is subject to Sections 7.10 and 7.11 hereof. 66 Section 7.4 Trustee's Disclaimer. The Trustee makes no representation as to the validity or adequacy of this Indenture or the Securities, it shall not be accountable for the Obligors' use of the proceeds from the Securities, and it shall not be responsible for any statement in the Securities other than its certificate of authentication. Section 7.5 Notice of Default or Events of Default. If a default or an Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to each Securityholder notice of the Default or Event of Default within 90 days after it occurs. However, the Trustee may withhold the notice if and so long as a committee of its Trust Officers in good faith determines that withholding notice is in the interests of Securityholders, except in the case of a Default or an Event of Default in payment of the principal (including premium, if any) of, interest or Additional Interest, if any, on any Security. Section 7.6 Reports by Trustee to Holders. If such report is required by TIA Section 313, within 60 days after each May 15, beginning with the May 15 following the date of this Indenture, the Trustee shall mail to each Holder a brief report dated as of such May 15 that complies with TIA Section 313(a). The Trustee also shall comply with TIA Section 313(b)(2) and (c). A copy of each report at the time of its mailing to Holders shall be mailed to the Obligors and filed with the SEC and each stock exchange, if any, on which the Securities are listed. The Obligors shall notify the Trustee whenever the Securities become listed on any stock exchange or listed or admitted to trading on any quotation system and any changes in the stock exchanges or quotation systems on which the Securities are listed or admitted to trading and of any delisting thereof. Section 7.7 Compensation and Indemnity. The Obligors shall pay to the Trustee from time to time such compensation (as agreed to from time to time by the Obligors and the Trustee in writing) for its services (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust). The Obligors shall reimburse the Trustee upon request for all reasonable disbursements, expenses and advances incurred or made by it. Such expenses may include the reasonable compensation, disbursements and expenses of the Trustee's agents and counsel. The Obligors shall indemnify the Trustee or any predecessor Trustee (which for purposes of this Section 7.7 shall include its officers, directors, employees and agents) for, and hold it harmless against, any and all loss, liability or expense including taxes (other than taxes based upon, measured by or determined by the income of the Trustee), (including reasonable legal fees and expenses) incurred by it in connection with the acceptance or administration of its duties under this Indenture or any action or failure to act as authorized or within the discretion or rights or powers conferred upon the Trustee hereunder including the reasonable costs and expenses of the Trustee and its counsel in defending itself against any claim or liability in connection with 67 the exercise or performance of any of its powers or duties hereunder. The Trustee shall notify the Obligors promptly of any claim asserted against the Trustee for which it may seek indemnity. The Obligors need not pay for any settlement effected without its prior written consent, which shall not be unreasonably withheld. The Obligors need not reimburse the Trustee for any expense or indemnify it against any loss or liability incurred by it resulting from its gross negligence or bad faith. To secure the Obligors' payment obligations in this Section 7.7, the Trustee shall have a senior claim to which the Securities are hereby made subordinate on all money or property held or collected by the Trustee, except such money or property held in trust to pay the principal of, interest and Additional Interest, if any, on the Securities. The obligations of the Obligors under this Section 7.7 shall survive the satisfaction and discharge of this Indenture or the resignation or removal of the Trustee. When the Trustee incurs expenses or renders services after an Event of Default specified in clause (g) or (h) of Section 6.1 hereof occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under any Bankruptcy Law to the extent permitted by law. The provisions of this Section shall survive the termination of this Indenture. Section 7.8 Replacement of Trustee. The Trustee may resign by so notifying the Obligors. The Holders of a majority in aggregate principal amount of the Securities then outstanding may remove the Trustee by so notifying the Trustee and may, with the Obligors' written consent, appoint a successor Trustee. The Obligors may remove the Trustee if: (a) the Trustee fails to comply with Section 7.10 hereof; (b) the Trustee is adjudged a bankrupt or an insolvent; (c) a receiver or other public officer takes charge of the Trustee or its property; or (d) the Trustee becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of the Trustee for any reason, the Obligors shall promptly appoint a successor Trustee. The resignation or removal of a Trustee shall not be effective until a successor Trustee shall have delivered the written acceptance of its appointment as described below. If a successor Trustee does not take office within 45 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Obligors or the Holders of 10% in principal amount of the Securities then outstanding may petition any court of competent jurisdiction for the appointment of a successor Trustee at the expense of the Obligors. 68 If the Trustee fails to comply with Section 7.10 hereof, any Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Obligors. Immediately after that, the retiring Trustee shall transfer all property held by it as Trustee to the successor Trustee and be released from its obligations (exclusive of any liabilities that the retiring Trustee may have incurred while acting as Trustee) hereunder, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. A successor Trustee shall mail notice of its succession to each Holder. A retiring Trustee shall not be liable for the acts or omissions of any successor Trustee after its succession. Notwithstanding replacement of the Trustee pursuant to this Section 7.8, the Obligors' obligations under Section 7.7 hereof shall continue for the benefit of the retiring Trustee. Section 7.9 Successor Trustee by Merger, Etc. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust assets (including the administration of this Indenture) to, another corporation, the resulting, surviving or transferee corporation, without any further act, shall be the successor Trustee, provided such transferee corporation shall qualify and be eligible under Section 7.10 hereof. Such successor Trustee shall promptly mail notice of its succession to the Obligors and each Holder. Section 7.10 Eligibility; Disqualification. The Trustee shall always satisfy the requirements of paragraphs (1), (2) and (5) of TIA Section 310(a). The Trustee (or its parent holding company) shall have a combined capital and surplus of at least $50,000,000. If at any time the Trustee shall cease to satisfy any such requirements, it shall resign immediately in the manner and with the effect specified in this Article 7. The Trustee shall be subject to the provisions of TIA Section 310(b). Nothing herein shall prevent the Trustee from filing with the SEC the application referred to in the penultimate paragraph of TIA Section 310(b). Section 7.11 Preferential Collection of Claims Against Obligors. The Trustee shall comply with TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated therein. 69 ARTICLE 8 DEFEASANCE; SATISFACTION AND DISCHARGE OF INDENTURE; RELEASE OF RIBAPHARM Section 8.1 Satisfaction and Discharge of Indenture. This Indenture shall cease to be of further effect (except as to any surviving rights of conversion, registration of transfer or exchange of Securities herein expressly provided for and except as further provided below), and the Trustee, on demand of and at the expense of the Obligors, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when (a) either (i) all Securities theretofore authenticated and delivered (other than (i) Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.7 hereof and (ii) Securities for whose payment money has theretofore been deposited in trust and thereafter repaid to the Obligors as provided in Section 8.5 hereof) have been delivered to the Trustee for cancellation; or (ii) all such Securities not theretofore delivered to the Trustee for cancellation are within one year of the maturity date and the Obligors have irrevocably deposited or caused to be irrevocably deposited cash with the Trustee or a Paying Agent (other than the Obligors or any of their Affiliates) as trust funds in trust for the purpose of and in an amount sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal and interest (including Additional Interest, if any) to the date of such deposit (in the case of Securities which have become due and payable); (b) the Obligors have paid or caused to be paid all other sums payable hereunder by the Obligors; and (c) the Obligors have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein relating to the satisfaction and discharge of this Indenture have been complied with. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Obligors to the Trustee under Section 7.7 hereof shall survive and, if money shall have been deposited with the Trustee pursuant to subclause (ii) of clause (a) of this Section, the provisions of Sections 2.3, 2.4, 2.5, 2.6, 2.7, 2.12, Section 4.2, Section 4.3, Section 7.8 this Article 8 and Section 11.5, shall survive until the Securities have been paid in full. Section 8.2 Legal Defeasance. The Obligors shall be deemed to have paid and will be discharged from any and all obligations in respect of this Indenture and the Securities on the date of the deposit referred to in clause (a) of this Section 8.2, and the provisions of this Indenture shall no longer be in effect 70 with respect to the Securities ("LEGAL DEFEASANCE"), and the Trustee, at the expense of the Obligors, shall execute proper instruments acknowledging the same, except for the following provisions, which shall survive until otherwise terminated or discharged hereunder: (i) the rights of Holders of outstanding Securities to receive solely from the trust fund described in clause (a) below payments in respect of the principal of, premium, if any, and interest on such Securities when such payments are due, (ii) the Obligors' obligations with respect to such Securities under Article 2 and Section 4.3 hereof, (iii) the rights, powers, trusts, duties, indemnities and immunities of the Trustee hereunder, including, without limitation, Section 7.7 hereof and the Obligors' obligations in connection therewith and (iv) this Section 8.2. Subject to compliance with this Section 8.2, the Obligors may exercise their option under this Section 8.2 notwithstanding the prior exercise of their option under Section 8.3 hereof. The following conditions shall apply to Legal Defeasance: (a) the Obligors shall have irrevocably deposited with the Trustee, in trust, for the benefit of the Holders cash in U.S. dollars, U.S. Government Obligations, or a combination thereof, in such amounts as shall be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest on the Securities at the Stated Maturity thereof or on the applicable Redemption Date, as the case may be and the Obligors must specify whether the Securities are being defeased to their Stated Maturity or to a particular Redemption Date; (b) the Obligors shall have delivered to the Trustee an Opinion of Counsel (based on a ruling published by the United States Internal Revenue Service or other change in the applicable U.S. federal income tax law) in the United States reasonably acceptable to the Trustee to the effect that the Holders will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such deposit and Legal Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such deposit and Legal Defeasance had not occurred; (c) no Default or Event of Default shall have occurred and be continuing either: (i) on the date of such deposit (other than a Default or an Event of Default resulting from the borrowing of funds to be applied to such deposit or (ii) insofar as Events of Default from bankruptcy or insolvency events are concerned, at the time in the period ending on the 91st day after the date of deposit; (d) the Legal Defeasance shall not result in a breach or violation of, or constitute a default under any material agreement or instrument(other than this Indenture) to which the Company or any of its Restricted Subsidiaries is a party or by which the Company or any of its Restricted Subsidiary is bound; (e) the Obligors must deliver to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee to the effect that after the 91st day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally; (f) the Obligors must deliver to the Trustee an Officers' Certificate stating that the deposit was not made by the Obligors with the intent of preferring the Holders of 71 Securities over the other creditors of the Obligors with the intent of defeating, hindering, delaying or defrauding creditors of the Obligors or others; and (g) the Obligors must deliver to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent relating to the Legal Defeasance have been complied with. After any such irrevocable deposit, the Trustee upon request shall acknowledge in writing the discharge of the Obligors' obligations under the Securities and this Indenture except for those surviving obligations in the immediately preceding paragraph. Notwithstanding the foregoing, the Opinion of Counsel required by Section 8.2(b) hereof with respect to a Legal Defeasance need not be delivered if all Securities not theretofore delivered to the Trustee for cancellation (1) have become due and payable or (2) shall become due and payable upon maturity or redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Obligors. Section 8.3 Covenant Defeasance. The Company may omit to comply with any term, provision or condition set forth in clause (iv) of Section 5.1(a) hereof, and the Obligors may omit to comply with any term, provision or condition set forth in Sections 4.8 through 4.17 hereof and any breach of clauses (c), (d), (e), or (f), or with respect to Significant Subsidiaries only, clauses (g) or (h) under Section 6.1 hereof shall be deemed not to be an Event of Default ("COVENANT DEFEASANCE"), if in each case with respect to the outstanding Securities: (a) the Obligors shall have irrevocably deposited with the Trustee, in trust, for the benefit of the Holders cash in U.S. dollars, U.S. Government Obligations, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest on the Securities at the Stated Maturity thereof or on the applicable Redemption Date, as the case may be, and the Obligors must specify whether the Securities are being defeased to their Stated Maturity or to a particular Redemption Date; (b) the Obligors shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to such Trustee confirming that the Holders will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if the Covenant Defeasance had not occurred; (c) no Default or Event of Default shall have occurred and be continuing either: (i) on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit or (ii) insofar as Events of Default from bankruptcy or insolvency events are concerned, at the time in the period ending on the 91st day after the date of deposit; 72 (d) the Covenant Defeasance shall not result in a breach or violation of, or constitute a default under any material agreement or instrument (other than this Indenture) to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound; (e) the Obligors must deliver to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee to the effect that after the 91st day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally; (f) the Obligors must deliver to the Trustee an Officers' Certificate stating that the deposit was not made by the Obligors with the intent of preferring the Holders of Securities over the other creditors of the Obligors with the intent of defeating, hindering, delaying or defrauding creditors of the Obligors or others; and (g) the Obligors must deliver to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent relating to the Legal Defeasance have been complied with. If the funds deposited with the Trustee to effect Covenant Defeasance are insufficient to pay the principal of and interest on the Securities when due, then the obligations of the Obligors under this Indenture will be revived and no such defeasance will be deemed to have occurred. Upon the occurrence of a Covenant Defeasance, the Trustee shall send written notice of such Covenant Defeasance to the Obligors. Notwithstanding the foregoing, the Opinion of Counsel required by Section 8.3(b) hereof with respect to a Covenant Defeasance need not be delivered if all Securities not theretofore delivered to the Trustee for cancellation (1) have become due and payable or (2) shall become due and payable upon maturity or redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Obligors. Section 8.4 Application of Trust Money. Subject to the provisions of Section 8.5 hereof, the Trustee or a Paying Agent shall hold in trust, for the benefit of the Holders, all money deposited with it pursuant to Section 8.1, 8.2 or 8.3 hereof and shall apply the deposited money in accordance with this Indenture and the Securities to the payment of the principal of, interest and Additional Interest, if any, on the Securities. 73 Section 8.5 Repayment to Obligors. The Trustee and each Paying Agent shall promptly pay to the Obligors upon request any excess money (i) deposited with them pursuant to Section 8.1, 8.2 or 8.3 hereof and (ii) held by them at any time. The Trustee and each Paying Agent shall pay to the Obligors upon request any money held by them for the payment of principal or interest or Additional Interest, if any, that remains unclaimed for two years after a right to such money has matured; provided, however, that the Trustee or such Paying Agent, before being required to make any such payment, may at the expense of the Obligors cause to be mailed to each Holder entitled to such money notice that such money remains unclaimed and that after a date specified therein, which shall be at least 30 days from the date of such mailing, any unclaimed balance of such money then remaining will be repaid to the Obligors. After payment to the Obligors, Holders entitled to money must look to the Obligors for payment as general creditors unless an applicable abandoned property law designates another person. Section 8.6 Reinstatement. If the Trustee or any Paying Agent is unable to apply any money in accordance with Section 8.5 hereof by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Obligors' obligations under this Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.1, 8.2 or 8.3 hereof until such time as the Trustee or such Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with Section 8.5 hereof; provided, however, that if the Obligors have made any payment of the principal of or interest or Additional Interest, if any, on any Securities because of the reinstatement of their obligations, the Obligors shall be subrogated to the rights of the Holders of such Securities to receive any such payment from the money or U.S. Government Obligations held by the Trustee or such Paying Agent. Section 8.7 Release of Ribapharm as Obligor. If Ribapharm's obligations under the 6 1/2% Notes and the 6 1/2% Indenture shall have been discharged in accordance with Article VIII of such indenture (other than the obligations which shall survive pursuant to Section 8.01 of the 6 1/2% Indenture), the Company and Ribapharm shall deliver to the Trustee Officers' Certificates certifying to that effect as of the date of such Officers' Certificates, then automatically, without the requirement of any further action by the Company, Ribapharm or the Trustee, Ribapharm shall, from the date of such Officers' Certificates, have no further obligation or liability under the Indenture or the Securities. The Trustee shall, at the Company's and Ribapharm's expense, execute and deliver such instruments as the Company and Ribapharm may reasonably request to evidence such discharge. Section 8.8 Reinstatement of Ribapharm as Obligor. If, at any time after Ribapharm has been released as an Obligor pursuant to Section 8.7 hereof, the obligations of Ribapharm under the 6 1/2% Notes and the 6 1/2% Indenture shall be revived and reinstated pursuant to Section 8.04 of the 6 1/2% Indenture, the Company and 74 Ribapharm shall promptly execute a supplemental indenture reinstating Ribapharm as an Obligor under the Indenture and the Securities until such time as Section 8.7 hereof shall again apply. ARTICLE 9 AMENDMENTS, SUPPLEMENTS AND WAIVERS Section 9.1 Without Consent of Holders. The Obligors and the Trustee may amend or supplement this Indenture or the Securities without notice to or consent of any Holder: (a) to comply with Section 5.1 hereof (b) to cure any ambiguity, defect or inconsistency; (c) to provide for uncertificated Securities in addition to or in place of certificated Securities; (d) to make any change that would provide any additional rights or benefits to the Holders of Securities or that does not adversely affect the legal rights under this Indenture of any such Holder; (e) to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA; (f) to conform the text of this Indenture or the Securities to any provision of the section of the Offering Memorandum dated December 9, 2003 captioned "Description of the Notes" to the extent that such provision was intended to be a verbatim recitation of a provision of this Indenture or the Securities; (g) to provide for the issuance of Additional Securities in accordance with the limitations set forth in this Indenture as of the date hereof; (h) to allow any Person to execute a supplemental indenture and a Guarantee with respect to the Securities; (i) to appoint a successor Trustee; or (j) to remove or reinstate Ribapharm as an Obligor under the Indenture, pursuant to Section 8.7 or Section 8.8 hereof. Section 9.2 With Consent of Holders. The Obligors and the Trustee may amend or supplement this Indenture or the Securities with the written consent of the Holders of at least a majority in aggregate principal amount of the Securities then outstanding. The Holders of at least a majority in aggregate principal amount of the Securities then outstanding may waive compliance in a particular 75 instance by the Obligors with any provision of this Indenture or the Securities without notice to any Securityholder. However, notwithstanding the foregoing but subject to Section 9.4 hereof, without the written consent of each Securityholder, an amendment, supplement or waiver, including a waiver pursuant to Section 6.4 hereof, may not: (a) reduce the principal amount of Securities whose Holders must consent to an amendment, supplement or waiver; (b) reduce the principal of or change the Stated Maturity of any Security or alter the provisions with respect to the redemption of the Securities (other than provisions relating to Sections 3.8, 3.14 and 4.14); (c) reduce the rate of or change the time for payment of interest on any Security; (d) waive a Default or Event of Default in the payment of principal of, or interest or premium or Additional Interest, if any, on the Securities (except a rescission of acceleration of the Securities by the Holders of at least a majority in aggregate principal amount of the Securities and a waiver of the payment default that resulted from such acceleration); (e) make any Security payable in money other than U.S. dollars; (f) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders of Securities to receive payments of principal of, or interest or premium or Additional Interest, if any, on the Securities; (g) waive a redemption payment with respect to any note (other than a payment required by Sections 3.8, 3.14 and 4.14); (h) impair the right to institute suit for the enforcement of any payment on or with respect to the Securities; (i) remove Ribapharm as an Obligor on the Securities prior to such time as Ribapharm's obligations under the 6 1/2% Notes and 6 1/2% Indenture shall have been discharged as described in Section 8.5 hereof; or (j) make any change in the preceding amendment and waiver provisions. It shall not be necessary for the consent of the Holders under this Section 9.2 to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such consent approves the substance thereof. Any Securities held by the Obligors or one of their Subsidiaries will be disregarded for voting purposes in connection with this Article 9. After an amendment, supplement or waiver under Section 9.1 or this Section 9.2 becomes effective, the Obligors shall mail to the Holders affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Obligors to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amendment, supplement or waiver. 76 Section 9.3 Compliance With Trust Indenture Act. Every amendment to or supplement of this Indenture or the Securities shall comply with the TIA as in effect at the date of such amendment or supplement. Section 9.4 Revocation and Effect of Consents. Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder is a continuing consent by the Holder and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder's Security, even if notation of the consent is not made on any Security. However, any such Holder or subsequent Holder may revoke the consent as to its Security or portion of a Security if the Trustee receives the notice of revocation before the date the amendment, supplement or waiver becomes effective. After an amendment, supplement or waiver becomes effective, it shall bind every Holder, unless it makes a change described in any of clauses (a) through (i) of Section 9.2 hereof. In that case the amendment, supplement or waiver shall bind each Holder of a Security who has consented to it and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder's Security. Section 9.5 Notation On or Exchange of Securities. If an amendment, supplement or waiver changes the terms of a Security, the Trustee may require the Holder of the Security to deliver it to the Trustee. The Trustee may place an appropriate notation on the Security about the changed terms and return it to the Holder. Alternatively, if the Obligors or the Trustee so determines, the Obligors in exchange for the Security shall issue and the Trustee shall authenticate a new Security that reflects the changed terms. Section 9.6 Trustee to Sign Amendments, Etc. The Trustee shall sign any amendment or supplemental indenture authorized pursuant to this Article 9 if the amendment or supplemental indenture does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may, in its sole discretion, but need not sign it. In signing or refusing to sign such amendment or supplemental indenture, the Trustee shall be entitled to receive and, subject to Section 7.1 hereof, shall be fully protected in relying upon, an Opinion of Counsel stating that such amendment or supplemental indenture is authorized or permitted by this Indenture. The Obligors may not sign an amendment or supplemental indenture until their Boards of Directors approve it. Section 9.7 Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. 77 ARTICLE 10 SUBSIDIARY GUARANTEES Section 10.1 Future Guarantees. If, after the date of this Indenture, any Domestic Subsidiary of the Company provides a Guarantee in connection with any Indebtedness of the Company or the Co-Obligor, that in each case ranks pari passu in right of payment with the Securities, then the Company shall cause such Domestic Subsidiary, within five Business Days of the date on which any such Domestic Subsidiary became so obligated, to execute and deliver to the Trustee a Supplemental Indenture in form reasonably satisfactory to the Trustee, pursuant to which such Domestic Subsidiary shall unconditionally guarantee, on a senior unsecured basis, all of the Obligors' obligations under the Securities and this Indenture on the terms set forth herein and therein. Any Domestic Subsidiary that becomes a Guarantor shall remain a Guarantor unless (i) designated an Unrestricted Subsidiary by the Company in accordance with this Indenture or (ii) it is otherwise released from its obligations as a Guarantor pursuant to Section 10.5 hereof. Section 10.2 Terms of Guarantees. (a) Subject to this Article 10, pursuant to the Supplemental Indenture described in Section 10.1 hereof, each of the Domestic Subsidiaries that will become Guarantors will, jointly and severally, unconditionally Guarantee to each Holder of a Security authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Securities or the obligations of the Obligors hereunder or thereunder that: (i) the due and punctual payment of principal, premium and interest and Additional Interest, if any, on the Securities shall be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, (ii) the due and punctual payment of interest on the overdue principal of and interest on the Securities, if any, if lawful, and all other obligations of the Obligors to the Holders or the Trustee hereunder or thereunder shall be promptly paid in full or performed, all in accordance with the terms hereof and thereof, and (iii) in case of any extension of time of payment or renewal of any Securities or any of such other obligations, that same shall be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration pursuant to Section 6.2 hereof or otherwise. Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors shall be jointly and severally obligated to pay the same immediately. Each Guarantor shall agree that this is a Guarantee of payment and not a Guarantee of collection. (b) Each Guarantor shall agree that its obligations with regard to its Guarantee shall be joint and several, unconditional, irrespective of the validity or enforceability of the Securities or the obligations of the Obligors under this Indenture, the absence of any action to enforce the same, the recovery of any judgment against the Obligors or any other obligor with respect to this Indenture, the Securities or the obligations of the Obligors under this Indenture or the Securities, any action to enforce the same or any other circumstances (other than complete performance) which might otherwise constitute a legal or equitable discharge or defense of a Guarantor. Each Guarantor further, to the extent permitted by law, shall waive and relinquish all 78 claims, rights and remedies accorded by applicable law to guarantors and shall agree not to assert or take advantage of any such claims, rights or remedies, including but not limited to: (i) any right to require any of the Trustee, the Holders or the Obligors (each a "BENEFITED PARTY"), as a condition of payment or performance by such Guarantor, to (A) proceed against the Obligors, any other guarantor (including any other Guarantor) of the obligations under the Guarantees or any other person, (B) proceed against or exhaust any security held from the Obligors, any such other guarantor or any other person, (C) proceed against or have resort to any balance of any deposit account or credit on the books of any Benefited Party in favor of the Obligors or any other person, or (D) pursue any other remedy in the power of any Benefited Party whatsoever; (ii) any defense arising by reason of the incapacity, lack of authority or any disability or other defense of the Obligors including any defense based on or arising out of the lack of validity or the unenforceability of the obligations under the Guarantees or any agreement or instrument relating thereto or by reason of the cessation of the liability of the Obligors from any cause other than payment in full of the obligations under the Guarantees; (iii) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (iv) any defense based upon any Benefited Party's errors or omissions in the administration of the obligations under the Guarantees, except behavior which amounts to bad faith; (v)(A) any principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms of the Guarantees and any legal or equitable discharge of such Guarantor's obligations hereunder and under its Guarantee, (B) the benefit of any statute of limitations affecting such Guarantor's liability hereunder and under its Guarantee or the enforcement hereof and thereof, (C) any rights to set-offs, recoupments and counterclaims and (D) promptness, diligence and any requirement that any Benefited Party protect, secure, perfect or insure any security interest or lien or any property subject thereto; (vi) notices, demands, presentations, protests, notices of protest, notices of dishonor and notices of any action or inaction, including acceptance of the Guarantees, notices of default under the Securities or any agreement or instrument related thereto, notices of any renewal, extension or modification of the obligations under the Guarantees or any agreement related thereto, and notices of any extension of credit to the Obligors and any right to consent to any thereof; (vii) to the extent permitted under applicable law, the benefits of any "One Action" rule and (viii) any defenses or benefits that may be derived from or afforded by law which limit the liability of or exonerate guarantors or sureties, or which may conflict with the terms of the Guarantees. Except as set forth in Section 10.5, each Guarantor shall covenant that its Guarantee shall not be discharged except by complete performance of the obligations contained in its Guarantee and this Indenture. (c) If any Holder or the Trustee is required by any court or otherwise to return to the Obligors, the Guarantors or any custodian, trustee, liquidator or other similar official acting in relation to either the Obligors or the Guarantors, any amount paid to either the Trustee or such Holder, any Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. (d) Each Guarantor shall agree that it shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. Each Guarantor shall further agree that, as between the Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (i) the maturity of the obligations guaranteed hereby may be accelerated as provided in Section 6.2 79 hereof for the purposes of any Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby and (ii) in the event of any declaration of acceleration of such obligations as provided in Section 6.2 hereof, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantors for the purpose of any such Guarantee. The Guarantors shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the applicable Guarantee. Section 10.3 Limitation on Guarantor Liability. Each Guarantor shall confirm, and by its acceptance of Securities, each Holder hereby confirms, that it is the intention of all such parties that any Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to any Guarantee. To effectuate the foregoing intention, the Trustee and the Holders irrevocably agree, and the Guarantors shall irrevocably agree, that the obligations of such Guarantor under this Article 10 shall be limited to the maximum amount as will, after giving effect to such maximum amount and all other contingent and fixed liabilities of such Guarantor that are relevant under such laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under this Article 10, result in the obligations of such Guarantor under its Guarantee not constituting a fraudulent transfer or conveyance. Section 10.4 Merger and Consolidation of Guarantors. (a) In case of any sale or other disposition, consolidation, merger, sale or conveyance and upon the assumption by the successor person, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the Guarantee endorsed upon the Securities and the due and punctual performance of all of the covenants and conditions of this Indenture to be performed by the Guarantor, such successor person shall succeed to and be substituted for the Guarantor with the same effect as if it had been named herein as a Guarantor. Such successor person thereupon may cause to be signed any or all of the Guarantees to be endorsed upon all of the Securities available hereunder which theretofore shall not have been signed by the Obligors and delivered to the Trustee. All the Guarantees so issued shall in all respects have the same legal rank and benefit under this Indenture as the Guarantees theretofore and thereafter issued in accordance with the terms of this Indenture as though all of such Guarantees had been issued at the date of the execution hereof. (b) Except as set forth in Articles 4 and 5 hereof, and notwithstanding clause (a) of this Section 10.4, nothing contained in this Indenture or in any of the Securities shall prevent any consolidation or merger of a Guarantor with or into the Company or the Co-Obligor, or shall prevent any sale or conveyance of the property of a Guarantor as an entirety or substantially as an entirety to the Company, the Co-Obligor or another Guarantor. 80 Section 10.5 Release. (a) In the event (i) that a Guarantor ceases to provide a Guarantee in connection with any and all Indebtedness of the Company or the Co-Obligor, that in each case ranks pari passu in right of payment with the Securities, (ii) of a sale or other disposition of all or substantially all of the assets of any Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all to the Capital Stock of any Guarantor, in each case to a person that is not (either before or after giving effect to such transactions) a Subsidiary of the Company, so long as the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of this Indenture, including without limitation Section 4.14 hereof, or (iii) of a designation by the Company of any Restricted Subsidiary that is a Guarantor as an Unrestricted Subsidiary in accordance with the definition thereof, such Guarantor or, in the case of a sale or other disposition of all or substantially all of the assets of such Guarantor, the corporation acquiring such property, shall be released and relieved of any obligations under its Guarantee without any further action being required by the Trustee or any Holder. (b) Upon delivery by the Company to the Trustee of an Officers' Certificate and an Opinion of Counsel to the effect that such sale or other disposition was made by the Company in accordance with the provisions of this Indenture, including without limitation Section 4.8 hereof, the Trustee shall execute any documents reasonably required in order to evidence the release of any Guarantor from its obligations under its Guarantee. (a) Any Guarantor not released from its obligations under its Security Guarantee shall remain liable for the full amount of principal of and interest on the Securities and for the other obligations of any Guarantor under this Indenture as provided in this Article 10. ARTICLE 11 MISCELLANEOUS Section 11.1 Trust Indenture Act Controls. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by any of Sections 310 to 317, inclusive, of the TIA through operation of Section 318(c) thereof, such imposed duties shall control. 81 Section 11.2 Notices. Any demand, authorization notice, request, consent or communication shall be given in writing and delivered in person or mailed by first-class mail, postage prepaid, addressed as follows or transmitted by facsimile transmission (confirmed by delivery in person or mail by first-class mail, postage prepaid, or by guaranteed overnight courier) to the following facsimile numbers: If to the Obligors, to: Valeant Pharmaceuticals International 3300 Hyland Avenue Costa Mesa, California 92626 Attention: Chief Financial Officer Facsimile No.: (714) 641-7271 With a copy to: Valeant Pharmaceuticals International 3300 Hyland Avenue Costa Mesa, California 92626 Attention: General Counsel Facsimile No.: (714) 641-7228 If to the Trustee, to: The Bank of New York 101 Barclay Street - 8W New York, NY 10286 Attn: Corporate Trust Administration Facsimile No.: (212) 815-5705 Such notices or communications shall be effective when received. The Obligors or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications. Any notice or communication mailed to a Holder shall be mailed by first-class mail or delivered by an overnight delivery service to it at its address shown on the register kept by the Primary Registrar. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication to a Holder is mailed in the manner provided above, it is duly given, whether or not the addressee receives it. 82 Section 11.3 Communications by Holders With Other Holders. Securityholders may communicate pursuant to TIA Section 312(b) with other Securityholders with respect to their rights under this Indenture or the Securities. The Obligors, the Trustee, the Registrar and any other person shall have the protection of TIA Section 312(c). Section 11.4 Certificate and Opinion of Counsel as to Conditions Precedent. (a) Upon any request or application by the Obligors to the Trustee to take any action under this Indenture, the Obligors shall furnish to the Trustee at the request of the Trustee: (A) an Officers' Certificate stating that, in the opinion of the signers, all conditions precedent (including any covenants, compliance with which constitutes a condition precedent), if any, provided for in this Indenture relating to the proposed action have been complied with; and (B) an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent (including any covenants, compliance with which constitutes a condition precedent) have been complied with. (b) Each Officers' Certificate and Opinion of Counsel with respect to compliance with a condition or covenant provided for in this Indenture shall include: (A) a statement that the person making such certificate or opinion has read such covenant or condition; (B) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (C) a statement that, in the opinion of such person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with; and (D) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with; provided, however, that with respect to matters of fact an Opinion of Counsel may rely on an Officers' Certificate or certificates of public officials. Section 11.5 Record Date for Vote or Consent of Holders. The Obligors (or, in the event deposits have been made pursuant to 8.1, 8.2 or 8.3 hereof, the Trustee) may set a record date for purposes of determining the identity of Holders entitled to vote or consent to any action by vote or consent authorized or permitted under this Indenture, which record date shall not be more than thirty (30) days prior to the date of the commencement of solicitation of such action. Notwithstanding the provisions of Section 9.4 hereof, if a record 83 date is fixed, those persons who were Holders of Securities at the close of business on such record date (or their duly designated proxies), and only those persons, shall be entitled to take such action by vote or consent or to revoke any vote or consent previously given, whether or not such persons continue to be Holders after such record date. Section 11.6 Rules by Trustee, Paying Agent and Registrar.The Trustee may make reasonable rules (not inconsistent with the terms of this Indenture) for action by or at a meeting of Holders. Any Registrar or Paying Agent may make reasonable rules for its functions. Section 11.7 Legal Holidays. A "Legal Holiday" is a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York and the state in which the Corporate Trust Office is located are not required to be open. If a payment date, including any Redemption Date, Purchase Date, Change of Control Purchase Date and Final Maturity Date, is a Legal Holiday, payment shall be made on the next succeeding day that is not a Legal Holiday, and no interest or Additional Interest, if any, shall accrue for the intervening period on such payment. If an interest record date is a Legal Holiday, the record date shall not be affected. Section 11.8 Governing Law; Submission to Jurisdiction. (a) This Indenture and the Securities shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to principles of conflicts of laws. (b) The Obligors irrevocably submit to the non-exclusive jurisdiction of any New York State or United States Federal court sitting in The City of New York over any suit, action or proceeding arising out of or relating to this Indenture. The Obligors irrevocably waive, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of venue of any such suit, action or proceeding brought in such a court and any claim that any such suit, action or proceeding brought in such a court has been brought in an inconvenient forum. Section 11.9 No Adverse Interpretation of Other Agreements. This Indenture may not be used to interpret another indenture, loan or debt agreement of the Obligors or a Subsidiary of the Obligors. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. Section 11.10 No Recourse Against Others. All liability described in paragraph 13 of the Form of the Securities attached hereto as Exhibit A of any director, officer, employee or shareowner, as such, of the Obligors is waived and released. 84 Section 11.11 Successors. All agreements of the Obligors in this Indenture and the Securities shall bind their successors. All agreements of the Trustee in this Indenture shall bind its successor. Section 11.12 Multiple Counterparts. The parties may sign multiple counterparts of this Indenture. Each signed counterpart shall be deemed an original, but all of them together represent the same agreement. Section 11.13 Separability. In case any provisions in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 11.14 Table of Contents, Headings, etc. The table of contents, cross-reference sheet and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof. Section 11.15 Calculations in Respect of the Securities. The Obligors and their agents shall make all calculations under the Indenture and the Securities in good faith. In the absence of manifest error, such calculations shall be final and binding on all Holders. The Obligors shall provide a copy of such calculations to the Trustee as required hereunder. [SIGNATURE PAGE FOLLOWS] 85 EXECUTION COPY IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the date and year first above written. VALEANT PHARMACEUTICALS INTERNATIONAL By: /s/ Robert W. O'Leary -------------------------------------- Name: Robert W. O'Leary Title: Chairman of the Board and Chief Executive Officer RIBAPHARM INC. By: /s/ Philip W. Loberg, Jr. ---------------------------------- Name: Philip W. Loberg, Jr. Title: Treasurer THE BANK OF NEW YORK, AS TRUSTEE By: /s/ John Guiliano ---------------------------------- Name: John Guiliano Title: Vice President (Signature Page to Indenture) EXHIBIT A [FORM OF FACE OF SECURITY] [UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE COMPANY, RIBAPHARM OR THEIR AGENTS FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.] (1) [THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON AN EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE ISSUER THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1) (a) IN THE UNITED STATES TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (c) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (d) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501 (a) (1), (2), - ---------- (1) This paragraph to be included only if the Security is a Global Security. A-1 (3) OR (7) OF THE SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR")) THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO VALEANT PHARMACEUTICALS INTERNATIONAL THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT OR (e) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF VALEANT PHARMACEUTICALS INTERNATIONAL SO REQUESTS), (2) TO VALEANT PHARMACEUTICALS INTERNATIONAL OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."] (2) [THIS SECURITY AND ANY RELATED DOCUMENTATION MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME TO MODIFY THE RESTRICTIONS ON RESALES AND OTHER TRANSFERS OF THIS NOTE TO REFLECT ANY CHANGE IN APPLICABLE LAW OR REGULATION (OR THE INTERPRETATION THEREOF) OR IN PRACTICES RELATING TO THE RESALE OR TRANSFER OF RESTRICTED SECURITIES GENERALLY. THE HOLDER OF THIS SECURITY SHALL BE DEEMED BY THE ACCEPTANCE OF THIS NOTE TO HAVE AGREED TO ANY SUCH AMENDMENT OR SUPPLEMENT.] (3) [THE HOLDER OF THIS SECURITY IS ENTITLED TO THE BENEFITS OF A REGISTRATION RIGHTS AGREEMENT (AS SUCH TERM IS DEFINED IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF) AND, BY ITS ACCEPTANCE HEREOF, AGREES TO BE BOUND BY AND TO COMPLY WITH THE PROVISIONS OF SUCH REGISTRATION RIGHTS AGREEMENT.] (4) [THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL SECURITY, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR DEFINITIVE SECURITIES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOT THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL SECURITY SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON.] (5) - ---------- (2) These paragraphs to be included only if the Security is a Restricted Security. (3) Include only if the Security is a Restricted Security. (4) Include only if a Registration Statement is not effective. (5) Include only on Regulation S Temporary Global Security. A-2 VALEANT PHARMACEUTICALS INTERNATIONAL CUSIP: [ ] No. [ ] 7.0% SENIOR NOTES DUE DECEMBER 15, 2011 Valeant Pharmaceuticals International, a Delaware corporation (the "Company," which term shall include any successor corporation under the Indenture referred to on the reverse hereof), and Ribapharm Inc. ("Ribapharm," which term shall include any successor corporation under the Indenture referred to on the reverse hereof) promise to pay to ______________ or its registered assigns, the principal sum of _____________________________ Dollars ($__________) on December 15, 2011 [or such greater or lesser amount as is indicated on the Schedule of Exchanges of Notes on the other side of this Note] (6) and to pay interest thereon as provided on the other side of this Note. Interest Payment Dates: June 15 and December 15, beginning June 15, 2004. Record Dates: June 1 and December 1. Additional provisions of this Note are set forth on the other side of this Note. [SIGNATURE PAGE FOLLOWS] - ---------- (6) Include only if the Security is a Global Security. A-3 IN WITNESS WHEREOF, the Company and Ribapharm have caused this instrument to be duly executed. Valeant Pharmaceuticals International By: ------------------------------------- Name: Title: Ribapharm Inc. By: ------------------------------------- Name: Title: A-4 Trustee's Certificate of Authentication: This is one of the Securities referred to in the within-mentioned Indenture for the 7.0% Senior Notes due 2011. THE BANK OF NEW YORK, as Trustee - ---------------------------------------- Authorized Signatory By: Dated: A-5 [FORM OF REVERSE SIDE OF SECURITY] VALEANT PHARMACEUTICALS INTERNATIONAL 7.0% SENIOR NOTES DUE DECEMBER 15, 2011 1. INTEREST The Company and Ribapharm shall pay interest on this Note semiannually in arrears on June 15 and December 15, each an "interest payment date," of each year, commencing on June 15, 2004, at the rate per annum specified in the title of this Note. Interest shall accrue from and including December 12, 2003 or else the most recent interest payment date to which interest had been paid or duly provided for to but excluding the date on which such interest is paid. Interest on this Note will be computed on the basis of a 360-day year of twelve 30-day months. The Company and Ribapharm shall, (in immediately available funds) to the fullest extent permitted by law, pay interest on overdue principal (including premium, if any) and overdue installments of interest from the original due date to the date paid, at the rate applicable to this Note plus 1% per annum, which interest shall be payable on demand. All references in the Indenture and this Note to interest shall be deemed to include a reference to Additional Interest payable pursuant to the Registration Rights Agreement with respect to this Note. If Additional Interest is payable on this Note as contemplated under the Registration Rights Agreement, such interest shall be payable on each interest payment date and at maturity to the record holder entitled to interest on such date. The interest so payable and punctually paid or duly provided for on any interest payment date will be paid to the Person in whose name this Note is registered at the close of business on June 1 or December 1 preceding such interest payment date (the "RECORD DATE") except as provided in the Indenture. Payment of the principal of (and premium, if any) and interest on this Note will be made in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts and as otherwise provided in the Indenture. 2. METHOD OF PAYMENT The Holder must surrender this Note to a Paying Agent to collect payment of principal at maturity. The Company and Ribapharm will make any payments of interest at maturity to the person to whom the principal is paid. On presentation and surrender of the certificated Note, the Company and Ribapharm will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. Payment of the principal of, premium, if any, and interest (including Additional Interest, if any) on this Note shall be made at the office or agency of the Paying Agent and Registrar within the City and State of New York in immediately available funds in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided that the Company and Ribapharm may elect to make payment of interest or Additional Interest, if any, by check mailed to the address of the Person entitled thereto as such address A-6 appears in the Register. Payment of the principal of, premium, if any, and interest (including Additional Interest, if any) on a Note held by a Holder holding an aggregate principal amount of Notes in excess of $1,000,000 shall be made by wire transfer in immediately available funds to an account maintained by such Holder in the United States, if such Holder has provided wire transfer instructions to the Company and Ribapharm at least 10 Business Days prior to the payment date. Any wire transfer instructions received by the Trustee will remain in effect until revoked by the Holder. Notwithstanding the foregoing, so long as this Note is registered in the name of a Depositary or its nominee, all payments hereon shall be made by wire transfer of immediately available funds to the account of the Depositary or its nominee. 3. PAYING AGENT AND REGISTRAR Initially, The Bank of New York (the "TRUSTEE," which term shall include any successor trustee under the Indenture hereinafter referred to) will act as Paying Agent and Registrar. The Company and Ribapharm may change any Paying Agent or Registrar without notice to the Holder. The Company and Ribapharm or any of their Subsidiaries may, subject to certain limitations set forth in the Indenture, act as Paying Agent or Registrar. 4. INDENTURE, LIMITATIONS This Note is one of a duly authorized issue of Securities of the Company and Ribapharm designated as their 7.0% Senior Notes Due December 15, 2011 (the "NOTES"), issued under an Indenture dated as of December 12, 2003 (together with any supplemental indentures thereto, the "INDENTURE"), among the Company, Ribapharm and the Trustee. The terms of this Note include those stated in the Indenture and those required by or made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended, as in effect on the date of the Indenture. This Note is subject to all such terms, and the Holder of this Note is referred to the Indenture and said Act for a statement of them. Capitalized terms used and not defined herein have the meanings assigned to such terms in the Indenture. The Obligors shall be entitled to issue Additional Securities pursuant to Section 2.1(c) of the Indenture. 5. OPTIONAL REDEMPTION; PURCHASE OF NOTES AT OPTION OF HOLDER. (a) Optional Redemption. After December 15, 2007, the Notes are redeemable at the option of the Company at the prices, and upon the terms and conditions, set forth in the Indenture. On or prior to December 15, 2006, the Company may redeem up to 35% of the Notes with the net cash proceeds of one or more Equity Offerings, at the prices, and upon the terms and conditions, set forth in the Indenture. (b) Repurchase at Option of Holder. If there is a Change of Control, the Company shall be required to make an offer (a "CHANGE OF CONTROL OFFER") to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of each Holder's Notes at a purchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest and Additional Interest thereon, if any, to the date of purchase (the "CHANGE OF CONTROL A-7 PAYMENT"). Within 10 days following any Change of Control, the Company shall mail a notice to each Holder setting forth the procedures governing the Change of Control Offer as required by the Indenture. If after the Company or a Restricted Subsidiary consummates any Asset Sale, the aggregate amount of Excess Proceeds exceeds $10 million, the Company shall commence an offer to all Holders of Notes and all holders of other Parity Indebtedness an aggregate principal amount of Notes and such other Parity Indebtedness that may be purchased (or repaid, prepaid or redeemed) equal to the aggregate Excess Proceeds (an "ASSET SALE OFFER") pursuant to Section 4.14 of the Indenture to purchase the maximum principal amount of Notes and other Parity Indebtedness that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest and Additional Interest thereon, if any, to the date fixed for the closing of such offer, in accordance with the procedures set forth in the Indenture. To the extent that the aggregate amount of Notes and other Parity Indebtedness tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company (or such Restricted Subsidiary) may use such deficiency for any purpose not otherwise prohibited by the Indenture. If the aggregate principal amount of Notes and other Parity Indebtedness surrendered by holders thereof exceeds the amount of Excess Proceeds, the Company shall select the Notes and other Parity Indebtedness to be purchased on a pro rata basis. Holders of Notes that are the subject of an offer to purchase will receive an Asset Sale Offer from the Company prior to any related purchase date and may elect to have such Notes purchased by completing the form entitled "Option of Holder to Elect Purchase" on the reverse of the Notes. (c) Notice of Redemption. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address. Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Notes or portions thereof called for redemption. 6. DENOMINATIONS, TRANSFER, EXCHANGE, CANCELLATION The Notes are in registered form, without coupons, in denominations of $1,000 and integral multiples of $1,000. A Holder may register the transfer of or exchange Notes in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes or other governmental charges that may be imposed in relation thereto by law or permitted by the Indenture. All Notes surrendered for payment, registration of transfer or exchange or conversion will, if surrendered to the Company or Ribapharm or any of their other Agents with respect to the Notes, be delivered to the Trustee. The Trustee will promptly cancel all Notes delivered to it. No Notes will be authenticated in exchange for any Notes cancelled as provided in the Indenture. 7. PERSONS DEEMED OWNERS A-8 The Holder of a Note may be treated as the owner of it for all purposes. 8. UNCLAIMED MONEY If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent will pay the money back to the Company and Ribapharm at their written request, subject to applicable unclaimed property law. After that, Holders entitled to money must look to the Company and Ribapharm for payment as general creditors unless an applicable abandoned property law designates another person. 9. AMENDMENT, SUPPLEMENT AND WAIVER Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in aggregate principal amount of the Notes then outstanding, and an existing default or Event of Default and its consequence or compliance with any provision of the Indenture or the Notes may be waived in a particular instance with the consent of the Holders of a majority in aggregate principal amount of the Notes then outstanding. Without the consent of or notice to any Holder, the Company and Ribapharm and the Trustee may amend or supplement the Indenture or the Notes to, among other things, cure any ambiguity, defect or inconsistency or make any other change that does not adversely affect the rights of any Holder or remove Ribapharm as an obligor hereunder pursuant to paragraph 17 below. 10. SUCCESSOR ENTITY When a successor corporation assumes all the obligations of its predecessor under the Notes and the Indenture in accordance with the terms and conditions of the Indenture, the predecessor corporation (except in certain circumstances specified in the Indenture) shall be released from those obligations. 11. DEFAULTS AND REMEDIES Under the Indenture, an Event of Default includes: (i) default in payment of any principal (including, without limitation, any premium) on the Notes when due; (ii) default for 30 days in payment of interest or Additional Interest, if any, on any Notes; (iii) failure by the Company and Ribapharm for 60 days after notice to it to comply with certain covenants contained in the Indenture or the Notes; (iv) default in the payment of certain indebtedness of the Company, Ribapharm or a Significant Subsidiary; (v) certain events of bankruptcy, insolvency or reorganization of the Company, Ribapharm or any Significant Subsidiary and (vi) certain other events described in the Indenture. If an Event of Default (other than as a result of certain events of bankruptcy, insolvency or reorganization of the Company or Ribapharm) occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding may declare all unpaid principal, premium, if any, and accrued interest and Additional Interest, if any, to the date of acceleration on the Notes then outstanding to be due and payable immediately, all as and to the extent provided in the Indenture. If an Event of Default occurs as a result of certain events of bankruptcy, insolvency or reorganization of the Company or Ribapharm or any Significant Subsidiary, unpaid principal, premium, if any, and accrued interest and Additional Interest, if any, on the Notes then outstanding shall become due and A-9 payable immediately without any declaration or other act on the part of the Trustee or any Holder, all as and to the extent provided in the Indenture. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Notes. Subject to certain limitations, Holders of a majority in aggregate principal amount of the Notes then outstanding may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing default (except a default in payment of principal or interest) if it determines that withholding notice is in their interests. The Company and Ribapharm are required to file periodic reports with the Trustee as to the absence of default. 12. TRUSTEE DEALINGS WITH THE COMPANY The Bank of New York, the Trustee under the Indenture, in its individual or any other capacity, may make loans to, accept deposits from and perform services for the Company, Ribapharm or an Affiliate of the Company or Ribapharm, and may otherwise deal with the Company, Ribapharm or an Affiliate of the Company or Ribapharm, as if it were not the Trustee. 13. NO RECOURSE AGAINST OTHERS A director, officer, employee or shareowner, as such, of the Company and Ribapharm shall not have any liability for any obligations of the Company and Ribapharm under the Notes or the Indenture nor for any claim based on, in respect of or by reason of such obligations or their creation. The Holder of this Note by accepting this Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of this Note. 14. AUTHENTICATION This Note shall not be valid until the Trustee or an authenticating agent manually signs the certificate of authentication on the other side of this Note. 15. ABBREVIATIONS AND DEFINITIONS Customary abbreviations may be used in the name of the Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian) and UGMA (= Uniform Gifts to Minors Act). 16. INDENTURE TO CONTROL; GOVERNING LAW In the case of any conflict between the provisions of this Note and the Indenture, the provisions of the Indenture shall control. This Note shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to principles of conflicts of law. The Company and Ribapharm will furnish to any Holder, upon written request and without charge, a copy of the Indenture. Requests may be made to: Valeant Pharmaceuticals International, 3300 Hyland Avenue, Costa Mesa, California 92626, (714) 641-7215, Attention: Investor Relations. A-10 17. RELEASE OF RIBAPHARM AS OBLIGOR If Ribapharm's obligations under the 6 1/2% Notes and the 6 1/2% Indenture shall have been discharged in accordance with Article VIII of such indenture (other than the obligations which shall survive pursuant to Section 8.01 of the 6 1/2% Indenture), the Company and Ribapharm shall deliver to the Trustee Officers' Certificates certifying to that effect as of the date of such Officers' Certificates, then automatically, without the requirement of any further action by the Company, Ribapharm or the Trustee, Ribapharm shall, from the date of such Officers' Certificates, have no further obligation or liability under the Indenture or the Securities. The Trustee shall, at the Company's and Ribapharm's expense, execute and deliver such instruments as the Company and Ribapharm may reasonably request to evidence such discharge. 18. REINSTATEMENT OF RIBAPHARM AS OBLIGOR If, at any time after Ribapharm has been released as an Obligor pursuant to Section 8.7 of the Indenture, the obligations of Ribapharm under the 6 1/2% Notes and the 6 1/2% Indenture shall be revived and reinstated pursuant to Section 8.04 of the 6 1/2% Indenture, the Company and Ribapharm shall promptly execute a supplemental indenture reinstating Ribapharm as an Obligor under the Indenture and the Securities until such time as Section 8.7 of the Indenture shall again apply. A-11 ASSIGNMENT FORM To assign this Note, fill in the form below: I or we assign and transfer this Note to - -------------------------------------------------------------------------------- (Insert assignee's soc. sec. or tax I.D. no.) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint - -------------------------------------------------------------------------------- agent to transfer this Note on the books of the Company and Ribapharm. The agent may substitute another to act for him or her. Your Signature: Date: --------------------------------- --------------------------------------- (Sign exactly as your name appears on the other side of this Note) *Signature guaranteed by: By: ------------------------------------ * The signature must be guaranteed by an institution which is a member of one of the following recognized signature guaranty programs: (i) the Securities Transfer Agent Medallion Program (STAMP); (ii) the New York Stock Exchange Medallion Program (MSP); (iii) the Stock Exchange Medallion Program (SEMP); or (iv) such other guaranty program acceptable to the Trustee. A-12 OPTION TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to Section 3.8 or 4.14 of the Indenture, check the appropriate box below: [ ]Section 3.8 [ ] Section 4.14 If you want to elect to have only part of the Note purchased by the Company pursuant to Section 3.8 or Section 4.14 of the Indenture, state the amount you elect to have purchased: $_______________ Date: _______________ Your Signature: ------------------------ (Sign exactly as your name appears on the face of this Note) Tax Identification No.: ---------------- Signature Guarantee*: _________________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). A-13 SCHEDULE OF EXCHANGES OF NOTES (7) The following exchanges, repurchases or conversions of a part of this global Note have been made:

PRINCIPAL AMOUNT OF THIS GLOBAL SECURITY AUTHORIZED AMOUNT OF FOLLOWING SUCH SIGNATORY OF AMOUNT OF DECREASE IN INCREASE IN DECREASE DATE SECURITIES PRINCIPAL AMOUNT PRINCIPAL AMOUNT OF EXCHANGE (OR INCREASE) CUSTODIAN OF THIS GLOBAL SECURITY OF THIS GLOBAL SECURITY

- ---------- (7) This schedule should be included only if the Security is a Global Security. A-14 CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF RESTRICTED SECURITIES (8) Re: __% Senior Notes Due ________, 2011 (the "NOTES") of Valeant Pharmaceuticals International (the "COMPANY") and Ribapharm Inc. This certificate relates to $_______ principal amount of Notes owned in (check applicable box) [ ] book-entry or [ ] definitive form by ___________________ (the "TRANSFEROR"). The Transferor has requested a Registrar or the Trustee to exchange or register the transfer of such Notes. In connection with such request and in respect of each such Note, the Transferor does hereby certify that the Transferor is familiar with transfer restrictions relating to the Notes as provided in Section 2.12 of the Indenture dated as of December 12, 2003 among Valeant Pharmaceuticals International, Ribapharm Inc. and The Bank of New York, as trustee (the "INDENTURE"), and the transfer of such Note is in accordance with any applicable securities laws of any state and is being made pursuant to an effective registration statement under the Securities Act of 1933, as amended (the "SECURITIES ACT") (check applicable box) or the transfer or exchange, as the case may be, of such Note does not require registration under the Securities Act because (check applicable box): [ ] Such Note is being transferred pursuant to an effective registration statement under the Securities Act. [ ] Such Note is being acquired for the Transferor's own account, without transfer. [ ] Such Note is being transferred to the Company, Ribapharm or a Subsidiary (as defined in the Indenture) of the Company. [ ] Such Note is being transferred to a person the Transferor reasonably believes is a "qualified institutional buyer" (as defined in Rule 144A or any successor provision thereto ("RULE 144A") under the Securities Act) that is purchasing for its own account or for the account of a "qualified institutional buyer," in each case to whom notice has been given that the transfer is being made in reliance on such Rule 144A, and in each case in reliance on Rule 144A. [ ] Such Note is being transferred pursuant to and in compliance with an exemption from the registration requirements under the Securities Act in accordance with Rule 144 (or any successor thereto) ("RULE 144") under the Securities Act. [ ] Such Note is being transferred to a non-U.S. Person in an offshore transaction in compliance with Rule 904 of Regulation S under the Securities Act (or any successor thereto). - ---------- (8) This certificate should be included only if this Security is a Restricted Security. A-15 [ ] Such Note is being transferred to an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of the Securities Act) that has provided a letter addressed to the Company, in the form of Exhibit B attached to the Indenture, containing certain representations and agreements. The Transferor acknowledges and agrees that, if the transferee will hold any such Notes in the form of beneficial interests in a global Note which is a "restricted security" within the meaning of Rule 144 under the Securities Act, then such transfer can only be made pursuant to (i) Rule 144A under the Securities Act and such transferee must be a "qualified institutional buyer" (as defined in Rule 144A) or (ii) Regulation S under the Securities Act. Date: --------------------------------- --------------------------------------- (Insert Name of Transferor) A-16 EXHIBIT B FORM OF CERTIFICATE FROM ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR Valeant Pharmaceuticals International 3300 Hyland Avenue Costa Mesa, California 92626 Attention: General Counsel Facsimile No.: (714) 641-7228 [ ] RE: 7.0% SENIOR NOTES DUE 2011 Dear Sirs: Reference is hereby made to the Indenture, dated as of December 12, 2003 (the "INDENTURE"), among Valeant Pharmaceuticals International, as issuer (the "COMPANY"), Ribapharm Inc., as co-obligor ("RIBAPHARM") and The Bank of New York, a banking corporation duly organized under the laws of the State of New York, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. In connection with our proposed purchase of: $____________ aggregate principal amount of 7.0% Senior Notes Due 2011 (the "SECURITIES"), we confirm that: 1. We understand that any subsequent transfer of the Securities or any interest therein is subject to certain restrictions and conditions set forth in the Indenture and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Securities or any interest therein except in compliance with, such restrictions and conditions and the United States Securities Act of 1933, as amended (the "SECURITIES ACT"). 2. We understand that the offer and sale of the Securities have not been registered under the Securities Act, and that the Securities and any interest therein may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell the Securities or any interest therein, we will do so only (A) to the Company or any of its subsidiaries, including Ribapharm, (B) in accordance with Rule 144A under the Securities Act to a "qualified institutional buyer" (as defined therein), (C) inside the United States to an institutional "accredited investor" (as defined below) purchasing for its own account or for the account of another institutional accredited investor that, prior to such transfer, furnishes (or has furnished on its behalf by A-17 a U.S. broker-dealer) to you and to the Company a signed letter substantially in the form of this letter and, if the proposed transfer is in respect of an aggregate principal amount of Securities of less than $250,000, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such transfer is in compliance with the Securities Act, (D) pursuant to the provisions of Rule 144 under the Securities Act (if available), (E) in accordance with another exemption from the registration requirements of the Securities Act (and based upon an opinion of counsel acceptable to the Company) or (F) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any person purchasing the Securities from us in a transaction meeting the requirements of clauses (A) through (F) of this paragraph a notice advising such purchaser that resales thereof are restricted as stated herein. 3. We understand that, on any proposed resale of the Securities or beneficial interest therein, we will be required to furnish to you and the Company such certifications, legal opinions and other information as you and the Company may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Securities purchased by us will bear a legend to the foregoing effect. 4. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Securities, and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment. 5. We are acquiring the Securities or beneficial interest therein purchased by us for our own account or for one or more accounts (each of which is an institutional "ACCREDITED INVESTOR") as to each of which we exercise sole investment discretion. You, the Company and Ribapharm are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Dated: [Insert Name of Accredited Investor] By: ------------------------------------ Name: Title: 18 EX-4.3 4 a96405orexv4w3.txt EXHIBIT 4.3 Exhibit 4.3 VALEANT PHARMACEUTICALS INTERNATIONAL $300,000,000 7.0% SENIOR NOTES DUE 2011 REGISTRATION RIGHTS AGREEMENT December 12, 2003 Bear, Stearns & Co. Inc., As representative of the several Purchasers named in Schedule I to the Purchase Agreement, 383 Madison Avenue New York, New York 10179 Ladies and Gentlemen: Valeant Pharmaceuticals International, a Delaware corporation (the "Company"), proposes to issue and sell to the Purchasers (as defined herein) upon the terms set forth in the Purchase Agreement (as defined herein) $300,000,000 principal amount of the 7.0% Senior Notes Due 2011 (the "Notes"). The Notes will be issued under an Indenture (as defined herein). Ribapharm Inc. ("Ribapharm"), a wholly owned subsidiary of the Company, is an obligor with respect to the Notes and shall be subject to the provisions of this Agreement, jointly and severally with the Company, but only for so long as Ribapharm shall have outstanding obligations under the 6-1/2% Convertible Subordinated Notes due 2008, originally issued under an Indenture, dated as of July 18, 2001, among Valeant Pharmaceuticals International, Ribapharm and The Bank of New York, as Trustee. In order to induce the Purchasers to purchase the Notes, the Company has agreed to provide the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the obligations of the Purchasers as set forth in Section 7 of the Purchase Agreement. The parties hereby agree as follows: 1. Definitions. (a) Capitalized terms used herein without definition shall have the meanings ascribed to them in the Purchase Agreement. As used in this Agreement, the following defined terms shall have the following meanings: "Affiliate" of any specified person means any other person which, directly or indirectly, is in control of, is controlled by, or is under common control with such specified person. For purposes of this definition, control of a person means the power, direct or indirect, to direct or cause the direction of the management and policies of such person whether by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Broker-Dealer" means any broker or dealer registered under the Exchange Act. -1- "business day" means a day that is not a Saturday, Sunday or a day on which banking institutions in New York, New York are required by law, regulation or executive order to remain closed. "Closing Date" means the date of this Agreement. "Commission" means the United States Securities and Exchange Commission, or any other federal agency at the time administering the Exchange Act or the Securities Act, whichever is the relevant statute for the particular purpose. "Consummate:" An Exchange Offer shall be deemed "Consummated" for purposes of this Agreement upon the occurrence of (a) the filing and effectiveness under the Securities Act of the Exchange Offer Registration Statement relating to the Exchange Notes to be issued in the Exchange Offer, (b) the maintenance of such Exchange Offer Registration Statement continuously effective and the keeping of the Exchange Offer open for a period not less than the period required pursuant to Section 3(b) hereof and (c) the delivery by the Company to the Registrar under the Indenture of Exchange Notes in the same aggregate principal amount as the aggregate principal amount of Notes properly tendered and not subsequently withdrawn by Holders thereof pursuant to the Exchange Offer. "Consummation Deadline" has the meaning set forth in Section 3(a) hereof. "Effectiveness Deadline" has the meaning set forth in Sections 3(a) and 4(a) hereof. "Exchange Act" means the United States Securities Exchange Act of 1934, as amended. "Exchange Dealer" has the meaning set forth in Section 3(c) hereof. "Exchange Notes" means the 7.0% Senior Notes due 2011 to be issued by the Company and Ribapharm, if, at the time of the issuance of the Exchange Notes, Ribapharm is a co-obligor on the Notes, pursuant to the Indenture: (i) in the Exchange Offer or (ii) as contemplated by Section 4 hereof. "Exchange Offer" means the exchange and issuance by the Company and Ribapharm, if, at the time of the issuance of the Exchange Notes, Ribapharm is a co-obligor on the Notes, of a principal amount of Exchange Notes (which shall be registered pursuant to the Exchange Offer Registration Statement) equal to the outstanding principal amount of Notes that are properly tendered and not subsequently withdrawn by the Holders thereof in connection with such exchange and issuance. "Exchange Offer Registration Statement" means the Registration Statement relating to the Exchange Offer, including the related Prospectus. "Exempt Resales" means the transactions in which the Purchasers propose to sell the Notes to certain "qualified institutional buyers," as such term is defined in Rule 144A under the Securities Act and pursuant to Regulation S under the Securities Act. "Filing Deadline" has the meaning set forth in Sections 3(a) and 4(a) hereof. "Holder" has the meaning set forth in Section 2 hereof. "Indenture" means the Indenture, dated as of December 12, 2003, among the Company, Ribapharm and The Bank of New York, as amended and supplemented from time to time in accordance with its terms. "indemnified party" has the meaning set forth in Section 8(c) hereof. -2- "indemnifying party" has the meaning set forth in Section 8(c) hereof. "liquidated damages" has the meaning assigned thereto in Section 5(a) hereof. "Notes" has the meaning set forth in the preamble of this Agreement. person" means an individual, partnership, corporation, trust or unincorporated organization, or a government or agency or political subdivision thereof. "Prospectus" means the prospectus included in a Registration Statement at the time such Registration Statement is declared effective, as amended or supplemented by any prospectus supplement and by all other amendments thereto, including post-effective amendments, and all material incorporated by reference into such Prospectus. "Purchase Agreement" means the purchase agreement, dated December 9, 2003, among the Purchasers, the Company and Ribapharm relating to the Notes. "Purchasers" means the Purchasers named in Schedule I to the Purchase Agreement. "Recommencement Date" has the meaning set forth in Section 6(d) hereof. "Registration Default" has the meaning set forth in Section 5 hereof. "Registration Statement" means any registration statement of the Company and Ribapharm (if Ribapharm is, at the time of the filing of such registration statement, a co-obligor on the Notes) relating to (a) an offering of Exchange Notes pursuant to an Exchange Offer or (b) the registration for resale of Transfer Restricted Securities pursuant to the Shelf Registration Statement, in each case, (i) that is filed pursuant to the provisions of this Agreement and (ii) including the Prospectus included therein, all amendments and supplements thereto (including post-effective amendments) and all exhibits and material incorporated by reference therein. "Regulation S" means Regulation S promulgated under the Securities Act. "Requesting Holders" has the meaning set forth in Section 6(c)(xi)(A). Rule 144" means Rule 144 promulgated under the Securities Act. "Securities Act" means the United States Securities Act of 1933, as amended. "Shelf Registration Statement" has the meaning set forth in Section 4(a) hereof. "Suspension Notice" has the meaning set forth in Section 6(d) hereof. "TIA" means The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as in effect on the date of the Indenture. "Transfer Restricted Securities" means each Note, until the earliest to occur of (i) the date on which such Note is exchanged by a Person other than a Broker-Dealer for an Exchange Note in the Exchange Offer, (ii) following the exchange by a Broker-Dealer in the Exchange Offer of a Note for an Exchange Note, the date on which such Exchange Note is sold to a purchaser who receives from such Broker-Dealer on or prior to the date of such sale a copy of the Prospectus contained in the Exchange Offer Registration Statement, (iii) the date on which such Note has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement; or (iv) the date on which such Note is distributed to the public pursuant to Rule 144. -3- "underwriter" means any underwriter of Transfer Restricted Securities in connection with an offering thereof under a Shelf Registration Statement. 2. Holders. A Person is deemed to be a holder of Transfer Restricted Securities (each, a "Holder") whenever such Person owns Transfer Restricted Securities. 3. Registered Exchange Offer. (a) Unless the Exchange Offer shall not be permitted by applicable law or Commission policy (after the procedures set forth in Section 6(a)(i) below have been complied with), the Company and Ribapharm shall (i) use reasonable best efforts to file the Exchange Offer Registration Statement with the Commission on or prior to 90 days (unless such date is not a business day, then the next succeeding business day) after the Closing Date (such 90th day being the "Filing Deadline"), (ii) use reasonable best efforts to cause such Exchange Offer Registration Statement to be declared effective by the Commission on or prior to 270 days (unless such date is not a business day, then the next succeeding business day) after the Closing Date (such 270th day being the "Effectiveness Deadline"), (iii) in connection with the foregoing, (A) file all pre-effective amendments to such Exchange Offer Registration Statement as may be necessary in order to cause it to be declared effective, (B) file, if applicable, a post-effective amendment to such Exchange Offer Registration Statement pursuant to Rule 430A under the Securities Act and (C) cause all necessary filings, if any, in connection with the registration and qualification of the Exchange Notes to be made under the Blue Sky laws of such jurisdictions as are necessary to permit Consummation of the Exchange Offer, provided that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or to take any action which would subject it to general service of process or taxation in any jurisdiction where it is not then so subject and (iv) (A) the Company and Ribapharm will commence the Exchange Offer; and (B) use reasonable best efforts to issue on or prior to 30 business days, or longer, if required by the federal securities laws (such 30th or later day being the "Consummation Deadline"), after the date on which the Exchange Offer Registration Statement was declared effective by the Commission, Exchange Notes in exchange for all Notes properly tendered and not subsequently withdrawn prior thereto in the Exchange Offer. The Exchange Offer shall be on the appropriate form permitting (i) registration of the Exchange Notes to be offered in exchange for the Notes that are Transfer Restricted Securities and (ii) resales of Exchange Notes by Broker-Dealers that tendered into the Exchange Offer Notes that such Broker-Dealer acquired for its own account as a result of market making activities or other trading activities (other than Notes acquired directly from the Company or any of its Affiliates) as contemplated by Section 3(c) below. (b) The Company and Ribapharm shall use their reasonable best efforts to cause the Exchange Offer Registration Statement to be effective continuously, and shall keep the Exchange Offer open, for a period of not less than the minimum period required under applicable federal and state securities laws to Consummate the Exchange Offer; provided, however, that in no event shall such period be less than 20 business days. The Company and Ribapharm shall cause the Exchange Offer to comply with all applicable federal and state securities laws. No securities other than the Exchange Notes shall be included in the Exchange Offer Registration Statement. (c) The Company shall include a "Plan of Distribution" section in the Prospectus contained in the Exchange Offer Registration Statement and indicate therein that any Broker-Dealer who holds Transfer Restricted Securities that were acquired for the account of such Broker-Dealer as a result of market-making activities or other trading activities (an "Exchange Dealer") (other than Notes acquired directly from the Company or any Affiliate of the Company), may exchange such Transfer Restricted Securities pursuant to the Exchange Offer. Such "Plan of Distribution" section shall also contain all other information with respect to such sales by such Broker-Dealers that the Commission may require in order to permit such sales pursuant thereto, but such "Plan of -4- Distribution" shall not name any such Broker-Dealer or disclose the amount of Transfer Restricted Securities held by any such Broker-Dealer, except to the extent required by the Commission as a result of a change in policy, rules or regulations after the date of this Agreement. See the Shearman & Sterling no-action letter (available July 2, 1993). Because such Broker-Dealer may be deemed to be an "underwriter" within the meaning of the Securities Act and must, therefore, deliver a prospectus meeting the requirements of the Securities Act in connection with its initial sale of any Exchange Notes received by such Broker-Dealer in the Exchange Offer, the Company and Ribapharm shall permit the use of the Prospectus contained in the Exchange Offer Registration Statement by such Broker-Dealer to satisfy such prospectus delivery requirement. To the extent necessary to ensure that the Prospectus contained in the Exchange Offer Registration Statement is available for sales of Exchange Notes by Broker-Dealers, the Company and Ribapharm agree to use their reasonable best efforts to keep the Exchange Offer Registration Statement continuously effective, supplemented, amended and current as required by and subject to the provisions of Section 6(a) and (c) hereof and in conformity with the requirements of this Agreement, the Securities Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of 270 days from the Consummation Deadline or such shorter period as will terminate when all Transfer Restricted Securities covered by such Registration Statement have been sold pursuant thereto. The Company and Ribapharm shall provide sufficient copies of the latest version of such Prospectus to such Broker-Dealers, promptly upon request, and in no event later than one day after such request, at any time during such period. 4. Shelf Registration. (a) Shelf Registration. If (i) the Company and Ribapharm are not (A) required to file the Exchange Offer Registration Statement or (B) permitted to Consummate the Exchange Offer because the Exchange Offer is not permitted by applicable law or Commission policy or (ii) any Holder of Transfer Restricted Securities shall notify the Company within 20 days following the Consummation Deadline that (A) such Holder was prohibited by law or Commission policy from participating in the Exchange Offer; (B) such Holder may not resell the Exchange Notes acquired by it in the Exchange Offer to the public without delivering a prospectus and the Prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales by such Holder; or (C) such Holder is a Broker-Dealer and holds Notes acquired directly from the Company or any of its Affiliates, then the Company and Ribapharm will file a Shelf Registration Statement (as defined below) to cover resales of the Notes by Holders of the Notes who satisfy the conditions set forth in Section 4(b) hereof relating to the provision of information in connection with the Shelf Registration Statement. If obligated to file a Shelf Registration Statement, the Company and Ribapharm shall use commercially reasonable efforts to: (x) file, on or prior to 30 days after the earlier of (i) the date on which the Company determines that the Exchange Offer Registration Statement cannot be filed as a result of clause (a)(i) above and (ii) the date on which the Company receives the notice specified in clause (a)(ii) above, (such 30th day, the "Filing Deadline"), a shelf registration statement pursuant to Rule 415 under the Securities Act (which may be an amendment to the Exchange Offer Registration Statement (the "Shelf Registration Statement")), relating to all Transfer Restricted Securities, the Holders of which shall have provided the information required by Section 4(b) hereof; and (y) cause such Shelf Registration Statement to be declared effective by the Commission on or prior to 90 days after the obligation arises for the Shelf Registration Statement (such 90th day being the "Effectiveness Deadline"). If, after the Company and Ribapharm have filed an Exchange Offer Registration Statement that satisfies the requirements of Section 3(a) above, the Company and Ribapharm are required to file and make effective a Shelf Registration Statement solely because the Exchange Offer is not permitted under applicable federal law (i.e., clause (a)(i) above), then the filing of the Exchange Offer Registration Statement shall be deemed to satisfy the -5- requirements of clause (x) above; provided that, in such event, the Company and Ribapharm shall remain obligated to meet the Effectiveness Deadline set forth in clause (y). To the extent necessary to ensure that the Shelf Registration Statement is available for sales of Transfer Restricted Securities by the Holders thereof entitled to the benefit of this Section 4(a) and the Exchange Notes required to be registered therein pursuant to Section 6(b)(ii) hereof, the Company and Ribapharm shall use their reasonable best efforts to keep any Shelf Registration Statement required by this Section 4(a) continuously effective, supplemented, amended and current as required by and subject to the provisions of Sections 6(b) and (c) hereof and in conformity with the requirements of this Agreement, the Securities Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of at least two years (as extended pursuant to Section 6(d) hereof) following the Closing Date, or such shorter period as will terminate when all Transfer Restricted Securities covered by such Shelf Registration Statement have been sold pursuant thereto. (b) Provision by Holders of Certain Information in Connection with the Shelf Registration Statement. No Holder of Transfer Restricted Securities may include any of its Transfer Restricted Securities in any Shelf Registration Statement pursuant to this Agreement unless and until such Holder furnishes to the Company in writing, within 20 days after receipt of a request therefor, the information specified in Item 507 or Item 508 of Regulation S-K, as applicable, under the Securities Act for use in connection with any Shelf Registration Statement or Prospectus or preliminary Prospectus included therein. No Holder of Transfer Restricted Securities shall be entitled to liquidated damages pursuant to Section 5 hereof unless and until such Holder shall have provided all such information by the applicable deadline. Each selling Holder agrees to promptly furnish additional information required to be disclosed in order to make the information previously furnished to the Company by such Holder not materially misleading. 5. Liquidated Damages. (a) If (i) any Registration Statement required by this Agreement is not filed with the Commission on or prior to the applicable Filing Deadline, (ii) any such Registration Statement has not been declared effective by the Commission on or prior to the applicable Effectiveness Deadline, (iii) the Company and Ribapharm fail to Consummate the Exchange Offer within 30 business days following the Effectiveness Target Date with respect to the Exchange Offer Registration Statement, unless extended as required by the Commission or (iv) any Registration Statement required by this Agreement is filed and declared effective but thereafter ceases to be effective or usable in connection with resales of Transfer Restricted Securities during the period specified herein (each such event referred to in clauses (i) through (iv), a "Registration Default"), then the Company and Ribapharm hereby jointly and severally agree to pay to each Holder of Transfer Restricted Securities affected thereby liquidated damages in an amount equal to $.05 per week per $1,000 principal amount of Notes constituting Transfer Restricted Securities held by such Holder for each week or portion thereof that the Registration Default continues for the first 90-day period immediately following the occurrence of such Registration Default ("liquidated damages"). The amount of the liquidated damages shall increase by an additional $.05 per week per $1,000 principal amount of Notes constituting Transfer Restricted Securities with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of liquidated damages of $.50 per week per $1,000 principal amount of Notes constituting Transfer Restricted Securities; provided that the Company and Ribapharm shall in no event be required to pay liquidated damages for more than one Registration Default at any given time. Notwithstanding anything to the contrary set forth herein, (1) upon filing of the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement), in the case of (i) above, (2) upon the effectiveness of the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement), in the case of (ii) above, (3) upon Consummation of the Exchange Offer, in the case of (iii) above, or (4) upon the filing of a post-effective amendment to the Registration Statement or an additional Registration Statement that causes the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement) to again be declared effective or -6- made usable in the case of (iv) above, the liquidated damages payable with respect to the Transfer Restricted Securities as a result of such clause (i), (ii), (iii) or (iv), as applicable, shall cease. (b) All accrued liquidated damages shall be paid to the Holders of Transfer Restricted Securities, in the manner provided for the payment of interest in the Indenture, on each Interest Payment Date, as more fully set forth in the Indenture and the Notes. Notwithstanding the fact that any securities for which liquidated damages are due cease to be Transfer Restricted Securities, all obligations of the Company and Ribapharm to pay liquidated damages with respect to securities with respect to the period prior to the time the securities ceased to be Transfer Restricted Securities shall survive until such time as such obligations with respect to such securities shall have been satisfied in full. (c) A Registration Default referred to in Section 5(a) hereof shall be deemed not to have occurred and be continuing in relation to a Registration Statement or the related Prospectus if such Registration Default has occurred solely as a result of material events, with respect to the Company that would need to be described in such Registration Statement or the related Prospectus and the Company has provided written notice to the Purchasers that such an event has occurred, which notice need not specify the nature of the event that has occurred, and that a Registration Default would have occurred but for the provisions of this section; provided, however, that in any case if such Registration Default occurs for a continuous period in excess of 60 days, liquidated damages shall be payable in accordance with Section 5(a) from the day such Registration Default originally occurred. (d) Except as provided in Section 10(a) hereof, the liquidated damages as set forth in this Section 5 shall be the exclusive monetary remedy available to the Holders of Registrable Securities for such Registration Default. In no event shall the Company be required to pay liquidated damages in excess of the applicable maximum amount of $.50 per week per $1,000 principal amount of Notes constituting Transfer Restricted Securities set forth above, regardless of whether one or multiple Registration Defaults exist. 6. Registration Procedures. (a) Exchange Offer Registration Statement. In connection with the Exchange Offer, the Company and Ribapharm shall, subject to the provisions Section 5(c) above, (x) comply with all applicable provisions of Section 6(c) below, (y) use their respective reasonable best efforts to effect such exchange and to permit the resale of Exchange Notes by Broker-Dealers that tendered in the Exchange Offer Notes that such Broker-Dealer acquired for its own account as a result of its market making activities or other trading activities (other than Notes acquired directly from the Company or any of its Affiliates) being sold in accordance with the intended method or methods of distribution thereof, and (z) comply with all of the following provisions: (i) If, following the date hereof, there has been announced a change in Commission policy with respect to exchange offers such as the Exchange Offer, that in the reasonable opinion of counsel to the Company raises a substantial question as to whether the Exchange Offer is permitted by applicable federal law, or the Company and Ribapharm are not (A) required to file the Exchange Offer Registration Statement, (B) permitted to Consummate the Exchange Offer because the Exchange Offer is not permitted by applicable law or Commission policy or (C) obligated to file the Shelf Registration Statement, the Company and Ribapharm hereby agree to seek a no-action letter or other favorable decision from the Commission allowing the Company and Ribapharm to Consummate an Exchange Offer for such Transfer Restricted Securities. The Company and Ribapharm hereby agree to pursue the issuance of such a decision to the Commission staff level. In connection with the foregoing, the Company and Ribapharm hereby agree to take all such other actions as may be requested by the Commission or are otherwise required in connection with the issuance of such decision, including without limitation (A) participating in telephonic conferences with the Commission, (B) delivering to the Commission staff an analysis prepared by counsel to the Company setting forth the legal bases, if any, -7- upon which such counsel has concluded that such an Exchange Offer should be permitted and (C) diligently pursuing a resolution (which need not be favorable) by the Commission staff; (ii) As a condition to its participation in the Exchange Offer, each Holder of Transfer Restricted Securities (including, without limitation, any Holder who is a Broker Dealer) shall furnish, upon the request of the Company, prior to the Consummation of the Exchange Offer, a written representation to the Company and Ribapharm (which may be contained in the letter of transmittal contemplated by the Exchange Offer Registration Statement) to the effect that (A) it is not an Affiliate of the Company, (B) it is not engaged in, and does not intend to engage in, and has no arrangement or understanding with any person to participate in, a distribution of the Exchange Notes to be issued in the Exchange Offer and (C) it is acquiring the Exchange Notes in its ordinary course of business. As a condition to its participation in the Exchange Offer each Holder using the Exchange Offer to participate in a distribution of the Exchange Notes shall acknowledge and agree that, if the resales are of Exchange Notes obtained by such Holder in exchange for Notes acquired directly from the Company or an Affiliate thereof, it (1) could not, under Commission policy as in effect on the date of this Agreement, rely on the position of the Commission enunciated in Exxon Capital Holdings Corporation (available May 13, 1988) and Morgan Stanley and Co., Inc. (available June 5, 1991), as interpreted in the Commission's letter to Shearman & Sterling dated July 2, 1993, and similar no-action letters (including, if applicable, any no-action letter obtained pursuant to clause (i) above), and (2) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction and that such a secondary resale transaction must be covered by an effective registration statement containing the selling security holder information required by Item 507 or Item 508, as applicable, of Regulation S-K; and (iii) Prior to effectiveness of the Exchange Offer Registration Statement, the Company and Ribapharm shall provide a supplemental letter to the Commission (A) stating that the Company and Ribapharm are registering the Exchange Offer in reliance on the position of the Commission enunciated in Exxon Capital Holdings Corporation (available May 13, 1988) and Morgan Stanley and Co., Inc. (available June 5, 1991) as interpreted in the Commission's letter to Shearman & Sterling dated July 2, 1993, and, if applicable, any no-action letter obtained pursuant to clause (i) above, (B) including a representation that neither the Company nor Ribapharm has entered into any arrangement or understanding with any Person to distribute the Exchange Notes to be received in the Exchange Offer and that, to the best of the Company's and Ribapharm's information and belief, each Holder participating in the Exchange Offer is acquiring the Exchange Notes in its ordinary course of business and has no arrangement or understanding with any Person to participate in the distribution of the Exchange Notes received in the Exchange Offer and (C) any other undertaking or representation required by the Commission as set forth in any no-action letter obtained pursuant to clause (i) above, if applicable. (b) Shelf Registration Statement. In connection with the Shelf Registration Statement, the Company and Ribapharm shall: (i) comply with all the provisions of Section 6(c) below and use their reasonable best efforts to effect such registration to permit the sale of the Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof (as indicated in the information furnished to the Company pursuant to Section 4(b) hereof), and pursuant thereto the Company and Ribapharm will prepare and file with the Commission a Registration Statement relating to the registration on any appropriate form under the Securities Act, which form shall be available for the sale of the Transfer Restricted Securities in accordance with the intended method or methods of distribution thereof within the time periods and otherwise in accordance with the provisions hereof; and -8- (ii) issue, upon the request of any Holder or purchaser of the Notes covered by any Shelf Registration Statement contemplated by this Agreement, Exchange Notes having an aggregate principal amount equal to the aggregate principal amount of Notes sold pursuant to the Shelf Registration Statement and surrendered to the Company for cancellation; the Company shall register Exchange Notes on the Shelf Registration Statement for this purpose and issue the Exchange Notes to the purchasers of securities subject to the Shelf Registration Statement in the names as such purchasers shall designate. (c) General Provisions. In connection with any Registration Statement and any related Prospectus required by this Agreement, the Company and Ribapharm shall: (i) use their respective reasonable best efforts to keep such Registration Statement continuously effective and provide all requisite financial statements for the period specified in Section 3 or Section 4 of this Agreement, as applicable. Upon the occurrence of any event that would cause any such Registration Statement or the Prospectus contained therein (A) to contain an untrue statement of material fact or omit to state any material fact necessary to make the statements therein not misleading or (B) not to be effective and usable for resale of Transfer Restricted Securities during the period required by this Agreement, the Company and Ribapharm shall file promptly, subject to Section 5(c), an appropriate amendment to such Registration Statement curing such defect, and, if Commission review is required, use their reasonable best efforts to cause such amendment to be declared effective as soon as practicable; (ii) prepare and file with the Commission such amendments and post-effective amendments to the applicable Registration Statement as may be necessary to keep such Registration Statement effective for the applicable period set forth in Section 3 or Section 4 hereof, as the case may be; cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Securities Act, and to comply fully with Rules 424, 430A and 462, as applicable, under the Securities Act in a timely manner; and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth in such Registration Statement or supplement to the Prospectus; (iii) advise each Holder promptly and, if requested by such Holder, confirm such advice in writing: (A) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed with the Commission and, with respect to any applicable Registration Statement or any post-effective amendment thereto, when the same has become effective, in each case making a public announcement thereof by release made to Reuters Economic Services and Bloomberg Business News; (B) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus included therein or for additional information relating thereto; (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement under the Securities Act or of the suspension by any state securities commission of the qualification of the Transfer Restricted Securities for offering or sale in any jurisdiction, or the initiation of any proceedings for such purposes; and (D) of the occurrence of any event or the existence of any state of facts (but not as to the substance of any such event or facts) that requires the making of any changes in the -9- Registration Statement or the Prospectus included therein so that, as of such date, such Registration Statement and Prospectus do not contain an untrue statement of a material fact and do not omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the Prospectus, in light of the circumstances under which they were made) not misleading. (iv) subject to Section 5(c), if any fact or event contemplated by Section 6(c)(iii)(D) above shall exist or have occurred, prepare a supplement or post-effective amendment to the Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of Transfer Restricted Securities, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (v) furnish to each Purchaser and each Holder named in the Shelf Registration Statement in connection with such exchange or sale, if any, before filing with the Commission, copies of any Registration Statement or any Prospectus included therein or any amendments or supplements to any such Registration Statement or Prospectus, which documents will be subject to the review and comment of such Persons in connection with such sale, if any, for a period of at least three business days, and the Company will not file any such Registration Statement or Prospectus or any amendment or supplement to any such Registration Statement or Prospectus to which such Persons shall reasonably object within three business days after the receipt thereof. A Holder shall be deemed to have reasonably objected to such filing only if such Registration Statement, amendment, Prospectus or supplement, as applicable, as proposed to be filed, contains an untrue statement of a material fact or omits to state any material fact necessary to make the statements therein not misleading or fails to comply with the applicable requirements of the Securities Act; (vi) promptly prior to the filing of any document that is to be incorporated by reference into a Registration Statement or Prospectus, provide copies of such document to each Holder in connection with such exchange or sale, if any, make the Company's and Ribapharm's representatives available for discussion of such document and other customary due diligence matters, and include such information in such document prior to the filing thereof as such Holders may reasonably request; (vii) make available, at reasonable times, for inspection by each Holder and any attorney or accountant retained by such Holders, all financial and other records, pertinent corporate documents of the Company and Ribapharm and cause the Company's and Ribapharm's officers, directors and employees to supply all information reasonably requested by any such Holder, attorney or accountant in connection with such Registration Statement or any post-effective amendment thereto subsequent to the filing thereof and prior to its effectiveness; (viii) if requested by any Holders in connection with such exchange or sale, promptly include in any Registration Statement or Prospectus, pursuant to a supplement or post-effective amendment if necessary, such information as such Holders may reasonably request to have included therein, including, without limitation, information relating to the "Plan of Distribution" of the Transfer Restricted Securities; and make all required filings of such Prospectus supplement or post-effective amendment as soon as practicable after the Company is notified of the matters to be included in such Prospectus supplement or post-effective amendment; (ix) furnish to each Holder, upon such Holder's request, in connection with such exchange or sale, without charge, at least one copy of the Registration Statement, as first filed with the Commission, -10- and of each amendment thereto, including, if such Holder so requests, all documents incorporated by reference therein and all exhibits (including exhibits incorporated therein by reference); (x) deliver to each Holder, without charge, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such Persons reasonably may request; the Company and Ribapharm hereby consent to the use (in accordance with law) of the Prospectus and any amendment or supplement thereto by each selling Holder in connection with the offering and the sale of the Transfer Restricted Securities covered by the Prospectus or any amendment or supplement thereto; (xi) upon the request of (1) a Purchaser, but only in such firm's capacity as an Exchanging Dealer or(2) Holders who collectively hold an aggregate principal amount of the Transfer Restricted Securities in excess of 20% of the outstanding principal amount of the Transfer Restricted Securities (the "Requesting Holders"), enter into such agreements (including underwriting agreements) and make such representations and warranties and take all such other actions in connection therewith in order to expedite or facilitate the disposition of the Transfer Restricted Securities pursuant to any applicable Registration Statement contemplated by this Agreement as may be reasonably requested by any Holder in connection with any sale or resale pursuant to any applicable Registration Statement. In such connection, the Company and Ribapharm shall: (A) upon request of the Purchaser or the Requesting Holders, as applicable, furnish (or in the case of paragraphs (2) and (3), use its reasonable best efforts to cause to be furnished) to each Holder, upon Consummation of the Exchange Offer or upon the effectiveness of the Shelf Registration Statement, as the case may be: (1) a certificate, dated such date, signed on behalf of the Company and Ribapharm by (x) the President or any Vice President and (y) a principal financial or accounting officer of the Company and Ribapharm, confirming, as of the date thereof, the matters set forth in Sections 8(a), 8(b), 8(c) and 8(d) of the Purchase Agreement and such other similar matters as such Holders may reasonably request; (2) an opinion, dated the date of Consummation of the Exchange Offer or the date of effectiveness of the Shelf Registration Statement, as the case may be, of counsel for the Company and Ribapharm covering matters similar to those set forth in paragraph (h) of Section 8 of the Purchase Agreement and such other matters as such the Purchaser or the Requesting Holders may reasonably request, and in any event including a statement to the effect that such counsel has participated in conferences with officers and other representatives of the Company and Ribapharm, representatives of the independent public accountants for the Company and Ribapharm and have considered the matters required to be stated therein and the statements contained therein, although such counsel has not independently verified the accuracy, completeness or fairness of such statements; and that such counsel advises that, on the basis of the foregoing (relying as to materiality to the extent such counsel deems appropriate upon the statements of officers and other representatives of the Company and Ribapharm and without independent check or verification), no facts came to such counsel's attention that caused such counsel to believe that the applicable Registration Statement, at the time such Registration Statement or any post-effective amendment thereto became effective and, in the case of the Exchange Offer Registration Statement, as of the date of Consummation of the Exchange Offer, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus contained in such Registration Statement as of its date -11- and, in the case of the opinion dated the date of Consummation of the Exchange Offer, as of the date of Consummation, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. Without limiting the foregoing, such counsel may state further that such counsel assumes no responsibility for, and has not independently verified, the accuracy, completeness or fairness of the financial statements, notes and schedules and other financial data included in any Registration Statement contemplated by this Agreement or the related Prospectus; and (3) a customary comfort letter, dated the date of Consummation of the Exchange Offer, or as of the date of effectiveness of the Shelf Registration Statement, as the case may be, from the Company's independent accountants, in the customary form and covering matters of the type customarily covered in comfort letters to underwriters in connection with underwritten offerings, and affirming the matters set forth in the comfort letters and agreed upon procedures letters, as applicable, delivered pursuant to Section 7(e) of the Purchase Agreement; and (B) deliver such other documents and certificates as may be reasonably requested by the selling Holders to evidence compliance with the matters covered in clause (A) above and with any customary conditions contained in the any agreement entered into by the Company and Ribapharm pursuant to this clause (xi); (xii) prior to any public offering of Transfer Restricted Securities, cooperate with the selling Holders and their counsel in connection with the registration and qualification of the Transfer Restricted Securities under the securities or Blue Sky laws of such jurisdictions as the selling Holders may request and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Transfer Restricted Securities covered by the applicable Registration Statement; provided, however, that neither the Company nor Ribapharm shall be required to register or qualify as a foreign corporation where it is not now so qualified or to take any action that would subject it to the service of process in suits or to taxation, other than as to matters and transactions relating to the Registration Statement, in any jurisdiction where it is not now so subject; (xiii) in connection with any sale of Transfer Restricted Securities that will result in such securities no longer being Transfer Restricted Securities, cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Securities to be sold and not bearing any restrictive legends; and to register such Transfer Restricted Securities in such denominations and such names as the selling Holders may request at least two business days prior to such sale of Transfer Restricted Securities; (xiv) use their reasonable best efforts to cause the disposition of the Transfer Restricted Securities covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof to consummate the disposition of such Transfer Restricted Securities, subject to the proviso contained in clause (xii) above; (xv) provide a CUSIP number for all Transfer Restricted Securities not later than the effective date of a Registration Statement covering such Transfer Restricted Securities and provide the Trustee under the Indenture with printed certificates for the Transfer Restricted Securities which are in a form eligible for deposit with the Depository Trust Company; -12- (xvi) otherwise use their respective reasonable best efforts to comply with all applicable rules and regulations of the Commission, and make generally available to its security holders with regard to any applicable Registration Statement, as soon as practicable, a consolidated earnings statement meeting the requirements of Rule 158 under the Securities Act (which need not be audited) covering a twelve-month period beginning after the effective date of the Registration Statement (as such term is defined in paragraph (c) of Rule 158 under the Securities Act); (xvii) cause the Indenture to be qualified under the TIA not later than the effective date of the first Registration Statement required by this Agreement and, in connection therewith, cooperate with the Trustee and the Holders to effect such changes to the Indenture as may be required for such Indenture to be so qualified in accordance with the terms of the TIA; and execute and use its best efforts to cause the Trustee to execute, all documents that may be required to effect such changes and all other forms and documents required to be filed with the Commission to enable such Indenture to be so qualified in a timely manner; and (xviii) provide promptly to each Holder, upon request, each document filed with the Commission pursuant to the requirements of Section 13 or Section 15(d) of the Exchange Act. (d) Restrictions on Holders. Each Holder agrees by acquisition of a Transfer Restricted Security that, upon receipt of the notice referred to in Section 6(c)(iii)(C) or any notice from the Company of the existence of any fact of the kind described in Section 6(c)(iii)(D) hereof (in each case, a "Suspension Notice"), such Holder will forthwith discontinue disposition of Transfer Restricted Securities pursuant to the applicable Registration Statement until (i) such Holder has received copies of the supplemented or amended Prospectus contemplated by Section 6(c)(iv) hereof, or (ii) such Holder is advised in writing by the Company that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus (in each case, the "Recommencement Date"). Each Holder receiving a Suspension Notice hereby agrees that it will either (i) destroy any Prospectuses, other than permanent file copies, then in such Holder's possession which have been replaced by the Company with more recently dated Prospectuses or (ii) deliver to the Company (at the Company's expense) all copies, other than permanent file copies, then in such Holder's possession of the Prospectus covering such Transfer Restricted Securities that was current at the time of receipt of the Suspension Notice. The time period regarding the effectiveness of such Registration Statement set forth in Section 3 or Section 4 hereof, as applicable, shall be extended by a number of days equal to the number of days in the period from and including the date of delivery of the Suspension Notice to the date of delivery of the Recommencement Date. 7. Registration Expenses. (a) All expenses incident to the Company's and Ribapharm's performance of or compliance with this Agreement will be borne by the Company, regardless of whether a Registration Statement becomes effective, including without limitation: (i) all registration and filing fees and expenses; (ii) all fees and expenses of compliance with federal securities and state Blue Sky or securities laws; (iii) all expenses of printing (including printing certificates for the Exchange Notes to be issued in the Exchange Offer and printing of Prospectuses), messenger and delivery services and telephone; (iv) all fees and disbursements of counsel for the Company and Ribapharm; (v) all application and filing fees in connection with listing the Exchange Notes on a national securities exchange or automated quotation system pursuant to the requirements hereof; and (vi) all fees and disbursements of independent certified public accountants of the Company and Ribapharm (including the expenses of any special audit and comfort letters required by or incident to such performance). The Company will, in any event, bear its and Ribapharm's internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the -13- expenses of any annual audit and the fees and expenses of any Person, including special experts, retained by the Company or Ribapharm. (b) In connection with any Registration Statement required by this Agreement (including, without limitation, the Exchange Offer Registration Statement and the Shelf Registration Statement), regardless of whether a Registration Statement becomes effective, the Company and Ribapharm will reimburse the Purchasers and the Holders of Transfer Restricted Securities who are tendering Notes into in the Exchange Offer and/or selling or reselling Notes or Exchange Notes pursuant to the "Plan of Distribution" contained in the Exchange Offer Registration Statement or the Shelf Registration Statement, as applicable, for the reasonable fees and disbursements of not more than one counsel, who shall be Skadden, Arps, Slate, Meagher and Flom LLP, unless another firm shall be chosen by the Holders of a majority in principal amount of the Transfer Restricted Securities for whose benefit such Registration Statement is being prepared. 8. Indemnification (a) The Company and Ribapharm agree, jointly and severally, to indemnify and hold harmless each Holder, its directors, officers and each Person, if any, who controls such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act), from and against any and all losses, claims, damages, liabilities, judgments and expenses whatsoever (including without limitation, any legal or other expenses reasonably incurred in connection with investigating, preparing or defending against any investigation or litigation, commenced or threatened, or any claim whatsoever, and any and all amounts paid in settlement of any claim or litigation) caused by any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, preliminary prospectus or Prospectus (or any amendment or supplement thereto) provided by the Company to any Holder or any prospective purchaser of Exchange Notes or registered Notes, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Company and Ribapharm shall not be liable to any such Holder in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such Registration Statement or Prospectus, or amendment or supplement, in reliance upon and in conformity with written information furnished to the Company and Ribapharm by such Holder expressly for use therein. (b) Each Holder of Transfer Restricted Securities agrees, severally and not jointly, to indemnify and hold harmless the Company and Ribapharm, and their respective directors, officers, partners, employees, representatives and agents, and each person, if any, who controls (within the meaning of Section 15 of the Section Act or Section 20 of the Exchange Act) the Company, or Ribapharm to the same extent as the foregoing indemnity from the Company and Ribapharm set forth in section (a) above, but only with reference to information relating to such Holder furnished in writing to the Company by or on behalf of such Holder expressly for use in any Registration Statement, preliminary prospectus or Prospectus (or any amendment or supplement thereto.) In no event shall any Holder, its directors, officers or any Person who controls such Holder be liable or responsible for any amount in excess of the amount by which the total amount received by such Holder with respect to its sale of the Transfer Restricted Securities or Exchange Notes giving rise to such indemnification obligation pursuant to a Registration Statement exceeds (i) the amount paid by such Holder for such Transfer Restricted Securities and (ii) the amount of any damages that such Holder, its directors, officers or any Person who controls such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. (c) In case any action shall be commenced involving any person in respect of which indemnity may be sought pursuant to Section 8(a) or Section 8(b) (the "indemnified party"), the indemnified party shall promptly notify the person against whom such indemnity may be sought (the "indemnifying person") in writing of the commencement thereof (but the failure so to notify an indemnifying party shall not relieve it from any liability -14- which it may have under this Section 8 except to the extent that it has been prejudiced in any material respect by such failure or from any liability which it may otherwise have). In case any such action is brought against any indemnified party, and such indemnified party notifies an indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein, and to the extent such indemnified party may elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party. Notwithstanding the foregoing, the indemnified party or parties shall have the right to employ its or their own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such indemnified party or parties unless (i) the employment of such counsel shall have been authorized in writing by the indemnifying parties in connection with the defense of such action, (ii) the indemnifying parties shall not have employed counsel to take charge of the defense of such action within a reasonable time after notice of commencement of the action, or (iii) such indemnified party or parties shall have reasonably concluded that there may be defenses available to it or them which are different from or additional to those available to one or all of the indemnifying parties (in which case the indemnifying party or parties shall not have the right to direct the defense of such action on behalf of the indemnified party or parties), in any of which events such fees and expenses of counsel shall be borne by the indemnifying parties. In any such case, the indemnifying party shall not, in connection with any one action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) for all indemnified parties and all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by a majority of the Holders, in the case of the parties indemnified pursuant to Section 8(a), and by the Company and Ribapharm, in the case of parties indemnified pursuant to Section 8(b). The indemnifying party shall indemnify and hold harmless the indemnified party from and against any and all losses, claims, damages, liabilities and judgments by reason of any settlement of any action (i) effected with the indemnified party's written consent or (ii) effected without the indemnified party's written consent if the settlement is entered into more than twenty business days after the indemnifying party shall have received a request from the indemnified party for reimbursement for the fees and expenses of counsel (in any case where such fees and expenses are at the expense of the indemnifying party) and, prior to the date of such settlement, the indemnifying party shall have failed to comply with such reimbursement request. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement or compromise of, or consent to the entry of judgment with respect to, any pending or threatened action in respect of which the indemnified party is or could have been a party and indemnity or contribution may be or could have been sought hereunder by the indemnified party, unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability on claims that are or could have been the subject matter of such action and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of the indemnified party. (d) To the extent that the indemnification provided for in this Section 8 is unavailable to an indemnified party in respect of any losses, claims, damages, liabilities or judgments referred to therein, then each indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or judgments (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and Ribapharm, on the one hand, and the Holders, on the other hand, from their sale of Transfer Restricted Securities or (ii) if the allocation provided by clause 8(d)(i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause 8(d)(i) above but also the relative fault of the Company and Ribapharm, on the one hand, and of the Holder, on the other hand, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or judgments, as well as any other relevant equitable considerations. The relative fault of the Company and Ribapharm, on the one hand, and of the Holder, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or Ribapharm, on the one hand, or by the Holder, on the other hand, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or -15- omission. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and judgments referred to above shall be deemed to include, subject to the limitations set forth in the second paragraph of Section 8(a), any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The Company, Ribapharm and each Holder agree that it would not be just and equitable if contribution pursuant to this Section 8(d) were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities or judgments referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any matter relating to such losses, claims, damages, liabilities or judgments. Notwithstanding the provisions of this Section 8, no Holder, its directors, its officers or any Person, if any, who controls such Holder shall be required to contribute, in the aggregate, any amount in excess of the amount by which the total received by such Holder with respect to the sale of Transfer Restricted Securities pursuant to a Registration Statement exceeds (i) the amount paid by such Holder for such Transfer Restricted Securities and (ii) the amount of any damages which such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Holders' obligations to contribute pursuant to this Section 8(d) are several in proportion to the respective principal amount of Transfer Restricted Securities held by each Holder hereunder and not joint. 9. Rule 144A AND Rule 144 Each of the Company and Ribapharm agrees with each Holder, for so long as any Transfer Restricted Securities remain outstanding and during any period in which the Company or Ribapharm (i) is not subject to Section 13 or 15(d) of the Exchange Act, to make available, upon request of any Holder, to such Holder or beneficial owner of Transfer Restricted Securities in connection with any sale thereof and any prospective purchaser of such Transfer Restricted Securities designated by such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Securities Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A, and (ii) is subject to Section 13 or 15 (d) of the Exchange Act, to make all filings required thereby in a timely manner in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144. 10. Miscellaneous. (a) Specific Performance. The Company and Ribapharm acknowledge and agree that any failure by the Company and/or Ribapharm to comply with their respective obligations under Sections 3 and 4 hereof may result in material irreparable injury to the Purchasers or the Holders for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Purchasers or any Holder may obtain such relief as may be required to specifically enforce the Company's and Ribapharm's obligations under Sections 3 and 4 hereof. The Company and Ribapharm further agree to waive the defense in any action for specific performance that a remedy at law would be adequate. (b) No Inconsistent Agreements. Neither the Company nor Ribapharm will, on or after the date of this Agreement, enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. Neither the Company nor Ribapharm has previously entered into any agreement granting any registration rights with respect to its securities to any Person. The rights granted to the Holders hereunder do not in any way conflict with and are not -16- inconsistent with the rights granted to the holders of the Company's and Ribapharm's securities under any agreement in effect on the date hereof. (c) Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given unless (i) in the case of Section 5 hereof and this Section 10(c)(i), the Company has obtained the written consent of Holders of all outstanding Transfer Restricted Securities and (ii) in the case of all other provisions hereof, the Company has obtained the written consent of Holders of a majority of the outstanding principal amount of Transfer Restricted Securities (excluding Transfer Restricted Securities held by the Company or its Affiliates). Notwithstanding the foregoing, a waiver or consent to departure from the provisions hereof that relates exclusively to the rights of Holders whose Transfer Restricted Securities are being tendered pursuant to the Exchange Offer, and that does not affect directly or indirectly the rights of other Holders whose Transfer Restricted Securities are not being tendered pursuant to such Exchange Offer, may be given by the Holders of a majority of the outstanding principal amount of Transfer Restricted Securities subject to such Exchange Offer. (d) Third Party Beneficiary. The Holders shall be third party beneficiaries to the agreements made hereunder between the Company and Ribapharm, on the one hand, and the Purchasers, on the other hand, and shall have the right to enforce such agreements directly to the extent they may deem such enforcement necessary or advisable to protect its rights or the rights of Holders hereunder. (e) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail (registered or certified, return receipt requested), facsimile or air courier guaranteeing overnight delivery: (i) if to a Holder, at the address set forth on the records of the Registrar under the Indenture, with a copy to the Registrar under the Indenture; and (ii) if to the Company or Ribapharm: Valeant Pharmaceuticals International 3300 Hyland Avenue Costa Mesa, California 92626-1503 Facsimile No.: (714) 556-0131 Attention: Corporate Secretary All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five business days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if sent by facsimile; and on the next business day, if timely delivered to an air courier guaranteeing overnight delivery. Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee at the address specified in the Indenture. (d) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including without limitation and without the need for an express assignment, subsequent Holders; provided, that nothing herein shall be deemed to permit any assignment, transfer or other disposition of Transfer Restricted Securities in violation of the terms hereof or of the Purchase Agreement or the Indenture. If any transferee of any Holder shall acquire Transfer Restricted Securities in any manner, whether by operation of law or otherwise, such Transfer Restricted Securities shall be held subject to all of the terms of this Agreement, and by taking and holding such Transfer Restricted Securities such Person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this -17- Agreement, including the restrictions on resale set forth in this Agreement and, if applicable, the Purchase Agreement, and such Person shall be entitled to receive the benefits hereof. (e) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (f) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF. (h) Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. (i) Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted with respect to the Transfer Restricted Securities. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. -18- IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. VALEANT PHARMACEUTICALS INTERNATIONAL /s/ Robert W. O'Leary -------------------------------------------------------- By: Names: Robert W. O'Leary Title: Chairman of the Board, Chief Executive Officer RIBAPHARM INC. /s/ Philip W. Loberg -------------------------------------------------------- By: Name: Philip W. Loberg Title: Treasurer BEAR, STEARNS & CO. INC. By:/s/ Lawrence B. Alletto -------------------------------------- Name: Lawrence B. Alletto Title: Co-Head of Leveraged Finance -19- EX-12 5 a96405orexv12.txt EXHIBIT 12 . . . EXHIBIT 12 STATEMENT RE COMPUTATION OF RATIOS (DOLLARS IN THOUSANDS, EXCEPT RATIOS)

NINE MONTHS YEAR ENDED DECEMBER 31, ENDED ---------------------------------------------------------- SEPTEMBER 30, 2002 2001 2000 1999 1998 2003 (1) ---------- ---------- ---------- ---------- ---------- ------------- RATIO OF EARNINGS TO FIXED CHARGES: Earnings: Income (loss) before income taxes, minority interest ............... $ 176,938 $ 118,803 $ 136,683 $ 147,105 $ (342,809) $ (18,538) Add: interest expense .................... 42,856 55,665 60,248 55,439 37,757 23,892 IPR&D charges ............................ -- -- -- -- -- 117,609 ---------- ---------- ---------- ---------- ---------- ---------- $ 219,794 $ 174,468 $ 196,931 $ 202,544 $ (305,052) $ 122,963 ========== ========== ========== ========== ========== ========== Fixed Charges: Interest expense ......................... $ 42,856 $ 55,665 $ 60,248 $ 55,439 $ 37,757 $ 23,892 ========== ========== ========== ========== ========== ========== Ratio of earnings to fixed charges (coverage deficiency) .................... 5.1x 3.1x 3.3x 3.7x $ (305,052) 5.1x ========== ========== ========== ========== ========== ==========

- --------------- (1) For the nine months ended September 30, 2003, non-cash charges of $117,609,000 related to acquired in-process research and development were excluded from the calculation. EX-15 6 a96405orexv15.htm EXHIBIT 15

Exhibit 15

AWARENESS LETTER OF INDEPENDENT ACCOUNTANTS

February 11, 2004

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Commissioners:

     We are aware that our reports dated May 5, 2003, August 4, 2003 and November 10, 2003 on our review of interim financial information of Valeant Pharmaceuticals International (formerly known as ICN Pharmaceuticals, Inc.) (the “Company”) for the three, six and nine month periods ended March 31, 2003, June 30, 2003, and September 30, 2003 and included in the Company’s quarterly reports on Form 10-Q and Form 10-Q/A for the quarters then ended are incorporated by reference in this Registration Statement prepared or certified by us within the meaning of Sections 7 or 11 of the Act.

Sincerely,

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
Los Angeles, California EX-23.1 7 a96405orexv23w1.txt EXHIBIT 23.1 Exhibit 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in this Registration Statement on Form S-4 of our report dated March 28, 2003, relating to the financial statements and financial statement schedule, which appears in Valeant Pharmaceuticals International's (formerly known as ICN Pharmaceuticals, Inc.) Annual Report on Form 10-K for the year ended December 31, 2002, and of our report dated February 25, 2003, relating to the financial statements, which appears in Ribapharm Inc.'s Annual Report on Form 10-K for the year ended December 31, 2002. We also consent to the references to us under the headings, "Experts" and "Independent Accountants", in such Registration Statement. PricewaterhouseCoopers LLP Los Angeles, California February 11, 2004 EX-25 8 a96405orexv25.txt EXHIBIT 25 EXHIBIT 25 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------ STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ------------------- CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ------------------- THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) NEW YORK 13-5160382 (State of incorporation bank) (I.R.S. employer if not a national identification no.) ONE WALL STREET, NEW YORK, N.Y. 10286 (Address of principal executive offices) (Zip Code) ------------------- VALEANT PHARMACEUTICALS INTERNATIONAL DELAWARE 33-0628076 (State or other jurisdiction (I.R.S. Employer incorporation of organization) Identification No.) 3300 HYLAND AVENUE COSTA MESA, CA 92626 (Address of principal executive offices) (Zip Code) ------------------- RIBAPHARM INC. DELAWARE 95-4805655 (State or other jurisdiction (I.R.S. Employer incorporation of organization) Identification No.) 3300 HYLAND AVENUE COSTA MESA, CA 92626 (Address of principal executive offices) (Zip Code) 7.0% SENIOR NOTES DUE 2011 (Title of the indenture securities) 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT.

Name Address ---- ------- Superintendent of Banks of the 2 Rector Street, State of New York New York, N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Washington, D.C. 20429 Corporation New York Clearing House New York, New York 10005 Association

(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Yes. 2. AFFILIATIONS WITH THE OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. None 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.229.10(d). 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1, filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) t1-bony. 2 t-1, 4. A copy of the existing By-Laws of the Trustees. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019). 6. The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.) 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York, and State of New York, on the 30th day of January, 2004. THE BANK OF NEW YORK By: /s/ John Guiliano ____________________ John Guiliano Authorized Signer t1-bony.3 t-1, EXHIBIT 7 Consolidated Report of Condition of THE BANK OF NEW YORK of One Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business September 30, 2003, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.

Dollar Amounts ASSETS In Thousands Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin...................................... $ 3,688,426 Interest-bearing balances.......................... 4,380,259 Securities: Held-to-maturity securities........................ 270,396 Available-for-sale securities...................... 21,509,356 Federal funds sold in domestic offices.................. 1,269,945 Securities purchased under agreements to resell......... 5,320,737 Loans and lease financing receivables: Loans and leases held for sale..................... 629,178 Loans and leases, net of unearned income...........38,241,326 LESS: Allowance for loan and lease losses........813,502 Loans and leases, net of unearned income and allowance.......................... 37,427,824 Trading Assets.......................................... 6,323,529 Premises and fixed assets (including capitalized leases)................................ 938,488 Other real estate owned................................. 431 Investments in unconsolidated subsidiaries and associated companies........................... 256,230 Customers' liability to this bank on acceptances outstanding............................ 191,307 Intangible assets....................................... Goodwill........................................... 2,562,478 Other intangible assets............................ 798,536 Other assets....................................... 6,636,012 -----------

Total assets....................................................... $92,203,132 =========== LIABILITIES Deposits: In domestic offices........................................... $35,637,801 Noninterest-bearing........... 15,795,823 Interest-bearing.............. 19,841,978 In foreign offices, Edge and Agreement subsidiaries, and IBFs................................... 23,759,599 Noninterest-bearing........... 599,397 Interest-bearing.............. 23,160,202 Federal funds purchased in domestic offices........................ 464,907 Securities sold under agreements to repurchase..................... 693,638 Trading liabilities................................................ 2,634,445 Other borrowed money: (includes mortgage indebtedness and obligations under capitalized leases)......................... 11,168,402 Bank's liability on acceptances executed and outstanding................................................... 193,690 Subordinated notes and debentures.................................. 2,390,000 Other liabilities.................................................. 6,573,955 ----------- Total liabilities.................................................. $83,516,437 =========== Minority interest in consolidated subsidiaries..................... 519,418 EQUITY CAPITAL Perpetual preferred stock and related surplus...................... 0 Common stock....................................................... 1,135,284 Surplus............................................................ 2,057,234 Retained earnings.................................................. 4,892,597 Accumulated other comprehensive income............................. 82,162 Other equity capital components.................................... 0 Total equity capital............................................... 8,167,277 ----------- Total liabilities minority interest and equity capital............. $92,203,132 =========== I, Thomas J. Mastro, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition is true and correct to the best of my knowledge and belief. Thomas J. Mastro, Senior Vice President and Comptroller We, the undersigned directors, attest to the correctness of this statement of resources and liabilities. We declare that it has been examined by us, and to the best of our knowledge and belief has been prepared in conformance with the instructions and is true and correct. _ Thomas A. Renyi | Gerald L. Hassell | Directors Alan R. Griffith _| _______________________________________________________________________________ EX-99.1 9 a96405orexv99w1.htm EXHIBIT 99.1

Form of Letter of Transmittal

Exhibit 99.1

LETTER OF TRANSMITTAL

Valeant Pharmaceuticals International

Ribapharm Inc.

offer for all outstanding

7.0% Senior Notes due 2011

in exchange for

7.0% Senior Notes due 2011

which have been registered under

the Securities Act of 1933, as amended,

pursuant to the prospectus dated                             , 2004

THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON                         , 2004, UNLESS EXTENDED (SUCH TIME AND DATE, AS SO EXTENDED, THE “EXPIRATION DATE”). TENDERS MAY BE WITHDRAWN PRIOR TO THE EXPIRATION DATE.

The exchange agent for the exchange offer is:

The Bank of New York

For all forms of delivery:

The Bank of New York

Corporate Trust Operations

Reorganization Unit

101 Barclay Street, 7 East

New York, NY 10286

Attention: Ms. Diane Amoroso

Facsimile: (212) 298-1915

For confirmation, call: (212) 815-3738

DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OR FACSIMILE NUMBER OTHER THAN AS INDICATED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.

THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.

      The prospectus of Valeant Pharmaceuticals International, a Delaware corporation, and its wholly owned subsidiary, Ribapharm Inc., a Delaware corporation (together, the “Issuers”), dated                     , 2004, as the same may be amended or supplemented from time to time (the “Prospectus”), and this letter of transmittal, together constitute the Issuers’ offer, referred to as the exchange offer, to exchange an aggregate principal amount of up to $300,000,000 of the Issuers’ 7.0% Senior Notes due 2011, which have been registered under the Securities Act of 1933, as amended (the “New Notes”), for a like principal amount of the Issuers’ issued and outstanding 7.0% Senior Notes due 2011 (the “Old Notes”). Capitalized terms used but not defined in this letter of transmittal shall have the same meaning given to them in the Prospectus, as it may be amended or supplemented.

      This letter of transmittal is to be completed by a holder of Old Notes if either (a) a tender of Old Notes is to be made by book-entry transfer to the account of the exchange agent at The Depository Trust Company (“DTC”), pursuant to the procedures for tender by book-entry transfer set forth in the Prospectus under “The Exchange Offer — Procedures

for Tendering Old Notes” and an agent’s message, as defined below, is not delivered or (b) certificates for such Old Notes are to be forwarded herewith. Certificates or book-entry confirmation of the transfer of Old Notes into the exchange agent’s account at DTC, as well as this letter of transmittal, properly completed and duly executed, with any required signature guarantees, and any other documents, such as endorsements, bond powers, opinions of counsel, certifications and powers of attorney, if applicable, required by this letter of transmittal, must be received by the exchange agent at its address set forth herein on or prior to the expiration date. In connection with any tender of Old Notes by book-entry transfer, an agent’s message may be delivered as part of the book-entry confirmation in lieu of this letter of transmittal. The term “book-entry confirmation” means a confirmation of a book-entry transfer of Old Notes into the exchange agent’s account at DTC. The term “agent’s message” means a message transmitted to the exchange agent by DTC which states that DTC has received an express acknowledgment that the tendering holder agrees to be bound by the letter of transmittal and that the Issuers may enforce the letter of transmittal against such holder.

      If Old Notes are tendered pursuant to book-entry procedures, the exchange agent must receive, no later than 5:00 p.m., New York City time, on the expiration date, book-entry confirmation of the tender of the Old Notes into the exchange agent’s account at DTC, along with a completed letter of transmittal or an agent’s message.

      By crediting the Old Notes to the exchange agent’s account at DTC and by complying with the applicable procedures of DTC’s Automated Tender Offer Program, or ATOP, with respect to the tender of the Old Notes, including by the transmission of an agent’s message, the holder of Old Notes acknowledges and agrees to be bound by the terms of this letter of transmittal, and the participant in DTC confirms on behalf of itself and the beneficial owners of such Old Notes all provisions of this letter of transmittal as being applicable to it and such beneficial owners as fully as if such participant and each such beneficial owner had provided the information required herein and executed and transmitted this letter of transmittal to the exchange agent.

      Holders of Old Notes whose certificates for such Old Notes are not immediately available or who are unlikely to be able to deliver all required documents to the exchange agent on or prior to the expiration date or who cannot complete a book-entry transfer on a timely basis may tender their Old Notes according to the guaranteed delivery procedures described in the Prospectus under “The Exchange Offer — Procedures for Tendering Old Notes — Guaranteed Delivery.”

      DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.

      The undersigned has completed the appropriate boxes below and signed this letter of transmittal to indicate the action the undersigned desires to take with respect to the exchange offer.

2

      List below the Old Notes to which this letter of transmittal relates. The name(s) and address(es) of the registered holder(s) of the Old Notes tendered hereby should be printed below, if they are not already set forth below, as they appear on the certificates representing such Old Notes. The certificate number(s) and the principal amount of Old Notes that the undersigned wishes to tender should be indicated in the appropriate boxes below. If the space provided below is inadequate, the certificate numbers and principal amount of Old Notes should be listed on a separate, signed schedule affixed hereto.

DESCRIPTION OF OLD NOTES TENDERED
If Blank, please print Name and
Address of Registered Holder	Old Notes Tendered (Attach Additional List of Notes)
			Principal Amount
			of Old Notes
	Certificate	Principal Amount	Tendered (If Less
	Number(s)*	of Old Notes	Than All)**
	Total Amount Tendered:
* Need not be completed by book-entry holders.
** Old Notes may be tendered in whole or in part in denominations of $1,000 and integral multiples thereof. Unless otherwise indicated in this column, a holder will be deemed to have tendered ALL of the Old Notes held by such holder indicated in the corresponding column to the left of this column.

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      BOXES BELOW ARE TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY:

o CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND COMPLETE THE FOLLOWING:

Name of Tendering Institution: 

DTC Account No.:      Transaction Code No. 

o CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING:

Name(s) of Registered Holder(s): 

Window Ticket Number (if any): 

Date of Execution of Notice of Guaranteed Delivery: 

Name of Institution which Guaranteed Delivery: 

      IF GUARANTEED DELIVERY IS TO BE MADE BY BOOK-ENTRY TRANSFER:

Name of Tendering Institution: 

DTC Account No.      Transaction Code No. 

o CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED OLD NOTES ARE TO BE RETURNED BY CREDITING THE DTC ACCOUNT NUMBER SET FORTH ABOVE.

o CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE OLD NOTES FOR ITS OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING ACTIVITIES (A “PARTICIPATING BROKER-DEALER”) AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.*

Name: 

Address: 

      * You are entitled to as many copies as you reasonably believe necessary. If you require more than 10 copies, please indicate the number required in the following space: 

4

PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY

Ladies and Gentlemen:

      The undersigned hereby tenders to the Issuers the principal amount of Old Notes indicated above, upon the terms and subject to the conditions of the exchange offer. Subject to and effective upon the acceptance for exchange of all or any portion of the Old Notes tendered herewith in accordance with the terms and conditions of the exchange offer, including, if the exchange offer is extended or amended, the terms and conditions of any such extension or amendment, the undersigned hereby irrevocably sells, assigns and transfers to or upon the order of the Issuers all right, title and interest in and to such Old Notes.

      The undersigned hereby irrevocably constitutes and appoints the exchange agent as its agent and attorney-in-fact, with full knowledge that the exchange agent is also acting as agent of the Issuers in connection with the exchange offer and as trustee under the indenture governing the Old Notes and the New Notes, with respect to the tendered Old Notes, with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), subject only to the right of withdrawal described in the Prospectus, to (1) deliver certificates representing such Old Notes, together with all accompanying evidences of transfer and authenticity, to or upon the order of the Issuer upon receipt by the exchange agent, as the undersigned’s agent, of the New Notes to be issued in exchange for such Old Notes, (2) present certificates for such Old Notes for transfer and to transfer the Old Notes on the books of the Issuers and (3) receive for the account of the Issuers all benefits and otherwise exercise all rights of beneficial ownership of such Old Notes, all in accordance with the terms and conditions of the exchange offer.

      The undersigned hereby represents and warrants that (1) the undersigned has full power and authority to tender, exchange, sell, assign and transfer the Old Notes tendered hereby, (2) the Issuers will acquire good, marketable and unencumbered title to the tendered Old Notes, free and clear of all liens, restrictions, charges and other encumbrances, and (3) the Old Notes tendered hereby are not subject to any adverse claims or proxies. The undersigned warrants and agrees that the undersigned will, upon request, execute and deliver any additional documents requested by the Issuers or the exchange agent to complete the exchange, sale, assignment and transfer of the Old Notes tendered hereby. The undersigned agrees to all of the terms and conditions of the exchange offer.

      The undersigned understands that tenders of Old Notes pursuant to any one of the procedures described in “The Exchange Offer — Procedures for Tendering Old Notes” in the Prospectus and in the instructions accompanying this letter of transmittal will, upon the Issuers’ acceptance for exchange of such tendered Old Notes, constitute a binding agreement between the undersigned and the Issuers upon the terms and subject to the conditions of the exchange offer and that the tendering holder will be deemed to have waived the right to receive any payment in respect of interest or otherwise on such Old Notes accrued up to the date of issuance of the New Notes. The undersigned recognizes that, under certain circumstances set forth in the Prospectus, the Issuer may not be required to accept for exchange any of the Old Notes tendered hereby.

      Unless otherwise indicated herein in the box entitled “Special Issuance Instructions” below, the undersigned hereby directs that the New Notes be issued in the name(s) of the undersigned or, in the case of a book-entry transfer of Old Notes, that such New Notes be credited to the account indicated above maintained at DTC. If applicable, substitute certificates representing Old Notes not exchanged or not accepted for exchange will be issued to the undersigned or, in the case of a book-entry transfer of Old Notes, will be credited to the account indicated above maintained at DTC. Similarly, unless otherwise indicated under “Special Delivery Instructions,” the undersigned hereby directs that the New Notes be delivered to the undersigned at the address shown below the undersigned’s signature. The undersigned recognizes that the Issuers have no obligation pursuant to “Special Delivery Instructions” to transfer any Old Notes from a registered holder thereof if the Issuers do not accept for exchange any of the principal amount of such Old Notes so tendered.

      By tendering Old Notes and executing this letter of transmittal, the undersigned hereby represents and agrees that it:

•  is not an “affiliate,” as defined under the Securities Act of 1933, or the Securities Act, of the Issuers;

•  acquired the New Notes in its ordinary course of business;

•  is not engaged in, does not intend to engage in and has no arrangement or understanding with any person to participate in a “distribution,” as defined under the Securities Act, of the New Notes; and

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•  is not acting on behalf of any person who could not truthfully make the foregoing representations.

      If any of the above conditions is not satisfied or the undersigned acquired its old notes to be exchanged for new notes in the exchange offer directly from the Issuers or any affiliate thereof, it must acknowledge and agree that it:

•  may not, under the Securities and Exchange Commission, or the SEC, policy as in effect on July 1, 2003, rely on the position of the SEC enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted in the SEC’s letter to Shearman & Sterling dated July 2, 1993, and similar no-action letters; and

•  must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction and that such a secondary resale transaction must be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K.

      Any broker-dealer that receives New Notes for its own account in exchange for Old Notes may be deemed to be an “underwriter” within the meaning of the Securities Act. Each broker-dealer that receives New Notes for its own account in exchange for Old Notes represents that the Old Notes to be exchanged for the New Notes were acquired by it as a result of market-making activities or other trading activities (and not acquired directly from the Issuers or any of their affiliates) and acknowledges that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of the New Notes; however, by so acknowledging and by delivering a prospectus, the participating broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

      The Issuers have agreed that, upon receiving prior written notice from a participating broker-dealer, during the period ending on the earlier of (1) 270 days from the effective date of the exchange offer registration statement relating to the New Notes, subject to extension in limited circumstances, and (2) the date on which participating broker-dealers are no longer required to deliver a prospectus in connection with any resale of New Notes, they will use commercially reasonable efforts to keep such exchange offer registration statement effective to the extent necessary to ensure that the prospectus included in the exchange offer registration statement is available for sales of the New Notes by participating broker-dealers.

      All authority conferred or agreed to be conferred herein and every obligation of the undersigned under this letter of transmittal shall survive the death or incapacity of the undersigned, and any obligation of the undersigned hereunder shall be binding upon the heirs, executors, administrators, personal representatives, trustees in bankruptcy, legal representatives, successors and assigns of the undersigned. Except as stated in the Prospectus under “The Exchange Offer — Withdrawal Rights,” this tender is irrevocable.

      The undersigned, by completing the box entitled “Description of Old Notes” above and signing this letter of transmittal, will be deemed to have tendered the Old Notes as set forth in such box.

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HOLDER(S) SIGN HERE

(SEE INSTRUCTIONS 2 AND 7)

(PLEASE COMPLETE SUBSTITUTE FORM W-9 BELOW)

(NOTE: SIGNATURE(S) MUST BE GUARANTEED IF REQUIRED BY INSTRUCTION 2)

Must be signed by registered holder(s) exactly as name(s) appear on Certificate(s) for the Old Notes hereby tendered or on a security position listing, or by any person(s) authorized to become the registered holder(s) by endorsements and documents transmitted herewith (including such opinions of counsel, certifications and other information as may be required by the Issuers or the Trustee for the Old Notes to comply with the restrictions on transfer applicable to the Old Notes). If the signature is by an attorney-in-fact, executor, administrator, trustee, guardian, officer of a corporation or another acting in a fiduciary capacity or representative capacity, please set forth the signer’s full title. See Instruction 7.

(SIGNATURE(S) OF HOLDER(S))

Signature(s):  Dated: ______________________________ , 2004

Name(s):

(Please Print)

Address:

(Include Zip Code)

Area Code and Telephone Number:

TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER(S)

GUARANTEE OF SIGNATURE(S)

(SEE INSTRUCTION 2)

Authorized Signature:

Name:

(Please Print)

Date: ______________________________ , 2004

Capacity or Title:

Name of Firm:

Address:

(Include Zip Code)

Area Code and Telephone Number:

7

SPECIAL ISSUANCE INSTRUCTIONS

(See Instructions 2, 5, 8 AND 14)

      To be completed ONLY if the New Notes are to be issued in the name of someone other than the registered holder of the Old Notes whose name(s) appear(s) above.

Issue New Notes to:

Name:

(Please Print)

Address:

(Include Zip Code)

(Taxpayer Identification or Social Security No.)

SPECIAL DELIVERY INSTRUCTIONS

(See Instructions 2, 6, 8 AND 14)

      To be completed ONLY if the New Notes are to be delivered to someone other than the registered holder of the Old Notes whose name(s) appear(s) above, or to such registered holder(s) at an address other than that shown above.

Mail New Notes to:

Name:

(Please Print)

Address:

(Include Zip Code)

(Taxpayer Identification or Social Security No.)

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INSTRUCTIONS

Forming Part of the Terms and Conditions of the Exchange Offer

      1.     Delivery of Letter of Transmittal and Certificates; Guaranteed Delivery Procedures. This letter of transmittal is to be completed by a holder of Old Notes to tender such holder’s Old Notes if either (a) tenders are to be made pursuant to the procedures for tender by book-entry transfer set forth in “The Exchange Offer — Procedures for Tendering Old Notes” in the Prospectus and an agent’s message, as defined on page 2 hereof, is not delivered or (b) certificates are to be forwarded herewith. Certificates or book-entry confirmation of transfer of Old Notes into the exchange agent’s account at DTC, as well as this letter of transmittal, properly completed and duly executed, with any required signature guarantees, and any other documents, such as endorsements, bond powers, opinions of counsel, certifications and powers of attorney, if applicable, required by this letter of transmittal, must be received by the exchange agent at its address set forth herein on or prior to the expiration date. If the tender of Old Notes is effected in accordance with applicable ATOP procedures for book-entry transfer, an agent’s message may be transmitted to the exchange agent in lieu of an executed letter of transmittal. Old Notes may be tendered in whole or in part in integral multiples of $1,000.

      For purposes of the exchange offer, the term “holder” includes any participant in DTC named in a securities position listing as a holder of Old Notes. Only a holder of record may tender Old Notes in the exchange offer. Any beneficial owner of Old Notes who wishes to tender some or all of such Old Notes should arrange with DTC, a DTC participant or the record owner of such Old Notes to execute and deliver this letter of transmittal or to send an electronic instruction effecting a book-entry transfer on his or her behalf. See Instruction 7.

      Holders who wish to tender their Old Notes and (i) whose certificates for the Old Notes are not immediately available or for whom all required documents are unlikely to reach the exchange agent on or prior to the expiration date; or (ii) who cannot complete the procedures for delivery by book-entry transfer on a timely basis, may tender their Old Notes by properly completing and duly executing a notice of guaranteed delivery pursuant to the guaranteed delivery procedures set forth in “The Exchange Offer — Procedures for Tendering Old Notes — Guaranteed Delivery” in the Prospectus. Pursuant to such procedures: (i) such tender must be made by or through an eligible institution; (ii) a properly completed and duly executed notice of guaranteed delivery, substantially in the form made available by the Issuers, must be received by the exchange agent on or prior to the expiration date; and (iii) the certificates for the Old Notes, or a book-entry confirmation, together with a properly completed and duly executed letter of transmittal, or an agent’s message in lieu thereof, with any required signature guarantees and any other documents required by this letter of transmittal, must be received by the exchange agent within three New York Stock Exchange trading days after the date of execution of such notice of guaranteed delivery for all such tendered Old Notes, all as provided in “The Exchange Offer — Procedures for Tendering Old Notes — Guaranteed Delivery” in the Prospectus.

      The notice of guaranteed delivery may be delivered by hand, facsimile (for eligible institutions only), mail or overnight delivery service to the exchange agent, and must include a guarantee by an eligible institution in the form set forth in such notice of guaranteed delivery. For Old Notes to be properly tendered pursuant to the guaranteed delivery procedure, the exchange agent must receive a notice of guaranteed delivery on or prior to the expiration date. As used herein, “eligible institution” means a firm or other entity which is identified as an “Eligible Guarantor Institution” in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended, including a bank; a broker, dealer, municipal securities broker or dealer or government securities broker or dealer; a credit union; a national securities exchange, registered securities association or clearing agency; or a savings association.

      The method of delivery of certificates for the Old Notes, this letter of transmittal and all other required documents is at the election and sole risk of the tendering holder. If delivery is by mail, registered mail with return receipt requested, properly insured, or overnight delivery service is recommended. In all cases, sufficient time should be allowed to ensure timely delivery. No letters of transmittal or Old Notes should be sent to the Issuers. Delivery is complete when the exchange agent actually receives the items to be delivered. Delivery of documents to DTC in accordance with DTC’s procedures does not constitute delivery to the exchange agent.

      The Issuers will not accept any alternative, conditional or contingent tenders. Each tendering holder, by execution of a letter of transmittal or by causing the transmission of an agent’s message, waives any right to receive any notice of the acceptance of such tender.

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      2.     Guarantee of Signatures. No signature guarantee on this letter of transmittal is required if:

      a.     this letter of transmittal is signed by the registered holder (which term, for purposes of this document, shall include any participant in DTC whose name appears on a security position listing as the owner of the Old Notes) of Old Notes tendered herewith, unless such holder has completed either the box entitled “Special Issuance Instructions” or the box entitled “Special Delivery Instructions” above; or

      b.     such Old Notes are tendered for the account of a firm that is an eligible institution.

      In all other cases, an eligible institution must guarantee the signature(s) on this letter of transmittal. See Instruction 7.

      3.     Inadequate Space. If the space provided in the box captioned “Description of Old Notes” is inadequate, the certificate number(s) and/or the principal amount of Old Notes and any other required information should be listed on a separate, signed schedule which is attached to this letter of transmittal.

      4.     Partial Tenders (not applicable to holders who tender by book-entry transfer). If less than all the Old Notes evidenced by any certificate submitted are to be tendered, fill in the principal amount of Old Notes which are to be tendered in the “Principal Amount Tendered” column of the box entitled “Description of Old Notes” on page 3 of this letter of transmittal. In such case, new certificate(s) for the remainder of the Old Notes that were evidenced by your old certificate(s) will be sent only to the holder of the Old Notes as promptly as practicable after the expiration date. All Old Notes represented by certificates delivered to the exchange agent will be deemed to have been tendered unless otherwise indicated. Tender of Old Notes will be accepted only in integral multiples of $1,000.

      5.     Withdrawal Rights. Except as otherwise provided herein, tenders of Old Notes may be withdrawn at any time on or prior to the expiration date. In order for a withdrawal to be effective, a written notice of withdrawal must be timely received by the exchange agent at its address set forth above and in the Prospectus on or prior to the expiration date. Any such notice of withdrawal must specify the name of the person that tendered the Old Notes to be withdrawn; identify the Old Notes to be withdrawn, including the total principal amount of Old Notes to be withdrawn; and, where certificates for Old Notes are transmitted, the name of the registered holder of the Old Notes, if different from that of the person withdrawing such Old Notes. If certificates for the Old Notes have been delivered or otherwise identified to the exchange agent, then the tendering holder must submit the serial numbers of the Old Notes to be withdrawn and the signature on the notice of withdrawal must be guaranteed by an eligible institution, except in the case of Old Notes tendered for the account of an eligible institution. If Old Notes have been tendered pursuant to the procedures for book-entry transfer set forth in the Prospectus under “The Exchange Offer — Procedures for Tendering Old Notes,” the notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawn Old Notes and the notice of withdrawal must be delivered to the exchange agent. Withdrawals of tenders of Old Notes may not be rescinded; however, Old Notes properly withdrawn may again be tendered at any time on or prior to the expiration date by following any of the procedures described in the Prospectus under “The Exchange Offer — Procedures for Tendering Old Notes.”

      All questions regarding the validity, form and eligibility, including time of receipt, of withdrawal notices will be determined by the Issuers, in their sole discretion, which determination of such questions as well as their interpretation of the terms and conditions of the exchange offer (including this letter of transmittal) will be final and binding on all parties. None of the Issuers, any of their respective affiliates or assigns, the exchange agent or any other person is under any obligation to give notice of any irregularities in any notice of withdrawal, nor will any of them be liable for failing to give any such notice.

      Withdrawn Old Notes will be returned to the holder after withdrawal. Old Notes tendered by book-entry transfer through DTC that are withdrawn will be credited to an account maintained with DTC. The Old Notes will be returned or credited to the account maintained at DTC as promptly as practicable after withdrawal. Any Old Notes which have been tendered for exchange but which are withdrawn will be returned to the holder thereof without cost to such holder.

      6.     Return of Unexchanged Old Notes. If any tendered Old Notes are not exchanged pursuant to the exchange offer for any reason, or if certificates are submitted for more Old Notes than are tendered or accepted for exchange, certificates for such nonexchanged or nontendered Old Notes will be returned, or, in the case of Old Notes tendered by book-entry transfer, such Old Notes will be credited to an account maintained at DTC, without expense to the tendering holder, as promptly as practicable following the expiration or termination of the exchange offer.

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      7.     Signatures on Letter of Transmittal, Assignments and Endorsements. If this letter of transmittal is signed by the registered holder(s) of the Old Notes tendered hereby, the signature(s) must correspond exactly with the name(s) as written on the face of the certificate(s) without any change whatsoever.

      If any Old Notes tendered hereby are owned of record by two or more joint owners, all such owners must sign this letter of transmittal.

      If any tendered Old Notes are registered in different name(s) on several certificates, it will be necessary to complete, sign and submit as many separate letters of transmittal or facsimiles hereof as there are different registrations of certificates.

      If this letter of transmittal or any certificates, endorsements, bond powers, powers of attorney or any other document required by this letter of transmittal are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing and, unless waived by the Issuers, must submit proper evidence satisfactory to the Issuers, in their sole discretion, of each such person’s authority so to act.

      When this letter of transmittal is signed by the registered owner(s) of the Old Notes listed and transmitted hereby, no endorsement(s) of certificate(s) or separate instruments of transfer or exchange are required unless New Notes are to be issued in the name of a person other than the registered holder(s). Signature(s) on such certificate(s) or instruments of transfer or exchange must be guaranteed by an eligible institution.

      If this letter of transmittal is signed by a person other than the registered owner(s) of the Old Notes listed, the certificates must be endorsed or accompanied by a written instrument or instruments of transfer or exchange, signed exactly as the name or names of the registered owner(s) appear(s) on the certificates, and also must be accompanied by such opinions of counsel, certifications and other information as the Issuers or the trustee under the indenture for the Old Notes may require in accordance with the restrictions on transfer applicable to the Old Notes. Signatures on such certificates or bond powers must be guaranteed by an eligible institution.

      8.     Special Issuance and Delivery Instructions. If New Notes are to be issued in the name of a person other than the signer of this letter of transmittal, or if New Notes are to be sent to someone other than the signer of this letter of transmittal or to an address other than that shown above, the appropriate boxes on this letter of transmittal should be completed. In the case of issuance in a different name, the U.S. taxpayer identification number of the person named must also be indicated. A holder of Old Notes tendering Old Notes by book-entry transfer may instruct that Old Notes not exchanged be credited to such account maintained at DTC as such holder may designate. If no such instructions are given, certificates for Old Notes not exchanged will be returned by mail to the address of the signer of this letter of transmittal or, if the Old Notes not exchanged were tendered by book-entry transfer, such Old Notes will be returned by crediting the account indicated on page 3 above maintained at DTC. See Instruction 6.

      9.     Irregularities. All questions regarding the form of documents, validity, eligibility (including time of receipt) and acceptance for exchange of any tender of Old Notes will be determined by the Issuers, in their sole discretion, which determination of such questions as well as their interpretation of the terms and conditions of the exchange offer will be final and binding on all parties. The Issuers reserve the absolute right, in their sole and absolute discretion, to reject any tenders determined to be in improper form or the acceptance of which, or exchange for which, may, in the view of counsel to the Issuers, be unlawful. The Issuers also reserve the absolute right, subject to applicable law, to waive any of the conditions of the exchange offer set forth in the Prospectus under “The Exchange Offer — Conditions to the Exchange Offer” or any condition or irregularity in any tender of Old Notes by any holder, whether or not the Issuers waived similar conditions or irregularities in the case of other holders. A tender of Old Notes is invalid until all defects and irregularities have been cured or waived. None of the Issuers, any of their respective affiliates or assigns, the exchange agent or any other person is under any obligation to give notice of any irregularities in any notice of withdrawal, nor will any of them be liable for failing to give any such notice.

      10.     Questions, Requests for Assistance and Additional Copies. Questions regarding the procedure for tendering Old Notes and requests for assistance may be directed to the exchange agent at its address and telephone number set forth on the front of this letter of transmittal. Additional copies of the Prospectus, the letter of transmittal, the notice of guaranteed delivery and Forms W-8 (as defined in Instruction 16) may be obtained from the exchange agent at the

11

address and telephone/ facsimile numbers indicated above, or from your broker, dealer, commercial bank, trust company or other nominee.

      11.     Waiver of Conditions. The Issuers reserve the absolute right to waive satisfaction of any or all conditions, completely or partially, enumerated in the Prospectus.

      12.     No Conditional Tenders. No alternative, conditional or contingent tenders will be accepted. All tendering holders of Old Notes, by execution of this letter of transmittal, shall waive any right to receive notice of the acceptance of Old Notes for exchange.

      None of the Issuers, any of their respective affiliates or assigns, the exchange agent or any other person is under any obligation to give notice of any defect or irregularity with respect to any tender of Old Notes, nor will any of them incur any liability for failing to give any such notice.

      13.     Mutilated, Lost, Destroyed or Stolen Certificates. If any certificate(s) representing Old Notes have been mutilated, lost, destroyed or stolen, the holder should promptly notify the exchange agent. The holder will then be instructed as to the steps that must be taken in order to replace the certificate(s). This letter of transmittal and related documents cannot be processed until the procedures for replacing lost, destroyed or stolen certificate(s) have been followed.

      14.     Security Transfer Taxes. Except as provided below, holders who tender their Old Notes for exchange will not be obligated to pay any transfer taxes in connection therewith. If, however, (i) New Notes are to be delivered to, or are to be issued in the name of, any person other than the registered holder of the Old Notes tendered or (ii) a transfer tax is imposed for any reason other than the exchange of Old Notes in connection with the exchange offer, then the amount of any such transfer tax (whether imposed on the registered holder or any other persons) will be payable by the tendering holder or such other person. The amount of any transfer taxes payable by a holder or other person will be deducted from the New Notes unless satisfactory evidence of the payment of such taxes or exemption therefrom is submitted.

      Except as provided in this Instruction 14, it is not necessary for transfer tax stamps to be affixed to the Old Notes specified in this letter of transmittal.

      15.     Incorporation of Letter of Transmittal. This letter of transmittal shall be deemed to be incorporated in any tender of Old Notes by any DTC participant effected through procedures established by DTC and, by virtue of such tender, such participant shall be deemed to have acknowledged and accepted this letter of transmittal on behalf of itself and the beneficial owners of any Old Notes so tendered.

      16.     Backup Withholding; Tax Identification Number; Purpose of Form W-9. To prevent backup withholding on payments of interest on the New Notes, each tendering U.S. Holder (as defined below) must either (x) provide his, her or its correct taxpayer identification number (“TIN”) by completing the copy of the substitute IRS Form W-9 attached to this Letter of Transmittal, certifying that (1) he, she or it is a “United States person” (as defined in section 7701(a)(30) of the Internal Revenue Code of 1986, as amended (the “Code”), (2) the TIN provided is correct (or that such U.S. Holder is awaiting a TIN) and (3) that the U.S. Holder is exempt from backup withholding because (i) the holder has not been notified by the Internal Revenue Service (the “IRS”) that he, she or it is subject to backup withholding as a result of a failure to report all interest or dividends, or (ii) the IRS has notified the U.S. Holder that he, she or it is no longer subject to backup withholding or (y) otherwise establish an exemption. If you do not provide your TIN to the exchange agent, backup withholding may begin and continue until you furnish your TIN. If you do not provide the exchange agent with the correct TIN or an adequate basis for exemption, you may be subject to a $50 penalty imposed by the Internal Revenue Services (the “IRS”), and payments made with respect to the New Notes may be subject to backup withholding at a current rate of 28%. If withholding results in an overpayment of taxes, a refund may be obtained.

      Certain holders (including, among others, corporations and certain foreign individuals) are exempt recipients not subject to these backup withholding requirements. See the enclosed copy of the IRS Substitute Form W-9, Request for Taxpayer Identification Number and Certification, and the Instructions to Form W-9. To avoid possible erroneous backup withholding, exempt U.S. Holders, while not required to file Substitute Form W-9, should complete and return the Substitute Form W-9 and check the “Exempt” box on its face. Foreign persons cannot submit a Substitute Form W-9, but may qualify as exempt recipients by submitting to the exchange agent a properly completed IRS Form W-8BEN, certifying under penalty of perjury to the person’s foreign status. Such forms may be obtained from the exchange agent.

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      For the purposes of these instructions, a “U.S. Holder” is (i) an individual who is a citizen or resident alien of the United States, (ii) a corporation (including an entity taxable as a corporation) or partnership created under the laws of the United States or of any political subdivision thereof, (iii) an estate the income of which is subject to U.S. federal income tax regardless of its source or (iv) a trust if (a) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (b) the trust has a valid election in effect under applicable Treasury regulations to be treated as a U.S. person.

      See the enclosed Guidelines for Request for Taxpayer Identification Number and Certification on Substitute Form W-9 for additional information and instructions.

13

REQUESTER’S NAME: THE BANK OF NEW YORK
SUBSTITUTE FORM W-9	PART 1 — PLEASE PROVIDE YOUR TIN IN THE BOX AT THE RIGHT OR, IF YOU DO NOT HAVE A TIN, WRITE “APPLIED FOR” AND SIGN THE CERTIFICATION BELOW.	Social Security Number OR Taxpayer Identification Number o Exempt

Department of the Treasury, Internal Revenue Service (IRS) Payer’s Request for Taxpayer Identification Number (TIN) Please fill in your name and address below. Name Address (number and street) City, State and Zip Code	PART 2 — CERTIFICATION — Under penalties of perjury, I certify that: (1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me), (2) I am not subject to backup withholding either because (a) I am exempt from backup withholding, (b) I have not been notified by the IRS that I am subject to backup withholding as a result of failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding, and (3) I am a U.S. person (as defined for U.S. federal income tax purposes). CERTIFICATION INSTRUCTIONS — You must cross out item (2) in Part 2 above if you have been notified by the IRS that you are subject to backup withholding because of under reporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding, you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out item (2). If you are exempt from backup withholding, check the box in Part 1 and see the enclosed “Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9”.
	Signature:	Date:

NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING ON ANY PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE, AS WELL AS FUTURE INTEREST PAYMENTS. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL INFORMATION.

YOU MUST COMPLETE THE FOLLOWING CERTIFICATION IF YOU WROTE “APPLIED FOR” ON SUBSTITUTE FORM W-9.

CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER

I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (b) I intend to mail or deliver an application in the near future. I understand that until I provide a taxpayer identification number, all reportable payments made to me will be subject to backup withholding, but will be refunded if I provide a certified taxpayer identification number within 60 days.

Signature: ______________________________  Date: 

THE IRS DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.

14

GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER

ON SUBSTITUTE FORM W-9

What Name and Number to Give the Requester

Name

If you are an individual, you must generally enter the name shown on your Social Security card. However, if you have changed your last name, for instance, due to marriage, without informing the Social Security Administration of the name change, enter your first name, the last name shown on your Social Security card, and your new last name. If the account is in joint names, list first and then circle the name of the person or entity whose number you enter in Part I of the form.

Sole Proprietor — You must enter your individual name as shown on your Social Security card. You may enter your business, trade or “doing business as” name on the business name line.

Limited Liability Company (LLC) — If you are a single-member LLC (including a foreign LLC with a domestic owner) that is disregarded as an entity separate from its owner under Treasury regulations §301.7701-3, enter the owner’s name. Enter the LLC’s name on the business name line. A disregarded domestic entity that has a foreign owner must use the appropriate Form W-8.

Other Entities — Enter the business name as shown on required federal income tax documents. This name should match the name shown on the charter or other legal document creating the entity. You may enter any business, trade or “doing business as” name on the business name line.

Taxpayer Identification Number (TIN)

You must enter your taxpayer identification number in the appropriate box. If you are a resident alien and you do not have and are not eligible to get a Social Security number, your taxpayer identification number is your IRS individual taxpayer identification number (ITIN). Enter it in the Social Security number box. If you do not have an individual taxpayer identification number, see How to Get a TIN below. If you are a sole proprietor and you have an employer identification number, you may enter either your Social Security number or employer identification number. However, using your employer identification number may result in unnecessary notices to the requester, and the IRS prefers that you use your Social Security number. If you are an LLC that is disregarded as an entity separate from its owner under Treasury regulations §301.7701-3, and are owned by an individual, enter the owner’s Social Security number. If the owner of a disregarded LLC is a corporation, partnership, etc., enter the owner’s employer identification number. See the chart below for further clarification of name and TIN combinations.

Social Security numbers (SSN’s) have nine digits separated by two hyphens: i.e. 000-00-0000. Employer identification numbers (EIN’s) have nine digits separated by only one hyphen: i.e. 00-0000000.

The table below will help determine the number to give the requester.

For this type of account:		Give Name and TIN of:
1.	Individual	The individual
2.	Two or more individuals (joint account)	The actual owner of the account or, if combined funds, the first individual on the account(1)
3.	Custodian account of a minor (Uniform Gift to Minors Act)	The minor(2)
4.	a. The usual revocable savings trust (grantor is also trustee)	The grantor-trustee(1)
	b. So-called trust account that is not a legal or valid trust under State law	The actual owner(1)
For this type of account:		Give Name and TIN of:
5.	Sole proprietorship	The owner
6.	A valid trust, estate, or pension trust	Legal entity(4)
7.	Corporation	The corporation
8.	Association, club, religious, charitable, educational or other tax-exempt organization	The organization
9.	Partnership	The partnership
10.	A broker or registered nominee	The broker or nominee
11.	Account with the Department of Agriculture in the name of a public entity (such as a state or local government, school district, or prison) that receives agricultural program payments	The public entity

(1)	List first and circle the name of the person whose number you furnish. If only one person on a joint account has a Social Security number, that person’s number must be furnished.
(2)	Circle the minor’s name and furnish the minor’s Social Security number.
(3)	You must show your individual name, but you may also enter your business or “doing business as” name. You may use either your Social Security number or employer identification number (if you have one).
(4)	List first and circle the name of the legal trust, estate or pension trust. (Do not furnish the taxpayer identification number of the personal representative or trustee unless the legal entity itself is not designated in the account title.)

Note:   If no name is circled when more than one name is listed, the number will be considered to be that of the first name listed.

How to Get a TIN

If you do not have a taxpayer identification number, apply for one immediately. To apply for a Social Security number, get Form SS-5, Application for a Social Security Number Card, from your local Social Security Administration office. Get Form W-7 to apply for an individual taxpayer identification number or Form SS-4, Application for Employer Identification Number, to apply for an employer identification number. You can get Forms W-7 and SS-4 from the IRS.

If you do not have a taxpayer identification number, write “Applied For” in the space for the taxpayer identification number, sign and date the form (including the Certificate of Awaiting Taxpayer Identification Number), and give it to the requester. For interest and dividend payments and certain payments made with respect to readily tradable instruments, you will generally have 60 days to get a taxpayer identification number and give it to the requester before you are subject to backup withholding. Other payments are subject to backup withholding without regard to the 60-day rule, until you provide your taxpayer identification number.

Note:   Writing “Applied For” means that you have already applied for a taxpayer identification number or that you intend to apply for one soon.

Exemption From Backup Withholding

Payees Exempt From Backup Withholding

Individuals (including sole proprietors and LLCs disregarded as entities separate from their individual owners) are NOT automatically exempt from backup withholding.

For interest, the following payees are generally exempt from backup withholding:

1)	An organization exempt from tax under section 501(a) of the Internal Revenue Code of 1986, as amended (the “Code”), an individual retirement account (IRA), or a custodial account under section 403(b)(7) of the Code if the account satisfies the requirements of section 401(f)(2) of the Code.
2)	The United States or any of its agencies or instrumentalities.
3)	A state, the District of Columbia, a possession of the United States, or any of their political subdivisions or instrumentalities.
4)	A foreign government or any of its political subdivisions, agencies or instrumentalities.
5)	An international organization or any of its agencies or instrumentalities.
6)	A corporation.
7)	A foreign bank of central issue.
8)	A dealer in securities or commodities required to register in the United States, the District of Columbia or a possession of the United States.
9)	A real estate investment trust.

10)	An entity registered at all times during the tax year under the Investment Company Act of 1940.
11)	A common trust fund operated by a bank under section 584(a) of the Code.
12)	A financial institution (as defined for purposes of section 3406 of the Code).
13)	A middleman known in the investment community as a nominee or who is listed in the most recent publication of the American Society of Corporate Secretaries, Inc., Nominee List.
14)	A trust exempt from tax under section 664 of the Code or described in section 4947 of the Code.

For broker transactions, persons listed in items 1-12, above, as well the persons listed in items 15-16, below, are exempt from backup withholding.

15)	A futures commission merchant registered with the Commodity Futures Trading Commission.
16)	A person registered under the Investment Advisors Act of 1940 who regularly acts as a broker.

If you are exempt from backup withholding, you should still complete and file Substitute Form W-9 to avoid possible erroneous backup withholding. Enter your correct taxpayer identification number in Part 1, write “Exempt” in Part 2, and sign and date the form and return it to the requester.

If you are a nonresident alien or a foreign entity not subject to backup withholding, give the requester the appropriate completed Form W-8BEN.

Privacy Act Notice. — Section 6109 of the Code requires you to give your correct taxpayer identification number to persons who must file information returns with the IRS to report interest, dividends and certain other income paid to you. The IRS uses the numbers for identification purposes and to help verify the accuracy of your tax return. The IRS may also provide this information to the Department of Justice for civil and criminal litigation and to cities, states, and the District of Columbia to carry out their tax laws. You must provide your taxpayer identification number whether or not you are required to file a tax return. Payers must generally withhold at the applicable rate on payments of taxable interest, dividends and certain other items to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply.

FOR ADDITIONAL INFORMATION, CONTACT YOUR TAX

CONSULTANT OR THE INTERNAL REVENUE SERVICE

15 EX-99.2 10 a96405orexv99w2.htm EXHIBIT 99.2

Exhibit 99.2

NOTICE OF GUARANTEED DELIVERY

VALEANT PHARMACEUTICALS INTERNATIONAL

RIBAPHARM INC.

offer for all outstanding

7.0% Senior Notes due 2011

in exchange for

7.0% Senior Notes due 2011

which have been registered under

the Securities Act of 1933, as amended,

pursuant to the prospectus dated                             , 2004

      This notice of guaranteed delivery, or one substantially equivalent to this form, must be used to accept the above-referenced exchange offer (the “Exchange Offer”) pursuant to the prospectus of Valeant Pharmaceuticals International, a Delaware corporation (“Valeant”), and Ribapharm Inc., a Delaware corporation and a wholly owned subsidiary of Valeant (“Ribapharm” and with Valeant, the “Issuers”), dated                     , 2004, as the same may be amended or supplemented from time to time (the “Prospectus”) and the accompanying letter of transmittal (the “Letter of Transmittal”), if (i) certificates for the Issuers’ 7.0% Senior Notes due 2011 (the “Old Notes”) are not immediately available or all required documents are unlikely to reach the exchange agent, The Bank of New York, on or prior to the Expiration Date, as defined below; or (ii) a book-entry transfer cannot be completed on a timely basis. This notice of guaranteed delivery may be delivered by hand, facsimile, mail or overnight delivery service to the exchange agent. See “The Exchange Offer — Procedures for Tendering Old Notes” in the Prospectus. In addition, in order to utilize the guaranteed delivery procedure to tender Old Notes pursuant to the Exchange Offer, (a) such tender must be made by or through an eligible institution, (b) a properly completed and duly executed notice of guaranteed delivery must be received by the exchange agent on or prior to the Expiration Date and (c) the certificates for the Old Notes, or a book-entry confirmation, together with a properly completed and duly executed Letter of Transmittal, or an agent’s message in lieu thereof, with any required signature guarantees and any other documents required by the Letter of Transmittal, must be received by the exchange agent within three (3) New York Stock Exchange trading days after the date of execution of such notice of guaranteed delivery for all such tendered Old Notes. Unless indicated otherwise, capitalized terms used but not defined herein shall have the same meaning given to them in the Prospectus or the Letter of Transmittal, as the case may be.

THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON                         , 2004, UNLESS EXTENDED (SUCH TIME AND DATE, AS SO EXTENDED, THE “EXPIRATION DATE”). TENDERS MAY BE WITHDRAWN PRIOR TO THE EXPIRATION DATE.

The exchange agent for the exchange offer is:

The Bank of New York

For all forms of delivery:

The Bank of New York

Corporate Trust Operations

Reorganization Unit

101 Barclay Street, 7 East

New York, NY 10286

Attention: Ms. Diane Amoroso

Facsimile: (212) 298-1915

For confirmation, call: (212) 815-3738

      Delivery of this notice of guaranteed delivery to an address other than as set forth above or transmission of this notice of guaranteed delivery via facsimile to a number other than as set forth above will not constitute a valid delivery.

      This notice of guaranteed delivery is not to be used to guarantee signatures. If a signature on the Letter of Transmittal is required to be guaranteed by an “eligible institution” under the instructions thereto, such signature guarantee must appear in the applicable space provided in the signature box on the Letter of Transmittal.

2

Ladies and Gentlemen:

      The undersigned hereby tenders to the Issuers, upon the terms and subject to the conditions set forth in the Prospectus and the Letter of Transmittal, and which together constitute the Exchange Offer, receipt of which is hereby acknowledged, the aggregate principal amount of Old Notes set forth below pursuant to the guaranteed delivery procedures set forth in the Prospectus under the caption “The Exchange Offer — Procedures for Tendering Old Notes — Guaranteed Delivery.”

Aggregate Principal Amount Tendered:	Name(s) of Registered Holder(s):
$---------------------------------------------------
(Must be in integral multiples of $1,000.)*

Certificate No(s). (if available):

________________________________________________________________________________

$

(Total Principal Amount Represented by Old Note Certificate(s))

If Old Notes will be tendered by book-entry transfer, provide the following information:

DTC Account Number:

Date:

All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned and every obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned.

X
X
Signature(s) of Owner(s) or Authorized Signatory	Date
Telephone Number:

Must be signed by the holder(s) of the Old Notes as their name(s) appear(s) on certificates for the Old Notes or on a security position listing, or by person(s) authorized to become registered holder(s) by endorsement and documents transmitted with this notice of guaranteed delivery. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer or other person acting in a fiduciary or representative capacity, such person must set forth his or her full title below and, unless waived by the Issuer, provide proper evidence satisfactory to the Issuer, in its sole discretion, of such person’s authority to so act.

Please print name(s) and address(es)

Name(s):

Capacity:

Address(es):

3

GUARANTEE OF DELIVERY

(Not to be used for signature guarantee)

      The undersigned, a firm or other entity which is identified as an “Eligible Guarantor Institution” in Rule 17Ad-15 under the Securities and Exchange Act of 1934, as amended, including: a bank; a broker, dealer, municipal securities broker or dealer or government securities broker or dealer; a credit union; a national securities exchange, registered securities association or clearing agency; or a savings association, each of the foregoing being referred to as an “eligible institution,” hereby guarantees to deliver to the exchange agent, at the address set forth herein, either the Old Notes tendered hereby in proper form for transfer, or confirmation of the book-entry transfer of such Old Notes to the exchange agent’s account at DTC, pursuant to the procedures for book-entry transfer set forth in the Prospectus, in either case together with a properly completed and duly executed Letter of Transmittal, or an agent’s message in lieu thereof, and any other required documents within three (3) New York Stock Exchange trading days after the date of execution of this notice of guaranteed delivery.

      The undersigned acknowledges that it must deliver to the exchange agent the Letter of Transmittal, or an agent’s message in lieu thereof, and the Old Notes tendered hereby in proper form for transfer or confirmation of the book-entry transfer of such Old Notes to the exchange agent’s account at DTC within the time period set forth above and that failure to do so could result in a financial loss to the undersigned.

Name of Firm:

Address:

Area Code and Telephone Number:

(Authorized Signature)

Title:

Name:

(Please type or print)

Date:

NOTE: DO NOT SEND CERTIFICATES FOR OLD NOTES WITH THIS FORM. CERTIFICATES FOR OLD NOTES SHOULD ONLY BE SENT WITH THE PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL.

4 EX-99.3 11 a96405orexv99w3.htm EXHIBIT 99.3

Exhibit 99.3

VALEANT PHARMACEUTICALS, INTERNATIONAL

RIBAPHARM, INC.

offer for all outstanding

7.0% Senior Notes due 2011

in exchange for

7.0% Senior Notes due 2011

which have been registered under

the Securities Act of 1933, as amended,

pursuant to the prospectus dated                             , 2004

THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON                         , 2004, UNLESS EXTENDED (SUCH TIME AND DATE, AS SO EXTENDED, THE “EXPIRATION DATE”). TENDERS MAY BE WITHDRAWN PRIOR TO THE EXPIRATION DATE.

To Brokers, Dealers, Commercial Banks,

Trust Companies and other Nominees:

      Valeant Pharmaceuticals International, a Delaware corporation, and Ribapharm Inc., a Delaware corporation (together, the “Issuers”), are making an offer, referred to as the exchange offer, to exchange an aggregate principal amount of up to $300,000,000 of their 7.0% Senior Notes due 2011, which have been registered under the Securities Act of 1933, as amended, (the “New Notes”), for a like principal amount of their outstanding 7.0% Senior Notes due 2011 (the “Old Notes”), upon the terms and subject to the conditions set forth in the prospectus dated                     , 2004 and in the related letter of transmittal. Unless indicated otherwise, capitalized terms used but not defined herein shall have the same meaning given to them in the prospectus or the letter of transmittal, as the case may be.

      Enclosed herewith are copies of the following documents:

      1. the prospectus;

      2. the letter of transmittal for your use and for the information of your clients, including a substitute Internal Revenue Service Form W-9 for collection of information relating to backup United States federal income tax withholding;

      3. a notice of guaranteed delivery to be used to accept the exchange offer with respect to Old Notes in certificated form or Old Notes accepted for clearance through the facilities of The Depository Trust Company if (i) certificates for the Old Notes are not immediately available or all required documents are unlikely to reach the exchange agent on or prior to the expiration date or (ii) a book-entry transfer cannot be completed on a timely basis;

      4. a form of letter which may be sent to your clients for whose account you hold Old Notes in your name or in the name of a nominee, with space provided for obtaining such clients’ instructions with regard to the exchange offer; and

      5. return envelopes addressed to The Bank of New York, the exchange agent for the exchange offer.

      PLEASE NOTE THAT THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON                     , 2004, UNLESS EXTENDED. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE.

      The Issuers have not retained any dealer-manager in connection with the exchange offer and will not pay any fee or commission to any broker, dealer, nominee or other person, other than the exchange agent, for soliciting tenders of Old Notes pursuant to the exchange offer. You will be reimbursed by the Issuers for customary mailing and handling expenses incurred by you in forwarding the enclosed materials to your clients and for handling or tendering for your clients.

      Additional copies of the enclosed materials may be obtained by contacting the exchange agent as provided in the enclosed letter of transmittal.

Very truly yours,

Valeant Pharmaceuticals International

Ribapharm Inc.

NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON AS AN AGENT OF THE ISSUERS, OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY OTHER PERSON TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION ON BEHALF OF ANY OF THEM WITH RESPECT TO THE EXCHANGE OFFER NOT CONTAINED IN THE PROSPECTUS OR THE LETTER OF TRANSMITTAL.

2 EX-99.4 12 a96405orexv99w4.htm EXHIBIT 99.4

Form of Letter to Clients Exhibit 99.4

VALEANT PHARMACEUTICALS INTERNATIONAL

RIBAPHARM, INC.

offer for all outstanding

7.0% Senior Notes due 2011

in exchange for

7.0% Senior Notes due 2011

which have been registered under

the Securities Act of 1933, as amended,

pursuant to the prospectus dated                             , 2004

THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON                         , 2004, UNLESS EXTENDED (SUCH DATE AND TIME, AS SO EXTENDED, THE “EXPIRATION DATE”). TENDERS MAY BE WITHDRAWN PRIOR TO THE EXPIRATION DATE.

To Our Clients:

      Enclosed for your consideration is a prospectus dated                      , 2004 and the related letter of transmittal and instructions thereto in connection with the offer, referred to as the exchange offer, of Valeant Pharmaceuticals International, a Delaware corporation, and Ribapharm Inc., a Delaware corporation (together, the “Issuers”), to exchange an aggregate principal amount of up to $300,000,000 of their 7.0% Senior Notes due 2011, which have been registered under the Securities Act of 1933, as amended, (the “New Notes”), for a like principal amount of their outstanding 7.0% Senior Notes due 2011 (the “Old Notes”), upon the terms and subject to the conditions set forth in the prospectus and the letter of transmittal. Consummation of the exchange offer is subject to certain conditions described in the prospectus. Unless indicated otherwise, capitalized terms used but not defined herein shall have the same meaning given to them in the prospectus or the letter of transmittal, as the case may be.

      WE ARE THE REGISTERED HOLDER OF OLD NOTES HELD BY US FOR YOUR ACCOUNT. A TENDER OF ANY SUCH OLD NOTES CAN BE MADE ONLY BY US AS THE REGISTERED HOLDER AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER OLD NOTES HELD BY US FOR YOUR ACCOUNT.

      Accordingly, we request instructions as to whether you wish us to tender any or all such Old Notes held by us for your account pursuant to the terms and conditions set forth in the prospectus and the letter of transmittal. WE URGE YOU TO READ THE PROSPECTUS AND THE LETTER OF TRANSMITTAL CAREFULLY BEFORE INSTRUCTING US TO TENDER YOUR OLD NOTES.

      Your instructions to us should be forwarded as promptly as possible in order to permit us to tender Old Notes on your behalf in accordance with the provisions of the exchange offer. THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME ON                     , 2004, UNLESS EXTENDED. Old Notes tendered pursuant to the exchange offer may be withdrawn only under the circumstances described in the prospectus and the letter of transmittal.

      Your attention is directed to the following:

      1. The exchange offer is for the entire aggregate principal amount of outstanding Old Notes.

      2. Consummation of the exchange offer is conditioned upon the terms and conditions set forth in the prospectus under “The Exchange Offer.”

      3. Tendering holders may withdraw their tender at any time prior to the Expiration Date.

      4. Any transfer taxes incident to the transfer of Old Notes from the tendering holder to the Issuers due to their cancellation will be paid by the Issuers, except as provided in the prospectus and the instructions to the letter of transmittal.

      5. The exchange offer is not being made to, nor will the surrender of Old Notes for exchange be accepted from or on behalf of, holders of Old Notes in any jurisdiction in which the exchange offer or acceptance thereof would not be in compliance with the securities or blue sky laws of such jurisdiction.

      6. The acceptance for exchange of Old Notes validly tendered and not withdrawn will be effected promptly after the Expiration Date and the issuance of New Notes will be made promptly thereafter.

      7. The Issuers expressly reserve the right, in their reasonable discretion and in accordance with applicable law, (i) to extend the Expiration Date, (ii) to delay the acceptance of any Old Notes, (iii) to terminate the exchange offer and not accept any Old Notes for exchange if they determine that any of the conditions to the exchange offer, as set forth in the prospectus, have not occurred or have not been satisfied and (iv) to amend the terms of the exchange offer in any manner. In the event of any extension, delay, non-acceptance, termination or amendment, the Issuers will as promptly as practicable give oral or written notice of the action to the exchange agent and make a public announcement of such action. In the case of an extension, the announcement will be made no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date.

      8. Consummation of the exchange offer may have adverse consequences to non-tendering Old Note holders, including that the reduced amount of outstanding Old Notes as a result of the exchange offer may adversely affect the trading market, liquidity and market price of the Old Notes.

      If you wish to have us tender any or all of the Old Notes held by us for your account, please so instruct us by completing, executing and returning to us the instruction form that follows.

2

VALEANT PHARMACEUTICALS INTERNATIONAL

RIBAPHARM INC.

INSTRUCTIONS REGARDING THE EXCHANGE OFFER

WITH RESPECT TO THE

$300,000,000 OF 7.0% SENIOR NOTES DUE 2011

THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF YOUR LETTER AND THE ENCLOSED DOCUMENTS REFERRED TO THEREIN RELATING TO THE EXCHANGE OFFER OF THE ISSUERS WITH RESPECT TO THE OLD NOTES.

THIS WILL INSTRUCT YOU WHETHER TO TENDER THE PRINCIPAL AMOUNT OF OLD NOTES INDICATED BELOW HELD BY YOU FOR THE ACCOUNT OF THE UNDERSIGNED PURSUANT TO THE TERMS OF AND CONDITIONS SET FORTH IN THE PROSPECTUS AND THE LETTER OF TRANSMITTAL.

Box 1     o Please tender the Old Notes held by you for my account, as indicated below.

Box 2     o Please do not tender any Old Notes held by you for my account.

Date: ---------------------------------------------, 2004

Principal Amount of Old Notes to be Tendered:

$  (must be in the principal amount of $1,000 or an integral multiple thereof) Signature(s)

Please Print Name(s) Here


Please Type or Print Address

Area Code and Telephone Number

Taxpayer Identification or Social Security Number

My Account Number with You

UNLESS OTHERWISE INDICATED, SIGNATURE(S) HEREON BY BENEFICIAL OWNER(S) SHALL CONSTITUTE AN INSTRUCTION TO THE NOMINEE TO TENDER ALL OLD NOTES OF SUCH BENEFICIAL OWNER(S).

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EX-4.1

                                                                     Exhibit 4.1
- --------------------------------------------------------------------------------

                      VALEANT PHARMACEUTICALS INTERNATIONAL

                                       AND

                                 RIBAPHARM INC.

                           7.0% SENIOR NOTES DUE 2011

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

                                    INDENTURE
                          DATED AS OF DECEMBER 12, 2003

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

                              THE BANK OF NEW YORK,
                                   AS TRUSTEE

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

                             CROSS-REFERENCE TABLE*



 TIA                                                                INDENTURE
SECTION                                                              SECTION
- -------                                                           --------------
                                                            
Section   310(a)(1)............................................        7.10

          (a)(2)...............................................        7.10

          (a)(3)...............................................       N.A.**

          (a)(4)...............................................        N.A.

          (a)(5)...............................................        7.10

          (b)..................................................      7.8; 7.10

          (c)..................................................        N.A.

Section   311(a)..............................................         7.11

          (b)..................................................        7.11

          (c)..................................................        N.A.

Section   312(a)...............................................         2.5

          (b)..................................................        11.3

          (c)..................................................        11.3

Section   313(a)...............................................         7.6

          (b)(1)...............................................        N.A.

          (b)(2)...............................................         7.6

          (c)..................................................      7.6; 11.2

          (d)..................................................         7.6

Section   314(a)...............................................   4.3; 4.5; 11.2

          (b)..................................................        N.A.

          (c)(1)...............................................       11.4(a)

          (c)(2)...............................................       11.4(a)

          (c)(3)...............................................        N.A.

          (d)..................................................        N.A.

          (e)..................................................       11.4(b)

          (f)..................................................        N.A.

Section   315(a)...............................................       7.1(b)

          (b)..................................................      7.5; 11.2

          (c)..................................................       7.1(a)

          (d)..................................................       7.1(c)

          (e)..................................................        8.11

Section   316(a)(last sentence)................................         2.9

          (a)(1)(A)............................................         8.5

          (a)(1)(B)............................................         8.4

          (a)(2)...............................................        N.A.

          (b)..................................................         8.7

          (c)..................................................        11.5

Section   317(a)(1)............................................         8.8

          (a)(2)...............................................         8.9

          (b)..................................................         2.4


- ----------
*     This Cross-Reference Table shall not, for any purpose, be deemed a part of
      this Indenture.

**    N.A. means Not Applicable.

                                        i

                                TABLE OF CONTENTS



                                                                                               Page
                                                                                               ----

                                                                                         
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE..............................................1

   Section 1.1     Definitions....................................................................1
   Section 1.2     Other Definitions.............................................................22
   Section 1.3     Trust Indenture Act Provisions................................................23
   Section 1.4     Rules of Construction.........................................................23

ARTICLE 2 THE SECURITIES.........................................................................24

   Section 2.1     Form and Dating...............................................................24
   Section 2.2     Execution and Authentication..................................................26
   Section 2.3     Registrar and Paying Agent....................................................26
   Section 2.4     Paying Agent to Hold Money in Trust...........................................27
   Section 2.5     Securityholder Lists..........................................................27
   Section 2.6     Transfer and Exchange.........................................................28
   Section 2.7     Replacement Securities........................................................28
   Section 2.8     Outstanding Securities........................................................29
   Section 2.9     Treasury Securities...........................................................29
   Section 2.10    Temporary Securities..........................................................30
   Section 2.11    Cancellation..................................................................30
   Section 2.12    Legend; Additional Transfer and Exchange Requirements.........................30
   Section 2.13    CUSIP and ISIN Numbers........................................................34

ARTICLE 3 REDEMPTION AND PURCHASES...............................................................34

   Section 3.1     Right to Redeem...............................................................34
   Section 3.2     Selection of Securities to be Redeemed........................................34
   Section 3.3     Notice of Redemption..........................................................35
   Section 3.4     Effect of Notice of Redemption................................................36
   Section 3.5     Deposit of Redemption Price...................................................36
   Section 3.6     Securities Redeemed in Part...................................................36
   Section 3.7     Optional Redemption...........................................................36
   Section 3.8     Purchase of Securities at Option of the Holder Upon Change of Control.........37
   Section 3.9     Effect of Change of Control Purchase Notice...................................39
   Section 3.10    Deposit of Change of Control Purchase Price...................................40
   Section 3.11    Securities Purchased in Part..................................................40
   Section 3.12    Compliance With Securities Laws Upon Purchase of Securities...................40
   Section 3.13    Repayment to the Obligors.....................................................40
   Section 3.14    Offer to Purchase by Application of Excess Proceeds...........................41

ARTICLE 4 COVENANTS..............................................................................43

   Section 4.1     Payment of Securities.........................................................43
   Section 4.2     Maintenance of Office or Agency...............................................43
   Section 4.3     Reports.......................................................................44


                                       ii

                                                                                         
   Section 4.4     Compliance Certificates.......................................................45
   Section 4.5     Further Instruments and Acts..................................................45
   Section 4.6     Maintenance of Corporate Existence............................................45
   Section 4.7     Changes in Covenants when Securities Rated Investment Grade...................45
   Section 4.8     Restricted Payments...........................................................46
   Section 4.9     Incurrence of Indebtedness and Issuance of Preferred Stock....................48
   Section 4.10    Sale and Leaseback Transactions...............................................51
   Section 4.11    Liens.........................................................................52
   Section 4.12    Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries.....52
   Section 4.13    Transactions with Affiliates..................................................53
   Section 4.14    Asset Sales...................................................................55
   Section 4.15    Designation of Restricted and Unrestricted Subsidiaries.......................56
   Section 4.16    Business Activities...........................................................56
   Section 4.17    Payments for Consent..........................................................57
   Section 4.18    Stay, Extension and Usury Laws................................................57
   Section 4.19    Payment of Additional Interest................................................57
   Section 4.20    Notice of Default.............................................................57

ARTICLE 5 MERGER, CONSOLIDATION OR SALE OF ASSETS................................................57

   Section 5.1     Merger, Consolidation or Sale of Assets.......................................57
   Section 5.2     Successor Substituted.........................................................58

ARTICLE 6 DEFAULT AND REMEDIES...................................................................59

   Section 6.1     Events of Default.............................................................59
   Section 6.2     Acceleration..................................................................61
   Section 6.3     Other Remedies................................................................62
   Section 6.4     Waiver of Defaults and Events of Default......................................62
   Section 6.5     Control by Majority...........................................................62
   Section 6.6     Limitations on Suits..........................................................62
   Section 6.7     Rights of Holders to Receive Payment..........................................63
   Section 6.8     Collection Suit by Trustee....................................................63
   Section 6.9     Trustee May File Proofs of Claim..............................................63
   Section 6.10    Priorities....................................................................64
   Section 6.11    Undertaking for Costs.........................................................64

ARTICLE 7 TRUSTEE................................................................................64

   Section 7.1     Duties of Trustee.............................................................64
   Section 7.2     Rights of Trustee.............................................................65
   Section 7.3     Individual Rights of Trustee..................................................66
   Section 7.4     Trustee's Disclaimer..........................................................67
   Section 7.5     Notice of Default or Events of Default........................................67
   Section 7.6     Reports by Trustee to Holders.................................................67
   Section 7.7     Compensation and Indemnity....................................................67
   Section 7.8     Replacement of Trustee........................................................68
   Section 7.9     Successor Trustee by Merger, Etc..............................................69
   Section 7.10    Eligibility; Disqualification.................................................69



                                       iii

                                                                                         
   Section 7.11    Preferential Collection of Claims Against Obligors............................69

ARTICLE 8 DEFEASANCE; SATISFACTION AND DISCHARGE OF INDENTURE; RELEASE OF RIBAPHARM..............70

   Section 8.1     Satisfaction and Discharge of Indenture.......................................70
   Section 8.2     Legal Defeasance..............................................................70
   Section 8.3     Covenant Defeasance...........................................................72
   Section 8.4     Application of Trust Money....................................................73
   Section 8.5     Repayment to Obligors.........................................................74
   Section 8.6     Reinstatement.................................................................74
   Section 8.7     Release of Ribapharm as Obligor...............................................74
   Section 8.8     Reinstatement of Ribapharm as Obligor.........................................74

ARTICLE 9 AMENDMENTS, SUPPLEMENTS AND WAIVERS....................................................75

   Section 9.1     Without Consent of Holders....................................................75
   Section 9.2     With Consent of Holders.......................................................75
   Section 9.3     Compliance With Trust Indenture Act...........................................77
   Section 9.4     Revocation and Effect of Consents.............................................77
   Section 9.5     Notation On or Exchange of Securities.........................................77
   Section 9.6     Trustee to Sign Amendments, Etc...............................................77
   Section 9.7     Effect of Supplemental Indentures.............................................77

ARTICLE 10 SUBSIDIARY GUARANTEES.................................................................78

   Section 10.1    Future Guarantees.............................................................78
   Section 10.2    Terms of Guarantees...........................................................78
   Section 10.3    Limitation on Guarantor Liability.............................................80
   Section 10.4    Merger and Consolidation of Guarantors........................................80
   Section 10.5    Release.......................................................................81

ARTICLE 11 MISCELLANEOUS.........................................................................81

   Section 11.1    Trust Indenture Act Controls..................................................81
   Section 11.2    Notices.......................................................................82
   Section 11.3    Communications by Holders With Other Holders..................................83
   Section 11.4    Certificate and Opinion of Counsel as to Conditions Precedent.................83
   Section 11.5    Record Date for Vote or Consent of Holders....................................83
   Section 11.6    Rules by Trustee, Paying Agent and Registrar..................................84
   Section 11.7    Legal Holidays................................................................84
   Section 11.8    Governing Law; Submission to Jurisdiction.....................................84
   Section 11.9    No Adverse Interpretation of Other Agreements.................................84
   Section 11.10   No Recourse Against Others....................................................84
   Section 11.11   Successors....................................................................85
   Section 11.12   Multiple Counterparts.........................................................85
   Section 11.13   Separability..................................................................85
   Section 11.14   Table of Contents, Headings, etc..............................................85
   Section 11.15   Calculations in Respect of the Securities.....................................85



                                       iv

                                                                  EXECUTION COPY

      THIS INDENTURE dated as of December 12, 2003 is among Valeant
Pharmaceuticals International, a corporation duly organized under the laws of
the State of Delaware (the "Company"), Ribapharm Inc., a corporation duly
organized under the laws of the State of Delaware ("Ribapharm"), and The Bank of
New York, a banking corporation duly organized under the laws of the State of
New York, as Trustee (the "Trustee").

      In consideration of the premises and the purchase of the Securities by the
Holders thereof, all parties agree as follows for the benefit of the other and
for the equal and ratable benefit of the registered Holders of the Company's, as
issuer, and Ribapharm's, as co-obligor, 7.0% Senior Notes due 2011.

                                    ARTICLE 1

                   DEFINITIONS AND INCORPORATION BY REFERENCE

      Section 1.1 Definitions.

      "Acquired Debt" means, with respect to any specified Person:

      (1)   Indebtedness of any other Person existing at the time such other
            Person is merged with or into or became a Subsidiary of such
            specified Person, whether or not such Indebtedness is incurred in
            connection with, or in contemplation of, such other Person merging
            with or into, or becoming a Subsidiary of, such specified Person;
            and

      (2)   Indebtedness secured by a Lien encumbering any asset acquired by
            such specified Person.

      "Additional Interest" means "liquidated damages" as defined in Section 5
of the Registration Rights Agreement. All references herein to interest accrued
or payable as of any date shall include any Additional Interest accrued or
payable as of such date as provided in the Registration Rights Agreement.

      "Additional Securities" means any additional 7.0% Senior Notes due 2011
that the Obligors may issue from time to time under this Indenture in accordance
with Section 2.1(c) of this Indenture as part of the same series of Securities
issued on the date hereof.

      "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided, that beneficial ownership of 10% or more of
the Voting Stock of a Person will be deemed to be control. For purposes of this
definition, the terms "controlling," "controlled by" and "under common control
with" have correlative meanings.

      "Agent" means any Registrar or Paying Agent.

      "Applicable Procedures" means, with respect to any transfer or exchange of
beneficial ownership interests in the Global Securities, the rules and
procedures of the Depositary, to the extent applicable to such transfer or
exchange.

      "Asset Sale" means:

      (1)   the sale, lease, conveyance or other disposition of any assets or
            rights; provided, that the sale, conveyance or other disposition of
            all or substantially all of the assets of the Company and its
            Restricted Subsidiaries taken as a whole will be governed by Section
            3.8 and/or Section 5.1 hereof and not by the provisions of Section
            4.14; and

      (2)   the issuance of Equity Interests by any of the Company's Restricted
            Subsidiaries or the sale of Equity Interests in any of its
            Restricted Subsidiaries.

      Notwithstanding the preceding, none of the following items will be deemed
to be an Asset Sale:

      (1)   any single transaction or series of related transactions that
            involves assets having a Fair Market Value of less than $2.5
            million;

      (2)   a transfer of assets between or among the Company and its Restricted
            Subsidiaries;

      (3)   an issuance of Equity Interests by a Restricted Subsidiary to the
            Company or to another Restricted Subsidiary;

      (4)   the sale or lease of equipment, inventory or accounts receivable in
            the ordinary course of business;

      (5)   the sale or other disposition of cash or Cash Equivalents;

      (6)   a Restricted Payment or Permitted Investment that is permitted by
            Section 4.8 hereof

      (7)   the license of intellectual property to third persons on customary
            terms in the ordinary course of business as determined by the Board
            of Directors of the Company in good faith;

      (8)   the sale, exchange or other disposition of obsolete assets not
            integral to any Permitted Business;

      (9)   sales, transfers or other dispositions of assets for consideration
            at least equal to the Fair Market Value of the assets sold or
            disposed of, but only if the consideration received consists of
            property or assets (other than cash, except to the extent used as a
            bona fide means of equalizing the value of the property or assets
            involved in the swap transaction; provided, however, that cash does
            not exceed 10% of the sum of the amount of the cash and the Fair
            Market Value of the assets received or given) of a nature or type
            that are used in, a business having property or assets of

                                       2

            a nature or type or engaged in a Permitted Business (or Capital
            Stock of a Person whose assets consist of assets of the type
            described in this clause (9)); and

      (10)  the sale, transfer or disposition of any investment in, or any
            assets of ICN Czech and ICN Hungary, in each case existing on the
            date of this Indenture, or any Investment in any other entity that
            holds such investments or assets as its only assets.

      "Attributable Debt" in respect of a sale and leaseback transaction means,
at the time of determination, the present value of the obligation of the lessee
for net rental payments during the remaining term of the lease included in such
sale and leaseback transaction including any period for which such lease has
been extended or may, at the option of the lessor, be extended. Such present
value shall be calculated using a discount rate equal to the rate of interest
implicit in such transaction, determined in accordance with GAAP.

      "Bankruptcy Law" means Title 11 of the United States Code (or any
successor thereto) or any similar federal or state law for the relief of
debtors.

      "Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" will be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition. The terms
"Beneficially Owns" and "Beneficially Owned" have corresponding meanings.

      "Board of Directors" means:

      (1)   with respect to a company or corporation, the board of directors of
            the company or corporation or any committee thereof duly authorized
            to act on behalf of such board;

      (2)   with respect to a partnership, the Board of Directors of the general
            partner of the partnership or any committee thereof duly authorized
            to act on behalf of such board; and

      (3)   with respect to any other Person, the board or committee of such
            Person serving a similar function.

      "Borrowing Base" means, as of any date, an amount equal to:

      (1)   85% of the face amount of all accounts receivable owned by the
            Company and its Restricted Subsidiaries as of the end of the most
            recent fiscal quarter preceding such date that were not more than 90
            days past due; plus

      (2)   60% of the book value of all inventory, net of reserves, owned by
            the Company and its Restricted Subsidiaries as of the end of the
            most recent fiscal quarter preceding such date; minus

                                       3

      (3)   the aggregate amount of trade payables of the Company and its
            Restricted Subsidiaries outstanding as of the end of the most recent
            fiscal quarter preceding such date, all calculated on a consolidated
            basis and in accordance with GAAP.

      "Business Day" means each day that is not a Legal Holiday.

      "Capital Lease Obligations" means, at the time any determination is to be
made, the amount of the liability in respect of a capital lease that would at
that time be required to be capitalized on a balance sheet in accordance with
GAAP.

      "Capital Stock" means:

      (1)   in the case of a corporation, corporate stock;

      (2)   in the case of an association or business entity, any and all
            shares, interests, participations, rights or other equivalents
            (however designated) of corporate stock;

      (3)   in the case of a partnership or limited liability company,
            partnership or membership interests (whether general or limited);
            and

      (4)   any other interest or participation that confers on a Person the
            right to receive a share of the profits and losses of, or
            distributions of assets of, the issuing Person.

      "Cash Equivalents" means:

      (1)   securities issued or directly and fully guaranteed or insured by the
            U.S. government or any agency or instrumentality thereof (provided,
            that the full faith and credit of the U.S. is pledged in support
            thereof) having repricings or maturities of not more than one year
            from the date of acquisition;

      (2)   certificates of deposit and time deposits with maturities of one
            year or less from the date of acquisition, bankers' acceptances with
            maturities not exceeding one year and overnight bank deposits, in
            each case, with any domestic commercial bank having capital and
            surplus in excess of $500.0 million and a Thomson Bank Watch Rating
            of "B" or better;

      (3)   repurchase obligations with a term of not more than 14 days for
            underlying securities of the types described in clauses (1) and (2)
            above entered into with any financial institution meeting the
            qualifications specified in clause (2) above;

      (4)   commercial paper having a rating of at least "P-2" or better from
            Moody's or at least "A-2" or better from S&P, or carrying an
            equivalent rating by an internationally recognized rating agency
            and, in each case, maturing within one year after the date of
            acquisition;

      (5)   Auction-rate, corporate and municipal securities, in each case (x)
            having either short-term debt ratings of at least "P-2" or better
            from Moody's or at least "A-2" or better from S&P or long-term
            senior debt ratings of "A2" or better from

                                       4

            Moody's or at least "A" or better from S&P, or carrying an
            equivalent rating by an internationally recognized rating agency,
            (y) having repricings or maturities of not more than one year from
            the date of acquisition and (z) which are classifiable as cash and
            cash equivalents under GAAP;

      (6)   money market funds at least 95% of the assets of which constitute
            Cash Equivalents of the kinds described in clauses (1) through (5)
            of this definition;

      (7)   in the case of any Foreign Subsidiary:

            (a)   direct obligations of the sovereign nation, or any agency
                  thereof, in which such Foreign Subsidiary is organized and is
                  conducting business or in obligations fully and
                  unconditionally guaranteed by such sovereign nation, or any
                  agency thereof; provided, that such obligations are acquired
                  and held by such Foreign Subsidiary in the ordinary course of
                  business and have repricings or maturities of not more than
                  one year from the date of acquisition; or

            (b)   investments of the type and maturity described in clauses (1)
                  through (5) above of foreign obligors, which investments or
                  obligors have ratings described in such clauses or equivalent
                  ratings from internationally recognized rating agencies;
                  provided, that such investments are acquired and held by such
                  Foreign Subsidiary in the ordinary course of business.

      "Change of Control" means the occurrence of any of the following:

      (1)   any "person" (as that term is used in Section 13(d)(3) of the
            Exchange Act) becomes the Beneficial Owner of shares of the
            Company's Voting Stock representing (i) 50% or more of the total
            voting power of all of the Company's outstanding Voting Stock or
            (ii) the power, directly or indirectly, or elect a majority of the
            members of the Company's Board of Directors;

      (2)   the Company consolidates with, or merges with or into, another
            Person, or the Company, directly or indirectly, sells, assigns,
            conveys, transfers, leases or otherwise disposes of all or
            substantially all of the properties or assets of the Company and its
            Restricted Subsidiaries, taken as a whole (other than by way of
            merger or consolidation), in one or a series of related
            transactions, or any Person consolidates with, or merges with or
            into, the Company, in any such event other than pursuant to a
            transaction in which the Persons that Beneficially Owned the shares
            of the Company's Voting Stock immediately prior to such transaction
            Beneficially Own at least a majority of the total voting power of
            all outstanding Voting Stock (other than Disqualified Stock) of the
            surviving or transferee Person;

      (3)   the holders of the Company's Capital Stock approve any plan or
            proposal for the liquidation or dissolution of the Company (whether
            or not otherwise in compliance with this Indenture); or

                                       5

      (4)   during any period of two consecutive years, individuals who at the
            beginning of such period constituted the Board of Directors of the
            Company (together with any new directors whose election by such
            Board of Directors or whose nomination for election by the
            shareholders of the Company has been approved by a majority of the
            directors then still in office who either were directors at the
            beginning of such period or whose election or recommendation for
            election was previously so approved) cease to constitute a majority
            of the Board of Directors of the Company.

      "Clearstream" means Clearstream Banking, societe anonyme, Luxembourg.

      "Common Stock" means the common stock of the Company, $.01 par value per
share, as it exists on the date of this Indenture and any shares of any class or
classes of capital stock of the Company resulting from any reclassification or
reclassifications thereof and which have no preference in respect of dividends
or of amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding-up of the Company and which are not subject to redemption
by the Company.

      "Company" means the party named as such in the first paragraph of this
Indenture until a successor replaces it pursuant to the applicable provisions of
this Indenture, and thereafter "Company" shall mean such successor Company.

      "Consolidated Cash Flow" means, with respect to any specified Person for
any period, the Consolidated Net Income of such Person for such period plus:

      (1)   an amount equal to any extraordinary loss plus any net loss realized
            by such Person or any of its Restricted Subsidiaries in connection
            with an Asset Sale, to the extent such losses were deducted in
            computing such Consolidated Net Income; plus

      (2)   provision for taxes based on income or profits of such Person and
            its Restricted Subsidiaries for such period, to the extent that such
            provision for taxes was deducted in computing such Consolidated Net
            Income; plus

      (3)   consolidated interest expense of such Person and its Restricted
            Subsidiaries for such period, whether paid or accrued and whether or
            not capitalized (including, without limitation, amortization of debt
            issuance costs and original issue discount, non-cash interest
            payments, the interest component of any deferred payment
            obligations, the interest component of all payments associated with
            Capital Lease Obligations, commissions, discounts and other fees and
            charges incurred in respect of letter of credit or bankers'
            acceptance financings, and net of the effect of all payments made or
            received pursuant to Interest Rate Hedging Obligations), to the
            extent that any such expense was deducted in computing such
            Consolidated Net Income; plus

      (4)   depreciation, amortization (including amortization of intangibles
            but excluding amortization of prepaid cash expenses that were paid
            in a prior period) and other non-cash expenses (excluding any such
            non-cash expense to the extent that it represents an accrual of or
            reserve for cash expenses in any future period or

                                       6

            amortization of a prepaid cash expense that was paid in a prior
            period) of such Person and its Restricted Subsidiaries for such
            period to the extent that such depreciation, amortization and other
            non-cash expenses were deducted in computing such Consolidated Net
            Income; minus

      (5)   non-cash items increasing such Consolidated Net Income for such
            period, other than the accrual of revenue in the ordinary course of
            business,

in each case, on a consolidated basis and determined in accordance with GAAP.

      Notwithstanding the preceding, the provision for taxes based on the income
or profits of, and the depreciation and amortization and other non-cash expenses
of, a Restricted Subsidiary of the Company will be added to Consolidated Net
Income to compute Consolidated Cash Flow of the Company only to the extent that
a corresponding amount would be permitted at the date of determination to be
dividended to the Company by such Restricted Subsidiary without prior
governmental approval (that has not been obtained), and without direct or
indirect restriction pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Restricted Subsidiary or its stockholders.

      "Consolidated Net Income" means, with respect to any specified Person for
any period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that:

      (1)   the Net Income (but not loss) of any Person that is not a Restricted
            Subsidiary or that is accounted for by the equity method of
            accounting will be included only to the extent of the amount of
            dividends or distributions paid in cash to the specified Person or a
            Restricted Subsidiary of the Person;

      (2)   the Net Income of any Restricted Subsidiary will be excluded to the
            extent that the declaration or payment of dividends or similar
            distributions by that Restricted Subsidiary of that Net Income is
            not at the date of determination permitted without any prior
            governmental approval (that has not been obtained) or, directly or
            indirectly, by operation of the terms of its charter or any
            agreement, instrument, judgment, decree, order, statute, rule or
            governmental regulation applicable to that Restricted Subsidiary or
            its stockholders;

      (3)   the cumulative effect of a change in accounting principles will be
            excluded;

      (4)   any extraordinary or nonrecurring gain or loss and any expense or
            charge in connection with acquired in-process research and
            development will be excluded;

      (5)   any extraordinary or nonrecurring gain or loss and any expense or
            charge attributable to the disposition of discontinued operations
            will be excluded;

      (6)   charges incurred in connection with the retirement or redemption of
            the 6-1/2% Notes will be excluded; and

                                       7

      (7)   the Net Income (but not loss) of any Unrestricted Subsidiary will be
            excluded, whether or not distributed to the specified Person or one
            of its Subsidiaries.

      "Co-Obligor" means Ribapharm, for so long as Ribapharm has outstanding
obligations under the 6-1/2% Notes, originally issued under an indenture among
the Company, Ribapharm and the trustee.

      "Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered
which office at the date of the execution of this Indenture is located at 101
Barclay Street - 8W, New York, NY 10286, Attention: Corporate Trust
Administration or at any other time at such other address as the Trustee may
designate from time to time by notice to the Obligors.

      "Credit Facilities" means, one or more debt facilities or commercial paper
facilities, in each case with banks or other institutional lenders providing for
revolving credit loans, term loans, receivables financing (including through the
sale of receivables to such lenders or to special purpose entities formed to
borrow from such lenders against such receivables) or letters of credit or other
borrowings, in each case, as amended, restated, modified, renewed, refunded,
replaced or refinanced (including by means of sales of debt securities to
institutional investors) in whole or in part from time to time.

      "Current Dividend" means a quarterly dividend on the Common Stock in an
amount not to exceed $0.33 per share per annum, which amount will be reduced to
reflect any subdivision of the Common Stock by means of a stock split, stock
dividend or otherwise.

      "Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.

      "Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.

      "Definitive Securities" means Securities that are in substantially the
form attached hereto as Exhibit A and that do not include the information to
which footnotes 1, 6 and 7 thereof apply.

      "Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to the date that is 91 days after the
date on which the Securities mature. Notwithstanding the preceding sentence, any
Capital Stock that would constitute Disqualified Stock solely because the
holders of the Capital Stock have the right to require the Company to repurchase
such Capital Stock upon the occurrence of a change of control or an asset sale
will not constitute Disqualified Stock if the terms of such Capital Stock
provide that the Company may not repurchase or redeem any such Capital Stock
pursuant to such provisions unless such repurchase or redemption complies with
Section 4.8 hereof

                                       8

      "Domestic Subsidiary" means any Restricted Subsidiary that was formed
under the laws of the United States or any state thereof or the District of
Columbia or that guarantees or otherwise provides direct credit support for any
Indebtedness of the Company or the Co-Obligor.

      "Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).

      "Equity Offering" means a public or private offering of Equity Interests
(other than Disqualified Stock).

      "Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear System.

      "Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder, as in effect from time to
time.

      "Exchange Securities" means the 7.0% Senior Notes due 2011 to be issued by
the Company and Ribapharm pursuant to this Indenture in the Exchange Offer.

      "Exchange Offer" means the exchange and issuance by the Company and
Ribapharm of a principal amount of Exchange Securities (which shall be
registered pursuant to the Exchange Offer Registration Statement) equal to the
outstanding principal amount of Securities that are properly tendered and not
subsequently withdrawn by such Holders in connection with such exchange and
issuance.

      "Exchange Offer Registration Statement" means the Registration Statement
relating to the Exchange Offer, including the related Prospectus.

      "Existing Indebtedness" means Indebtedness of the Company and its
Restricted Subsidiaries (other than Indebtedness, if any, under Credit
Facilities incurred under Section 4.9(b)(i) hereof) in existence on the date of
this Indenture, until such amounts are repaid.

      "Fair Market Value" means the price that could be negotiated in an
arm's-length transaction, for cash, between a willing seller and a willing and
able buyer, neither of whom is under undue pressure or compulsion to complete
the transaction, determined in good faith by the Board of Directors of the
Company (unless otherwise provided in this Indenture).

      "Final Maturity Date," means December 15, 2011.

      "Fixed Charge Coverage Ratio" means with respect to any specified Person
for any period, the ratio of the Consolidated Cash Flow of such Person for such
period to the Fixed Charges of such Person for such period. In the event that
the specified Person or any of its Restricted Subsidiaries incurs, assumes,
Guarantees, repays, repurchases or redeems any Indebtedness (other than ordinary
working capital borrowings) or issues, repurchases or redeems preferred stock
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated and on or prior to the date on which the event for
which the calculation of the Fixed Charge Coverage Ratio is made (the
"CALCULATION DATE"), then the

                                       9

Fixed Charge Coverage Ratio will be calculated giving pro forma effect to such
incurrence, assumption, Guarantee, repayment, repurchase or redemption of
Indebtedness, or such issuance, repurchase or redemption of preferred stock, and
the use of the proceeds therefrom as if the same had occurred at the beginning
of the applicable four-quarter reference period.

      In addition, for purposes of calculating the Fixed Charge Coverage Ratio:

      (1)   acquisitions that have been made by the specified Person or any of
            its Restricted Subsidiaries, including through consolidations or
            mergers and including any related financing transactions, during the
            four-quarter reference period or subsequent to such reference period
            and on or prior to the Calculation Date will be given pro forma
            effect as if they had occurred on the first day of the four-quarter
            reference period and Consolidated Cash Flow for such reference
            period will be calculated on a pro forma basis in accordance with
            Regulation S-X under the Securities Act;

      (2)   the Consolidated Cash Flow attributable to discontinued operations,
            as determined in accordance with GAAP, and operations or businesses
            disposed of prior to the Calculation Date, will be excluded; and

      (3)   the Fixed Charges attributable to discontinued operations, as
            determined in accordance with GAAP, and operations or businesses
            disposed of prior to the Calculation Date, will be excluded, but
            only to the extent that the obligations giving rise to such Fixed
            Charges will not be obligations of the specified Person or any of
            its Restricted Subsidiaries following the Calculation Date.

      "Fixed Charges" means, with respect to any specified Person for any
period, the sum, without duplication, of:

      (1)   the consolidated interest expense of such Person and its Restricted
            Subsidiaries for such period, whether paid or accrued, including,
            without limitation, amortization of debt issuance costs and original
            issue discount, non-cash interest payments, the interest component
            of any deferred payment obligations, the interest component of all
            payments associated with Capital Lease Obligations, imputed interest
            with respect to Attributable Debt, commissions, discounts and other
            fees and charges incurred in respect of letter of credit or bankers'
            acceptance financings, and net of the effect of all payments made or
            received pursuant to Interest Rate Hedging Obligations; plus

      (2)   the consolidated interest of such Person and its Restricted
            Subsidiaries that was capitalized during such period; plus

      (3)   any interest expense on Indebtedness of another Person that is
            Guaranteed by such Person or one of its Restricted Subsidiaries or
            secured by a Lien on assets of such Person or one of its Restricted
            Subsidiaries, whether or not such Guarantee or Lien is called upon;
            plus

                                       10

      (4)   the product of (a) all dividends, whether paid or accrued and
            whether or not in cash, on any series of preferred stock of such
            Person or any of its Restricted Subsidiaries, other than dividends
            on Equity Interests payable solely in Equity Interests of the
            Company (other than Disqualified Stock) or to the Company or a
            Restricted Subsidiary of the Company, times (b) a fraction, the
            numerator of which is one and the denominator of which is one minus
            the then current combined federal, state and local statutory tax
            rate of such Person, expressed as a decimal, in each case, on a
            consolidated basis and in accordance with GAAP.

      "Foreign Subsidiary" means any Subsidiary that is not a Domestic
Subsidiary.

      "GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.

      "Global Securities" means Securities that are substantially in the form
attached hereto as Exhibit A and that include the information called for by
footnotes 1, 6 and 7 thereof, and which are deposited with the Depositary or its
custodian and registered in the name of the Depositary or its nominee.

      "Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness.

      "Guarantors" means any Subsidiary that executes a Guarantee in accordance
with the provisions of this Indenture and its successors and assigns.

      "Hedging Obligations" means, with respect to any specified Person

      (1)   Interest Rate Hedging Obligations; and

      (2)   the obligations of such Person under agreements or arrangements
            designed to protect such Person against fluctuations in currency
            exchange rates.

      "Holder" or "Securityholder" means the person in whose name a Security is
registered on the Primary Registrar's books.

      "Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent:

      (1)   in respect of borrowed money;

      (2)   evidenced by bonds, notes, debentures or similar instruments or
            letters of credit (or reimbursement agreements in respect thereof);

                                       11

      (3)   in respect of banker's acceptances;

      (4)   representing Capital Lease Obligations or Attributable Debt in
            respect of sale and leaseback transactions;

      (5)   representing the balance deferred and unpaid of the purchase price
            of any property, except any such balance that constitutes an accrued
            expense or trade payable; or

      (6)   representing any Hedging Obligations,

if and to the extent any of the preceding items (other than letters of credit,
Attributable Debt and Hedging Obligations) would appear as a liability upon a
balance sheet of the specified Person prepared in accordance with GAAP. In
addition, the term "Indebtedness" includes all Indebtedness of others secured by
a Lien on any asset of the specified Person (whether or not such Indebtedness is
assumed by the specified Person) and, to the extent not otherwise included, the
Guarantee by the specified Person of any Indebtedness of any other Person.

      The amount of any Indebtedness outstanding as of any date will be:

      (1)   the accreted value of the Indebtedness, in the case of any
            Indebtedness issued with original issue discount; and

      (2)   the principal amount of the Indebtedness, together with any interest
            on the Indebtedness that is more than 30 days past due, in the case
            of any other Indebtedness.

      "Indenture" means this Indenture as amended or supplemented from time to
time pursuant to the terms of this Indenture.

      "Interest" on any Security shall refer to interest and Additional Interest
thereon, unless the context otherwise requires.

      "Interest Rate Hedging Obligations" means, with respect to any specified
Person, the obligations of such Person under:

      (1)   interest rate swap agreements, interest rate cap agreements and
            interest rate collar agreements; and

      (2)   other agreements or arrangements designed to protect such Person
            against fluctuations in interest rates.

      "Investments" means, with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the forms
of loans (including Guarantees or other obligations), advances or capital
contributions (excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If the Company
or any Restricted Subsidiary of the Company sells or otherwise

                                       12

disposes of any Equity Interests of any direct or indirect Restricted Subsidiary
of the Company such that, after giving effect to any such sale or disposition,
such Person is no longer a Restricted Subsidiary of the Company, the Company
will be deemed to have made an Investment on the date of any such sale or
disposition equal to the Fair Market Value of the Company's Investments in such
Subsidiary that were not sold or disposed of in an amount determined as provided
in Section 4.8(c) hereof. The acquisition by the Company or any Restricted
Subsidiary of the Company of a Person that holds an Investment in a third Person
will be deemed to be an Investment by the Company or such Restricted Subsidiary
in such third Person in an amount equal to the Fair Market Value of the
Investments held by the acquired Person in such third Person in an amount
determined as provided in Section 4.8(c) hereof. For the avoidance of doubt,
acquisitions of or licenses for products or assets used or useful in a Permitted
Business do not constitute Investments.

      "Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge (fixed and/or floating), security interest or encumbrance of any kind in
respect of such asset, whether or not filed, recorded or otherwise perfected
under applicable law, including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement to
sell or give a security interest in and any filing of or agreement to give any
financing statement under the Uniform Commercial Code (or equivalent statutes)
of any jurisdiction.

      "Moody's" means Moody's Investors Service, Inc., or any successor to the
rating agency business thereof.

      "Net Income" means, with respect to any specified Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however:

      (1)   any gain (but not loss), together with any related provision for
            taxes on such gain (but not loss), realized in connection with: (a)
            any Asset Sale; or (b) the disposition of any securities by such
            Person or any of its Restricted Subsidiaries or the extinguishment
            of any Indebtedness of such Person or any of its Restricted
            Subsidiaries; and

      (2)   any extraordinary gain (but not loss), together with any related
            provision for taxes on such extraordinary gain (but not loss).

      "Net Proceeds" means the aggregate cash proceeds received by the Company
or any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale, including, without limitation, legal, accounting
and investment banking fees, and sales commissions, and any relocation expenses
incurred as a result of the Asset Sale, taxes paid or payable as a result of the
Asset Sale, in each case, after taking into account any available tax credits or
deductions and any tax sharing arrangements, and amounts required to be applied
to the repayment of Indebtedness, other than Indebtedness under a Credit
Facility, secured by a Lien on the asset or assets that were the subject of such
Asset Sale and any reserve for adjustment in respect of the sale price of such
asset or assets established in accordance with GAAP.

                                       13

      "Non-Recourse Debt" means Indebtedness:

      (1)   as to which neither the Company nor any of its Restricted
            Subsidiaries (a) provides credit support of any kind (including any
            undertaking, agreement or instrument that would constitute
            Indebtedness), (b) is directly or indirectly liable as a guarantor
            or otherwise, or (c) constitutes the lender;

      (2)   no default with respect to which (including any rights that the
            holders of the Indebtedness may have to take enforcement action
            against an Unrestricted Subsidiary) would permit upon notice, lapse
            of time or both any holder of any other Indebtedness (other than the
            Securities) of the Company or any of its Restricted Subsidiaries to
            declare a default on such other Indebtedness or cause the payment of
            the Indebtedness to be accelerated or payable prior to its stated
            maturity; and

      (3)   as to which the lenders have been notified in writing that they will
            not have any recourse to the stock or assets of the Company or any
            of its Restricted Subsidiaries.

      "Non-U.S. Person" means a Person who is not a U.S. Person.

      "Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.

      "Obligors" means the Company and Ribapharm; provided that at such time as
Ribapharm is no longer the Co-Obligor pursuant to the applicable provisions of
this Indenture, and thereafter "Obligors" shall mean the Company.

      "Officer" means the Chairman of the Board, the Chief Executive Officer,
the President, any Vice President, the Chief Financial Officer, the Controller,
Treasurer, the Secretary or any Assistant Controller, Assistant Treasurer or
Assistant Secretary of each of the Obligors.

      "Officers' Certificate" means a certificate signed by two Officers;
provided, however, that for purposes of Section 4.4 hereof, "Officers'
Certificate" means a certificate signed by the principal executive officer,
principal financial officer or principal accounting officer of each of the
Obligors and by one other Officer.

      "Opinion of Counsel" means a written opinion from legal counsel. The
counsel may be an employee of or counsel to each of the Obligors or the Trustee.

      "Participant" means, with respect to the Depositary, Euroclear or
Clearstream, a person who has an account with the Depositary, Euroclear or
Clearstream, respectively, and, with respect to the Depository Trust Company,
shall include Euroclear and Clearstream.

      "Permitted Business" means any business conducted by the Company and its
Restricted Subsidiaries on the date of this Indenture and any business
reasonably related, ancillary or


                                       14

complimentary to the business of the Company and its Restricted Subsidiaries on
the date of this Indenture.

      "Permitted Investments" means:

      (1)   any Investment in the Company or in a Restricted Subsidiary of the
            Company;

      (2)   any Investment in cash and Cash Equivalents;

      (3)   any Investment by the Company or any Subsidiary of the Company in a
            Person, if as a result of such Investment:

            (a)   such Person becomes a Restricted Subsidiary of the Company; or

            (b)   such Person is merged or consolidated with or into, or
                  transfers or conveys substantially all of its assets to, or is
                  liquidated into, the Company or a Restricted Subsidiary of the
                  Company;

      (4)   any Investment made as a result of the receipt of non-cash
            consideration from an Asset Sale that was made pursuant to and in
            compliance with Section 4.14 hereof;

      (5)   any Investments made solely in exchange for the issuance of Equity
            Interests (other than Disqualified Stock) of the Company;

      (6)   any Investments received in compromise of obligations of such
            persons incurred in the ordinary course of trade creditors or
            customers that were incurred in the ordinary course of business,
            including pursuant to any plan of reorganization or similar
            arrangement upon the bankruptcy or insolvency of any trade creditor
            or customer;

      (7)   Investments represented by Hedging Obligations;

      (8)   Investments in existence on the date of this Indenture;

      (9)   Investments in a Permitted Joint Venture, when taken together with
            all other Investments made pursuant to this clause (9) that are at
            the time outstanding not to exceed $25.0 million; and

      (10)  other Investments in any Person having an aggregate Fair Market
            Value (measured on the date each such Investment was made and
            without giving effect to subsequent changes in value), when taken
            together with all other Investments made pursuant to this clause
            (10) that are at the time outstanding not to exceed $25.0 million.

      "Permitted Joint Venture" means any joint venture (which may be in the
form of a limited liability company, partnership, corporation or other entity)
in which the Company or any of its Restricted Subsidiaries is a joint venturer;
provided, however, that (a) the joint venture is engaged solely in a Permitted
Business and (b) the governing documents of the joint venture


                                       15

require the consent of the Company or such Restricted Subsidiary with respect to
any material decisions relating to the activities of the joint venture.

      "Permitted Liens" means:

      (1)   Liens securing Indebtedness and other Obligations under Credit
            Facilities that were permitted by the terms of this Indenture to be
            incurred under Section 4.9(b)(i) hereof;

      (2)   Liens in favor of the Company;

      (3)   Liens on property of a Person existing at the time such Person is
            merged with or into or consolidated with or is acquired by the
            Company or any Subsidiary of the Company; provided, that such Liens
            were not incurred in contemplation of such merger, consolidation or
            acquisition and do not extend to any assets other than those of the
            Person merged into, consolidated with or acquired by the Company or
            the Subsidiary;

      (4)   Liens on property existing at the time of acquisition of the
            property by the Company or any Subsidiary of the Company, provided,
            that such Liens were not incurred in contemplation of such
            acquisition;

      (5)   Liens to secure the performance of statutory obligations, surety or
            appeal bonds, performance bonds or other obligations of a like
            nature incurred in the ordinary course of business;

      (6)   Liens to secure Indebtedness (including Capital Lease Obligations)
            permitted by Section 4.9(b)(iv) hereof, covering only the assets
            acquired with such Indebtedness;

      (7)   Liens existing on the date of this Indenture;

      (8)   Liens for taxes, assessments or governmental charges or claims that
            are not yet delinquent or that are being contested in good faith by
            appropriate proceedings promptly instituted and diligently
            concluded, provided, that any reserve or other appropriate provision
            as is required in conformity with GAAP has been made therefor;

      (9)   Liens securing Hedging Obligations;

      (10)  Liens arising by reason of deposits necessary to obtain standby
            letters of credit in the ordinary course of business (including
            deposits necessary to obtain standby letters of credit);

      (11)  Liens to secure any Permitted Refinancing Indebtedness permitted to
            be incurred under the Indenture; provided, however, that:


                                       16

            (a)   the new Lien shall be limited to all or part of the same
                  property and assets that secured or, under the written
                  agreements pursuant to which the original Lien arose, could
                  secure the original Lien (plus improvements and accessions to,
                  such property or proceeds or distributions thereof); and

            (b)   the Indebtedness secured by the new Lien is not increased to
                  any amount greater than the sum of (x) the outstanding
                  principal amount or, if greater, committed amount, of the
                  Permitted Refinancing Indebtedness and (y) an amount necessary
                  to pay any fees and expenses, including premiums, related to
                  such refinancings, refunding, extension, renewal or
                  replacement;

      (12)  Liens incurred in the ordinary course of business of the Company or
            any Restricted Subsidiary of the Company with respect to obligations
            that do not exceed $25.0 million at any one time outstanding;

      (13)  survey title exceptions, title defects, encumbrances, easements,
            reservations of, or rights of others for, rights of way, sewers,
            electric lines, telegraph or telephone lines and other similar
            purposes or zoning or other restrictions as to the use of real
            property not materially interfering with the ordinary conduct of the
            business of the Company and its Subsidiaries taken as a whole;

      (14)  Liens arising by operation of law in favor of landlords, mechanics,
            carriers, warehousemen, materialmen, laborers, employees, suppliers
            or the like, incurred in the ordinary course of business for sums
            which are not yet delinquent or are being contested in good faith by
            negotiations or by appropriate proceedings which suspend the
            collection thereof; and

      (15)  Liens arising out of judgments, decrees, orders or awards in respect
            of which the Company shall in good faith be prosecuting an appeal or
            proceedings for review which appeal or proceedings shall not have
            been finally terminated, or if the period within which such appeal
            or proceedings may be initiated shall not have expired.

      "Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided, that:

      (1)   the principal amount (or accreted value, if applicable) of such
            Permitted Refinancing Indebtedness does not exceed the principal
            amount (or accreted value, if applicable) of the Indebtedness
            extended, refinanced, renewed, replaced, defeased or refunded (plus
            all accrued interest on the Indebtedness and the amount of all
            expenses and premiums incurred in connection therewith);

      (2)   such Permitted Refinancing Indebtedness has a final maturity date
            later than the final maturity date of, and has a Weighted Average
            Life to Maturity equal to or greater than the Weighted Average Life
            to Maturity of, the Indebtedness being extended, refinanced,
            renewed, replaced, defeased or refunded;


                                       17

      (3)   if the Indebtedness being extended, refinanced, renewed, replaced,
            defeased or refunded is subordinated in right of payment to the
            Securities, such Permitted Refinancing Indebtedness has a final
            maturity date later than the final maturity date of, and is
            subordinated in right of payment to, the Securities on terms at
            least as favorable to the Holders of Securities as those contained
            in the documentation governing the Indebtedness being extended,
            refinanced, renewed, replaced, defeased or refunded; and

      (4)   such Indebtedness is incurred either by the Company or by the
            Restricted Subsidiary who is the obligor on the Indebtedness being
            extended, refinanced, renewed, replaced, defeased or refunded.

      "Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.

      "Principal" or "principal" of a debt security, including the Securities,
means the principal of the security plus, when appropriate, the premium, if any,
on the security.

      "Prospectus" means the prospectus included in a Registration Statement at
the time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.

      "Purchase Agreement" means the Purchase Agreement, dated December 9, 2003,
among the Company, Ribapharm and Bear, Stearns & Co., Inc., as representative of
the initial purchasers named in Schedule I thereto.

      "Redemption Date" or "redemption date" means the date specified for
redemption of the Securities in accordance with the terms thereof and this
Indenture.

      "Registration Rights Agreement" means the Registration Rights Agreement,
dated as of December 12, 2003, among the Company, Ribapharm and Bear, Stearns &
Co., Inc., as representative of the initial purchasers referred to therein.

      "Registration Statement" means any registration statement of the Company
and Ribapharm (if Ribapharm is, at the time of the filing of such registration
statement, a co-obligor on the Securities) under the Securities Act relating to
an offering of Exchange Securities pursuant to the Exchange Offer, including the
Prospectus included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by
reference therein.

      "Regulation S" means Regulation S under the Securities Act or any
successor to such regulation.

      "Regulation S Global Security" means a Regulation S Temporary Global
Security or Regulation S Permanent Global Security, as appropriate.


                                       18

      "Regulation S Permanent Global Security" means a permanent Global Security
in substantially the form of Exhibit A hereto that includes the information
called for by footnotes 1, 6 and 7 thereof and that is deposited with or on
behalf of and registered in the name of the Depositary or its nominee, issued in
a denomination equal to the outstanding principal amount of the Regulation S
Temporary Global Security upon expiration of the Restricted Period.

      "Regulation S Temporary Global Security" means a temporary Global Security
in substantially the form of Exhibit A hereto that includes the information
called for by footnotes 1, 5, 6 and 7 thereof and that is deposited with or on
behalf of and registered in the name of the Depositary or its nominee, issued in
a denomination equal to the outstanding principal amount of the Securities
initially sold in reliance on Rule 903 of Regulation S.

      "Restricted Global Security" means a permanent Global Security in
substantially the form of Exhibit A attached hereto that bears the Global
Security Legend and that has the "Schedule of Exchanges of Interests in the
Global Security" attached thereto, and that is deposited with or on behalf of
and registered in the name of the Depositary or a nominee of the Depositary,
representing Securities that bear the Legend.

      "Restricted Investment" means an Investment other than a Permitted
Investment.

      "Restricted Period" means the 40-day distribution compliance period as
defined in Regulation S.

      "Restricted Definitive Security" means a Definitive Security that is a
Restricted Security.

      "Restricted Global Security" means a Global Security that is a Restricted
Security.

      "Restricted Security" means a Security required to bear the restricted
legend set forth in the form of Securities set forth in Exhibit A of this
Indenture.

      "Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.

      "Ribapharm" means the party named as such in the first paragraph of this
Indenture until a successor replaces it pursuant to the applicable provisions of
this Indenture, and thereafter "Ribapharm" shall mean such successor.

      "Rule 144" means Rule 144 promulgated under the Securities Act or any
successor to such rule.

      "Rule 144A" means Rule 144A promulgated under the Securities Act or any
successor to such rule.

      "Rule 903" means Rule 903 promulgated under the Securities Act.

      "Rule 904" means Rule 904 promulgated under the Securities Act.


                                       19

      "S&P" means Standard & Poor's Ratings Group, Inc., or any successor to the
rating agency business thereof.

      "SEC" means the Securities and Exchange Commission.

      "Securities" means any of the 7.0% Senior Notes due 2011 (each, a
"Security"), as amended or supplemented from time to time, that are issued under
this Indenture.

      "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder, as in effect from time to time.

      "Securities Custodian" means the Trustee, as custodian with respect to the
Securities in global form, or any successor thereto.

      "Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such regulation is in effect on the date
hereof.

      "6 1/2% Indenture" means the indenture, dated July 18, 2001, among the
Company, Ribapharm and The Bank of New York under which the 6 1/2% Notes were
originally issued.

      "6 1/2% Notes" means any of the 6 1/2% Convertible Subordinated Notes due
July 15, 2008, originally issued under the 6 -1/2% Indenture.

      "Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which the payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and will not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.

      "Subsidiary" means, with respect to any specified Person:

      (1)   any corporation, association or other business entity of which more
            than 50% of the total voting power of shares of Capital Stock
            entitled (without regard to the occurrence of any contingency) to
            vote in the election of directors, managers or trustees of the
            corporation, association or other business entity is at the time
            owned or controlled, directly or indirectly, by that Person or one
            or more of the other Subsidiaries of that Person (or a combination
            thereof); and

      (2)   any partnership (a) the sole general partner or the managing general
            partner of which is such Person or a Subsidiary of such Person or
            (b) the only general partners of which are that Person or one or
            more Subsidiaries of that Person (or any combination thereof).

      "TIA" means the Trust Indenture Act of 1939, as amended, and the rules and
regulations thereunder as in effect on the date of this Indenture, except as
provided in Section 9.3 hereof, and except to the extent any amendment to the
Trust Indenture Act expressly provides for application of the Trust Indenture
Act as in effect on another date.


                                       20

      "Trustee" means the party named as such in the first paragraph of this
Indenture until a successor replaces it in accordance with the provisions of
this Indenture, and thereafter means the successor.

      "Trust Officer" means, with respect to the Trustee, any officer assigned
to the Corporate Trust Office, and also, with respect to a particular matter,
any other officer to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject.

      "Unrestricted Definitive Security" means a Definitive Security that is not
a Restricted Security.

      "Unrestricted Global Security" means a Global Security that is not a
Restricted Security.

      "Unrestricted Subsidiary" means:

      (1) any Subsidiary of the Company that is designated by the Board of
Directors as an Unrestricted Subsidiary pursuant to a Board Resolution, and

      (2) ICN Yugoslavia DD (formerly ICN Galenika),

in each case only to the extent that such Subsidiary:

      (a)   has no Indebtedness other than Non-Recourse Debt;

      (b)   is not party to any agreement, contract, arrangement or
            understanding with the Company or any Restricted Subsidiary of the
            Company unless the terms of any such agreement, contract,
            arrangement or understanding are no less favorable to the Company or
            such Restricted Subsidiary than those that might be obtained at the
            time from Persons who are not Affiliates of the Company;

      (c)   is a Person with respect to which neither the Company nor any of its
            Restricted Subsidiaries has any direct or indirect obligation (a) to
            subscribe for additional Equity Interests or (b) to maintain or
            preserve such Person's financial condition or to cause such Person
            to achieve any specified levels of operating results; and

      (d)   has not guaranteed or otherwise directly or indirectly provided
            credit support for any Indebtedness of the Company or any of its
            Restricted Subsidiaries.

      Any designation of a Subsidiary of the Company as an Unrestricted
Subsidiary (other than the foregoing designation of ICN Yugoslavia DD as an
Unrestricted Subsidiary) will be evidenced to the Trustee by filing with the
Trustee a certified copy of the Board Resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the preceding conditions and was permitted by Section 4.8 hereof.
If, at any time, any Unrestricted Subsidiary would fail to meet the preceding
requirements as an Unrestricted Subsidiary, it will thereafter cease to be an
Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of
such Subsidiary will be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date, and, if such Indebtedness is not permitted to be
incurred as of such date under Section 4.9 hereof, the Company will be in
default of such


                                       21

covenant. The Board of Directors of the Company may at any time designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such
designation will be deemed to be an incurrence of Indebtedness by a Restricted
Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted
Subsidiary and such designation will only be permitted if (1) such Indebtedness
is permitted under Section 4.9 hereof, calculated on a pro forma basis as if
such designation had occurred at the beginning of the four-quarter reference
period; and (2) no Default or Event of Default would be in existence following
such designation.

      "U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable at the issuer's option.

      "Vice President" when used with respect to either of the Obligors or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president."

      "Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.

      "Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:

      (1)   the sum of the products obtained by multiplying (a) the amount of
            each then remaining installment, sinking fund, serial maturity or
            other required payments of principal, including payment at final
            maturity, in respect of the Indebtedness, by (b) the number of years
            (calculated to the nearest one-twelfth) that will elapse between
            such date and the making of such payment; by

      (2)   the then outstanding principal amount of such Indebtedness.

      Section 1.2 Other Definitions.



                                         TERM                                                 DEFINED IN SECTION
- -------------------------------------------------------------------------------------      ------------------------
                                                                                        
"Affiliate Transaction"..............................................................               4.13(a)
"Agent Members"......................................................................               2.1(b)
"Asset Sale Offer"...................................................................            4.14(c)/3.14
"Benefited Party"....................................................................               10.2(b)
"Change of Control Offer ............................................................               3.8(b)
"Change of Control Purchase Date"....................................................               3.8(b)
"Change of Control Purchase Notice"..................................................               3.8(c)
"Change of Control Purchase Price"...................................................               3.8(a)
"Covenant Defeasance"................................................................                 8.3
"DTC"................................................................................               2.1(a)
"Depositary".........................................................................               2.1(a)
"Event of Default"...................................................................                 6.1
"Excess Proceeds"....................................................................               4.14(c)



                                       22



                                         TERM                                                 DEFINED IN SECTION
- -------------------------------------------------------------------------------------      ------------------------
                                                                                        
"incur"..............................................................................               4.9(a)
"Legal Defeasance"...................................................................                 8.2
"Legal Holiday"......................................................................                11.7
"Legend" ............................................................................               2.12(a)
"Notice of Default"..................................................................                 6.1
"Obligors Notice"....................................................................               3.8(b)
"Obligors Order".....................................................................                 2.2
"Offer Amount".......................................................................                3.14
"Offer Period".......................................................................                3.14
"Parity Indebtedness"................................................................                3.14
"Paying Agent".......................................................................                 2.3
"Payment Default"....................................................................               6.1(e)
"Permitted Debt".....................................................................               4.9(b)
"Primary Registrar"..................................................................                 2.3
"Purchase Date"......................................................................                3.14
"QIB"................................................................................                 2.1
"Registrar"..........................................................................                 2.3
"Restricted Payments"................................................................               4.8(a)


      Section 1.3 Trust Indenture Act Provisions.

      Whenever this Indenture refers to a provision of the TIA, that provision
is incorporated by reference in and made a part of this Indenture. The Indenture
shall also include those provisions of the TIA required to be included herein by
the provisions of the Trust Indenture Reform Act of 1990. The following TIA
terms used in this Indenture have the following meanings:

      "indenture securities" means the Securities;

      "indenture security holder" means a Securityholder;

      "indenture to be qualified" means this Indenture;

      "indenture trustee" or "institutional trustee" means the Trustee;

      "obligor" on the indenture securities means the Obligors or any other
obligor on the Securities.

      All other terms used in this Indenture that are defined in the TIA,
defined by TIA reference to another statute or defined by any SEC rule and not
otherwise defined herein have the meanings assigned to them therein.

      Section 1.4 Rules of Construction.

      Unless the context otherwise requires:

            (A)   a term has the meaning assigned to it;


                                       23

            (B)   an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;

            (C)   words in the singular include the plural, and words in the
plural include the singular;

            (D)   provisions apply to successive events and transactions;

            (E)   the term "merger" includes a statutory share exchange and the
term "merged" has a correlative meaning;

            (F)   the masculine gender includes the feminine and the neuter;

            (G)   references to agreements and other instruments include
subsequent amendments thereto;

            (H)   "herein," "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or other
subdivision; and

            (I)   references to ratings by Moody's or S&P shall include any
successor equivalent ratings if either Moody's or S&P changes its ratings scale
subsequent to the date of this Indenture.

                                   ARTICLE 2

                                 THE SECURITIES

      Section 2.1 Form and Dating.

      The Securities and the Trustee's certificate of authentication shall be
substantially in the form set forth in Exhibit A, which is incorporated in and
made part of this Indenture. The Securities may have notations, legends or
endorsements required by law, stock exchange rule or usage. The Obligors shall
provide any such notations, legends or endorsements to the Trustee in writing.
The Securities shall be in denominations of $1,000 and integral multiples
thereof. Each Security shall be dated the date of its authentication. The
Securities are being offered and sold by the Obligors pursuant to the Purchase
Agreement, in transactions exempt from, or not subject to, the registration
requirements of the Securities Act.

            (a)   Restricted Global Securities. All of the Securities are
initially being offered and sold to (i) qualified institutional buyers as
defined in Rule 144A (collectively, "QIBS" or individually, each a "QIB") in
reliance on Rule 144A under the Securities Act or (ii) outside the United States
to persons other than U.S. persons in reliance upon Regulation S under the
Securities Act, and shall be issued initially in the form of one or more
Restricted Global Securities, which shall be deposited on behalf of the
purchasers of the Securities represented thereby with the Trustee, as custodian
for the depositary, The Depository Trust Company ("DTC") (such depositary, or
any successor thereto, being hereinafter referred to as the "DEPOSITARY"), and
registered in the name of its nominee, Cede & Co., duly executed by the


                                       24

Obligors and authenticated by the Trustee as hereinafter provided. The aggregate
principal amount of the Restricted Global Securities may from time to time be
increased or decreased by adjustments made on the records of the Securities
Custodian as hereinafter provided, subject in each case to compliance with the
Applicable Procedures.

            (b)   Form of Securities. Global Securities shall be substantially
in the form of Exhibit A attached hereto (including the Global Security Legend
thereon and the "Schedule of Exchanges of Interests in the Global Security"
attached thereto). Definitive Securities shall be substantially in the form of
Exhibit A attached hereto (but without the Global Security Legend thereon and
without the "Schedule of Exchanges of Interests in the Global Security" attached
thereto). Each Global Security shall represent such of the outstanding
Securities as shall be specified therein and each shall provide that it shall
represent the aggregate principal amount of outstanding Securities from time to
time endorsed thereon and that the aggregate principal amount of outstanding
Securities represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of a Global
Security to reflect the amount of any increase or decrease in the aggregate
principal amount of outstanding Securities represented thereby shall be made by
the Trustee or the Securities Custodian, at the direction of the Trustee, in
accordance with instructions given by the Holder thereof as required by Section
2.12 hereof and shall be made on the records of the Trustee and the Depositary.

            Members of, or participants in, the Depositary ("AGENT MEMBERS")
shall have no rights under this Indenture with respect to any Global Security
held on their behalf by the Depositary or under the Global Security, and the
Depositary (including, for this purpose, its nominee) may be treated by the
Obligors, the Trustee and any agent of the Obligors or the Trustee as the
absolute owner and Holder of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall (A) prevent the Obligors,
the Trustee or any agent of the Obligors or the Trustee from giving effect to
any written certification, proxy or other authorization furnished by the
Depositary or (B) impair, as between the Depositary and its Agent Members, the
operation of customary practices governing the exercise of the rights of a
Holder of any Security.

            (c)   Additional Securities. Subject to compliance with the
provisions of Section 4.9 hereof, the Obligors may issue Additional Securities
in an unlimited amount under this Indenture.

            (d)   Temporary Global Securities. Securities offered and sold in
reliance on Regulation S shall be issued initially in the form of the Regulation
S Temporary Global Security, which shall be deposited on behalf of the
purchasers of the Securities represented thereby with the Trustee, at its New
York office, as custodian for the Depositary, and registered in the name of the
Depositary or the nominee of the Depositary for the accounts of designated
agents holding on behalf of Euroclear or Clearstream, duly executed by the
Obligors and authenticated by the Trustee as hereinafter provided. Following the
termination of the Restricted Period, beneficial interests in the Regulation S
Temporary Global Security shall be exchanged for beneficial interests in
Regulation S Permanent Global Securities pursuant to the Applicable Procedures.
Simultaneously with the authentication of Regulation S Permanent Global
Securities, the Trustee shall cancel the Regulation S Temporary Global Security.
The aggregate principal amount of the


                                       25

Regulation S Temporary Global Security and the Regulation S Permanent Global
Securities may from time to time be increased or decreased by adjustments made
on the records of the Trustee and the Depositary or its nominee, as the case may
be, in connection with transfers of interest as hereinafter provided.

            (e)   Book Entry Provisions. The Obligors shall execute and the
Trustee shall, in accordance with this Section 2.1(e), authenticate and deliver
initially one or more Global Securities that (i) shall be registered in the name
of the Depositary or its nominee, (ii) shall be delivered by the Trustee to the
Depositary or pursuant to the Depositary's instructions and (iii) shall bear
legends substantially in the form of the first paragraph of Exhibit A hereto.

      Section 2.2 Execution and Authentication.

      An Officer of each of the Obligors shall sign the Securities for the
Obligors by manual or facsimile signature. Typographic and other minor errors or
defects in any such facsimile signature shall not affect the validity or
enforceability of any Security which has been authenticated and delivered by the
Trustee.

      If an Officer whose signature is on a Security no longer holds that office
at the time the Trustee authenticates the Security, the Security shall be valid
nevertheless.

      A Security shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Security. The signature
shall be conclusive evidence that the Security has been authenticated under this
Indenture.

      The Trustee shall authenticate and make available for delivery Securities
for original issue in an initial aggregate principal amount of $300,000,000 upon
receipt of a written order or orders of the Obligors signed by an Officer of the
Obligors (an "OBLIGORS ORDER"). The Obligors Order shall specify the amount of
Securities to be authenticated and shall provide that all such Securities will
be represented by a Restricted Global Security and the date on which each
original issue of Securities is to be authenticated. The aggregate principal
amount of Securities outstanding at any time may not exceed the amounts in the
foregoing sentence, except as provided in Sections 2.1(c), 2.1(d) and 2.7
hereof.

      The Trustee shall act as the initial authenticating agent. Thereafter, the
Trustee may appoint an authenticating agent acceptable to the Obligors to
authenticate Securities. An authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent shall have the same rights as an Agent to deal with the
Obligors or an Affiliate of the Obligors.

      The Securities shall be issuable only in registered form without coupons
and only in denominations of $1,000 principal amount and any integral multiple
thereof.

      Section 2.3 Registrar and Paying Agent.

      The Obligors shall maintain one or more offices or agencies where
Securities may be presented for registration of transfer or for exchange (each,
a "REGISTRAR"), one or more offices


                                       26

or agencies where Securities may be presented for payment (each, a "PAYING
AGENT") and one or more offices or agencies where notices and demands to or upon
the Obligors in respect of the Securities and this Indenture may be served. The
Obligors will at all times maintain a Paying Agent, Registrar and an office or
agency where notices and demands to or upon the Obligors in respect of the
Securities and this Indenture may be served in the Borough of Manhattan, The
City of New York. One of the Registrars (the "PRIMARY REGISTRAR") shall keep a
register of the Securities and of their transfer and exchange.

      The Obligors shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Agent. The Obligors shall
notify the Trustee of the name and address of any Agent not a party to this
Indenture. If the Obligors fail to maintain a Registrar, Paying Agent or agent
for service of notices and demands in any place required by this Indenture, or
fail to give the foregoing notice, the Trustee shall act as such. The Obligors
or any Affiliate of the Obligors may act as Paying Agent (except for the
purposes of Section 4.1 and Article 8).

      The Obligors hereby initially designate the Trustee as Paying Agent,
Registrar and Securities Custodian, and the office or agency of the Trustee in
the Borough of Manhattan, The City of New York (which shall initially be the
office of the Trustee located at 101 Barclay Street - 8W, New York, NY 10286) as
one such office or agency of the Obligors for each of the aforesaid purposes.

      Section 2.4 Paying Agent to Hold Money in Trust.

      Prior to 11:00 a.m., New York City time, on each due date of the principal
of, interest or Additional Interest, if any, on any Securities, the Obligors
shall deposit with a Paying Agent a sum sufficient to pay such principal,
interest or Additional Interest, if any, so becoming due. A Paying Agent shall
hold in trust for the benefit of Securityholders or the Trustee all money held
by the Paying Agent for the payment of principal of, interest or Additional
Interest, if any, on the Securities, and shall notify the Trustee of any default
by the Obligors (or any other obligor on the Securities) in making any such
payment. If the Obligors or an Affiliate of the Obligors act as Paying Agent,
the Obligors or such Affiliate shall, before 11:00 a.m., New York City time, on
each due date of the principal of, interest or Additional Interest, if any, on
any Securities, segregate the money and hold it as a separate trust fund. The
Obligors at any time may require a Paying Agent to pay all money held by it to
the Trustee, and the Trustee may at any time during the continuance of any
default, upon written request to a Paying Agent, require such Paying Agent to
pay forthwith to the Trustee all sums so held in trust by such Paying Agent.
Upon doing so, the Paying Agent (other than the Obligors) shall have no further
liability for the money.

      Section 2.5 Securityholder Lists.

      The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Securityholders. If the Trustee is not the Primary Registrar, the Obligors shall
furnish to the Trustee on or before each interest payment date, and at such
other times as the Trustee may request in writing, a list in such form and as of
such date as the Trustee may reasonably require of the names and addresses of
Securityholders.


                                       27

      Section 2.6 Transfer and Exchange.

            (a)   Subject to compliance with any applicable additional
requirements contained in Section 2.12 hereof, when a Security is presented to a
Registrar with a request to register a transfer thereof or to exchange such
Security for an equal principal amount of Securities of other authorized
denominations, the Registrar shall register the transfer or make the exchange as
requested; provided, however, that every Security presented or surrendered for
registration of transfer or exchange shall be duly endorsed or accompanied by an
assignment form and, if applicable, a transfer certificate in the form(s)
included in Exhibit A and Exhibit B, as applicable, and in form satisfactory to
the Registrar, duly executed by the Holder thereof or its attorney duly
authorized in writing. To permit registration of transfers and exchanges, upon
surrender of any Security for registration of transfer or exchange at an office
or agency maintained pursuant to Section 2.3 hereof, the Obligors shall execute
and the Trustee shall authenticate Securities of a like aggregate principal
amount at the Registrar's request. Any exchange or transfer shall be without
charge, except that the Obligors or the Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto, and provided, that this sentence shall not apply to any
exchange pursuant to Section 2.10, 2.12(a), 3.6, 3.11 or 9.5 hereof.

      Neither the Obligors, any Registrar nor the Trustee shall be required to
exchange or register a transfer of any Securities or portions thereof in respect
of which a Change of Control Purchase Notice or a notice in connection with an
Asset Sale Offer has been delivered and not withdrawn by the Holder thereof
(except, in the case of the purchase of a Security in part, the portion thereof
not to be purchased).

      All Securities issued upon any transfer or exchange of Securities shall be
valid obligations of the Obligors, evidencing the same debt and entitled to the
same benefits under this Indenture, as the Securities surrendered upon such
transfer or exchange.

            (b)   Any Registrar appointed pursuant to Section 2.3 hereof shall
provide to the Trustee such information as the Trustee may reasonably require in
connection with the delivery by such Registrar of Securities upon transfer or
exchange of Securities.

            (c)   Each Holder of a Security agrees to indemnify the Obligors and
the Trustee against any liability that may result from the transfer, exchange or
assignment of such Holder's Security in violation of any provision of this
Indenture and/or applicable United States federal or state securities law.

      Section 2.7 Replacement Securities.

      If any mutilated Security is surrendered to the Obligors, a Registrar or
the Trustee, or the Obligors, a Registrar and the Trustee receive evidence to
their satisfaction of the destruction, loss or theft of any Security, and there
is delivered to the Obligors, the applicable Registrar and the Trustee such
security or indemnity as will be required by them to save each of them harmless,
then, in the absence of notice to the Obligors, such Registrar or the Trustee
that such Security has been acquired by a bona fide purchaser, the Obligors
shall execute, and upon its written request the Trustee shall authenticate and
deliver, in exchange for any such mutilated Security or in lieu


                                       28

of any such destroyed, lost or stolen Security, a new Security of like tenor and
principal amount, bearing a number not contemporaneously outstanding.

      In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, or is about to be purchased by the
Obligors pursuant to Article 3, the Obligors in their discretion may, instead of
issuing a new Security, pay or purchase such Security, as the case may be.

      Upon the issuance of any new Securities under this Section 2.7, the
Obligors may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
reasonable expenses (including the reasonable fees and expenses of the Trustee
or the Registrar) in connection therewith.

      Every new Security issued pursuant to this Section 2.7 in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Obligors, whether or not the mutilated,
destroyed, lost or stolen Security shall be at any time enforceable by anyone,
and shall be entitled to all benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder.

      The provisions of this Section 2.7 are (to the extent lawful) exclusive
and shall preclude (to the extent lawful) all other rights and remedies with
respect to the replacement or payment of mutilated, destroyed, lost or stolen
Securities.

      Section 2.8 Outstanding Securities.

      Securities outstanding at any time are all Securities authenticated by the
Trustee, except for those canceled by it, those delivered to it for cancellation
or surrendered for transfer or exchange and those described in this Section 2.8
as not outstanding.

      If a Security is replaced pursuant to Section 2.7 hereof, it ceases to be
outstanding unless the Obligors receive proof satisfactory to them that the
replaced Security is held by a bona fide purchaser.

      If a Paying Agent (other than the Obligors or an Affiliate of the
Obligors) holds on a Redemption Date, Change of Control Purchase Date or the
Final Maturity Date money sufficient to pay the principal of (including premium,
if any), interest and Additional Interest, if any, on Securities (or portions
thereof) payable on that date, then on and after such Redemption Date, Change of
Control Purchase Date or the Final Maturity Date, as the case may be, such
Securities (or portions thereof, as the case may be) shall cease to be
outstanding and interest and Additional Interest, if any, on them shall cease to
accrue.

      Subject to the restrictions contained in Section 2.9 hereof, a Security
does not cease to be outstanding because the Obligors or an Affiliate of the
Obligors hold the Security.

      Section 2.9 Treasury Securities.

      In determining whether the Holders of the required principal amount of
Securities have concurred in any notice, direction, waiver or consent,
Securities owned by the Obligors or any


                                       29

other obligor on the Securities or by any Affiliate of the Obligors or of such
other obligor shall be disregarded, except that, for purposes of determining
whether the Trustee shall be protected in relying on any such notice, direction,
waiver or consent, only Securities which a Trust Officer of the Trustee actually
knows are so owned shall be so disregarded. Securities so owned which have been
pledged in good faith shall not be disregarded if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to the
Securities and that the pledgee is not the either of Obligors or any other
obligor on the Securities or any Affiliate of the Obligors or of such other
obligor.

      Section 2.10 Temporary Securities.

      Until Definitive Securities are ready for delivery, the Obligors may
prepare and execute, and, upon receipt of a Obligors Order, the Trustee shall
authenticate and deliver, temporary Securities. Temporary Securities shall be
substantially in the form of Definitive Securities but may have variations that
the Obligors with the consent of the Trustee considers appropriate for temporary
Securities. Without unreasonable delay, the Obligors shall prepare and the
Trustee shall authenticate and deliver definitive Securities in exchange for
temporary Securities.

      Section 2.11 Cancellation.

      The Obligors at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee or
its agent any Securities surrendered to them for transfer, exchange, payment or
conversion. The Trustee and no one else shall cancel, in accordance with its
standard procedures, all Securities surrendered for transfer, exchange, payment,
conversion or cancellation and shall deliver the canceled Securities to the
Obligors. All Securities which are purchased or otherwise acquired by the
Obligors or any of their Subsidiaries prior to the Final Maturity Date may be
delivered to the Trustee for cancellation or, if permitted by the Purchase
Agreement, be resold. The Obligors may not hold or resell such Securities or
issue any new Securities to replace any Securities delivered for cancellation

      Section 2.12 Legend; Additional Transfer and Exchange Requirements.

            (a)   If Securities are issued upon the transfer, exchange or
replacement of Securities subject to restrictions on transfer and bearing the
legends set forth on the form of Securities attached hereto as Exhibit A
(collectively, the "LEGEND"), or if a request is made to remove the Legend on a
Security, the Securities so issued shall bear the Legend, or the Legend shall
not be removed, as the case may be, unless there is delivered to the Obligors
and the Registrar such satisfactory evidence, which shall include an opinion of
counsel if requested by the Obligors or such Registrar, as may be reasonably
required by the Obligors and the Registrar, that neither the Legend nor the
restrictions on transfer set forth therein are required to ensure that transfers
thereof comply with the provisions of Rule 144 under the Securities Act or that
such Securities are not "restricted" within the meaning of Rule 144 under the
Securities Act; provided that no such evidence need be supplied in connection
with the sale of such Security pursuant to a registration statement that is
effective at the time of such sale. Upon (i) provision of such satisfactory
evidence if requested, or (ii) notification by the Obligors to the Trustee and
Registrar of the sale of such Security pursuant to a registration statement that
is effective at the time of


                                       30

such sale, the Trustee, at the written direction of the Obligors, shall
authenticate and deliver a Security that does not bear the Legend. If the Legend
is removed from the face of a Security and the Security is subsequently held by
an Affiliate of the Obligors, the Legend shall be reinstated.

            (b)   A Global Security may not be transferred, in whole or in part,
to any Person other than the Depositary or a nominee or any successor thereof,
and no such transfer to any such other Person may be registered; provided that
the foregoing shall not prohibit any transfer of a Security that is issued in
exchange for a Global Security but is not itself a Global Security; provided
further that in no event shall (x) the Regulation S Temporary Global Security be
exchanged by the Obligors for a Regulation S Permanent Global Security or (y) a
beneficial interest in a Regulation S Global Security be transferred to a U.S.
Person, prior to (A) the expiration of the Restricted Period and (B) the receipt
by the Registrar of any certificates required pursuant to Regulation S, as
determined by the Obligors. No transfer of a Security to any Person shall be
effective under this Indenture or the Securities unless and until such Security
has been registered in the name of such Person. Notwithstanding any other
provisions of this Indenture or the Securities, transfers of a Global Security,
in whole or in part, shall be made only in accordance with this Section 2.12.

            (c)   Subject to the succeeding paragraph, every Security shall be
subject to the restrictions on transfer provided in the Legend. Whenever any
Restricted Security is presented or surrendered for registration of transfer or
for exchange for a Security registered in a name other than that of the Holder,
such Security must be accompanied by a certificate in substantially the form set
forth in Exhibit A, dated the date of such surrender and signed by the Holder of
such Security, as to compliance with such restrictions on transfer. The
Registrar shall not be required to accept for such registration of transfer or
exchange any Security not so accompanied by a properly completed certificate.

            (d)   The restrictions imposed by the Legend upon the
transferability of any Security shall cease and terminate when such Security has
been exchanged for an Exchange Security in the Exchange Offer, sold pursuant to
an effective registration statement under the Securities Act or transferred in
compliance with Rule 144 under the Securities Act (or any successor provision
thereto) or, if earlier, upon the expiration of the holding period applicable to
sales thereof under Rule 144(k) under the Securities Act (or any successor
provision). Any Security as to which such restrictions on transfer shall have
expired in accordance with their terms or shall have terminated may, upon a
surrender of such Security for exchange to the Registrar in accordance with the
provisions of this Section 2.12 (accompanied, in the event that such
restrictions on transfer have terminated by reason of a transfer in compliance
with Rule 144 or any successor provision, by, if requested by the Obligors or
the Registrar, an opinion of counsel reasonably acceptable to the Obligors and
addressed to the Obligors to the effect that the transfer of such Security has
been made in compliance with Rule 144 or such successor provision), be exchanged
for a new Security, of like tenor and aggregate principal amount, which shall
not bear the restrictive Legend. The Obligors shall inform the Trustee of the
consummation of the Exchange Offer and the effective date of any registration
statement registering the Securities under the Securities Act. The Trustee shall
not be liable for any action taken or omitted to be taken by it in good faith in
accordance with the aforementioned opinion of counsel or registration statement.


                                       31

            (e)   As used in this Section 2.12, the term "transfer" encompasses
any sale, pledge, transfer, hypothecation or other disposition of any Security.

            (f)   The provisions of clauses (iii), (iv) and (v) below shall
apply only to Global Securities:

                  (i)   Notwithstanding any other provisions of this Indenture
      or the Securities, a Global Security shall not be exchanged in whole or in
      part for a Security registered in the name of any Person other than the
      Depositary or one or more nominees thereof, provided that a Global
      Security may be exchanged for Securities registered in the names of any
      person designated by the Depositary in the event that (A) the Depositary
      (x) has notified the Obligors that it is unwilling or unable to continue
      as Depositary for such Global Security or (y) such Depositary has ceased
      to be a "clearing agency" registered under the Exchange Act and, in either
      case, a successor Depositary is not appointed by the Obligors within 90
      days after receipt of such notice or the Obligors become aware of such
      failure of registration, (B) the Obligors have provided the Depositary
      with written notice that they have elected to cause the issuance of the
      Definitive Securities or (C) an Event of Default has occurred and is
      continuing with respect to the Securities. Any Global Security exchanged
      pursuant to clause (A) above shall be so exchanged in whole and not in
      part, and any Global Security exchanged pursuant to clause (B) or (C)
      above may be exchanged in whole or from time to time in part as directed
      by the Depositary. Any Security issued in exchange for a Global Security
      or any portion thereof shall be a Global Security; provided that any such
      Security so issued that is registered in the name of a Person other than
      the Depositary or a nominee thereof shall not be a Global Security.

                  (ii)  Securities issued in exchange for a Global Security or
      any portion thereof shall be issued in definitive, fully registered form,
      without interest coupons, shall have an aggregate principal amount equal
      to that of such Global Security or portion thereof to be so exchanged,
      shall be registered in such names and be in such authorized denominations
      as the Depositary shall designate and shall bear the applicable legends
      provided for herein. Any Global Security to be exchanged in whole shall be
      surrendered by the Depositary to the Trustee, as Registrar. With regard to
      any Global Security to be exchanged in part, either such Global Security
      shall be so surrendered for exchange or, if the Trustee is acting as
      custodian for the Depositary or its nominee with respect to such Global
      Security, the principal amount thereof shall be reduced, by an amount
      equal to the portion thereof to be so exchanged, by means of an
      appropriate adjustment made on the records of the Trustee. Upon any such
      surrender or adjustment, the Trustee shall authenticate and deliver the
      Security issuable on such exchange to or upon the order of the Depositary
      or an authorized representative thereof.

                  (iii) Subject to the provisions of clause (v) below, the
      registered Holder may grant proxies and otherwise authorize any Person,
      including Agent Members and persons that may hold interests through Agent
      Members, to take any action which a Holder is entitled to take under this
      Indenture or the Securities.

                  (iv)  In the event of the occurrence of any of the events
      specified in clause (i) above, the Obligors will promptly make available
      to the Trustee a reasonable


                                       32

      supply of Definitive Securities in definitive, fully registered form,
      without interest coupons.

                  (v)   Neither Agent Members nor any other Persons on whose
      behalf Agent Members may act shall have any rights under this Indenture
      with respect to any Global Security registered in the name of the
      Depositary or any nominee thereof, or under any such Global Security, and
      the Depositary or such nominee, as the case may be, may be treated by the
      Obligors, the Trustee and any agent of the Obligors or the Trustee as the
      absolute owner and holder of such Global Security for all purposes
      whatsoever. Notwithstanding the foregoing, nothing herein shall prevent
      the Obligors, the Trustee or any agent of the Obligors or the Trustee from
      giving effect to any written certification, proxy or other authorization
      furnished by the Depositary or such nominee, as the case may be, or
      impair, as between the Depositary, its Agent Members and any other Person
      on whose behalf an Agent Member may act, the operation of customary
      practices of such Persons governing the exercise of the rights of a holder
      of any Security.

                  (vi)  The Trustee shall have no obligation or duty to monitor,
      determine or inquire as to compliance with any restrictions on transfer
      imposed under this Indenture or under applicable law with respect to any
      transfer of any interest in any Security (including any transfers between
      or among Agent Members or beneficial owners in any Global Security) other
      than to require delivery of such certificates and other documentation or
      evidence as are expressly required by, and to do so as and when expressly
      required by, the terms or this Indenture, and to examine the same to
      determine substantial compliance as to form with the express requirements
      hereof.

            (g)   Euroclear and Clearstream Procedures Applicable. The
provisions of the "Operating Procedures of the Euroclear System" and "Terms and
Conditions Governing Use of Euroclear" and the equivalent procedures of
Clearstream shall be applicable to transfers of beneficial interests in Global
Securities that are held by Participants through Euroclear or Clearstream.

            (h)   Exchange Offer. Upon the consummation of the Exchange Offer in
accordance with the Registration Rights Agreement, the Obligors shall issue and,
upon receipt of an Obligors Order, and any documents required by Section 11.4
hereof, the Trustee shall authenticate (i) one or more Unrestricted Global
Securities in an aggregate principal amount equal to the principal amount of the
beneficial interests in the Restricted Global Securities accepted for exchange
in the Exchange Offer and (ii) Unrestricted Definitive Securities in an
aggregate principal amount equal to the principal amount of the applicable
Restricted Definitive Securities accepted for exchange in the Exchange Offer.
Concurrently with the issuance of such Securities, the Trustee shall cause the
aggregate principal amount of the applicable Restricted Global Securities to be
canceled or reduced accordingly, and the Trustee shall deliver to the Persons
designated by the Holders of the Definitive Securities so accepted Unrestricted
Definitive Securities in the appropriate principal amount.


                                       33

      Section 2.13 CUSIP and ISIN Numbers.

      The Obligors in issuing the Securities may use one or more "CUSIP" and
"ISIN" numbers (if then generally in use), and, if so, the Trustee shall use
"CUSIP" and "ISIN" numbers in notices of purchase as a convenience to Holders;
provided that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained
in any notice of a purchase and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such purchase shall
not be affected by any defect in or omission of such numbers. The Obligors will
promptly notify the Trustee of any change in the "CUSIP" and "ISIN" numbers.

                                   ARTICLE 3

                            REDEMPTION AND PURCHASES

      Section 3.1 Right to Redeem.

      The Obligors, at their option, may redeem the Securities, in whole or in
part, on or after December 15, 2007, in accordance with the provisions of
Section 3.7 hereof.

      The Obligors may not redeem the Securities if they have failed to pay any
interest or premium on the Securities and such failure to pay is continuing.

      If the Obligors elect to redeem the Securities, they shall notify the
Trustee at least 45 days prior to the Redemption Date (unless a shorter notice
period shall be satisfactory to the Trustee) of the Redemption Date, the
aggregate principal amount of the Securities to be redeemed and the Section of
this Indenture pursuant to which the Securities are being redeemed.

      Section 3.2 Selection of Securities to be Redeemed.

      If less than all the outstanding Securities are to be redeemed, the
Trustee shall select the Securities for redemption as follows:

      (1) if the Securities are listed on any securities exchange, in compliance
with the requirements of the principal securities exchange on which the
Securities are listed; or

      (2) if the Notes are not listed on any securities exchange, on a pro rata
basis, by lot or by such method as the Trustee shall deem fair and appropriate.

      In the event of partial redemption by lot, the particular Securities to be
redeemed will be selected, unless otherwise provided herein, not less than 30
nor more than 60 days prior to the redemption date by the Trustee from the
outstanding Securities not previously called for redemption.

      The Trustee will promptly notify the Company in writing of the Securities
selected for redemption and, in the case of any Security selected for partial
redemption, the principal amount thereof to be redeemed. Securities and portions
of Securities selected will be in amounts of


                                       34

$1,000 or whole multiples of $1,000; except that if all of the Securities of a
Holder are to be redeemed, the entire outstanding amount of Securities held by
such Holder, even if not a multiple of $1,000, shall be redeemed. Except as
provided in the preceding sentence, provisions of this Indenture that apply to
Securities called for redemption also apply to portions of Securities called for
redemption.

      Section 3.3 Notice of Redemption.

      At least 30 days but not more than 60 days before a Redemption Date, the
Obligors shall mail, or shall cause to be mailed, a notice of redemption by
first-class mail, postage prepaid, to the Trustee and to each Holder of
Securities to be redeemed.

      The notice shall identify the Securities to be redeemed and shall state:

            -     the aggregate principal amount of the Securities to be
                  redeemed;

            -     the Redemption Date (which shall be a Business Day);

            -     the redemption price;

            -     the name and address of the Paying Agent;

            -     that Securities called for redemption must be surrendered to
                  the Paying Agent to collect the redemption price;

            -     if fewer than all the outstanding Securities are to be
                  redeemed, the certificate numbers, if any, and principal
                  amounts of the particular Securities to be redeemed;

            -     that, unless the Obligors default in the deposit of the
                  redemption price, interest on Securities called for redemption
                  will cease to accrue on and after the Redemption Date;

            -     the Section of this Indenture pursuant to which the Securities
                  are being redeemed; and

            -     the CUSIP numbers of the Securities.

At the Obligors' request, the Trustee shall give the notice of redemption in the
Obligors' name and at the Obligors' expense, provided that the Obligors make
such request at least three Business Days prior to the date by which such notice
of redemption must be given to Holders in accordance with this Section 3.3.
Concurrently with the mailing of any such notice of redemption, the Obligors
shall issue a press release announcing such redemption, the form and content of
which shall be determined by the Obligors. A notice of redemption may not be
conditioned.


                                       35

      Section 3.4 Effect of Notice of Redemption.

      Once notice of redemption is given, Securities called for redemption
become due and payable on the Redemption Date and at the redemption price stated
in the notice. Upon surrender to the Paying Agent, such Securities shall be paid
at the redemption price stated in the notice. If the Redemption Date falls
during a period starting after the close of business on an interest payment
record date and ending on the opening of business on the first Business Day
after the next interest payment date, or if this interest payment date is not a
Business Day, the second Business Day after the interest payment date, then the
interest payment will be payable to the Holders who present the Securities for
redemption.

      On and after the Redemption Date, unless the Obligors default in the
deposit of the redemption price, interest will cease to accrue on the Securities
or any portion of the Securities called for redemption, and all other rights of
the Holder will terminate other than the right to receive the redemption price,
without interest from the Redemption Date, on surrender of the Securities.

      Section 3.5 Deposit of Redemption Price.

      Prior to 11:00 a.m. (New York City time) on the Redemption Date, the
Obligors shall deposit with the Paying Agent (or the Trustee) money sufficient
to pay the redemption price on all Securities to be redeemed on that date.

      Section 3.6 Securities Redeemed in Part.

      Upon surrender of a Security that is redeemed in part, the Obligors shall
execute and the Trustee shall authenticate and deliver to the Holder, without
service charge, a new Security in an authorized denomination equal in principal
amount to, and in exchange for, the unredeemed portion of the Security
surrendered.

      Section 3.7 Optional Redemption.

            (a)   At any time prior to December 15, 2006, the Company may, on
any one or more occasions, redeem, in whole or in part, up to 35% of the
aggregate principal amount of Securities, including Additional Securities, if
any, issued under this Indenture at a redemption price of 107.0% of the
principal amount of the Securities redeemed, plus accrued and unpaid interest
and Additional Interest, if any, on the Securities redeemed to the applicable
redemption date, with the net cash proceeds of one or more Equity Offerings;
provided that;

      (1)   at least 65% of the aggregate principal amount of Securities,
      including Additional Securities, if any, issued under this Indenture
      remains outstanding immediately after the occurrence of such redemption,
      excluding Securities held by the Company and its Subsidiaries; and

      (2)   the redemption occurs within 90 days of the date of the closing of
      such Equity Offerings.


                                       36

      Except pursuant to the preceding paragraph, the Securities will not be
redeemable at the Company's option prior to December 15, 2007.

            (b)   On or after December 15, 2007, the Company may, at its option,
redeem all or a part of the Securities upon not less than 30 nor more than 60
days' notice, at the redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest and Additional
Interest, if any, on the Securities redeemed, to the applicable redemption date,
if redeemed during the twelve-month period beginning on December 15 of the years
indicated below:



            Year                                                      Percentage
            ----                                                      ----------
                                                                   
            2007 ...................................................   103.500%
            2008 ...................................................   101.750%
            2009 and thereafter ....................................   100.000%


            (c)   Any redemption pursuant to this Section 3.7 shall be made
pursuant to the provisions of Section 3.1 through 3.6 hereof.

      Section 3.8 Purchase of Securities at Option of the Holder Upon Change of
Control.

            (a)   If at any time that Securities remain outstanding there shall
occur a Change of Control, Securities shall be purchased by the Obligors at the
option of the Holders, as of the Change of Control Purchase Date at a purchase
price equal to 101% of the principal amount of the Securities, together with
accrued and unpaid interest, including interest on any unpaid overdue interest,
compounded semi-annually, and Additional Interest, if any, to, but excluding,
the Change of Control Purchase Date (the "CHANGE OF CONTROL PURCHASE PRICE"),
subject to satisfaction by or on behalf of any Holder of the requirements set
forth in subsection (c) of this Section 3.8.

            (b)   Within 10 days after the occurrence of a Change of Control,
the Obligors shall mail a written notice ("OBLIGORS NOTICE") of the Change of
Control to the Trustee and to each Holder (and to beneficial owners as required
by applicable law) pursuant to which the Obligors shall make an offer (a "CHANGE
OF CONTROL OFFER") to each Holder to repurchase all or any part (equal to $1,000
or an integral multiple of $1,000) of each Holder's Securities at the Change of
Control Purchase Price. The notice shall include the form of a Change of Control
Purchase Notice to be completed by the Holder, shall describe the transaction or
transactions that constitute the Change of Control and shall state:

                  (i)    that the Change of Control Offer is being made pursuant
      to this Section 3.8 and that all Securities tendered will be accepted for
      payment;

                  (ii)   the date by which the Change of Control Purchase Notice
      pursuant to this Section 3.8 must be given;


                                       37

                  (iii)  the purchase date, which date shall be no earlier than
      30 days and no later than 60 days after the date the Obligors Notice is
      mailed (the "CHANGE OF CONTROL PURCHASE DATE");

                  (iv)   the Change of Control Purchase Price;

                  (v)    the Holder's right to require the Obligors to purchase
      the Securities;

                  (vi)   the name and address of the Paying Agent;

                  (vii)  that, unless the Obligors default in making such
      payment, any Security accepted for payment pursuant to the Change of
      Control Offer will cease to accrue interest after the Change of Control
      Purchase Date;

                  (viii) the procedures that the Holder must follow to exercise
      rights under this Section 3.8; and

                  (ix)   the procedures for withdrawing a Change of Control
      Purchase Notice, including a form of notice of withdrawal.

      If any of the Securities is in the form of a Global Security, then the
Obligors shall modify such notice to the extent necessary to accord with the
procedures of the Depositary applicable to the repurchase of Global Securities.

            (c)   A Holder may exercise its rights specified in subsection (a)
of this Section 3.8 upon delivery of a written notice (which shall be in
substantially the form included in Exhibit A hereto, as applicable, and which
may be delivered by letter, overnight courier, hand delivery, facsimile
transmission or in any other written form and, in the case of Global Securities,
may be delivered electronically or by other means in accordance with the
Depositary's customary procedures) of the exercise of such rights (a "CHANGE OF
CONTROL PURCHASE NOTICE") to any Paying Agent at any time prior to the close of
business on the Business Day next preceding the Change of Control Purchase Date.

      The delivery of such Security to any Paying Agent (together with all
necessary endorsements) at the office of such Paying Agent shall be a condition
to the receipt by the Holder of the Change of Control Purchase Price therefor.

      The Obligors shall purchase from the Holder thereof, pursuant to this
Section 3.8, a portion of a Security if the principal amount of such portion is
$1,000 or an integral multiple of $1,000. Provisions of the Indenture that apply
to the purchase of all of a Security pursuant to Sections 3.8 through 3.13 also
apply to the purchase of such portion of such Security.

      Notwithstanding anything herein to the contrary, any Holder delivering to
a Paying Agent the Change of Control Purchase Notice contemplated by this
subsection (c) shall have the right to withdraw such Change of Control Purchase
Notice in whole or in a portion thereof that is a principal amount of $1,000 or
in an integral multiple thereof at any time prior to the close of business on
the Business Day next preceding the Change of Control Purchase Date by delivery
of a written notice of withdrawal to the Paying Agent in accordance with Section
3.9 hereof


                                       38

      A Paying Agent shall promptly notify the Obligors of the receipt by it of
any Change of Control Purchase Notice or written withdrawal thereof.

      Anything herein to the contrary notwithstanding, in the case of Global
Securities, any Change of Control Purchase Notice may be delivered or withdrawn
and such Securities may be surrendered or delivered for purchase in accordance
with the Applicable Procedures as in effect from time to time.

      If the Change of Control Purchase Date falls after an interest payment
record date and on or before the date that is one Business Day after the next
interest payment date, then the interest payment will be payable to the Holder
who presents a Security for purchase.

            (d)   The Obligors will not be required to make a Change of Control
Offer upon a Change of Control if (1) a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements applicable to a Change of Control Offer made by the Obligors set
forth in subsection (b) of this Section 3.8 and purchases all Securities
properly tendered and not withdrawn under the Change of Control Offer, (2)
notice of redemption has been given pursuant to Section 3.1 or 3.7 hereof,
unless and until there is a default in payment of the applicable redemption
price, or (3) after giving effect to such Change of Control, (i) no Default or
Event of Default has occurred and is continuing, (ii) the Change of Control
transaction has been approved by the Board of Directors of the Company, and
(iii) the Securities are rated Baa3 or better by Moody's and BBB- or better by
S&P.

            (e)   The Obligors will publicly announce the results of the Change
of Control Offer on or as soon as practicable after the Change of Control
Payment Date.

      Section 3.9 Effect of Change of Control Purchase Notice.

      Upon receipt by any Paying Agent of the Change of Control Purchase Notice
specified in Section 3.8(c) hereof, the Holder of the Security in respect of
which such Change of Control Purchase Notice was given shall (unless such Change
of Control Purchase Notice is withdrawn as specified below) thereafter be
entitled to receive the Change of Control Purchase Price with respect to such
Security. Such Change of Control Purchase Price shall be paid to such Holder
promptly following the later of (a) the Change of Control Purchase Date with
respect to such Security (provided the conditions in Section 3.8(c) hereof have
been satisfied) and (b) the time of delivery of such Security to a Paying Agent
by the Holder thereof in the manner required by Section 3.8(c) hereof.

      A Change of Control Purchase Notice may be withdrawn by means of a written
notice (which may be delivered by mail, overnight courier, hand delivery,
facsimile transmission or in any other written form and, in the case of Global
Securities, may be delivered electronically or by other means in accordance with
the Depositary's customary procedures) of withdrawal delivered by the Holder to
a Paying Agent at any time prior to the close of business on the Business Day
immediately preceding the Change of Control Purchase Date, specifying the
principal amount of the Security or portion thereof (which must be a principal
amount of $1,000 or an integral multiple of $1,000 in excess thereof) with
respect to which such notice of withdrawal is being submitted.


                                       39

      Section 3.10 Deposit of Change of Control Purchase Price.

      On or before 11:00 a.m. New York City time on the Change of Control
Purchase Date, the Obligors shall deposit with the Trustee or with a Paying
Agent (other than the Obligors or an Affiliate of the Obligors) an amount of
money (in immediately available funds if deposited on such Change of Control
Purchase Date) sufficient to pay the aggregate Change of Control Purchase Price
of all the Securities or portions thereof that are to be purchased as of such
Change of Control Purchase Date. The manner in which the deposit required by
this Section 3.10 is made by the Obligors shall be at the option of the
Obligors, provided that such deposit shall be made in a manner such that the
Trustee or a Paying Agent shall have immediately available funds on the Change
of Control Purchase Date.

      If a Paying Agent holds, in accordance with the terms hereof, money
sufficient to pay the Change of Control Purchase Price of any Security for which
a Change of Control Purchase Notice has been tendered and not withdrawn in
accordance with this Indenture then, on the Change of Control Purchase Date,
interest will cease to accrue on such Securities or any portion of the
Securities as to which a Change of Control Purchase Notice has been tendered and
not withdrawn in accordance with this Indenture and all other rights of the
Holder will terminate other than the right to receive the Change of Control
Purchase Price, without interest from the Change of Control Purchase Date, on
surrender of the Securities.

      Section 3.11 Securities Purchased in Part.

      Any Security that is to be purchased only in part shall be surrendered at
the office of a Paying Agent, and promptly after the Change of Control Purchase
Date the Obligors shall execute and the Trustee shall authenticate and deliver
to the Holder of such Security, without service charge, a new Security or
Securities, of such authorized denomination or denominations as may be requested
by such Holder, in aggregate principal amount equal to, and in exchange for, the
portion of the principal amount of the Security so surrendered that is not
purchased.

      Section 3.12 Compliance With Securities Laws Upon Purchase of Securities.

      In connection with any offer to purchase or purchase of Securities under
Section 3.8 hereof, the Obligors shall (a) comply with Rule 14e-1 (or any
successor to such Rule), if applicable, under the Exchange Act, and (b)
otherwise comply with all federal and state securities laws in connection with
such offer to purchase or purchase of Securities, all so as to permit the rights
of the Holders and obligations of the Obligors under Sections 3.8 through 3.11
hereof to be exercised in the time and in the manner specified therein.

      Section 3.13 Repayment to the Obligors.

      To the extent that the aggregate amount of cash deposited by the Obligors
pursuant to Section 3.10 hereof exceeds the aggregate Change of Control Purchase
Price (including interest and Additional Interest, if any, thereon) of the
Securities or portions thereof that the Obligors are obligated to purchase, then
promptly after the Change of Control Purchase Date the Trustee or a Paying
Agent, as the case may be, shall return any such excess cash to the Obligors.


                                       40

      Section 3.14 Offer to Purchase by Application of Excess Proceeds.

      In the event that, pursuant to Section 4.14 hereof, the Company is
required to commence an offer to all Holders to purchase Securities ("ASSET SALE
OFFER"), it shall follow the procedures specified below.

      The Asset Sale Offer shall be made to all Holders of Securities and all
holders of other Indebtedness that is pari passu with the Securities containing
provisions similar to those set forth in this Indenture with respect to offers
to purchase or redeem with the proceeds of sales of assets ("PARITY
INDEBTEDNESS"). The Asset Sale Offer shall remain open for a period of at least
20 Business Days following its commencement and not more than 30 Business Days,
except to the extent that a longer period is required by applicable law (the
"OFFER PERIOD"). No later than three Business Days after the termination of the
Offer Period (the "PURCHASE DATE"), the Company shall apply a portion of the
Excess Proceeds as calculated pursuant to the Section 4.14 hereof (the "OFFER
AMOUNT") to the purchase of Securities and such other Parity Indebtedness (on a
pro rata basis, if applicable) or, if less than the Offer Amount has been
tendered, all Securities and other Parity Indebtedness tendered in response to
the Asset Sale Offer. Payment for any Securities so purchased shall be made in
the same manner as interest payments are made.

      Upon the commencement of an Asset Sale Offer, the Company shall send, by
first class mail, a notice to the Trustee and each of the Holders. The notice
will contain all instructions and materials necessary to enable such Holders to
tender Securities pursuant to the Asset Sale Offer. The notice, which will
govern the terms of the Asset Sale Offer, will state:

            (1) that the Asset Sale Offer is being made pursuant to this Section
      3.14 and Section 4.14 hereof and the length of time the Asset Sale Offer
      will remain open;

            (2) the Offer Amount, the purchase price and the Purchase Date;

            (3) that any Security not tendered or accepted for payment will
      continue to accrue interest and Additional Interest, if any;

            (4) that, unless the Company defaults in making such payment, any
      Security accepted for payment pursuant to the Asset Sale Offer shall cease
      to accrue interest and Additional Interest, if any, after the Purchase
      Date;

            (5) that Holders electing to have a Security purchased pursuant to
      an Asset Sale Offer may elect to have Securities purchased in integral
      multiples of $1,000 only;

            (6) that Holders electing to have a Security purchased pursuant to
      any Asset Sale Offer shall be required to surrender the Security, with the
      form entitled "Option of Holder to Elect Purchase" on the reverse of the
      Security completed, or transfer by book-entry transfer, to the Company, a
      Depositary, if appointed by the Company, or a Paying Agent at the address
      specified in the notice at least three days before the Purchase Date;

            (7) that Holders shall be entitled to withdraw their election if the
      Company or the Paying Agent, as the case may be, receives, not later than
      the expiration of the Offer Period, a telegram, telex, facsimile
      transmission or letter setting forth the name of the


                                       41

      Holder, the principal amount of the Security the Holder delivered for
      purchase and a statement that such Holder is withdrawing his election to
      have such Security purchased;

            (8) that, if the aggregate principal amount of Securities and other
      Parity Indebtedness surrendered in connection with the Asset Sale Offer
      exceeds the Offer Amount, the Company shall select the Securities and
      other Parity Indebtedness to be purchased on a pro rata basis based on the
      principal amount of Securities and such other Parity Indebtedness
      surrendered (with such adjustments as may be deemed appropriate by the
      Company so that only Securities in denominations of $1,000, or integral
      multiples thereof, will be purchased); and

            (9) that Holders whose Securities were purchased only in part will
      be issued new Securities equal in principal amount to the unpurchased
      portion of the Securities surrendered (or transferred by book-entry
      transfer).

      On or before the Purchase Date, the Company shall, to the extent lawful,
accept for payment, on a pro rata basis to the extent necessary, the Offer
Amount of Securities or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Securities
tendered, and shall deliver to the Trustee an Officer's Certificate stating that
such Securities or portions thereof were accepted for payment by the Company in
accordance with the terms of this Section 3.14. The Company, the Depositary or
the Paying Agent, as the case may be, shall promptly (but in any case not later
than five days after the Purchase Date) mail or deliver to each tendering Holder
an amount equal to the purchase price of the Securities tendered by such Holder
and accepted by the Company for purchase, and the Company shall promptly issue a
new Security, and the Trustee, upon written request from the Company shall
authenticate and mail or deliver such new Security to such Holder, in a
principal amount equal to any unpurchased portion of the Security surrendered.
Any Security not so accepted shall be promptly mailed or delivered by the
Company to the Holder thereof. The Company shall publicly announce the results
of the Asset Sale Offer on or as soon as practicable after the Purchase Date.

      Other than as specifically provided in this Section 3.14, any purchase
pursuant to this Section 3.14 shall be made pursuant to the provisions of
Sections 3.1 through 3.6 hereof.


                                       42


                                    ARTICLE 4

                                    COVENANTS

      Section 4.1 Payment of Securities.

      The Obligors shall promptly make all payments in respect of the Securities
on the dates and in the manner provided in the Securities and this Indenture. An
installment of principal, interest or Additional Interest, if any, shall be
considered paid on the date it is due if the Paying Agent (other than the
Obligors) holds by 11:00 a.m., New York City time, on that date money, deposited
by the Obligors or an Affiliate thereof, sufficient to pay the installment.
Except in the case of a redemption, a Change of Control Offer or an Asset Sale
Offer, accrued and unpaid interest or Additional Interest, if any, on any
Security that is payable, and is punctually paid or duly provided for, on any
interest payment date shall be paid to the Person in whose name that Security is
registered at the close of business on the record date for such interest or
Additional Interest, if any, at the office or agency of the Obligors maintained
for such purpose. The Obligors shall, (in immediately available funds) to the
fullest extent permitted by law, pay interest on overdue principal (including
premium, if any) and overdue installments of interest from the original due date
to the date paid, at the rate applicable to the Security plus 1% per annum,
which interest shall be payable on demand. Additional Interest, if any, shall
accrue at the rates provided for in the Registration Rights Agreement and shall
be paid at the same time and in the same manner as regular interest.

      Payment of the principal of, premium, if any, and interest (including
Additional Interest, if any) on the Securities shall be made at the office or
agency of the Paying Agent and Registrar within the City and State of New York
in immediately available funds in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts; provided that the Obligors may elect to make payment of interest
or Additional Interest, if any, by check mailed to the address of the Person
entitled thereto as such address appears in the Register. Payment of the
principal of, premium, if any, and interest (including Additional Interest, if
any) on the Securities held by a Holder holding an aggregate principal amount of
Securities in excess of $1,000,000 shall be made by wire transfer in immediately
available funds to an account maintained by such Holder in the United States, if
such Holder has provided wire transfer instructions to the Obligors at least 10
Business Days prior to the payment date. Any wire transfer instructions received
by the Trustee will remain in effect until revoked by the Holder.

      Section 4.2 Maintenance of Office or Agency.

            (a)   The Obligors shall maintain in the Borough of Manhattan, The
City of New York, an office or agency (which may be an office of the Trustee or
an affiliate of the Trustee, Registrar or co registrar) where Securities may be
surrendered for payment, registration of transfer or for exchange and where
notices and demands to or upon the Obligors in respect of the Securities and
this Indenture may be served. The Obligors shall give prompt written notice to
the Trustee of the location, and any change in the location, of such office or
agency. If at any


                                       43

time the Obligors shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.

            (b)   The Obligors may also from time to time designate one or more
other offices or agencies where the Securities may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Obligors of its obligation to maintain an office or
agency in the Borough of Manhattan, The City of New York for such purposes. The
Obligors shall give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.

            (c)   The Obligors hereby designate the Corporate Trust Office of
the Trustee as one such office or agency of the Obligors in accordance with
Section 2.3 hereof.

      Section 4.3 Reports.

            (a)   Whether or not required by the SEC's rules and regulations, so
long as any Securities are outstanding, the Company shall furnish (to the extent
not publicly available on the SEC's EDGAR system) to the Holders of Securities,
within the time periods specified in the SEC's rules and regulations:

                  (i)   all quarterly and annual reports that would be required
      to be filed with the SEC on Forms 10-Q and 10-K if the Company were
      required to file such reports; and

                  (ii)  all current reports that would be required to be filed
      with the SEC on Form 8-K if the Company were required to file such
      reports.

      All such reports shall be prepared in all material respects in accordance
with all of the rules and regulations applicable to such reports. Each annual
report on Form 10-K shall include a report on the Company's consolidated
financial statements by the Company's certified independent accountants. In
addition, the Company shall file a copy of each of the reports referred to in
clauses (i) and (ii) above with the SEC for public availability within the time
periods specified in the rules and regulations applicable to such reports
(unless the SEC will not accept such a filing) and make such information
available to securities analysts and prospective investors upon request.

            (b)   If, at any time, the Company is no longer subject to the
periodic reporting requirements of the Exchange Act for any reason, the Company
shall nevertheless continue filing the reports specified in Section 4.3(a)
hereof with the SEC within the time periods specified above unless the SEC will
not accept such a filing. The Company agrees that it shall not take any action
for the purpose of causing the SEC not to accept any such filings. If,
notwithstanding the foregoing, the SEC will not accept the Company's filings for
any reason, the Company shall post the reports referred to in Section 4.3(a)
hereof on its website within the time periods that would apply if the Company
were required to file those reports with the SEC.


                                       44

            (c)   The Company further agrees that, for so long as any Securities
remain outstanding, at any time it is not required to file the reports required
by Section 4.3(a) or (b) hereof with the SEC, it shall furnish to the Holders
and to securities analysts and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act.

            (d)   If the Company has designated any of its Subsidiaries as
Unrestricted Subsidiaries (other than ICN Yugoslavia DD), then the quarterly and
annual financial information required by Section 4.3 (a), (b) and (c) hereof
shall include a reasonably detailed presentation, either on the face of the
financial statements or in the footnotes thereto, and in Management's Discussion
and Analysis of Financial Condition and Results of Operations, of the financial
condition and results of operations of the Company and its Restricted
Subsidiaries separate from the financial condition and results of operations of
the Unrestricted Subsidiaries of the Company.

      Section 4.4 Compliance Certificates.

      The Obligors shall deliver to the Trustee, within 90 days after the end of
each fiscal year of the Obligors (beginning with the fiscal year ending December
31, 2003), an Officers' Certificate as to the signer's knowledge of the
Obligors' compliance with all conditions and covenants on their part contained
in this Indenture and stating whether or not the signer knows of any Default or
Event of Default. If such signer knows of such a Default or Event of Default,
the Officers' Certificate shall describe the Default or Event of Default and the
efforts to remedy the same. For the purposes of this Section 4.4, compliance
shall be determined without regard to any grace period or requirement of notice
provided pursuant to the terms of this Indenture.

      Section 4.5 Further Instruments and Acts.

      Upon request of the Trustee, the Obligors will execute and deliver such
further instruments and do such further acts as may be reasonably necessary or
proper to carry out more effectively the purposes of this Indenture.

      Section 4.6 Maintenance of Corporate Existence.

      Subject to Article 5 hereof, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and the corporate existence of each Restricted Subsidiary; provided,
however, that the Company shall not be required to preserve the corporate
existence of any Restricted Subsidiary if (a) the Board of Directors of the
Company shall determine that the preservation thereof is no longer desirable in
the conduct of the business of the Company and the Restricted Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders of the Securities or (b) if a Subsidiary is to be
dissolved, such Subsidiary has no assets.

      Section 4.7 Changes in Covenants when Securities Rated Investment Grade.

      If on any date following the date of this Indenture:


                                       45

            (a)   the Securities are rated Baa3 or better by Moody's and BBB- or
better by S&P; and

            (b)   no Default or Event of Default shall have occurred and be
continuing,

then, beginning on that day and continuing at all times thereafter regardless of
any subsequent changes in the rating of the Securities, the provisions of
Sections 4.8, 4.9, 4.10, 4.12, 4.13, 4.14 hereof and clause (iv) of Section
5.1(a) hereof will no longer be applicable to the Securities.

      Section 4.8 Restricted Payments.

            (a)   The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly:

                  (i)   declare or pay any dividend or make any other payment or
      distribution on account of the Company's or any of its Restricted
      Subsidiaries' Equity Interests (including, without limitation, any payment
      in connection with any merger or consolidation involving the Company or
      any of its Restricted Subsidiaries) or to the direct or indirect holders
      of the Company's or any of its Restricted Subsidiaries' Equity Interests
      in their capacity as such (other than dividends or distributions payable
      in Equity Interests (other than Disqualified Stock) of the Company or to
      the Company or a Restricted Subsidiary of the Company);

                  (ii)  purchase, redeem or otherwise acquire or retire for
      value (including, without limitation, in connection with any merger or
      consolidation involving the Company) any Equity Interests of the Company
      or any direct or indirect parent of the Company;

                  (iii) make any payment on or with respect to, or purchase,
      redeem, defease or otherwise acquire or retire for value any Indebtedness
      that is subordinated to the Securities, except (i) payments of interest
      thereon, (ii) payments of principal at the Stated Maturity thereof and
      (iii) any payment on or with respect to the 6-1/2% Notes; or

                  (iv)  make any Restricted Investment;

(all such payments and other actions set forth in these clauses (i) through (iv)
above being collectively referred to as "RESTRICTED PAYMENTS"), unless, at the
time of and after giving effect to such Restricted Payment:

                  (1)   no Default or Event of Default has occurred and is
      continuing or would occur as a consequence of such Restricted Payment;

                  (2)   the Company would, at the time of such Restricted
      Payment and after giving pro forma effect thereto as if such Restricted
      Payment had been made at the beginning of the applicable four-quarter
      period, have been permitted to incur at least $1.00 of additional
      Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in
      Section 4.9(a) hereof and


                                       46

                  (3)   such Restricted Payment, together with the aggregate
      amount of all other Restricted Payments made by the Company and its
      Restricted Subsidiaries after the date of the indenture (excluding
      Restricted Payments permitted by clauses (ii) through (vi) of Section
      4.8(b) hereof), is less than the sum, without duplication, of:

                        (A)   50% of the Consolidated Net Income of the Company
            for the period (taken as one accounting period) from the beginning
            of the first fiscal quarter commencing after the date of this
            Indenture to the end of the Company's most recently ended fiscal
            quarter for which internal financial statements are available at the
            time of such Restricted Payment (or, if such Consolidated Net Income
            for such period is a deficit, less 100% of such deficit), plus

                        (B)   100% of the aggregate net cash proceeds received
            by the Company since the date of this Indenture as a contribution to
            its common equity capital or from the issue or sale of Equity
            Interests of the Company (other than Disqualified Stock) or from the
            issue or sale of convertible or exchangeable Disqualified Stock or
            convertible or exchangeable debt securities of the Company that have
            been converted into or exchanged for such Equity Interests (other
            than Equity Interests (or Disqualified Stock or debt securities)
            sold to a Subsidiary of the Company), plus

                        (C)   to the extent that any Restricted Investment that
            was made after the date of the indenture is sold for cash or
            otherwise liquidated or repaid for cash, the lesser of (i) the cash
            return of capital with respect to such Restricted Investment (less
            the cost of disposition, if any) or (ii) the initial amount of such
            Restricted Investment, plus

                        (D)   to the extent that any Unrestricted Subsidiary of
            the Company is redesignated as a Restricted Subsidiary after the
            date of this Indenture, the lesser of (i) the Fair Market Value of
            the Company's Investment in such Subsidiary as of the date of such
            redesignation or (ii) such Fair Market Value as of the date on which
            such Subsidiary was originally designated as an Unrestricted
            Subsidiary.

            (b)   So long as no Default or Event of Default has occurred and is
continuing or would be caused thereby, the preceding provisions shall not
prohibit:

                  (i)   the payment of any dividend within 60 days after the
      date of declaration of the dividend, if at the date of declaration the
      dividend payment would have complied with the provisions of this
      Indenture;

                  (ii)  the declaration and payment of the Current Dividend;
      provided, that at the time of declaration of such dividend the Company is
      able to incur at least an additional $1.00 of Indebtedness pursuant to
      Section 4.9(a) hereof; provided further, that if in any successive
      quarterly period after the date of this Indenture the Company does not
      declare and pay the Current Dividend, the Company shall no longer be
      permitted to pay any future Current Dividend under this clause (ii);


                                       47

                  (iii) the redemption, repurchase, retirement, defeasance or
      other acquisition of any subordinated Indebtedness of the Company or the
      Co-Obligor or of any Equity Interests of the Company in exchange for, or
      out of the net cash proceeds of the substantially concurrent sale (other
      than to a Restricted Subsidiary of the Company) of, Equity Interests of
      the Company (other than Disqualified Stock); provided that the amount of
      any such net cash proceeds that are utilized for any such redemption,
      repurchase, retirement, defeasance or other acquisition will be excluded
      from clause (3)(B) of Section 4.8(a) hereof;

                  (iv)  the defeasance, redemption, repurchase or other
      acquisition of subordinated Indebtedness of the Company or the Co-Obligor
      with the net cash proceeds from an incurrence of Permitted Refinancing
      Indebtedness;

                  (v)   the payment of any dividend by a Restricted Subsidiary
      of the Company to the holders of its Equity Interests on a pro rata basis;

                  (vi)  the repurchase, redemption or other acquisition or
      retirement for value of any Equity Interests of the Company or any
      Restricted Subsidiary of the Company held by any employee of the Company
      or any of its Restricted Subsidiaries pursuant to any equity subscription
      agreement, stock option agreement or similar agreement; provided that the
      aggregate price paid for all such repurchased, redeemed, acquired or
      retired Equity Interests may not exceed an aggregate of $5.0 million since
      the date of this Indenture; and

                  (vii) other Restricted Payments in an aggregate amount not to
      exceed $20.0 million since the date of this Indenture.

            (c)   The amount of all Restricted Payments (other than cash) shall
be the Fair Market Value (determined, for purposes of this covenant, by the
Company or, in the case of any asset(s) valued in excess of $10 million, by the
Board of Directors of the Company, in each case evidenced by an Officers'
Certificate delivered to the Trustee) on the date of the Restricted Payment of
the asset(s) or securities proposed to be transferred or issued by the Company
or such Restricted Subsidiary, as the case may be, pursuant to the Restricted
Payment. The Board of Directors' determination shall be based upon an opinion or
appraisal issued by an accounting, appraisal or investment banking firm of
national standing if the Fair Market Value exceeds $25.0 million. Not later than
the date of making any Restricted Payment, the Company shall deliver to the
Trustee an Officers' Certificate stating that such Restricted Payment is
permitted and setting forth the basis upon which the calculations required by
this Section 4.8 were computed, together with a copy of any fairness opinion or
appraisal required by this subsection (c).

      Section 4.9 Incurrence of Indebtedness and Issuance of Preferred Stock.

            (a)   The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise (collectively, "INCUR"), with respect to any
Indebtedness (including Acquired Debt), and the Company shall not issue any
Disqualified Stock and shall not permit any of its Restricted Subsidiaries to
issue any Disqualified Stock or


                                       48

preferred stock; provided, however, that the Company may incur Indebtedness
(including Acquired Debt) or issue Disqualified Stock if the Fixed Charge
Coverage Ratio for the Company's most recently ended four full fiscal quarters
for which internal financial statements are available immediately preceding the
date on which such additional Indebtedness is incurred or such Disqualified
Stock is issued would have been at least 2.0 to 1, determined on a pro forma
basis (including a pro forma application of the net proceeds therefrom), as if
the additional Indebtedness had been incurred or the Disqualified Stock had been
issued, as the case may be, at the beginning of such four-quarter period.

            (b)   Subsection (a) of this Section 4.9 shall not prohibit the
incurrence of any of the following items of Indebtedness (collectively,
"PERMITTED DEBT"):

                  (i)   the incurrence by the Company of Indebtedness and
      letters of credit under Credit Facilities in an aggregate principal amount
      at any one time outstanding under this clause (i) (with letters of credit
      being deemed to have a principal amount equal to the maximum potential
      liability of the Company and its Restricted Subsidiaries thereunder) not
      to exceed the greater of (x) $150.0 million less the aggregate amount of
      all Net Proceeds of Asset Sales applied by the Company or any of its
      Restricted Subsidiaries since the date of this Indenture to repay any term
      Indebtedness under a Credit Facility or to repay any Indebtedness under a
      Credit Facility and effect a corresponding commitment reduction thereunder
      pursuant to Section 4.14 hereof and (y) the amount of the Borrowing Base
      as of the date of such incurrence;

                  (ii)  the incurrence by the Company and its Restricted
      Subsidiaries of the Existing Indebtedness;

                  (iii) the incurrence by the Company and the Co-Obligor of
      Indebtedness represented by the Securities to be issued on the date of
      this Indenture and the Exchange Securities to be issued pursuant to the
      Registration Rights Agreement and Guarantees thereof, if any, by Domestic
      Subsidiaries of the Company;

                  (iv)  the incurrence by the Company or any of its Restricted
      Subsidiaries of Indebtedness represented by Capital Lease Obligations,
      mortgage financings or purchase money obligations, in each case, incurred
      for the purpose of financing all or any part of the purchase price or cost
      of construction or improvement of property, plant or equipment used in the
      business of the Company or such Restricted Subsidiary, in an aggregate
      principal amount, including all Permitted Refinancing Indebtedness
      incurred to refund, refinance or replace any Indebtedness incurred
      pursuant to this clause (iv), not to exceed $25.0 million at any time
      outstanding;

                  (v)   the incurrence by the Company or any of its Restricted
      Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the
      net proceeds of which are used to refund, refinance or replace
      Indebtedness (other than intercompany Indebtedness) that was permitted by
      this Indenture to be incurred under Section 4.9(a) hereof or clauses (ii),
      (iii), (iv), (v), (xi) or (xii) of this Section 4.9(b);


                                       49

                  (vi)  the incurrence by the Company or any of its Restricted
      Subsidiaries of intercompany Indebtedness between or among the Company and
      any of its Restricted Subsidiaries; provided, however, that:

                        (A)   if the Company or the Co-Obligor is the obligor on
      such Indebtedness, such Indebtedness must be expressly subordinated to the
      prior payment in full in cash of all Obligations with respect to the
      Securities; and

                        (B)   (i) any subsequent issuance or transfer of Equity
      Interests that results in any such Indebtedness being held by a Person
      other than the Company or a Restricted Subsidiary of the Company and (ii)
      any sale or other transfer of any such Indebtedness to a Person that is
      not either the Company or a Restricted Subsidiary of the Company shall be
      deemed, in each case, to constitute an incurrence of such Indebtedness by
      the Company or such Restricted Subsidiary, as the case may be, that was
      not permitted by this clause (vi);

                  (vii) the incurrence by the Company or any of its Restricted
      Subsidiaries of Hedging Obligations that are incurred in the ordinary
      course of business and not for speculative purposes;

                  (viii) the Guarantee by the Company or the Co-Obligor of
      Indebtedness of the Company or a Restricted Subsidiary of the Company that
      was permitted to be incurred under this Section 4.9; provided that if the
      Indebtedness being guaranteed is subordinated to or pari passu with the
      Securities, then the Guarantee shall be subordinated to the same extent as
      the Indebtedness guaranteed;

                  (ix)  the accrual of interest, the accretion or amortization
      of original issue discount, the payment of interest on any Indebtedness in
      the form of additional Indebtedness with the same terms, and the payment
      of dividends on Disqualified Stock in the form of additional shares of the
      same class of Disqualified Stock will not be deemed to be an incurrence of
      Indebtedness or an issuance of Disqualified Stock for purposes of this
      covenant; provided, in each such case, that the amount thereof is included
      in Fixed Charges of the Company as accrued;

                  (x)   Obligations in respect of performance and surety bonds
      and completion guarantees provided by the Company or any Restricted
      Subsidiary in an aggregate principal amount at any time outstanding not to
      exceed $25.0 million;

                  (xi)  the incurrence by the Company or any of its Restricted
      Subsidiaries of Acquired Debt in an aggregate principal amount at any time
      outstanding not to exceed $25.0 million;

                  (xii) the incurrence by the Company or any of its Restricted
      Subsidiaries of additional Indebtedness in an aggregate principal amount
      (or accreted value, as applicable) at any time outstanding, including all
      Permitted Refinancing Indebtedness incurred to refund, refinance or
      replace any Indebtedness incurred pursuant to this clause (xii), not to
      exceed $25.0 million; and


                                       50

                  (xiii) the Guarantee by Domestic Subsidiaries of the Company
      of Indebtedness of the Company permitted to be incurred under another
      provision of this Section 4.9.

            (c)   The Company shall not incur any Indebtedness (including
Permitted Debt) that is contractually subordinated in right of payment to any
other Indebtedness of the Company unless such Indebtedness is also contractually
subordinated in right of payment to the Securities on substantially identical
terms; provided, however, that no Indebtedness of the Company shall be deemed to
be contractually subordinated in right of payment to any other Indebtedness of
the Company solely by virtue of being unsecured.

            (d)   For purposes of determining compliance with this Section 4.9,
in the event that an item of proposed Indebtedness meets the criteria of more
than one of the categories of Permitted Debt described in clauses (i) through
(xii) of Section 4.9(b) hereof, or is entitled to be incurred pursuant to
subsection (a) of this Section 4.9, the Company shall be permitted to classify
such item of Indebtedness on the date of its incurrence, or later reclassify all
or a portion of such item of Indebtedness, in any manner that complies with this
Section 4.9. Indebtedness under Credit Facilities outstanding on the date on
which Securities are first issued and authenticated under this Indenture will be
deemed to have been incurred on such date in reliance on the exception provided
by clause (i) of Section 4.9(b) hereof.

      Section 4.10 Sale and Leaseback Transactions.

            (a)   The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, enter into any sale and leaseback transaction (other
than a sale leaseback transaction involving a lease, including any renewal
period, optional or otherwise, not in excess of 24 months); provided that the
Company or any Restricted Subsidiary may enter into a sale and leaseback
transaction if:

                  (i)   the Company or that Restricted Subsidiary, as
      applicable, could have (x) incurred Indebtedness in an amount equal to the
      Attributable Debt relating to such sale and leaseback transaction under
      the Fixed Charge Coverage Ratio test in Section 4.9(a) hereof, and (y)
      incurred a Lien to secure such Indebtedness pursuant to Section 4.11
      hereof;

                  (ii)  the gross cash proceeds of that sale and leaseback
      transaction are at least equal to the Fair Market Value, as determined in
      good faith by the Company, or, in the case of a sale leaseback transaction
      in excess of $10 million, the Board of Directors of the Company, in each
      case set forth in an Officers' Certificate delivered to the Trustee, of
      the property that is the subject of that sale and leaseback transaction;
      and

                  (iii) the transfer of assets in that sale and leaseback
      transaction is permitted by, and the Company applies the proceeds of such
      transaction in compliance with, Section 4.14 hereof.


                                       51

      Section 4.11 Liens.

      The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien of any kind on any asset now owned or hereafter acquired, except
Permitted Liens.

      Section 4.12 Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries.

            (a)   The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or permit to exist or
become effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to:

                  (i)   pay dividends or make any other distributions on its
      Capital Stock to the Company or any of its Restricted Subsidiaries, or
      with respect to any other interest or participation in, or measured by,
      its profits, or pay any indebtedness owed to the Company or any of its
      Restricted Subsidiaries;

                  (ii)  make loans or advances to the Company or any of its
      Restricted Subsidiaries; or

                  (iii) transfer any of its properties or assets to the Company
      or any of its Restricted Subsidiaries.

            (b)   The restrictions set forth in Section 4.12(a) hereof shall not
apply to encumbrances or restrictions existing under or by reason of:

                  (i)   agreements governing Existing Indebtedness as in effect
      on the date of this Indenture and any amendments, modifications,
      restatements, renewals, increases, supplements, refundings, replacements
      or refinancings of those agreements, provided that the amendments,
      modifications, restatements, renewals, increases, supplements, refundings,
      replacement or refinancings are no more restrictive, taken as a whole,
      with respect to such dividend and other payment restrictions than those
      contained in those agreements on the date of this Indenture;

                  (ii)  this Indenture and the Securities;

                  (iii) any encumbrance or restriction pursuant to Credit
      Facilities incurred under clause (i) of Section 4.9(b) hereof;

                  (iv)  applicable law, rule, regulation or order, approval,
      license, permit or similar restriction, including under contracts with
      foreign governments or agencies thereof entered into in the ordinary
      course of business;

                  (v)   any instrument governing Indebtedness or Capital Stock
      of a Person acquired by the Company or any of its Restricted Subsidiaries
      as in effect at the time of such acquisition (except to the extent such
      Indebtedness was incurred, or such Capital Stock was issued, in connection
      with or in contemplation of such acquisition),


                                       52

      which encumbrance or restriction is not applicable to any Person, or the
      properties or assets of any Person, other than the Person, or the property
      or assets of the Person, so acquired, provided that, in the case of
      Indebtedness, such Indebtedness was permitted to be incurred under Section
      4.9 hereof;

                  (vi)  customary non-assignment provisions in leases, contracts
      and licenses entered into in the ordinary course of business and
      consistent with past practices;

                  (vii) purchase money obligations for property acquired in the
      ordinary course of business that impose restrictions on that property of
      the nature described in clause (iii) of Section 4.12(a) hereof;

                  (viii) any agreement for the sale or other disposition of a
      Restricted Subsidiary that restricts distributions by that Restricted
      Subsidiary pending its sale or other disposition;

                  (ix)  Permitted Refinancing Indebtedness, provided that the
      restrictions contained in the agreements governing such Permitted
      Refinancing Indebtedness are no more restrictive, taken as a whole, than
      those contained in the agreements governing the Indebtedness being
      refinanced;

                  (x)   Permitted Liens securing Indebtedness that limit the
      right of the debtor to dispose of the assets subject to such Liens;

                  (xi)  customary provisions with respect to the disposition or
      distribution of assets or property in joint venture agreements, assets
      sale agreements, stock sale agreements and other similar agreements
      entered into in the ordinary course of business; and

                  (xii) restrictions on cash or other deposits or net worth
      imposed by customers under contracts entered into in the ordinary course
      of business.

      Section 4.13 Transactions with Affiliates.

            (a)   The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each, an "AFFILIATE TRANSACTION"), unless:

                  (i)   the Affiliate Transaction is on terms that are no less
      favorable to the Company or the relevant Restricted Subsidiary than those
      that would have been obtained in a comparable transaction by the Company
      or such Restricted Subsidiary with an unrelated Person; and

                  (ii)  the Company delivers to the Trustee:


                                       53

                        (A)   respect to any Affiliate Transaction or series of
            related Affiliate Transactions involving aggregate consideration in
            excess of $10.0 million, a resolution of the Board of Directors of
            the Company set forth in an Officers' Certificate certifying that
            such Affiliate Transaction complies with this Section 4.13(a) and
            that such Affiliate Transaction has been approved by a majority of
            the disinterested members of the Board of Directors of the Company;
            and

                        (B)   with respect to any Affiliate Transaction or
            series of related Affiliate Transactions involving aggregate
            consideration in excess of $25.0 million, an opinion as to the
            fairness to the Company or such Restricted Subsidiary of such
            Affiliate Transaction from a financial point of view issued by an
            accounting, appraisal or investment banking firm of national
            standing.

            (b)   The following items shall not be deemed to be Affiliate
Transactions and, therefore, will not be subject to the provisions of Section
4.13(a) hereof:

                  (i)   any employment agreement entered into by the Company or
      any of its Restricted Subsidiaries in the ordinary course of business and
      consistent with the past practice of the Company or such Restricted
      Subsidiary;

                  (ii)  transactions between or among the Company and/or its
      Restricted Subsidiaries;

                  (iii) transactions with a Person that is an Affiliate of the
      Company solely because the Company owns, directly or through a Restricted
      Subsidiary, an Equity Interest in, or controls, such Person;

                  (iv)  payment of reasonable directors' fees to Persons who are
      not otherwise Affiliates of the Company;

                  (v)   issuances or sales of Equity Interests (other than
      Disqualified Stock) of the Company to Affiliates of the Company;

                  (vi)  Restricted Payments that are permitted by the provisions
      of Section 4.8 hereof;

                  (vii) transactions effected pursuant to agreements in effect
      on the date of this Indenture and any amendment, modification, or
      replacement to such agreement (so long as the amendment, modification or
      replacement is not disadvantageous to the Holders of the Securities in any
      respect);

                  (viii) advances to employees in the ordinary course of
      business not to exceed $1.0 million in the aggregate at any one time
      outstanding; and

                  (ix)  transactions with a Permitted Joint Venture.


                                       54

      Section 4.14 Asset Sales.

            (a)   The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, consummate an Asset Sale unless:

                  (i)   the Company (or the Restricted Subsidiary, as the case
      may be) receives consideration at the time of the Asset Sale at least
      equal to the Fair Market Value (determined, for purposes of this clause
      (i), by the Company or, in the case of any asset(s) valued in excess of
      $10 million, by the Board of Directors of the Company, in each case
      evidenced by an Officers' Certificate delivered to the Trustee) of the
      assets or Equity Interests issued or sold or otherwise disposed of; and

                  (ii)  at least 75% of the consideration received in the Asset
      Sale by the Company or such Restricted Subsidiary is in the form of cash
      or Cash Equivalents. For purposes of this provision, each of the following
      will be deemed to be cash:

                        (A)   any liabilities, as shown on the Company's most
      recent consolidated balance sheet, of the Company or any Restricted
      Subsidiary (other than contingent liabilities and liabilities that are by
      their terms subordinated to the Securities) that are assumed by the
      transferee of any such assets pursuant to a customary novation agreement
      that releases the Company or such Restricted Subsidiary from further
      liability; and

                        (B)   any securities, notes or other obligations
      received by the Company or any such Restricted Subsidiary from such
      transferee that are contemporaneously, subject to ordinary settlement
      periods, converted by the Company or such Restricted Subsidiary into cash,
      to the extent of the cash received in that conversion.

            (b)   Within 365 days after the receipt of any Net Proceeds from an
Asset Sale, the Company may apply those Net Proceeds:

                  (i)   to repay Indebtedness and other Obligations under a
      Credit Facility and, if the Indebtedness repaid is revolving credit
      Indebtedness, to correspondingly reduce commitments with respect thereto;

                  (ii)  to acquire all or substantially all of the assets of, or
      a majority of the Voting Stock of, another Permitted Business;

                  (iii) to make a capital expenditure in or that is useful in a
      Permitted Business;

                  (iv)  to retire Securities pursuant to privately negotiated
      transactions, open market purchases or otherwise; or

                  (v)   to acquire other assets that are not classified as
      current assets (for the avoidance of doubt, including acquisitions of
      in-process research and development) under GAAP and that are used or
      useful in a Permitted Business.


                                       55

      Pending the final application of any Net Proceeds, the Company may
      temporarily reduce revolving credit borrowings or otherwise invest the Net
      Proceeds in any manner that is not prohibited by this Indenture.

            (c)   Any Net Proceeds from Asset Sales that are not applied or
invested as provided in Section 4.14(b) hereof shall constitute "EXCESS
PROCEEDS." When the aggregate amount of Excess Proceeds exceeds $10.0 million,
the Company shall make an offer (an "ASSET SALE OFFER") to all Holders of
Securities and all holders of Parity Indebtedness to purchase the maximum
principal amount of Securities and such other Parity Indebtedness that may be
purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer
shall be equal to 100% of principal amount plus accrued and unpaid interest and
Additional Interest, if any, to the date of purchase, and shall be payable in
cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer,
the Company may use those Excess Proceeds for any purpose not otherwise
prohibited by this Indenture. If the aggregate principal amount of Securities
and other Parity Indebtedness tendered into such Asset Sale Offer exceeds the
amount of Excess Proceeds, the Company shall select the Securities and such
other Parity Indebtedness to be purchased on a pro rata basis. Upon completion
of each Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.

            (d)   The Company shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent those laws and regulations are applicable in connection with each
repurchase of Securities pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with the Asset Sale
provisions of this Indenture, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under the Asset Sale provisions of this Indenture by virtue of such
compliance.

      Section 4.15 Designation of Restricted and Unrestricted Subsidiaries.

      The Board of Directors of the Company may designate any Restricted
Subsidiary to be an Unrestricted Subsidiary if that designation would not cause
a Default. If a Restricted Subsidiary is designated as an Unrestricted
Subsidiary, the aggregate Fair Market Value of all outstanding Investments owned
by the Company and its Restricted Subsidiaries in the Subsidiary designated as
an Unrestricted Subsidiary shall be deemed to be an Investment made as of the
time of the designation and will reduce the amount available for Restricted
Payments under Section 4.8(a) hereof or under one or more of the clauses of the
definition of Permitted Investments, as determined by the Company. That
designation will only be permitted if the Investment would be permitted at that
time and if the Restricted Subsidiary otherwise meets the definition of an
Unrestricted Subsidiary. The Board of Directors may redesignate any Unrestricted
Subsidiary to be a Restricted Subsidiary if the redesignation would not cause a
Default.

      Section 4.16 Business Activities.

      The Company shall not, and shall not permit any Restricted Subsidiary to,
engage in any business other than Permitted Businesses, except to such extent as
would not be material to the Company and its Restricted Subsidiaries taken as a
whole.


                                       56

      Section 4.17 Payments for Consent.

      The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration to or for the benefit of any Holder of Securities for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture or the Securities unless such consideration is offered to be
paid and is paid to all Holders of the Securities that consent, waive or agree
to amend in the time frame set forth in the solicitation documents relating to
such consent, waiver or agreement.

      Section 4.18 Stay, Extension and Usury Laws.

      The Obligors covenant (to the extent that they may lawfully do so) that
they shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law or other
law which would prohibit or forgive the Obligors from paying all or any portion
of the principal of, premium, if any, interest or Additional Interest, if any,
on the Securities as contemplated herein, wherever enacted, now or at any time
hereafter in force, or which may affect the covenants or the performance of this
Indenture, and the Obligors (to the extent they may lawfully do so) hereby
expressly waive all benefit or advantage of any such law and covenant that they
will not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.

      Section 4.19 Payment of Additional Interest.

      If Additional Interest is payable by the Obligors pursuant to the
Registration Rights Agreement, the Obligors shall deliver to the Trustee a
certificate to that effect stating (i) the amount of such Additional Interest
that is payable, (ii) the reason why such Additional Interest is payable and
(iii) the date on which such Additional Interest is payable. Unless and until a
Trust Officer of the Trustee receives such a certificate, the Trustee may assume
without inquiry that no such Additional Interest is payable.

      Section 4.20 Notice of Default.

      In the event that any Default or Event of Default under Section 6.1 hereof
shall occur, the Obligors shall give prompt written notice of such Default or
Event of Default to the Trustee.

                                   ARTICLE 5

                     MERGER, CONSOLIDATION OR SALE OF ASSETS

      Section 5.1 Merger, Consolidation or Sale of Assets.

            (a)   The Company shall not, directly or indirectly, consolidate or
merge with or into another Person (whether or not the Company is the surviving
corporation) or sell, assign, transfer, convey or otherwise dispose of all or
substantially all of the properties or assets of the Company and its Restricted
Subsidiaries taken as a whole, in one or more related transactions, to another
Person, unless:


                                       57

                  (i)   either: (x) the Company is the surviving corporation; or
      (y) the Person formed by or surviving any such consolidation or merger (if
      other than the Company) or to which such sale, assignment, transfer,
      conveyance or other disposition has been made is organized and validly
      existing under the laws of the United States, any state of the United
      States or the District of Columbia and shall expressly assume, by an
      indenture supplemental hereto, executed and delivered to the Trustee, in
      form satisfactory to the Trustee, the due and punctual payment of the
      principal of, (premium, if any), interest and Additional Interest, if any,
      on all the Securities and the performance or observance of every covenant
      of this Indenture on the part of the Obligors to be performed or observed;

                  (ii)  the Person formed by or surviving any such consolidation
      or merger (if other than the Company) or the Person to which such sale,
      assignment, transfer, conveyance or other disposition has been made
      assumes all the obligations of the Company under the Securities, this
      Indenture and the Registration Rights Agreement pursuant to agreements
      reasonably satisfactory to the Trustee;

                  (iii) immediately after such transaction, no Default or Event
      of Default exists;

                  (iv)  the Company or the Person formed by or surviving any
      such consolidation or merger (if other than the Company), or to which such
      sale, assignment, transfer, conveyance or other disposition has been made
      shall, on the date of such transaction after giving pro forma effect
      thereto and any related financing transactions as if the same had occurred
      at the beginning of the applicable four-quarter period, be permitted to
      incur at least $1.00 of additional Indebtedness pursuant to the Fixed
      Charge Coverage Ratio test set forth in Section 4.9(a) hereof; and

                  (v)   the Company has delivered to the Trustee an Officers'
      Certificate and an Opinion of Counsel, each stating that such
      consolidation, merger, conveyance, transfer or lease and, if a
      supplemental indenture is required in connection with such transaction,
      such supplemental indenture complies with this Article and that all
      conditions precedent herein provided for relating to such transaction have
      been complied with.

            (b)   The Company may not, directly or indirectly, lease all or
substantially all of its properties or assets, in one or more related
transactions, to any other Person.

      Section 5.2 Successor Substituted.

            Upon any consolidation of the Company with, or merger of the Company
into, any other Person or any conveyance, transfer or lease of all or
substantially all of the properties and assets of the Company in accordance with
Section 5.1 hereof, the successor Person formed by such consolidation or into
which the Company is merged or to which such conveyance, transfer or lease is
made shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein, and thereafter, except in
the case of a lease, the


                                       58

predecessor Person shall be relieved of all obligations and covenants under this
Indenture and the Securities.

                                    ARTICLE 6

                              DEFAULT AND REMEDIES

      Section 6.1 Events of Default.

      An "EVENT OF DEFAULT" shall occur if:

            (a)   the Obligors default in the payment of any principal of
(including, without limitation, any premium, if any, on) any Security when the
same becomes due and payable (whether at maturity, upon a Redemption Date,
Change of Control Purchase Date, Purchase Date or otherwise);

            (b)   the Obligors default in the payment of any interest or
Additional Interest, if any, payable on any Security when the same becomes due
and payable and the default continues for a period of 30 days;

            (c)   the Company or any of its Restricted Subsidiaries fails to
comply with any of the provisions of Sections 3.8, 4.8, 4.9, 4.14 and 5.1 of
this Indenture;

            (d)   the Company or any of its Restricted Subsidiaries fails to
comply with any of the other covenants contained in the Securities or this
Indenture and the default continues for 60 days after notice to the Company from
the Trustee or the Holders of at least 25% in aggregate principal amount of
Securities then outstanding;

            (e)   the Company or any of its Restricted Subsidiaries default
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any Indebtedness for money borrowed
by the Company or any of its Restricted Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Restricted Subsidiaries) whether such
Indebtedness or guarantee now exists, or is created after the date of this
Indenture, if that default:

                  (i)   is caused by a failure to pay principal of, or interest
      or premium, if any, on such Indebtedness prior to the expiration of the
      grace period provided in such Indebtedness on the date of such default (a
      "PAYMENT DEFAULT"); or

                  (ii)  results in the acceleration of such Indebtedness prior
      to its express maturity,

      and, in each case, the principal amount of any such Indebtedness, together
      with the principal amount of any other such Indebtedness under which there
      has been a Payment Default or the maturity of which has been so
      accelerated, aggregates $10.0 million or more;


                                       59

            (f)   the Company or any of its Restricted Subsidiaries fails to pay
final non-appealable judgments aggregating in excess of $10.0 million, which
judgments are not paid, discharged or stayed for a period of 60 days;

            (g)   the Company, any Subsidiary that is a Significant Subsidiary
or any group of Subsidiaries that, taken together, would constitute a
Significant Subsidiary, pursuant to or within the meaning of any Bankruptcy Law:

                  (i)   commences a voluntary case or proceeding;

                  (ii)  consents to the entry of an order for relief against it
      in an involuntary case or proceeding;

                  (iii) consents to the appointment of a Custodian of it or for
      all or substantially all of its property;

                  (iv)  makes a general assignment for the benefit of its
      creditors;

            (h)   a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:

                  (i)   is for relief against the Company, any Subsidiary that
      is a Significant Subsidiary or any group of Subsidiaries that, taken
      together, would constitute a Significant Subsidiary in an involuntary case
      or proceeding;

                  (ii)  appoints a Custodian of the Company, any Subsidiary that
      is a Significant Subsidiary or any group of Subsidiaries that, taken
      together, would constitute a Significant Subsidiary or for all or
      substantially all of the property of the Company, any Subsidiary that is a
      Significant Subsidiary or any group of Subsidiaries that, taken together,
      would constitute a Significant Subsidiary; or

                  (iii) orders the liquidation of the Company, any Subsidiary
      that is a Significant Subsidiary or any group of Subsidiaries that, taken
      together, would constitute a Significant Subsidiary;

and in each case the order or decree described in this clause (h) remains
unstayed and in effect for 60 consecutive days.

      Any notice given pursuant to Section 6.1(d) hereof must be in writing and
must specify the Default, demand that it be remedied and state that the notice
is a "NOTICE OF DEFAULT." When any Default under this Section 6.1 is cured, it
ceases.

      The Trustee shall not be charged with knowledge of any Default or Event of
Default unless written notice thereof shall have been given to a Trust Officer
at the Corporate Trust Office of the Trustee by the Obligors, a Paying Agent,
any Holder or any agent of any Holder.


                                       60

      Section 6.2 Acceleration.

      If an Event of Default (other than an Event of Default specified in clause
(g) or (h) of Section 6.1 hereof) occurs and is continuing, the Trustee may, by
notice to the Obligors, or the Holders of at least 25% in aggregate principal
amount of the Securities then outstanding may, by notice to the Obligors and the
Trustee, declare all unpaid principal to the date of acceleration on the
Securities then outstanding (if not then due and payable) to be due and payable
upon any such declaration, and the same shall become and be immediately due and
payable. If an Event of Default specified in clause (g) or (h) of Section 6.1
hereof occurs, all unpaid principal (including, without limitation, any premium,
in any), and accrued interest and additional amounts, if any on the Securities
then outstanding shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any Holder.
The Holders of a majority in aggregate principal amount of the Securities then
outstanding by notice to the Trustee may rescind an acceleration and its
consequences if (a) all existing Events of Default, other than the nonpayment of
the principal of the Securities which has become due solely by such declaration
of acceleration, have been cured or waived; (b) to the extent the payment of
such interest is lawful, interest at a rate of 1% per annum over the amount of
interest otherwise payable on such Security on overdue installments of interest
and Additional Interest, if any, and overdue principal, which has become due
otherwise than by such declaration of acceleration, has been paid; (c) the
rescission would not conflict with any judgment or decree of a court of
competent jurisdiction; and (d) all payments due to the Trustee and any
predecessor Trustee under Section 7.7 hereof have been made. No such rescission
shall affect any subsequent default or impair any right consequent thereto.

      If an Event of Default occurs on or after December 15, 2007, by reason of
any willful action (or inaction) taken (or not taken) by or on behalf of the
Company in bad faith with the intention of avoiding payment of the premium that
the Company would have had to pay if the Company then had elected to redeem the
Securities pursuant to Section 3.7 hereof, then, upon acceleration of the
Securities, an equivalent premium shall also become and be immediately due and
payable, to the extent permitted by law, anything in this Indenture or in the
Securities to the contrary notwithstanding. If an Event of Default occurs prior
to December 15, 2007, by reason of any willful action (or inaction) taken (or
not taken) by or on behalf of the Company in bad faith with the intention of
avoiding the prohibition on redemption of the Securities prior to December 15,
2007, then, upon acceleration of the Securities, an additional premium shall
also become and be immediately due and payable in an amount, for each of the
years beginning on each of the years set forth below, as set forth below
(expressed as a percentage of the aggregate principal amount to the date of
payment that would otherwise be due but for the provisions of this sentence):



      Year                                                    Percentage
      ----                                                    ----------
                                                           
      2004.................................................    107.000%

      2005.................................................    105.833%

      2006.................................................    104.666%

      2007.................................................    103.500%



                                       61

      Section 6.3 Other Remedies.

      If an Event of Default occurs and is continuing, the Trustee may, but
shall not be obligated to, pursue any available remedy by proceeding at law or
in equity to collect the payment of the principal of or interest or Additional
Interest, if any, on the Securities or to enforce the performance of any
provision of such Securities or this Indenture.

      The Trustee may maintain a proceeding even if it does not possess any of
the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.

      Section 6.4 Waiver of Defaults and Events of Default.

      Subject to Sections 6.7 and 9.2 hereof, the Holders of a majority in
aggregate principal amount of the Securities then outstanding by notice to the
Trustee may waive an existing Default or Event of Default and its consequence,
except a Default or Event of Default in the payment of the principal of,
premium, if any, or interest or Additional Interest, if any, on any Security
when due or any Default or Event of Default in respect of any provision of this
Indenture or the Securities which, under Section 9.2 hereof, cannot be modified
or amended without the consent of the Holder of each Security affected. When a
Default or Event of Default is waived, it is cured and ceases.

      Section 6.5 Control by Majority.

      The Holders of a majority in principal amount of all Securities then
outstanding may direct the time, method and place of conducting any proceeding
for exercising any remedy or power available to the Trustee or exercising any
trust or power conferred on it. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture, that the Trustee determines
may be unduly prejudicial to the rights of another Holder or the Trustee, or
that may involve the Trustee in personal liability unless the Trustee is offered
indemnity satisfactory to it; provided, however, that the Trustee may take any
other action deemed proper by the Trustee which is not inconsistent with such
direction.

      Section 6.6 Limitations on Suits.

      A Holder may not pursue any remedy with respect to this Indenture or the
Securities (except actions for payment of overdue principal, premium, if any, or
interest or Additional Interest, if any) unless:

            (a)   the Holder gives to the Trustee written notice of a continuing
Event of Default;

            (b)   the Holders of at least 25% in aggregate principal amount of
the then outstanding Securities make a written request to the Trustee to pursue
the remedy;


                                       62

            (c)   such Holder or Holders offer to the Trustee reasonable
indemnity to the Trustee against any loss, liability or expense;

            (d)   the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of indemnity; and

            (e)   no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority in
aggregate principal amount of the Securities.

      A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over such other
Securityholder.

      Section 6.7 Rights of Holders to Receive Payment.

      Notwithstanding any other provision of this Indenture, the right of any
Holder of a Security to receive payment of the principal of, interest and
Additional Interest, if any, on the Security, on or after the respective due
dates expressed in the Security and this Indenture and to bring suit for the
enforcement of any such payment on or after such respective dates, is absolute
and unconditional and shall not be impaired or affected without the consent of
the Holder.

      Section 6.8 Collection Suit by Trustee.

      If an Event of Default in the payment of principal, interest or Additional
Interest, if any, specified in clause (a) or (b) of Section 6.1 hereof occurs
and is continuing with respect to any Securities, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Obligors
or another obligor on the Securities for the whole amount of principal and
accrued interest or Additional Interest, if any, remaining unpaid, together
with, to the extent that payment of such interest is lawful, interest on overdue
principal and overdue installments of interest or Additional Interest, if any,
in each case at a rate equal to the interest rate then in effect on such
Security plus 1% per annum and such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.

      Section 6.9 Trustee May File Proofs of Claim.

      The Trustee may file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel) and the Holders allowed in
any judicial proceedings relative to the Obligors (or any other obligor on the
Securities), its creditors or its property and shall be entitled and empowered
to collect and receive any money or other property payable or deliverable on any
such claims and to distribute the same, and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due to it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.7 hereof, and to the extent that such payment of the reasonable
compensation, expenses, disbursements and advances


                                       63

in any such proceedings shall be denied for any reason, payment of the same
shall be secured by a lien on, and shall be paid out of, any and all
distributions, dividends, money, securities and other property which the Holders
may be entitled to receive in such proceedings, whether in liquidation or under
any plan of reorganization or arrangement or otherwise. Nothing herein contained
shall be deemed to authorize the Trustee to authorize or consent to, or, on
behalf of any Holder, to authorize, accept or adopt any plan of reorganization,
arrangement, adjustment or composition affecting the Securities or the rights of
any Holder thereof, or to authorize the Trustee to vote in respect of the claim
of any Holder in any such proceeding.

      Section 6.10 Priorities.

      If the Trustee collects any money pursuant to this Article 6, it shall pay
out the money in the following order:

      First, to the Trustee for amounts due under Section 7.7 hereof;

      Second, to Holders for amounts due and unpaid on the Securities for
principal, interest and Additional Interest, if any, ratably, without preference
or priority of any kind, according to the amounts due and payable on the
Securities for principal, interest and Additional Interest, if any,
respectively; and

      Third, the balance, if any, to the Obligors.

      The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 6.10.

      Section 6.11 Undertaking for Costs.

      In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.11 does not apply to a suit made by the Trustee, a suit
by a Holder pursuant to Section 6.7 hereof, or a suit by Holders of more than
10% in aggregate principal amount of the Securities then outstanding.

                                    ARTICLE 7

                                     TRUSTEE

      Section 7.1 Duties of Trustee.

            (a)   If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in its exercise as a prudent
person would exercise or use under the circumstances in the conduct of his or
her own affairs.


                                       64

            (b)   Except during the continuance of an Event of Default:

                        (A)   the Trustee need perform only those duties as are
      specifically set forth in this Indenture and no others; and

                        (B)   in the absence of bad faith on its part, the
      Trustee may conclusively rely, as to the truth of the statements and the
      correctness of the opinions expressed therein, upon certificates or
      opinions furnished to the Trustee and conforming to the requirements of
      this Indenture. The Trustee, however, shall examine any certificates and
      opinions which by any provision hereof are specifically required to be
      delivered to the Trustee to determine whether or not they conform to the
      requirements of this Indenture.

            (c)   The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except (subject to the TIA) that:

                        (A)   this paragraph does not limit the effect of
      subsection (b) of this Section 7.1;

                        (B)   the Trustee shall not be liable for any error of
      judgment made in good faith by a Trust Officer, unless it is proved that
      the Trustee was negligent in ascertaining the pertinent facts; and

                        (C)   the Trustee shall not be liable with respect to
      any action it takes or omits to take in good faith in accordance with a
      direction received by it pursuant to Section 6.5 hereof.

            (d)   No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers unless the Trustee shall have received satisfactory indemnity
in its opinion against potential costs and liabilities incurred by it relating
thereto.

            (e)   Every provision of this Indenture that in any way relates to
the Trustee is subject to subsections (a), (b), (c) and (d) of this Section 7.1.

            (f)   The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Obligors.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.

      Section 7.2 Rights of Trustee.

      Subject to Section 7.1 hereof:

            (a)   The Trustee may rely conclusively on any document believed by
it to be genuine and to have been signed or presented by the proper person. The
Trustee need not investigate any fact or matter stated in the document.


                                       65

            (b)   Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel, which shall conform
to Section 11.4(b) hereof. The Trustee shall not be liable for any action it
takes or omits to take in good faith in reliance on such Officers' Certificate
or Opinion of Counsel.

            (c)   The Trustee may act through its agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.

            (d)   The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers.

            (e)   The Trustee may consult with counsel of its selection, and the
advice or opinion of such counsel as to matters of law shall be full and
complete authorization and protection in respect of any such action taken,
omitted or suffered by it hereunder in good faith and in accordance with the
advice or opinion of such counsel.

            (f)   The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee security or indemnity satisfactory to the Trustee against
the costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction.

            (g)   The Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document, but
the Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it shall be entitled to
examine the books, records and premises of the Obligors, personally or by agent
or attorney at the sole cost of the Obligors and shall incur no liability or
additional liability of any kind by reason of such inquiry or investigation.

            (h)   The Trustee shall not be deemed to have notice of any Default
or Event of Default unless a Trust Officer of the Trustee has actual knowledge
thereof or unless written notice of any event which is in fact such a default is
received by the Trustee at the Corporate Trust Office, and such notice
references the Securities and this Indenture.

            (i)   The rights, privileges, protections, immunities and benefits
given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder, and to each agent, custodian and other Person
employed to act hereunder.

      Section 7.3 Individual Rights of Trustee.

      The Trustee in its individual or any other capacity may become the owner
or pledgee of Securities and may otherwise deal with the Obligors or an
Affiliate of the Obligors with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. However, the Trustee is
subject to Sections 7.10 and 7.11 hereof.


                                       66

      Section 7.4 Trustee's Disclaimer.

      The Trustee makes no representation as to the validity or adequacy of this
Indenture or the Securities, it shall not be accountable for the Obligors' use
of the proceeds from the Securities, and it shall not be responsible for any
statement in the Securities other than its certificate of authentication.

      Section 7.5 Notice of Default or Events of Default.

      If a default or an Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to each Securityholder notice of
the Default or Event of Default within 90 days after it occurs. However, the
Trustee may withhold the notice if and so long as a committee of its Trust
Officers in good faith determines that withholding notice is in the interests of
Securityholders, except in the case of a Default or an Event of Default in
payment of the principal (including premium, if any) of, interest or Additional
Interest, if any, on any Security.

      Section 7.6 Reports by Trustee to Holders.

      If such report is required by TIA Section 313, within 60 days after each
May 15, beginning with the May 15 following the date of this Indenture, the
Trustee shall mail to each Holder a brief report dated as of such May 15 that
complies with TIA Section 313(a). The Trustee also shall comply with TIA Section
313(b)(2) and (c).

      A copy of each report at the time of its mailing to Holders shall be
mailed to the Obligors and filed with the SEC and each stock exchange, if any,
on which the Securities are listed. The Obligors shall notify the Trustee
whenever the Securities become listed on any stock exchange or listed or
admitted to trading on any quotation system and any changes in the stock
exchanges or quotation systems on which the Securities are listed or admitted to
trading and of any delisting thereof.

      Section 7.7 Compensation and Indemnity.

      The Obligors shall pay to the Trustee from time to time such compensation
(as agreed to from time to time by the Obligors and the Trustee in writing) for
its services (which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust). The Obligors shall
reimburse the Trustee upon request for all reasonable disbursements, expenses
and advances incurred or made by it. Such expenses may include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.

      The Obligors shall indemnify the Trustee or any predecessor Trustee (which
for purposes of this Section 7.7 shall include its officers, directors,
employees and agents) for, and hold it harmless against, any and all loss,
liability or expense including taxes (other than taxes based upon, measured by
or determined by the income of the Trustee), (including reasonable legal fees
and expenses) incurred by it in connection with the acceptance or administration
of its duties under this Indenture or any action or failure to act as authorized
or within the discretion or rights or powers conferred upon the Trustee
hereunder including the reasonable costs and expenses of the Trustee and its
counsel in defending itself against any claim or liability in connection with


                                       67

the exercise or performance of any of its powers or duties hereunder. The
Trustee shall notify the Obligors promptly of any claim asserted against the
Trustee for which it may seek indemnity. The Obligors need not pay for any
settlement effected without its prior written consent, which shall not be
unreasonably withheld.

      The Obligors need not reimburse the Trustee for any expense or indemnify
it against any loss or liability incurred by it resulting from its gross
negligence or bad faith.

      To secure the Obligors' payment obligations in this Section 7.7, the
Trustee shall have a senior claim to which the Securities are hereby made
subordinate on all money or property held or collected by the Trustee, except
such money or property held in trust to pay the principal of, interest and
Additional Interest, if any, on the Securities. The obligations of the Obligors
under this Section 7.7 shall survive the satisfaction and discharge of this
Indenture or the resignation or removal of the Trustee.

      When the Trustee incurs expenses or renders services after an Event of
Default specified in clause (g) or (h) of Section 6.1 hereof occurs, the
expenses and the compensation for the services are intended to constitute
expenses of administration under any Bankruptcy Law to the extent permitted by
law. The provisions of this Section shall survive the termination of this
Indenture.

      Section 7.8 Replacement of Trustee.

      The Trustee may resign by so notifying the Obligors. The Holders of a
majority in aggregate principal amount of the Securities then outstanding may
remove the Trustee by so notifying the Trustee and may, with the Obligors'
written consent, appoint a successor Trustee. The Obligors may remove the
Trustee if:

            (a)   the Trustee fails to comply with Section 7.10 hereof;

            (b)   the Trustee is adjudged a bankrupt or an insolvent;

            (c)   a receiver or other public officer takes charge of the Trustee
or its property; or

            (d)   the Trustee becomes incapable of acting.

      If the Trustee resigns or is removed or if a vacancy exists in the office
of the Trustee for any reason, the Obligors shall promptly appoint a successor
Trustee. The resignation or removal of a Trustee shall not be effective until a
successor Trustee shall have delivered the written acceptance of its appointment
as described below.

      If a successor Trustee does not take office within 45 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Obligors or
the Holders of 10% in principal amount of the Securities then outstanding may
petition any court of competent jurisdiction for the appointment of a successor
Trustee at the expense of the Obligors.


                                       68

      If the Trustee fails to comply with Section 7.10 hereof, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.

      A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Obligors. Immediately after that, the
retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee and be released from its obligations (exclusive of any
liabilities that the retiring Trustee may have incurred while acting as Trustee)
hereunder, the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have all the rights, powers and
duties of the Trustee under this Indenture. A successor Trustee shall mail
notice of its succession to each Holder.

      A retiring Trustee shall not be liable for the acts or omissions of any
successor Trustee after its succession.

      Notwithstanding replacement of the Trustee pursuant to this Section 7.8,
the Obligors' obligations under Section 7.7 hereof shall continue for the
benefit of the retiring Trustee.

      Section 7.9 Successor Trustee by Merger, Etc.

      If the Trustee consolidates with, merges or converts into, or transfers
all or substantially all of its corporate trust assets (including the
administration of this Indenture) to, another corporation, the resulting,
surviving or transferee corporation, without any further act, shall be the
successor Trustee, provided such transferee corporation shall qualify and be
eligible under Section 7.10 hereof. Such successor Trustee shall promptly mail
notice of its succession to the Obligors and each Holder.

      Section 7.10 Eligibility; Disqualification.

      The Trustee shall always satisfy the requirements of paragraphs (1), (2)
and (5) of TIA Section 310(a). The Trustee (or its parent holding company) shall
have a combined capital and surplus of at least $50,000,000. If at any time the
Trustee shall cease to satisfy any such requirements, it shall resign
immediately in the manner and with the effect specified in this Article 7. The
Trustee shall be subject to the provisions of TIA Section 310(b). Nothing herein
shall prevent the Trustee from filing with the SEC the application referred to
in the penultimate paragraph of TIA Section 310(b).

      Section 7.11 Preferential Collection of Claims Against Obligors.

      The Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.


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                                    ARTICLE 8

    DEFEASANCE; SATISFACTION AND DISCHARGE OF INDENTURE; RELEASE OF RIBAPHARM

      Section 8.1 Satisfaction and Discharge of Indenture.

      This Indenture shall cease to be of further effect (except as to any
surviving rights of conversion, registration of transfer or exchange of
Securities herein expressly provided for and except as further provided below),
and the Trustee, on demand of and at the expense of the Obligors, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture,
when

            (a)   either

                  (i)   all Securities theretofore authenticated and delivered

      (other than (i) Securities which have been destroyed, lost or stolen and
      which have been replaced or paid as provided in Section 2.7 hereof and
      (ii) Securities for whose payment money has theretofore been deposited in
      trust and thereafter repaid to the Obligors as provided in Section 8.5
      hereof) have been delivered to the Trustee for cancellation; or

                  (ii)  all such Securities not theretofore delivered to the
      Trustee for cancellation are within one year of the maturity date and the
      Obligors have irrevocably deposited or caused to be irrevocably deposited
      cash with the Trustee or a Paying Agent (other than the Obligors or any of
      their Affiliates) as trust funds in trust for the purpose of and in an
      amount sufficient to pay and discharge the entire indebtedness on such
      Securities not theretofore delivered to the Trustee for cancellation, for
      principal and interest (including Additional Interest, if any) to the date
      of such deposit (in the case of Securities which have become due and
      payable);

            (b)   the Obligors have paid or caused to be paid all other sums
payable hereunder by the Obligors; and

            (c)   the Obligors have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein relating to the satisfaction and discharge of this Indenture
have been complied with.

      Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Obligors to the Trustee under Section 7.7 hereof shall
survive and, if money shall have been deposited with the Trustee pursuant to
subclause (ii) of clause (a) of this Section, the provisions of Sections 2.3,
2.4, 2.5, 2.6, 2.7, 2.12, Section 4.2, Section 4.3, Section 7.8 this Article 8
and Section 11.5, shall survive until the Securities have been paid in full.

      Section 8.2 Legal Defeasance.

      The Obligors shall be deemed to have paid and will be discharged from any
and all obligations in respect of this Indenture and the Securities on the date
of the deposit referred to in clause (a) of this Section 8.2, and the provisions
of this Indenture shall no longer be in effect


                                       70

with respect to the Securities ("LEGAL DEFEASANCE"), and the Trustee, at the
expense of the Obligors, shall execute proper instruments acknowledging the
same, except for the following provisions, which shall survive until otherwise
terminated or discharged hereunder: (i) the rights of Holders of outstanding
Securities to receive solely from the trust fund described in clause (a) below
payments in respect of the principal of, premium, if any, and interest on such
Securities when such payments are due, (ii) the Obligors' obligations with
respect to such Securities under Article 2 and Section 4.3 hereof, (iii) the
rights, powers, trusts, duties, indemnities and immunities of the Trustee
hereunder, including, without limitation, Section 7.7 hereof and the Obligors'
obligations in connection therewith and (iv) this Section 8.2. Subject to
compliance with this Section 8.2, the Obligors may exercise their option under
this Section 8.2 notwithstanding the prior exercise of their option under
Section 8.3 hereof. The following conditions shall apply to Legal Defeasance:

            (a)   the Obligors shall have irrevocably deposited with the
Trustee, in trust, for the benefit of the Holders cash in U.S. dollars, U.S.
Government Obligations, or a combination thereof, in such amounts as shall be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and interest on the
Securities at the Stated Maturity thereof or on the applicable Redemption Date,
as the case may be and the Obligors must specify whether the Securities are
being defeased to their Stated Maturity or to a particular Redemption Date;

            (b)   the Obligors shall have delivered to the Trustee an Opinion of
Counsel (based on a ruling published by the United States Internal Revenue
Service or other change in the applicable U.S. federal income tax law) in the
United States reasonably acceptable to the Trustee to the effect that the
Holders will not recognize income, gain or loss for U.S. federal income tax
purposes as a result of such deposit and Legal Defeasance and will be subject to
U.S. federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such deposit and Legal Defeasance had not
occurred;

            (c)   no Default or Event of Default shall have occurred and be
continuing either: (i) on the date of such deposit (other than a Default or an
Event of Default resulting from the borrowing of funds to be applied to such
deposit or (ii) insofar as Events of Default from bankruptcy or insolvency
events are concerned, at the time in the period ending on the 91st day after the
date of deposit;

            (d)   the Legal Defeasance shall not result in a breach or violation
of, or constitute a default under any material agreement or instrument(other
than this Indenture) to which the Company or any of its Restricted Subsidiaries
is a party or by which the Company or any of its Restricted Subsidiary is bound;

            (e)   the Obligors must deliver to the Trustee an Opinion of Counsel
reasonably acceptable to the Trustee to the effect that after the 91st day
following the deposit, the trust funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally;

            (f)   the Obligors must deliver to the Trustee an Officers'
Certificate stating that the deposit was not made by the Obligors with the
intent of preferring the Holders of


                                       71

Securities over the other creditors of the Obligors with the intent of
defeating, hindering, delaying or defrauding creditors of the Obligors or
others; and

            (g)   the Obligors must deliver to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent relating to the Legal Defeasance have been complied with.

            After any such irrevocable deposit, the Trustee upon request shall
acknowledge in writing the discharge of the Obligors' obligations under the
Securities and this Indenture except for those surviving obligations in the
immediately preceding paragraph.

            Notwithstanding the foregoing, the Opinion of Counsel required by
Section 8.2(b) hereof with respect to a Legal Defeasance need not be delivered
if all Securities not theretofore delivered to the Trustee for cancellation (1)
have become due and payable or (2) shall become due and payable upon maturity or
redemption within one year under arrangements satisfactory to the Trustee for
the giving of notice of redemption by the Trustee in the name, and at the
expense, of the Obligors.

      Section 8.3 Covenant Defeasance.

      The Company may omit to comply with any term, provision or condition set
forth in clause (iv) of Section 5.1(a) hereof, and the Obligors may omit to
comply with any term, provision or condition set forth in Sections 4.8 through
4.17 hereof and any breach of clauses (c), (d), (e), or (f), or with respect to
Significant Subsidiaries only, clauses (g) or (h) under Section 6.1 hereof shall
be deemed not to be an Event of Default ("COVENANT DEFEASANCE"), if in each case
with respect to the outstanding Securities:

            (a)   the Obligors shall have irrevocably deposited with the
Trustee, in trust, for the benefit of the Holders cash in U.S. dollars, U.S.
Government Obligations, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and interest on the
Securities at the Stated Maturity thereof or on the applicable Redemption Date,
as the case may be, and the Obligors must specify whether the Securities are
being defeased to their Stated Maturity or to a particular Redemption Date;

            (b)   the Obligors shall have delivered to the Trustee an Opinion of
Counsel in the United States reasonably acceptable to such Trustee confirming
that the Holders will not recognize income, gain or loss for U.S. federal income
tax purposes as a result of such Covenant Defeasance and will be subject to U.S.
federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if the Covenant Defeasance had not occurred;

            (c)   no Default or Event of Default shall have occurred and be
continuing either: (i) on the date of such deposit (other than a Default or
Event of Default resulting from the borrowing of funds to be applied to such
deposit or (ii) insofar as Events of Default from bankruptcy or insolvency
events are concerned, at the time in the period ending on the 91st day after the
date of deposit;


                                       72

            (d)   the Covenant Defeasance shall not result in a breach or
violation of, or constitute a default under any material agreement or instrument
(other than this Indenture) to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries is bound;

            (e)   the Obligors must deliver to the Trustee an Opinion of Counsel
reasonably acceptable to the Trustee to the effect that after the 91st day
following the deposit, the trust funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally;

            (f)   the Obligors must deliver to the Trustee an Officers'
Certificate stating that the deposit was not made by the Obligors with the
intent of preferring the Holders of Securities over the other creditors of the
Obligors with the intent of defeating, hindering, delaying or defrauding
creditors of the Obligors or others; and

            (g)   the Obligors must deliver to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent relating to the Legal Defeasance have been complied with.

            If the funds deposited with the Trustee to effect Covenant
Defeasance are insufficient to pay the principal of and interest on the
Securities when due, then the obligations of the Obligors under this Indenture
will be revived and no such defeasance will be deemed to have occurred.

            Upon the occurrence of a Covenant Defeasance, the Trustee shall send
written notice of such Covenant Defeasance to the Obligors.

            Notwithstanding the foregoing, the Opinion of Counsel required by
Section 8.3(b) hereof with respect to a Covenant Defeasance need not be
delivered if all Securities not theretofore delivered to the Trustee for
cancellation (1) have become due and payable or (2) shall become due and payable
upon maturity or redemption within one year under arrangements satisfactory to
the Trustee for the giving of notice of redemption by the Trustee in the name,
and at the expense, of the Obligors.

      Section 8.4 Application of Trust Money.

      Subject to the provisions of Section 8.5 hereof, the Trustee or a Paying
Agent shall hold in trust, for the benefit of the Holders, all money deposited
with it pursuant to Section 8.1, 8.2 or 8.3 hereof and shall apply the deposited
money in accordance with this Indenture and the Securities to the payment of the
principal of, interest and Additional Interest, if any, on the Securities.


                                       73

      Section 8.5 Repayment to Obligors.

      The Trustee and each Paying Agent shall promptly pay to the Obligors upon
request any excess money (i) deposited with them pursuant to Section 8.1, 8.2 or
8.3 hereof and (ii) held by them at any time.

      The Trustee and each Paying Agent shall pay to the Obligors upon request
any money held by them for the payment of principal or interest or Additional
Interest, if any, that remains unclaimed for two years after a right to such
money has matured; provided, however, that the Trustee or such Paying Agent,
before being required to make any such payment, may at the expense of the
Obligors cause to be mailed to each Holder entitled to such money notice that
such money remains unclaimed and that after a date specified therein, which
shall be at least 30 days from the date of such mailing, any unclaimed balance
of such money then remaining will be repaid to the Obligors. After payment to
the Obligors, Holders entitled to money must look to the Obligors for payment as
general creditors unless an applicable abandoned property law designates another
person.

      Section 8.6 Reinstatement.

      If the Trustee or any Paying Agent is unable to apply any money in
accordance with Section 8.5 hereof by reason of any legal proceeding or by
reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, then the
Obligors' obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 8.1, 8.2 or
8.3 hereof until such time as the Trustee or such Paying Agent is permitted to
apply all such money or U.S. Government Obligations in accordance with Section
8.5 hereof; provided, however, that if the Obligors have made any payment of the
principal of or interest or Additional Interest, if any, on any Securities
because of the reinstatement of their obligations, the Obligors shall be
subrogated to the rights of the Holders of such Securities to receive any such
payment from the money or U.S. Government Obligations held by the Trustee or
such Paying Agent.

      Section 8.7 Release of Ribapharm as Obligor.

      If Ribapharm's obligations under the 6 1/2% Notes and the 6 1/2% Indenture
shall have been discharged in accordance with Article VIII of such indenture
(other than the obligations which shall survive pursuant to Section 8.01 of the
6 1/2% Indenture), the Company and Ribapharm shall deliver to the Trustee
Officers' Certificates certifying to that effect as of the date of such
Officers' Certificates, then automatically, without the requirement of any
further action by the Company, Ribapharm or the Trustee, Ribapharm shall, from
the date of such Officers' Certificates, have no further obligation or liability
under the Indenture or the Securities. The Trustee shall, at the Company's and
Ribapharm's expense, execute and deliver such instruments as the Company and
Ribapharm may reasonably request to evidence such discharge.

      Section 8.8 Reinstatement of Ribapharm as Obligor.

      If, at any time after Ribapharm has been released as an Obligor pursuant
to Section 8.7 hereof, the obligations of Ribapharm under the 6 1/2% Notes and
the 6 1/2% Indenture shall be revived and reinstated pursuant to Section 8.04 of
the 6 1/2% Indenture, the Company and


                                       74

Ribapharm shall promptly execute a supplemental indenture reinstating Ribapharm
as an Obligor under the Indenture and the Securities until such time as Section
8.7 hereof shall again apply.

                                    ARTICLE 9

                       AMENDMENTS, SUPPLEMENTS AND WAIVERS

      Section 9.1 Without Consent of Holders.

      The Obligors and the Trustee may amend or supplement this Indenture or the
Securities without notice to or consent of any Holder:

            (a)   to comply with Section 5.1 hereof

            (b)   to cure any ambiguity, defect or inconsistency;

            (c)   to provide for uncertificated Securities in addition to or in
place of certificated Securities;

            (d)   to make any change that would provide any additional rights or
benefits to the Holders of Securities or that does not adversely affect the
legal rights under this Indenture of any such Holder;

            (e)   to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA;

            (f)   to conform the text of this Indenture or the Securities to any
provision of the section of the Offering Memorandum dated December 9, 2003
captioned "Description of the Notes" to the extent that such provision was
intended to be a verbatim recitation of a provision of this Indenture or the
Securities;

            (g)   to provide for the issuance of Additional Securities in
accordance with the limitations set forth in this Indenture as of the date
hereof;

            (h)   to allow any Person to execute a supplemental indenture and a
Guarantee with respect to the Securities;

            (i)   to appoint a successor Trustee; or

            (j)   to remove or reinstate Ribapharm as an Obligor under the
Indenture, pursuant to Section 8.7 or Section 8.8 hereof.

      Section 9.2 With Consent of Holders.

            The Obligors and the Trustee may amend or supplement this Indenture
or the Securities with the written consent of the Holders of at least a majority
in aggregate principal amount of the Securities then outstanding. The Holders of
at least a majority in aggregate principal amount of the Securities then
outstanding may waive compliance in a particular


                                       75

instance by the Obligors with any provision of this Indenture or the Securities
without notice to any Securityholder. However, notwithstanding the foregoing but
subject to Section 9.4 hereof, without the written consent of each
Securityholder, an amendment, supplement or waiver, including a waiver pursuant
to Section 6.4 hereof, may not:

            (a)   reduce the principal amount of Securities whose Holders must
consent to an amendment, supplement or waiver;

            (b)   reduce the principal of or change the Stated Maturity of any
Security or alter the provisions with respect to the redemption of the
Securities (other than provisions relating to Sections 3.8, 3.14 and 4.14);

            (c)   reduce the rate of or change the time for payment of interest
on any Security;

            (d)   waive a Default or Event of Default in the payment of
principal of, or interest or premium or Additional Interest, if any, on the
Securities (except a rescission of acceleration of the Securities by the Holders
of at least a majority in aggregate principal amount of the Securities and a
waiver of the payment default that resulted from such acceleration);

            (e)   make any Security payable in money other than U.S. dollars;

            (f)   make any change in the provisions of this Indenture relating
to waivers of past Defaults or the rights of Holders of Securities to receive
payments of principal of, or interest or premium or Additional Interest, if any,
on the Securities;

            (g)   waive a redemption payment with respect to any note (other
than a payment required by Sections 3.8, 3.14 and 4.14);

            (h)   impair the right to institute suit for the enforcement of any
payment on or with respect to the Securities;

            (i)   remove Ribapharm as an Obligor on the Securities prior to such
time as Ribapharm's obligations under the 6 1/2% Notes and 6 1/2% Indenture
shall have been discharged as described in Section 8.5 hereof; or

            (j)   make any change in the preceding amendment and waiver
provisions.

      It shall not be necessary for the consent of the Holders under this
Section 9.2 to approve the particular form of any proposed amendment, supplement
or waiver, but it shall be sufficient if such consent approves the substance
thereof. Any Securities held by the Obligors or one of their Subsidiaries will
be disregarded for voting purposes in connection with this Article 9.

      After an amendment, supplement or waiver under Section 9.1 or this Section
9.2 becomes effective, the Obligors shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Obligors to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amendment, supplement or
waiver.


                                       76

      Section 9.3 Compliance With Trust Indenture Act.

      Every amendment to or supplement of this Indenture or the Securities shall
comply with the TIA as in effect at the date of such amendment or supplement.

      Section 9.4 Revocation and Effect of Consents.

      Until an amendment, supplement or waiver becomes effective, a consent to
it by a Holder is a continuing consent by the Holder and every subsequent Holder
of a Security or portion of a Security that evidences the same debt as the
consenting Holder's Security, even if notation of the consent is not made on any
Security. However, any such Holder or subsequent Holder may revoke the consent
as to its Security or portion of a Security if the Trustee receives the notice
of revocation before the date the amendment, supplement or waiver becomes
effective.

      After an amendment, supplement or waiver becomes effective, it shall bind
every Holder, unless it makes a change described in any of clauses (a) through
(i) of Section 9.2 hereof. In that case the amendment, supplement or waiver
shall bind each Holder of a Security who has consented to it and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security.

      Section 9.5 Notation On or Exchange of Securities.

      If an amendment, supplement or waiver changes the terms of a Security, the
Trustee may require the Holder of the Security to deliver it to the Trustee. The
Trustee may place an appropriate notation on the Security about the changed
terms and return it to the Holder. Alternatively, if the Obligors or the Trustee
so determines, the Obligors in exchange for the Security shall issue and the
Trustee shall authenticate a new Security that reflects the changed terms.

      Section 9.6 Trustee to Sign Amendments, Etc.

      The Trustee shall sign any amendment or supplemental indenture authorized
pursuant to this Article 9 if the amendment or supplemental indenture does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may, in its sole discretion, but need not sign it. In
signing or refusing to sign such amendment or supplemental indenture, the
Trustee shall be entitled to receive and, subject to Section 7.1 hereof, shall
be fully protected in relying upon, an Opinion of Counsel stating that such
amendment or supplemental indenture is authorized or permitted by this
Indenture. The Obligors may not sign an amendment or supplemental indenture
until their Boards of Directors approve it.

      Section 9.7 Effect of Supplemental Indentures.

      Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.


                                       77

                                   ARTICLE 10

                              SUBSIDIARY GUARANTEES

      Section 10.1 Future Guarantees.

      If, after the date of this Indenture, any Domestic Subsidiary of the
Company provides a Guarantee in connection with any Indebtedness of the Company
or the Co-Obligor, that in each case ranks pari passu in right of payment with
the Securities, then the Company shall cause such Domestic Subsidiary, within
five Business Days of the date on which any such Domestic Subsidiary became so
obligated, to execute and deliver to the Trustee a Supplemental Indenture in
form reasonably satisfactory to the Trustee, pursuant to which such Domestic
Subsidiary shall unconditionally guarantee, on a senior unsecured basis, all of
the Obligors' obligations under the Securities and this Indenture on the terms
set forth herein and therein. Any Domestic Subsidiary that becomes a Guarantor
shall remain a Guarantor unless (i) designated an Unrestricted Subsidiary by the
Company in accordance with this Indenture or (ii) it is otherwise released from
its obligations as a Guarantor pursuant to Section 10.5 hereof.

      Section 10.2 Terms of Guarantees.

            (a)   Subject to this Article 10, pursuant to the Supplemental
Indenture described in Section 10.1 hereof, each of the Domestic Subsidiaries
that will become Guarantors will, jointly and severally, unconditionally
Guarantee to each Holder of a Security authenticated and delivered by the
Trustee and to the Trustee and its successors and assigns, irrespective of the
validity and enforceability of this Indenture, the Securities or the obligations
of the Obligors hereunder or thereunder that: (i) the due and punctual payment
of principal, premium and interest and Additional Interest, if any, on the
Securities shall be promptly paid in full when due, whether at maturity, by
acceleration, redemption or otherwise, (ii) the due and punctual payment of
interest on the overdue principal of and interest on the Securities, if any, if
lawful, and all other obligations of the Obligors to the Holders or the Trustee
hereunder or thereunder shall be promptly paid in full or performed, all in
accordance with the terms hereof and thereof, and (iii) in case of any extension
of time of payment or renewal of any Securities or any of such other
obligations, that same shall be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration pursuant to Section 6.2 hereof or otherwise. Failing
payment when due of any amount so guaranteed or any performance so guaranteed
for whatever reason, the Guarantors shall be jointly and severally obligated to
pay the same immediately. Each Guarantor shall agree that this is a Guarantee of
payment and not a Guarantee of collection.

            (b)   Each Guarantor shall agree that its obligations with regard to
its Guarantee shall be joint and several, unconditional, irrespective of the
validity or enforceability of the Securities or the obligations of the Obligors
under this Indenture, the absence of any action to enforce the same, the
recovery of any judgment against the Obligors or any other obligor with respect
to this Indenture, the Securities or the obligations of the Obligors under this
Indenture or the Securities, any action to enforce the same or any other
circumstances (other than complete performance) which might otherwise constitute
a legal or equitable discharge or defense of a Guarantor. Each Guarantor
further, to the extent permitted by law, shall waive and relinquish all


                                       78

claims, rights and remedies accorded by applicable law to guarantors and shall
agree not to assert or take advantage of any such claims, rights or remedies,
including but not limited to: (i) any right to require any of the Trustee, the
Holders or the Obligors (each a "BENEFITED PARTY"), as a condition of payment or
performance by such Guarantor, to (A) proceed against the Obligors, any other
guarantor (including any other Guarantor) of the obligations under the
Guarantees or any other person, (B) proceed against or exhaust any security held
from the Obligors, any such other guarantor or any other person, (C) proceed
against or have resort to any balance of any deposit account or credit on the
books of any Benefited Party in favor of the Obligors or any other person, or
(D) pursue any other remedy in the power of any Benefited Party whatsoever; (ii)
any defense arising by reason of the incapacity, lack of authority or any
disability or other defense of the Obligors including any defense based on or
arising out of the lack of validity or the unenforceability of the obligations
under the Guarantees or any agreement or instrument relating thereto or by
reason of the cessation of the liability of the Obligors from any cause other
than payment in full of the obligations under the Guarantees; (iii) any defense
based upon any statute or rule of law which provides that the obligation of a
surety must be neither larger in amount nor in other respects more burdensome
than that of the principal; (iv) any defense based upon any Benefited Party's
errors or omissions in the administration of the obligations under the
Guarantees, except behavior which amounts to bad faith; (v)(A) any principles or
provisions of law, statutory or otherwise, which are or might be in conflict
with the terms of the Guarantees and any legal or equitable discharge of such
Guarantor's obligations hereunder and under its Guarantee, (B) the benefit of
any statute of limitations affecting such Guarantor's liability hereunder and
under its Guarantee or the enforcement hereof and thereof, (C) any rights to
set-offs, recoupments and counterclaims and (D) promptness, diligence and any
requirement that any Benefited Party protect, secure, perfect or insure any
security interest or lien or any property subject thereto; (vi) notices,
demands, presentations, protests, notices of protest, notices of dishonor and
notices of any action or inaction, including acceptance of the Guarantees,
notices of default under the Securities or any agreement or instrument related
thereto, notices of any renewal, extension or modification of the obligations
under the Guarantees or any agreement related thereto, and notices of any
extension of credit to the Obligors and any right to consent to any thereof;
(vii) to the extent permitted under applicable law, the benefits of any "One
Action" rule and (viii) any defenses or benefits that may be derived from or
afforded by law which limit the liability of or exonerate guarantors or
sureties, or which may conflict with the terms of the Guarantees. Except as set
forth in Section 10.5, each Guarantor shall covenant that its Guarantee shall
not be discharged except by complete performance of the obligations contained in
its Guarantee and this Indenture.

            (c)   If any Holder or the Trustee is required by any court or
otherwise to return to the Obligors, the Guarantors or any custodian, trustee,
liquidator or other similar official acting in relation to either the Obligors
or the Guarantors, any amount paid to either the Trustee or such Holder, any
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect.

            (d)   Each Guarantor shall agree that it shall not be entitled to
any right of subrogation in relation to the Holders in respect of any
obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby. Each Guarantor shall further agree that, as between the
Guarantors, on the one hand, and the Holders and the Trustee, on the other hand,
(i) the maturity of the obligations guaranteed hereby may be accelerated as
provided in Section 6.2


                                       79

hereof for the purposes of any Guarantee, notwithstanding any stay, injunction
or other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby and (ii) in the event of any declaration of acceleration of
such obligations as provided in Section 6.2 hereof, such obligations (whether or
not due and payable) shall forthwith become due and payable by the Guarantors
for the purpose of any such Guarantee. The Guarantors shall have the right to
seek contribution from any non-paying Guarantor so long as the exercise of such
right does not impair the rights of the Holders under the applicable Guarantee.

      Section 10.3 Limitation on Guarantor Liability.

      Each Guarantor shall confirm, and by its acceptance of Securities, each
Holder hereby confirms, that it is the intention of all such parties that any
Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance
for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar federal or state law to the
extent applicable to any Guarantee. To effectuate the foregoing intention, the
Trustee and the Holders irrevocably agree, and the Guarantors shall irrevocably
agree, that the obligations of such Guarantor under this Article 10 shall be
limited to the maximum amount as will, after giving effect to such maximum
amount and all other contingent and fixed liabilities of such Guarantor that are
relevant under such laws, and after giving effect to any collections from,
rights to receive contribution from or payments made by or on behalf of any
other Guarantor in respect of the obligations of such other Guarantor under this
Article 10, result in the obligations of such Guarantor under its Guarantee not
constituting a fraudulent transfer or conveyance.

      Section 10.4 Merger and Consolidation of Guarantors.

            (a)   In case of any sale or other disposition, consolidation,
merger, sale or conveyance and upon the assumption by the successor person, by
supplemental indenture, executed and delivered to the Trustee and satisfactory
in form to the Trustee, of the Guarantee endorsed upon the Securities and the
due and punctual performance of all of the covenants and conditions of this
Indenture to be performed by the Guarantor, such successor person shall succeed
to and be substituted for the Guarantor with the same effect as if it had been
named herein as a Guarantor. Such successor person thereupon may cause to be
signed any or all of the Guarantees to be endorsed upon all of the Securities
available hereunder which theretofore shall not have been signed by the Obligors
and delivered to the Trustee. All the Guarantees so issued shall in all respects
have the same legal rank and benefit under this Indenture as the Guarantees
theretofore and thereafter issued in accordance with the terms of this Indenture
as though all of such Guarantees had been issued at the date of the execution
hereof.

            (b)   Except as set forth in Articles 4 and 5 hereof, and
notwithstanding clause (a) of this Section 10.4, nothing contained in this
Indenture or in any of the Securities shall prevent any consolidation or merger
of a Guarantor with or into the Company or the Co-Obligor, or shall prevent any
sale or conveyance of the property of a Guarantor as an entirety or
substantially as an entirety to the Company, the Co-Obligor or another
Guarantor.


                                       80

      Section 10.5 Release.

            (a)   In the event (i) that a Guarantor ceases to provide a
Guarantee in connection with any and all Indebtedness of the Company or the
Co-Obligor, that in each case ranks pari passu in right of payment with the
Securities, (ii) of a sale or other disposition of all or substantially all of
the assets of any Guarantor, by way of merger, consolidation or otherwise, or a
sale or other disposition of all to the Capital Stock of any Guarantor, in each
case to a person that is not (either before or after giving effect to such
transactions) a Subsidiary of the Company, so long as the Net Proceeds of such
sale or other disposition are applied in accordance with the applicable
provisions of this Indenture, including without limitation Section 4.14 hereof,
or (iii) of a designation by the Company of any Restricted Subsidiary that is a
Guarantor as an Unrestricted Subsidiary in accordance with the definition
thereof, such Guarantor or, in the case of a sale or other disposition of all or
substantially all of the assets of such Guarantor, the corporation acquiring
such property, shall be released and relieved of any obligations under its
Guarantee without any further action being required by the Trustee or any
Holder.

            (b)   Upon delivery by the Company to the Trustee of an Officers'
Certificate and an Opinion of Counsel to the effect that such sale or other
disposition was made by the Company in accordance with the provisions of this
Indenture, including without limitation Section 4.8 hereof, the Trustee shall
execute any documents reasonably required in order to evidence the release of
any Guarantor from its obligations under its Guarantee.

            (a)   Any Guarantor not released from its obligations under its
Security Guarantee shall remain liable for the full amount of principal of and
interest on the Securities and for the other obligations of any Guarantor under
this Indenture as provided in this Article 10.

                                   ARTICLE 11

                                  MISCELLANEOUS

      Section 11.1 Trust Indenture Act Controls.

      If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by any of Sections 310 to 317, inclusive, of the TIA through
operation of Section 318(c) thereof, such imposed duties shall control.


                                       81

      Section 11.2 Notices.

      Any demand, authorization notice, request, consent or communication shall
be given in writing and delivered in person or mailed by first-class mail,
postage prepaid, addressed as follows or transmitted by facsimile transmission
(confirmed by delivery in person or mail by first-class mail, postage prepaid,
or by guaranteed overnight courier) to the following facsimile numbers:

            If to the Obligors, to:

            Valeant Pharmaceuticals International
            3300 Hyland Avenue
            Costa Mesa, California 92626
            Attention:  Chief Financial Officer
            Facsimile No.: (714) 641-7271

            With a copy to:

            Valeant Pharmaceuticals International
            3300 Hyland Avenue
            Costa Mesa, California 92626
            Attention:  General Counsel
            Facsimile No.: (714) 641-7228

            If to the Trustee, to:

            The Bank of New York
            101 Barclay Street - 8W
            New York, NY 10286
            Attn: Corporate Trust Administration
            Facsimile No.: (212) 815-5705

      Such notices or communications shall be effective when received.

      The Obligors or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.

      Any notice or communication mailed to a Holder shall be mailed by
first-class mail or delivered by an overnight delivery service to it at its
address shown on the register kept by the Primary Registrar.

      Failure to mail a notice or communication to a Holder or any defect in it
shall not affect its sufficiency with respect to other Holders. If a notice or
communication to a Holder is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.


                                       82

      Section 11.3 Communications by Holders With Other Holders.

      Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Obligors, the Trustee, the Registrar and any other person shall
have the protection of TIA Section 312(c).

      Section 11.4 Certificate and Opinion of Counsel as to Conditions
Precedent.

            (a)   Upon any request or application by the Obligors to the Trustee
to take any action under this Indenture, the Obligors shall furnish to the
Trustee at the request of the Trustee:

                        (A)   an Officers' Certificate stating that, in the
      opinion of the signers, all conditions precedent (including any covenants,
      compliance with which constitutes a condition precedent), if any, provided
      for in this Indenture relating to the proposed action have been complied
      with; and

                        (B)   an Opinion of Counsel stating that, in the opinion
      of such counsel, all such conditions precedent (including any covenants,
      compliance with which constitutes a condition precedent) have been
      complied with.

            (b)   Each Officers' Certificate and Opinion of Counsel with respect
to compliance with a condition or covenant provided for in this Indenture shall
include:

                        (A)   a statement that the person making such
      certificate or opinion has read such covenant or condition;

                        (B)   a brief statement as to the nature and scope of
      the examination or investigation upon which the statements or opinions
      contained in such certificate or opinion are based;

                        (C)   a statement that, in the opinion of such person,
      he or she has made such examination or investigation as is necessary to
      enable him or her to express an informed opinion as to whether or not such
      covenant or condition has been complied with; and

                        (D)   a statement as to whether or not, in the opinion
      of such person, such condition or covenant has been complied with;

provided, however, that with respect to matters of fact an Opinion of Counsel
may rely on an Officers' Certificate or certificates of public officials.

      Section 11.5 Record Date for Vote or Consent of Holders.

      The Obligors (or, in the event deposits have been made pursuant to 8.1,
8.2 or 8.3 hereof, the Trustee) may set a record date for purposes of
determining the identity of Holders entitled to vote or consent to any action by
vote or consent authorized or permitted under this Indenture, which record date
shall not be more than thirty (30) days prior to the date of the commencement of
solicitation of such action. Notwithstanding the provisions of Section 9.4
hereof, if a record


                                       83

date is fixed, those persons who were Holders of Securities at the close of
business on such record date (or their duly designated proxies), and only those
persons, shall be entitled to take such action by vote or consent or to revoke
any vote or consent previously given, whether or not such persons continue to be
Holders after such record date.

      Section 11.6 Rules by Trustee, Paying Agent and Registrar.The Trustee may
make reasonable rules (not inconsistent with the terms of this Indenture) for
action by or at a meeting of Holders. Any Registrar or Paying Agent may make
reasonable rules for its functions.

      Section 11.7 Legal Holidays.

      A "Legal Holiday" is a Saturday, Sunday or a day on which state or
federally chartered banking institutions in New York, New York and the state in
which the Corporate Trust Office is located are not required to be open. If a
payment date, including any Redemption Date, Purchase Date, Change of Control
Purchase Date and Final Maturity Date, is a Legal Holiday, payment shall be made
on the next succeeding day that is not a Legal Holiday, and no interest or
Additional Interest, if any, shall accrue for the intervening period on such
payment. If an interest record date is a Legal Holiday, the record date shall
not be affected.

      Section 11.8 Governing Law; Submission to Jurisdiction.

            (a)   This Indenture and the Securities shall be governed by, and
construed in accordance with, the laws of the State of New York, without regard
to principles of conflicts of laws.

            (b)   The Obligors irrevocably submit to the non-exclusive
jurisdiction of any New York State or United States Federal court sitting in The
City of New York over any suit, action or proceeding arising out of or relating
to this Indenture. The Obligors irrevocably waive, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of venue of any such suit, action or proceeding brought in such a court and any
claim that any such suit, action or proceeding brought in such a court has been
brought in an inconvenient forum.

      Section 11.9 No Adverse Interpretation of Other Agreements.

      This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Obligors or a Subsidiary of the Obligors. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.

      Section 11.10 No Recourse Against Others.

      All liability described in paragraph 13 of the Form of the Securities
attached hereto as Exhibit A of any director, officer, employee or shareowner,
as such, of the Obligors is waived and released.



                                       84

      Section 11.11 Successors.

      All agreements of the Obligors in this Indenture and the Securities shall
bind their successors. All agreements of the Trustee in this Indenture shall
bind its successor.

      Section 11.12 Multiple Counterparts.

      The parties may sign multiple counterparts of this Indenture. Each signed
counterpart shall be deemed an original, but all of them together represent the
same agreement.

      Section 11.13 Separability.

      In case any provisions in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

      Section 11.14 Table of Contents, Headings, etc.

      The table of contents, cross-reference sheet and headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof, and shall in no way modify or
restrict any of the terms or provisions hereof.

      Section 11.15 Calculations in Respect of the Securities.

      The Obligors and their agents shall make all calculations under the
Indenture and the Securities in good faith. In the absence of manifest error,
such calculations shall be final and binding on all Holders. The Obligors shall
provide a copy of such calculations to the Trustee as required hereunder.

                            [SIGNATURE PAGE FOLLOWS]


                                       85

                                                                  EXECUTION COPY

      IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the date and year first above written.

                                    VALEANT PHARMACEUTICALS INTERNATIONAL

                                    By: /s/ Robert W. O'Leary
                                        --------------------------------------
                                        Name: Robert W. O'Leary
                                        Title: Chairman of the Board and Chief
                                               Executive Officer

                                    RIBAPHARM INC.

                                    By: /s/ Philip W. Loberg, Jr.
                                            ----------------------------------
                                        Name: Philip W. Loberg, Jr.
                                        Title: Treasurer


                                    THE BANK OF NEW YORK, AS TRUSTEE

                                    By: /s/ John Guiliano
                                            ----------------------------------
                                        Name: John Guiliano
                                        Title: Vice President


                          (Signature Page to Indenture)

                                                                       EXHIBIT A

                           [FORM OF FACE OF SECURITY]

      [UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY TO THE COMPANY, RIBAPHARM OR THEIR AGENTS FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THIS SECURITY
IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO
AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS
SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER
THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE INDENTURE AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY.] (1)

      [THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON AN EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE
BENEFIT OF THE ISSUER THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY (1) (a) IN THE UNITED STATES TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, (b) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE
WITH RULE 904 UNDER THE SECURITIES ACT, (c) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (d) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501 (a) (1), (2),

- ----------
(1)   This paragraph to be included only if the Security is a Global Security.

                                      A-1

(3) OR (7) OF THE SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR")) THAT,
PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS (THE FORM OF WHICH CAN BE OBTAINED FROM THE
TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF
NOTES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO VALEANT
PHARMACEUTICALS INTERNATIONAL THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT OR (e) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF
VALEANT PHARMACEUTICALS INTERNATIONAL SO REQUESTS), (2) TO VALEANT
PHARMACEUTICALS INTERNATIONAL OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B)
THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN
(A) ABOVE."] (2)

      [THIS SECURITY AND ANY RELATED DOCUMENTATION MAY BE AMENDED OR
SUPPLEMENTED FROM TIME TO TIME TO MODIFY THE RESTRICTIONS ON RESALES AND OTHER
TRANSFERS OF THIS NOTE TO REFLECT ANY CHANGE IN APPLICABLE LAW OR REGULATION (OR
THE INTERPRETATION THEREOF) OR IN PRACTICES RELATING TO THE RESALE OR TRANSFER
OF RESTRICTED SECURITIES GENERALLY. THE HOLDER OF THIS SECURITY SHALL BE DEEMED
BY THE ACCEPTANCE OF THIS NOTE TO HAVE AGREED TO ANY SUCH AMENDMENT OR
SUPPLEMENT.] (3)

      [THE HOLDER OF THIS SECURITY IS ENTITLED TO THE BENEFITS OF A REGISTRATION
RIGHTS AGREEMENT (AS SUCH TERM IS DEFINED IN THE INDENTURE REFERRED TO ON THE
REVERSE HEREOF) AND, BY ITS ACCEPTANCE HEREOF, AGREES TO BE BOUND BY AND TO
COMPLY WITH THE PROVISIONS OF SUCH REGISTRATION RIGHTS AGREEMENT.] (4)

      [THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL SECURITY, AND
THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR DEFINITIVE SECURITIES,
ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOT
THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL SECURITY SHALL BE
ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON.] (5)

- ----------
(2)   These paragraphs to be included only if the Security is a Restricted
      Security.

(3)   Include only if the Security is a Restricted Security.

(4)   Include only if a Registration Statement is not effective.

(5)   Include only on Regulation S Temporary Global Security.

                                      A-2

                      VALEANT PHARMACEUTICALS INTERNATIONAL


CUSIP:  [                 ]                                              No. [ ]

                     7.0% SENIOR NOTES DUE DECEMBER 15, 2011

      Valeant Pharmaceuticals International, a Delaware corporation (the
"Company," which term shall include any successor corporation under the
Indenture referred to on the reverse hereof), and Ribapharm Inc. ("Ribapharm,"
which term shall include any successor corporation under the Indenture referred
to on the reverse hereof) promise to pay to ______________ or its registered
assigns, the principal sum of _____________________________ Dollars
($__________) on December 15, 2011 [or such greater or lesser amount as is
indicated on the Schedule of Exchanges of Notes on the other side of this Note]
(6)
and to pay interest thereon as provided on the other side of this Note.

Interest Payment Dates: June 15 and December 15, beginning June 15, 2004.

Record Dates: June 1 and December 1.

      Additional provisions of this Note are set forth on the other side of this
Note.

                            [SIGNATURE PAGE FOLLOWS]

- ----------
(6)   Include only if the Security is a Global Security.

                                      A-3

      IN WITNESS WHEREOF, the Company and Ribapharm have caused this instrument
to be duly executed.

                                        Valeant Pharmaceuticals International

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

                                        Ribapharm Inc.

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

                                      A-4

Trustee's Certificate of Authentication:
This is one of the Securities referred
to in the within-mentioned Indenture for
the 7.0% Senior Notes due 2011.

THE BANK OF NEW YORK,
as Trustee


- ----------------------------------------
Authorized Signatory

By:

Dated:

                                      A-5

                       [FORM OF REVERSE SIDE OF SECURITY]

                      VALEANT PHARMACEUTICALS INTERNATIONAL

                     7.0% SENIOR NOTES DUE DECEMBER 15, 2011

      1.    INTEREST

      The Company and Ribapharm shall pay interest on this Note semiannually in
arrears on June 15 and December 15, each an "interest payment date," of each
year, commencing on June 15, 2004, at the rate per annum specified in the title
of this Note. Interest shall accrue from and including December 12, 2003 or else
the most recent interest payment date to which interest had been paid or duly
provided for to but excluding the date on which such interest is paid. Interest
on this Note will be computed on the basis of a 360-day year of twelve 30-day
months.

      The Company and Ribapharm shall, (in immediately available funds) to the
fullest extent permitted by law, pay interest on overdue principal (including
premium, if any) and overdue installments of interest from the original due date
to the date paid, at the rate applicable to this Note plus 1% per annum, which
interest shall be payable on demand.

      All references in the Indenture and this Note to interest shall be deemed
to include a reference to Additional Interest payable pursuant to the
Registration Rights Agreement with respect to this Note. If Additional Interest
is payable on this Note as contemplated under the Registration Rights Agreement,
such interest shall be payable on each interest payment date and at maturity to
the record holder entitled to interest on such date.

      The interest so payable and punctually paid or duly provided for on any
interest payment date will be paid to the Person in whose name this Note is
registered at the close of business on June 1 or December 1 preceding such
interest payment date (the "RECORD DATE") except as provided in the Indenture.
Payment of the principal of (and premium, if any) and interest on this Note will
be made in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts and as
otherwise provided in the Indenture.

      2.    METHOD OF PAYMENT

      The Holder must surrender this Note to a Paying Agent to collect payment
of principal at maturity. The Company and Ribapharm will make any payments of
interest at maturity to the person to whom the principal is paid. On
presentation and surrender of the certificated Note, the Company and Ribapharm
will pay principal and interest in money of the United States that at the time
of payment is legal tender for payment of public and private debts. Payment of
the principal of, premium, if any, and interest (including Additional Interest,
if any) on this Note shall be made at the office or agency of the Paying Agent
and Registrar within the City and State of New York in immediately available
funds in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts; provided that
the Company and Ribapharm may elect to make payment of interest or Additional
Interest, if any, by check mailed to the address of the Person entitled thereto
as such address

                                      A-6

appears in the Register. Payment of the principal of, premium, if any, and
interest (including Additional Interest, if any) on a Note held by a Holder
holding an aggregate principal amount of Notes in excess of $1,000,000 shall be
made by wire transfer in immediately available funds to an account maintained by
such Holder in the United States, if such Holder has provided wire transfer
instructions to the Company and Ribapharm at least 10 Business Days prior to the
payment date. Any wire transfer instructions received by the Trustee will remain
in effect until revoked by the Holder. Notwithstanding the foregoing, so long as
this Note is registered in the name of a Depositary or its nominee, all payments
hereon shall be made by wire transfer of immediately available funds to the
account of the Depositary or its nominee.

      3.    PAYING AGENT AND REGISTRAR

      Initially, The Bank of New York (the "TRUSTEE," which term shall include
any successor trustee under the Indenture hereinafter referred to) will act as
Paying Agent and Registrar. The Company and Ribapharm may change any Paying
Agent or Registrar without notice to the Holder. The Company and Ribapharm or
any of their Subsidiaries may, subject to certain limitations set forth in the
Indenture, act as Paying Agent or Registrar.

      4.    INDENTURE, LIMITATIONS

      This Note is one of a duly authorized issue of Securities of the Company
and Ribapharm designated as their 7.0% Senior Notes Due December 15, 2011 (the
"NOTES"), issued under an Indenture dated as of December 12, 2003 (together with
any supplemental indentures thereto, the "INDENTURE"), among the Company,
Ribapharm and the Trustee. The terms of this Note include those stated in the
Indenture and those required by or made part of the Indenture by reference to
the Trust Indenture Act of 1939, as amended, as in effect on the date of the
Indenture. This Note is subject to all such terms, and the Holder of this Note
is referred to the Indenture and said Act for a statement of them. Capitalized
terms used and not defined herein have the meanings assigned to such terms in
the Indenture.

      The Obligors shall be entitled to issue Additional Securities pursuant to
Section 2.1(c) of the Indenture.

      5.    OPTIONAL REDEMPTION; PURCHASE OF NOTES AT OPTION OF HOLDER.

            (a)   Optional Redemption. After December 15, 2007, the Notes are
redeemable at the option of the Company at the prices, and upon the terms and
conditions, set forth in the Indenture. On or prior to December 15, 2006, the
Company may redeem up to 35% of the Notes with the net cash proceeds of one or
more Equity Offerings, at the prices, and upon the terms and conditions, set
forth in the Indenture.

            (b)   Repurchase at Option of Holder. If there is a Change of
Control, the Company shall be required to make an offer (a "CHANGE OF CONTROL
OFFER") to repurchase all or any part (equal to $1,000 or an integral multiple
thereof) of each Holder's Notes at a purchase price equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest and
Additional Interest thereon, if any, to the date of purchase (the "CHANGE OF
CONTROL

                                      A-7

PAYMENT"). Within 10 days following any Change of Control, the Company shall
mail a notice to each Holder setting forth the procedures governing the Change
of Control Offer as required by the Indenture.

      If after the Company or a Restricted Subsidiary consummates any Asset
Sale, the aggregate amount of Excess Proceeds exceeds $10 million, the Company
shall commence an offer to all Holders of Notes and all holders of other Parity
Indebtedness an aggregate principal amount of Notes and such other Parity
Indebtedness that may be purchased (or repaid, prepaid or redeemed) equal to the
aggregate Excess Proceeds (an "ASSET SALE OFFER") pursuant to Section 4.14 of
the Indenture to purchase the maximum principal amount of Notes and other Parity
Indebtedness that may be purchased out of the Excess Proceeds at an offer price
in cash in an amount equal to 100% of the principal amount thereof plus accrued
and unpaid interest and Additional Interest thereon, if any, to the date fixed
for the closing of such offer, in accordance with the procedures set forth in
the Indenture. To the extent that the aggregate amount of Notes and other Parity
Indebtedness tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Company (or such Restricted Subsidiary) may use such deficiency
for any purpose not otherwise prohibited by the Indenture. If the aggregate
principal amount of Notes and other Parity Indebtedness surrendered by holders
thereof exceeds the amount of Excess Proceeds, the Company shall select the
Notes and other Parity Indebtedness to be purchased on a pro rata basis. Holders
of Notes that are the subject of an offer to purchase will receive an Asset Sale
Offer from the Company prior to any related purchase date and may elect to have
such Notes purchased by completing the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Notes.

            (c)   Notice of Redemption. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes or
portions thereof called for redemption.

      6.    DENOMINATIONS, TRANSFER, EXCHANGE, CANCELLATION

      The Notes are in registered form, without coupons, in denominations of
$1,000 and integral multiples of $1,000. A Holder may register the transfer of
or exchange Notes in accordance with the Indenture. The Registrar may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay any taxes or other governmental charges that may be imposed
in relation thereto by law or permitted by the Indenture.

      All Notes surrendered for payment, registration of transfer or exchange or
conversion will, if surrendered to the Company or Ribapharm or any of their
other Agents with respect to the Notes, be delivered to the Trustee. The Trustee
will promptly cancel all Notes delivered to it. No Notes will be authenticated
in exchange for any Notes cancelled as provided in the Indenture.

      7.    PERSONS DEEMED OWNERS

                                      A-8

      The Holder of a Note may be treated as the owner of it for all purposes.

      8.    UNCLAIMED MONEY

      If money for the payment of principal or interest remains unclaimed for
two years, the Trustee or Paying Agent will pay the money back to the Company
and Ribapharm at their written request, subject to applicable unclaimed property
law. After that, Holders entitled to money must look to the Company and
Ribapharm for payment as general creditors unless an applicable abandoned
property law designates another person.

      9.    AMENDMENT, SUPPLEMENT AND WAIVER

      Subject to certain exceptions, the Indenture or the Notes may be amended
or supplemented with the consent of the Holders of at least a majority in
aggregate principal amount of the Notes then outstanding, and an existing
default or Event of Default and its consequence or compliance with any provision
of the Indenture or the Notes may be waived in a particular instance with the
consent of the Holders of a majority in aggregate principal amount of the Notes
then outstanding. Without the consent of or notice to any Holder, the Company
and Ribapharm and the Trustee may amend or supplement the Indenture or the Notes
to, among other things, cure any ambiguity, defect or inconsistency or make any
other change that does not adversely affect the rights of any Holder or remove
Ribapharm as an obligor hereunder pursuant to paragraph 17 below.

      10.   SUCCESSOR ENTITY

      When a successor corporation assumes all the obligations of its
predecessor under the Notes and the Indenture in accordance with the terms and
conditions of the Indenture, the predecessor corporation (except in certain
circumstances specified in the Indenture) shall be released from those
obligations.

      11.   DEFAULTS AND REMEDIES

      Under the Indenture, an Event of Default includes: (i) default in payment
of any principal (including, without limitation, any premium) on the Notes when
due; (ii) default for 30 days in payment of interest or Additional Interest, if
any, on any Notes; (iii) failure by the Company and Ribapharm for 60 days after
notice to it to comply with certain covenants contained in the Indenture or the
Notes; (iv) default in the payment of certain indebtedness of the Company,
Ribapharm or a Significant Subsidiary; (v) certain events of bankruptcy,
insolvency or reorganization of the Company, Ribapharm or any Significant
Subsidiary and (vi) certain other events described in the Indenture. If an Event
of Default (other than as a result of certain events of bankruptcy, insolvency
or reorganization of the Company or Ribapharm) occurs and is continuing, the
Trustee or the Holders of at least 25% in aggregate principal amount of the
Notes then outstanding may declare all unpaid principal, premium, if any, and
accrued interest and Additional Interest, if any, to the date of acceleration on
the Notes then outstanding to be due and payable immediately, all as and to the
extent provided in the Indenture. If an Event of Default occurs as a result of
certain events of bankruptcy, insolvency or reorganization of the Company or
Ribapharm or any Significant Subsidiary, unpaid principal, premium, if any, and
accrued interest and Additional Interest, if any, on the Notes then outstanding
shall become due and

                                      A-9

payable immediately without any declaration or other act on the part of the
Trustee or any Holder, all as and to the extent provided in the Indenture.
Holders may not enforce the Indenture or the Notes except as provided in the
Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Notes. Subject to certain limitations, Holders of
a majority in aggregate principal amount of the Notes then outstanding may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders notice of any continuing default (except a default in
payment of principal or interest) if it determines that withholding notice is in
their interests. The Company and Ribapharm are required to file periodic reports
with the Trustee as to the absence of default.

      12.   TRUSTEE DEALINGS WITH THE COMPANY

      The Bank of New York, the Trustee under the Indenture, in its individual
or any other capacity, may make loans to, accept deposits from and perform
services for the Company, Ribapharm or an Affiliate of the Company or Ribapharm,
and may otherwise deal with the Company, Ribapharm or an Affiliate of the
Company or Ribapharm, as if it were not the Trustee.

      13.   NO RECOURSE AGAINST OTHERS

      A director, officer, employee or shareowner, as such, of the Company and
Ribapharm shall not have any liability for any obligations of the Company and
Ribapharm under the Notes or the Indenture nor for any claim based on, in
respect of or by reason of such obligations or their creation. The Holder of
this Note by accepting this Note waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of this Note.

      14.   AUTHENTICATION

      This Note shall not be valid until the Trustee or an authenticating agent
manually signs the certificate of authentication on the other side of this Note.

      15.   ABBREVIATIONS AND DEFINITIONS

      Customary abbreviations may be used in the name of the Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian) and UGMA (= Uniform Gifts to Minors Act).

      16.   INDENTURE TO CONTROL; GOVERNING LAW

      In the case of any conflict between the provisions of this Note and the
Indenture, the provisions of the Indenture shall control. This Note shall be
governed by, and construed in accordance with, the laws of the State of New
York, without regard to principles of conflicts of law.

      The Company and Ribapharm will furnish to any Holder, upon written request
and without charge, a copy of the Indenture. Requests may be made to: Valeant
Pharmaceuticals International, 3300 Hyland Avenue, Costa Mesa, California 92626,
(714) 641-7215, Attention: Investor Relations.

                                      A-10

      17.   RELEASE OF RIBAPHARM AS OBLIGOR

      If Ribapharm's obligations under the 6 1/2% Notes and the 6 1/2% Indenture
shall have been discharged in accordance with Article VIII of such indenture
(other than the obligations which shall survive pursuant to Section 8.01 of the
6 1/2% Indenture), the Company and Ribapharm shall deliver to the Trustee
Officers' Certificates certifying to that effect as of the date of such
Officers' Certificates, then automatically, without the requirement of any
further action by the Company, Ribapharm or the Trustee, Ribapharm shall, from
the date of such Officers' Certificates, have no further obligation or liability
under the Indenture or the Securities. The Trustee shall, at the Company's and
Ribapharm's expense, execute and deliver such instruments as the Company and
Ribapharm may reasonably request to evidence such discharge.

      18.   REINSTATEMENT OF RIBAPHARM AS OBLIGOR

      If, at any time after Ribapharm has been released as an Obligor pursuant
to Section 8.7 of the Indenture, the obligations of Ribapharm under the 6 1/2%
Notes and the 6 1/2% Indenture shall be revived and reinstated pursuant to
Section 8.04 of the 6 1/2% Indenture, the Company and Ribapharm shall promptly
execute a supplemental indenture reinstating Ribapharm as an Obligor under the
Indenture and the Securities until such time as Section 8.7 of the Indenture
shall again apply.

                                      A-11

                                 ASSIGNMENT FORM

      To assign this Note, fill in the form below:

      I or we assign and transfer this Note to

- --------------------------------------------------------------------------------
                  (Insert assignee's soc. sec. or tax I.D. no.)


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

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

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

- --------------------------------------------------------------------------------
              (Print or type assignee's name, address and zip code)

and irrevocably appoint

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

agent to transfer this Note on the books of the Company and Ribapharm. The agent
may substitute another to act for him or her.

                                         Your Signature:


Date:
      ---------------------------------  ---------------------------------------
                                         (Sign exactly as your name appears on
                                         the other side of this Note)

*Signature guaranteed by:

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

      *     The signature must be guaranteed by an institution which is a member
            of one of the following recognized signature guaranty programs: (i)
            the Securities Transfer Agent Medallion Program (STAMP); (ii) the
            New York Stock Exchange Medallion Program (MSP); (iii) the Stock
            Exchange Medallion Program (SEMP); or (iv) such other guaranty
            program acceptable to the Trustee.

                                      A-12

                            OPTION TO ELECT PURCHASE

If you want to elect to have this Note purchased by the Company pursuant to
Section 3.8 or 4.14 of the Indenture, check the appropriate box below:

             [ ]Section 3.8                         [ ] Section 4.14

If you want to elect to have only part of the Note purchased by the Company
pursuant to Section 3.8 or Section 4.14 of the Indenture, state the amount you
elect to have purchased:

                                $_______________

Date:  _______________

                                         Your Signature:
                                                        ------------------------
                                              (Sign exactly as your name appears
                                              on the face of this Note)

                                         Tax Identification No.:
                                                                ----------------

Signature Guarantee*:  _________________________

*     Participant in a recognized Signature Guarantee Medallion Program (or
other signature guarantor acceptable to the Trustee).

                                      A-13

                       SCHEDULE OF EXCHANGES OF NOTES (7)

      The following exchanges, repurchases or conversions of a part of this
global Note have been made:



     PRINCIPAL AMOUNT
 OF THIS GLOBAL SECURITY     AUTHORIZED                                     AMOUNT OF
      FOLLOWING SUCH        SIGNATORY OF    AMOUNT OF DECREASE IN          INCREASE IN
      DECREASE DATE          SECURITIES       PRINCIPAL AMOUNT           PRINCIPAL AMOUNT
OF EXCHANGE (OR INCREASE)     CUSTODIAN    OF THIS GLOBAL SECURITY   OF THIS GLOBAL SECURITY
                                                            



- ----------
(7)   This schedule should be included only if the Security is a Global
      Security.

                                      A-14

            CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION
                    OF TRANSFER OF RESTRICTED SECURITIES (8)

Re:   __% Senior Notes Due ________, 2011 (the "NOTES") of Valeant
      Pharmaceuticals International (the "COMPANY") and Ribapharm Inc.

      This certificate relates to $_______ principal amount of Notes owned in
      (check applicable box)

      [ ]   book-entry or   [ ] definitive form by ___________________ (the
"TRANSFEROR").

      The Transferor has requested a Registrar or the Trustee to exchange or
register the transfer of such Notes.

      In connection with such request and in respect of each such Note, the
Transferor does hereby certify that the Transferor is familiar with transfer
restrictions relating to the Notes as provided in Section 2.12 of the Indenture
dated as of December 12, 2003 among Valeant Pharmaceuticals International,
Ribapharm Inc. and The Bank of New York, as trustee (the "INDENTURE"), and the
transfer of such Note is in accordance with any applicable securities laws of
any state and is being made pursuant to an effective registration statement
under the Securities Act of 1933, as amended (the "SECURITIES ACT") (check
applicable box) or the transfer or exchange, as the case may be, of such Note
does not require registration under the Securities Act because (check applicable
box):

      [ ]   Such Note is being transferred pursuant to an effective registration
            statement under the Securities Act.

      [ ]   Such Note is being acquired for the Transferor's own account,
            without transfer.

      [ ]   Such Note is being transferred to the Company, Ribapharm or a
            Subsidiary (as defined in the Indenture) of the Company.

      [ ]   Such Note is being transferred to a person the Transferor reasonably
            believes is a "qualified institutional buyer" (as defined in Rule
            144A or any successor provision thereto ("RULE 144A") under the
            Securities Act) that is purchasing for its own account or for the
            account of a "qualified institutional buyer," in each case to whom
            notice has been given that the transfer is being made in reliance on
            such Rule 144A, and in each case in reliance on Rule 144A.

      [ ]   Such Note is being transferred pursuant to and in compliance with an
            exemption from the registration requirements under the Securities
            Act in accordance with Rule 144 (or any successor thereto) ("RULE
            144") under the Securities Act.

      [ ]   Such Note is being transferred to a non-U.S. Person in an offshore
            transaction in compliance with Rule 904 of Regulation S under the
            Securities Act (or any successor thereto).

- ----------
(8)   This certificate should be included only if this Security is a Restricted
      Security.

                                      A-15

      [ ]   Such Note is being transferred to an institutional "accredited
            investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of the
            Securities Act) that has provided a letter addressed to the Company,
            in the form of Exhibit B attached to the Indenture, containing
            certain representations and agreements.

      The Transferor acknowledges and agrees that, if the transferee will hold
any such Notes in the form of beneficial interests in a global Note which is a
"restricted security" within the meaning of Rule 144 under the Securities Act,
then such transfer can only be made pursuant to (i) Rule 144A under the
Securities Act and such transferee must be a "qualified institutional buyer" (as
defined in Rule 144A) or (ii) Regulation S under the Securities Act.


Date:
      ---------------------------------  ---------------------------------------
                                         (Insert Name of Transferor)

                                      A-16

                                                                       EXHIBIT B

                       FORM OF CERTIFICATE FROM ACQUIRING
                        INSTITUTIONAL ACCREDITED INVESTOR

Valeant Pharmaceuticals International
3300 Hyland Avenue
Costa Mesa, California 92626
Attention:  General Counsel
Facsimile No.: (714) 641-7228

[                                   ]


                  RE:   7.0% SENIOR NOTES DUE 2011

Dear Sirs:

Reference is hereby made to the Indenture, dated as of December 12, 2003 (the
"INDENTURE"), among Valeant Pharmaceuticals International, as issuer (the
"COMPANY"), Ribapharm Inc., as co-obligor ("RIBAPHARM") and The Bank of New
York, a banking corporation duly organized under the laws of the State of New
York, as trustee. Capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture.

In connection with our proposed purchase of: $____________ aggregate principal
amount of 7.0% Senior Notes Due 2011 (the "SECURITIES"), we confirm that:

1.    We understand that any subsequent transfer of the Securities or any
interest therein is subject to certain restrictions and conditions set forth in
the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Securities or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "SECURITIES ACT").

2.    We understand that the offer and sale of the Securities have not been
registered under the Securities Act, and that the Securities and any interest
therein may not be offered or sold except as permitted in the following
sentence. We agree, on our own behalf and on behalf of any accounts for which we
are acting as hereinafter stated, that if we should sell the Securities or any
interest therein, we will do so only (A) to the Company or any of its
subsidiaries, including Ribapharm, (B) in accordance with Rule 144A under the
Securities Act to a "qualified institutional buyer" (as defined therein), (C)
inside the United States to an institutional "accredited investor" (as defined
below) purchasing for its own account or for the account of another
institutional accredited investor that, prior to such transfer, furnishes (or
has furnished on its behalf by

                                      A-17

a U.S. broker-dealer) to you and to the Company a signed letter substantially in
the form of this letter and, if the proposed transfer is in respect of an
aggregate principal amount of Securities of less than $250,000, an Opinion of
Counsel in form reasonably acceptable to the Company to the effect that such
transfer is in compliance with the Securities Act, (D) pursuant to the
provisions of Rule 144 under the Securities Act (if available), (E) in
accordance with another exemption from the registration requirements of the
Securities Act (and based upon an opinion of counsel acceptable to the Company)
or (F) pursuant to an effective registration statement under the Securities Act,
and we further agree to provide to any person purchasing the Securities from us
in a transaction meeting the requirements of clauses (A) through (F) of this
paragraph a notice advising such purchaser that resales thereof are restricted
as stated herein.

3.    We understand that, on any proposed resale of the Securities or beneficial
interest therein, we will be required to furnish to you and the Company such
certifications, legal opinions and other information as you and the Company may
reasonably require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Securities purchased by us will
bear a legend to the foregoing effect.

4.    We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Securities, and we
and any accounts for which we are acting are each able to bear the economic risk
of our or its investment.

5.    We are acquiring the Securities or beneficial interest therein purchased
by us for our own account or for one or more accounts (each of which is an
institutional "ACCREDITED INVESTOR") as to each of which we exercise sole
investment discretion.

You, the Company and Ribapharm are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.

Dated:
                                         [Insert Name of Accredited Investor]
                                         By:
                                            ------------------------------------
                                         Name:
                                         Title:

                                       18

EX-4.3

                                                                     Exhibit 4.3


                     VALEANT PHARMACEUTICALS INTERNATIONAL

                    $300,000,000 7.0% SENIOR NOTES DUE 2011


                         REGISTRATION RIGHTS AGREEMENT

                                                         December 12, 2003

Bear, Stearns & Co. Inc.,
   As representative of the several Purchasers
   named in Schedule I to the Purchase Agreement,
383 Madison Avenue
New York, New York  10179

Ladies and Gentlemen:

      Valeant Pharmaceuticals International, a Delaware corporation (the
"Company"), proposes to issue and sell to the Purchasers (as defined herein)
upon the terms set forth in the Purchase Agreement (as defined herein)
$300,000,000 principal amount of the 7.0% Senior Notes Due 2011 (the "Notes").
The Notes will be issued under an Indenture (as defined herein).

      Ribapharm Inc. ("Ribapharm"), a wholly owned subsidiary of the Company, is
an obligor with respect to the Notes and shall be subject to the provisions of
this Agreement, jointly and severally with the Company, but only for so long as
Ribapharm shall have outstanding obligations under the 6-1/2% Convertible
Subordinated Notes due 2008, originally issued under an Indenture, dated as of
July 18, 2001, among Valeant Pharmaceuticals International, Ribapharm and The
Bank of New York, as Trustee.

      In order to induce the Purchasers to purchase the Notes, the Company has
agreed to provide the registration rights set forth in this Agreement. The
execution and delivery of this Agreement is a condition to the obligations of
the Purchasers as set forth in Section 7 of the Purchase Agreement.

      The parties hereby agree as follows:

      1. Definitions.

      (a)   Capitalized terms used herein without definition shall have the
meanings ascribed to them in the Purchase Agreement. As used in this Agreement,
the following defined terms shall have the following meanings:

      "Affiliate" of any specified person means any other person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with such specified person. For purposes of this definition, control of a person
means the power, direct or indirect, to direct or cause the direction of the
management and policies of such person whether by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.

      "Broker-Dealer" means any broker or dealer registered under the Exchange
Act.


                                      -1-

      "business day" means a day that is not a Saturday, Sunday or a day on
which banking institutions in New York, New York are required by law, regulation
or executive order to remain closed.

      "Closing Date" means the date of this Agreement.

      "Commission" means the United States Securities and Exchange Commission,
or any other federal agency at the time administering the Exchange Act or the
Securities Act, whichever is the relevant statute for the particular purpose.

      "Consummate:" An Exchange Offer shall be deemed "Consummated" for purposes
of this Agreement upon the occurrence of (a) the filing and effectiveness under
the Securities Act of the Exchange Offer Registration Statement relating to the
Exchange Notes to be issued in the Exchange Offer, (b) the maintenance of such
Exchange Offer Registration Statement continuously effective and the keeping of
the Exchange Offer open for a period not less than the period required pursuant
to Section 3(b) hereof and (c) the delivery by the Company to the Registrar
under the Indenture of Exchange Notes in the same aggregate principal amount as
the aggregate principal amount of Notes properly tendered and not subsequently
withdrawn by Holders thereof pursuant to the Exchange Offer.

      "Consummation Deadline" has the meaning set forth in Section 3(a) hereof.

      "Effectiveness Deadline" has the meaning set forth in Sections 3(a) and
4(a) hereof.

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

      "Exchange Dealer" has the meaning set forth in Section 3(c) hereof.

      "Exchange Notes" means the 7.0% Senior Notes due 2011 to be issued by the
Company and Ribapharm, if, at the time of the issuance of the Exchange Notes,
Ribapharm is a co-obligor on the Notes, pursuant to the Indenture: (i) in the
Exchange Offer or (ii) as contemplated by Section 4 hereof.

      "Exchange Offer" means the exchange and issuance by the Company and
Ribapharm, if, at the time of the issuance of the Exchange Notes, Ribapharm is a
co-obligor on the Notes, of a principal amount of Exchange Notes (which shall be
registered pursuant to the Exchange Offer Registration Statement) equal to the
outstanding principal amount of Notes that are properly tendered and not
subsequently withdrawn by the Holders thereof in connection with such exchange
and issuance.

      "Exchange Offer Registration Statement" means the Registration Statement
relating to the Exchange Offer, including the related Prospectus.

      "Exempt Resales" means the transactions in which the Purchasers propose to
sell the Notes to certain "qualified institutional buyers," as such term is
defined in Rule 144A under the Securities Act and pursuant to Regulation S under
the Securities Act.

      "Filing Deadline" has the meaning set forth in Sections 3(a) and 4(a)
hereof.

      "Holder" has the meaning set forth in Section 2 hereof.

      "Indenture" means the Indenture, dated as of December 12, 2003, among the
Company, Ribapharm and The Bank of New York, as amended and supplemented from
time to time in accordance with its terms.

      "indemnified party" has the meaning set forth in Section 8(c) hereof.


                                      -2-

      "indemnifying party" has the meaning set forth in Section 8(c) hereof.

      "liquidated damages" has the meaning assigned thereto in Section 5(a)
hereof.

      "Notes" has the meaning set forth in the preamble of this Agreement.

      person" means an individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.

      "Prospectus" means the prospectus included in a Registration Statement at
the time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.

      "Purchase Agreement" means the purchase agreement, dated December 9, 2003,
among the Purchasers, the Company and Ribapharm relating to the Notes.

      "Purchasers" means the Purchasers named in Schedule I to the Purchase
Agreement.

      "Recommencement Date" has the meaning set forth in Section 6(d) hereof.

      "Registration Default" has the meaning set forth in Section 5 hereof.

      "Registration Statement" means any registration statement of the Company
and Ribapharm (if Ribapharm is, at the time of the filing of such registration
statement, a co-obligor on the Notes) relating to (a) an offering of Exchange
Notes pursuant to an Exchange Offer or (b) the registration for resale of
Transfer Restricted Securities pursuant to the Shelf Registration Statement, in
each case, (i) that is filed pursuant to the provisions of this Agreement and
(ii) including the Prospectus included therein, all amendments and supplements
thereto (including post-effective amendments) and all exhibits and material
incorporated by reference therein.

      "Regulation S" means Regulation S promulgated under the Securities Act.

      "Requesting Holders" has the meaning set forth in Section 6(c)(xi)(A).

      Rule 144" means Rule 144 promulgated under the Securities Act.

      "Securities Act" means the United States Securities Act of 1933, as
amended.

      "Shelf Registration Statement" has the meaning set forth in Section 4(a)
hereof.

      "Suspension Notice" has the meaning set forth in Section 6(d) hereof.

      "TIA" means The Trust Indenture Act of 1939 (15 U.S.C. Section
77aaa-77bbbb) as in effect on the date of the Indenture.

      "Transfer Restricted Securities" means each Note, until the earliest to
occur of (i) the date on which such Note is exchanged by a Person other than a
Broker-Dealer for an Exchange Note in the Exchange Offer, (ii) following the
exchange by a Broker-Dealer in the Exchange Offer of a Note for an Exchange
Note, the date on which such Exchange Note is sold to a purchaser who receives
from such Broker-Dealer on or prior to the date of such sale a copy of the
Prospectus contained in the Exchange Offer Registration Statement, (iii) the
date on which such Note has been effectively registered under the Securities Act
and disposed of in accordance with the Shelf Registration Statement; or (iv) the
date on which such Note is distributed to the public pursuant to Rule 144.


                                      -3-

      "underwriter" means any underwriter of Transfer Restricted Securities in
connection with an offering thereof under a Shelf Registration Statement.

      2. Holders.

      A Person is deemed to be a holder of Transfer Restricted Securities (each,
a "Holder") whenever such Person owns Transfer Restricted Securities.

      3. Registered Exchange Offer.

      (a)   Unless the Exchange Offer shall not be permitted by applicable law
or Commission policy (after the procedures set forth in Section 6(a)(i) below
have been complied with), the Company and Ribapharm shall (i) use reasonable
best efforts to file the Exchange Offer Registration Statement with the
Commission on or prior to 90 days (unless such date is not a business day, then
the next succeeding business day) after the Closing Date (such 90th day being
the "Filing Deadline"), (ii) use reasonable best efforts to cause such Exchange
Offer Registration Statement to be declared effective by the Commission on or
prior to 270 days (unless such date is not a business day, then the next
succeeding business day) after the Closing Date (such 270th day being the
"Effectiveness Deadline"), (iii) in connection with the foregoing, (A) file all
pre-effective amendments to such Exchange Offer Registration Statement as may be
necessary in order to cause it to be declared effective, (B) file, if
applicable, a post-effective amendment to such Exchange Offer Registration
Statement pursuant to Rule 430A under the Securities Act and (C) cause all
necessary filings, if any, in connection with the registration and qualification
of the Exchange Notes to be made under the Blue Sky laws of such jurisdictions
as are necessary to permit Consummation of the Exchange Offer, provided that the
Company shall not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action which would
subject it to general service of process or taxation in any jurisdiction where
it is not then so subject and (iv) (A) the Company and Ribapharm will commence
the Exchange Offer; and (B) use reasonable best efforts to issue on or prior to
30 business days, or longer, if required by the federal securities laws (such
30th or later day being the "Consummation Deadline"), after the date on which
the Exchange Offer Registration Statement was declared effective by the
Commission, Exchange Notes in exchange for all Notes properly tendered and not
subsequently withdrawn prior thereto in the Exchange Offer. The Exchange Offer
shall be on the appropriate form permitting (i) registration of the Exchange
Notes to be offered in exchange for the Notes that are Transfer Restricted
Securities and (ii) resales of Exchange Notes by Broker-Dealers that tendered
into the Exchange Offer Notes that such Broker-Dealer acquired for its own
account as a result of market making activities or other trading activities
(other than Notes acquired directly from the Company or any of its Affiliates)
as contemplated by Section 3(c) below.

      (b)   The Company and Ribapharm shall use their reasonable best efforts to
cause the Exchange Offer Registration Statement to be effective continuously,
and shall keep the Exchange Offer open, for a period of not less than the
minimum period required under applicable federal and state securities laws to
Consummate the Exchange Offer; provided, however, that in no event shall such
period be less than 20 business days. The Company and Ribapharm shall cause the
Exchange Offer to comply with all applicable federal and state securities laws.
No securities other than the Exchange Notes shall be included in the Exchange
Offer Registration Statement.

      (c)   The Company shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Broker-Dealer who holds Transfer Restricted Securities that
were acquired for the account of such Broker-Dealer as a result of market-making
activities or other trading activities (an "Exchange Dealer") (other than Notes
acquired directly from the Company or any Affiliate of the Company), may
exchange such Transfer Restricted Securities pursuant to the Exchange Offer.
Such "Plan of Distribution" section shall also contain all other information
with respect to such sales by such Broker-Dealers that the Commission may
require in order to permit such sales pursuant thereto, but such "Plan of


                                      -4-

Distribution" shall not name any such Broker-Dealer or disclose the amount of
Transfer Restricted Securities held by any such Broker-Dealer, except to the
extent required by the Commission as a result of a change in policy, rules or
regulations after the date of this Agreement. See the Shearman & Sterling
no-action letter (available July 2, 1993).

      Because such Broker-Dealer may be deemed to be an "underwriter" within the
meaning of the Securities Act and must, therefore, deliver a prospectus meeting
the requirements of the Securities Act in connection with its initial sale of
any Exchange Notes received by such Broker-Dealer in the Exchange Offer, the
Company and Ribapharm shall permit the use of the Prospectus contained in the
Exchange Offer Registration Statement by such Broker-Dealer to satisfy such
prospectus delivery requirement. To the extent necessary to ensure that the
Prospectus contained in the Exchange Offer Registration Statement is available
for sales of Exchange Notes by Broker-Dealers, the Company and Ribapharm agree
to use their reasonable best efforts to keep the Exchange Offer Registration
Statement continuously effective, supplemented, amended and current as required
by and subject to the provisions of Section 6(a) and (c) hereof and in
conformity with the requirements of this Agreement, the Securities Act and the
policies, rules and regulations of the Commission as announced from time to
time, for a period of 270 days from the Consummation Deadline or such shorter
period as will terminate when all Transfer Restricted Securities covered by such
Registration Statement have been sold pursuant thereto. The Company and
Ribapharm shall provide sufficient copies of the latest version of such
Prospectus to such Broker-Dealers, promptly upon request, and in no event later
than one day after such request, at any time during such period.

      4. Shelf Registration.

      (a)   Shelf Registration. If (i) the Company and Ribapharm are not (A)
required to file the Exchange Offer Registration Statement or (B) permitted to
Consummate the Exchange Offer because the Exchange Offer is not permitted by
applicable law or Commission policy or (ii) any Holder of Transfer Restricted
Securities shall notify the Company within 20 days following the Consummation
Deadline that (A) such Holder was prohibited by law or Commission policy from
participating in the Exchange Offer; (B) such Holder may not resell the Exchange
Notes acquired by it in the Exchange Offer to the public without delivering a
prospectus and the Prospectus contained in the Exchange Offer Registration
Statement is not appropriate or available for such resales by such Holder; or
(C) such Holder is a Broker-Dealer and holds Notes acquired directly from the
Company or any of its Affiliates, then the Company and Ribapharm will file a
Shelf Registration Statement (as defined below) to cover resales of the Notes by
Holders of the Notes who satisfy the conditions set forth in Section 4(b) hereof
relating to the provision of information in connection with the Shelf
Registration Statement. If obligated to file a Shelf Registration Statement, the
Company and Ribapharm shall use commercially reasonable efforts to:

      (x) file, on or prior to 30 days after the earlier of (i) the date on
which the Company determines that the Exchange Offer Registration Statement
cannot be filed as a result of clause (a)(i) above and (ii) the date on which
the Company receives the notice specified in clause (a)(ii) above, (such 30th
day, the "Filing Deadline"), a shelf registration statement pursuant to Rule 415
under the Securities Act (which may be an amendment to the Exchange Offer
Registration Statement (the "Shelf Registration Statement")), relating to all
Transfer Restricted Securities, the Holders of which shall have provided the
information required by Section 4(b) hereof; and

      (y) cause such Shelf Registration Statement to be declared effective by
the Commission on or prior to 90 days after the obligation arises for the Shelf
Registration Statement (such 90th day being the "Effectiveness Deadline").

            If, after the Company and Ribapharm have filed an Exchange Offer
Registration Statement that satisfies the requirements of Section 3(a) above,
the Company and Ribapharm are required to file and make effective a Shelf
Registration Statement solely because the Exchange Offer is not permitted under
applicable federal law (i.e., clause (a)(i) above), then the filing of the
Exchange Offer Registration Statement shall be deemed to satisfy the


                                      -5-

requirements of clause (x) above; provided that, in such event, the Company and
Ribapharm shall remain obligated to meet the Effectiveness Deadline set forth in
clause (y).

      To the extent necessary to ensure that the Shelf Registration Statement is
available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 4(a) and the Exchange Notes required to
be registered therein pursuant to Section 6(b)(ii) hereof, the Company and
Ribapharm shall use their reasonable best efforts to keep any Shelf Registration
Statement required by this Section 4(a) continuously effective, supplemented,
amended and current as required by and subject to the provisions of Sections
6(b) and (c) hereof and in conformity with the requirements of this Agreement,
the Securities Act and the policies, rules and regulations of the Commission as
announced from time to time, for a period of at least two years (as extended
pursuant to Section 6(d) hereof) following the Closing Date, or such shorter
period as will terminate when all Transfer Restricted Securities covered by such
Shelf Registration Statement have been sold pursuant thereto.

      (b)   Provision by Holders of Certain Information in Connection with the
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 days after receipt of a request therefor, the
information specified in Item 507 or Item 508 of Regulation S-K, as applicable,
under the Securities Act for use in connection with any Shelf Registration
Statement or Prospectus or preliminary Prospectus included therein. No Holder of
Transfer Restricted Securities shall be entitled to liquidated damages pursuant
to Section 5 hereof unless and until such Holder shall have provided all such
information by the applicable deadline. Each selling Holder agrees to promptly
furnish additional information required to be disclosed in order to make the
information previously furnished to the Company by such Holder not materially
misleading.

      5. Liquidated Damages.

      (a)   If (i) any Registration Statement required by this Agreement is not
filed with the Commission on or prior to the applicable Filing Deadline, (ii)
any such Registration Statement has not been declared effective by the
Commission on or prior to the applicable Effectiveness Deadline, (iii) the
Company and Ribapharm fail to Consummate the Exchange Offer within 30 business
days following the Effectiveness Target Date with respect to the Exchange Offer
Registration Statement, unless extended as required by the Commission or (iv)
any Registration Statement required by this Agreement is filed and declared
effective but thereafter ceases to be effective or usable in connection with
resales of Transfer Restricted Securities during the period specified herein
(each such event referred to in clauses (i) through (iv), a "Registration
Default"), then the Company and Ribapharm hereby jointly and severally agree to
pay to each Holder of Transfer Restricted Securities affected thereby liquidated
damages in an amount equal to $.05 per week per $1,000 principal amount of Notes
constituting Transfer Restricted Securities held by such Holder for each week or
portion thereof that the Registration Default continues for the first 90-day
period immediately following the occurrence of such Registration Default
("liquidated damages"). The amount of the liquidated damages shall increase by
an additional $.05 per week per $1,000 principal amount of Notes constituting
Transfer Restricted Securities with respect to each subsequent 90-day period
until all Registration Defaults have been cured, up to a maximum amount of
liquidated damages of $.50 per week per $1,000 principal amount of Notes
constituting Transfer Restricted Securities; provided that the Company and
Ribapharm shall in no event be required to pay liquidated damages for more than
one Registration Default at any given time. Notwithstanding anything to the
contrary set forth herein, (1) upon filing of the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement), in the case
of (i) above, (2) upon the effectiveness of the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement), in the case
of (ii) above, (3) upon Consummation of the Exchange Offer, in the case of (iii)
above, or (4) upon the filing of a post-effective amendment to the Registration
Statement or an additional Registration Statement that causes the Exchange Offer
Registration Statement (and/or, if applicable, the Shelf Registration Statement)
to again be declared effective or


                                      -6-

made usable in the case of (iv) above, the liquidated damages payable with
respect to the Transfer Restricted Securities as a result of such clause (i),
(ii), (iii) or (iv), as applicable, shall cease.

      (b)   All accrued liquidated damages shall be paid to the Holders of
Transfer Restricted Securities, in the manner provided for the payment of
interest in the Indenture, on each Interest Payment Date, as more fully set
forth in the Indenture and the Notes. Notwithstanding the fact that any
securities for which liquidated damages are due cease to be Transfer Restricted
Securities, all obligations of the Company and Ribapharm to pay liquidated
damages with respect to securities with respect to the period prior to the time
the securities ceased to be Transfer Restricted Securities shall survive until
such time as such obligations with respect to such securities shall have been
satisfied in full.

      (c)   A Registration Default referred to in Section 5(a) hereof shall be
deemed not to have occurred and be continuing in relation to a Registration
Statement or the related Prospectus if such Registration Default has occurred
solely as a result of material events, with respect to the Company that would
need to be described in such Registration Statement or the related Prospectus
and the Company has provided written notice to the Purchasers that such an event
has occurred, which notice need not specify the nature of the event that has
occurred, and that a Registration Default would have occurred but for the
provisions of this section; provided, however, that in any case if such
Registration Default occurs for a continuous period in excess of 60 days,
liquidated damages shall be payable in accordance with Section 5(a) from the day
such Registration Default originally occurred.

      (d)   Except as provided in Section 10(a) hereof, the liquidated damages
as set forth in this Section 5 shall be the exclusive monetary remedy available
to the Holders of Registrable Securities for such Registration Default. In no
event shall the Company be required to pay liquidated damages in excess of the
applicable maximum amount of $.50 per week per $1,000 principal amount of Notes
constituting Transfer Restricted Securities set forth above, regardless of
whether one or multiple Registration Defaults exist.

      6. Registration Procedures.

      (a)   Exchange Offer Registration Statement. In connection with the
Exchange Offer, the Company and Ribapharm shall, subject to the provisions
Section 5(c) above, (x) comply with all applicable provisions of Section 6(c)
below, (y) use their respective reasonable best efforts to effect such exchange
and to permit the resale of Exchange Notes by Broker-Dealers that tendered in
the Exchange Offer Notes that such Broker-Dealer acquired for its own account as
a result of its market making activities or other trading activities (other than
Notes acquired directly from the Company or any of its Affiliates) being sold in
accordance with the intended method or methods of distribution thereof, and (z)
comply with all of the following provisions:

            (i)   If, following the date hereof, there has been announced a
      change in Commission policy with respect to exchange offers such as the
      Exchange Offer, that in the reasonable opinion of counsel to the Company
      raises a substantial question as to whether the Exchange Offer is
      permitted by applicable federal law, or the Company and Ribapharm are not
      (A) required to file the Exchange Offer Registration Statement, (B)
      permitted to Consummate the Exchange Offer because the Exchange Offer is
      not permitted by applicable law or Commission policy or (C) obligated to
      file the Shelf Registration Statement, the Company and Ribapharm hereby
      agree to seek a no-action letter or other favorable decision from the
      Commission allowing the Company and Ribapharm to Consummate an Exchange
      Offer for such Transfer Restricted Securities. The Company and Ribapharm
      hereby agree to pursue the issuance of such a decision to the Commission
      staff level. In connection with the foregoing, the Company and Ribapharm
      hereby agree to take all such other actions as may be requested by the
      Commission or are otherwise required in connection with the issuance of
      such decision, including without limitation (A) participating in
      telephonic conferences with the Commission, (B) delivering to the
      Commission staff an analysis prepared by counsel to the Company setting
      forth the legal bases, if any,


                                      -7-

      upon which such counsel has concluded that such an Exchange Offer should
      be permitted and (C) diligently pursuing a resolution (which need not be
      favorable) by the Commission staff;

            (ii)  As a condition to its participation in the Exchange Offer,
      each Holder of Transfer Restricted Securities (including, without
      limitation, any Holder who is a Broker Dealer) shall furnish, upon the
      request of the Company, prior to the Consummation of the Exchange Offer, a
      written representation to the Company and Ribapharm (which may be
      contained in the letter of transmittal contemplated by the Exchange Offer
      Registration Statement) to the effect that (A) it is not an Affiliate of
      the Company, (B) it is not engaged in, and does not intend to engage in,
      and has no arrangement or understanding with any person to participate in,
      a distribution of the Exchange Notes to be issued in the Exchange Offer
      and (C) it is acquiring the Exchange Notes in its ordinary course of
      business. As a condition to its participation in the Exchange Offer each
      Holder using the Exchange Offer to participate in a distribution of the
      Exchange Notes shall acknowledge and agree that, if the resales are of
      Exchange Notes obtained by such Holder in exchange for Notes acquired
      directly from the Company or an Affiliate thereof, it (1) could not, under
      Commission policy as in effect on the date of this Agreement, rely on the
      position of the Commission enunciated in Exxon Capital Holdings
      Corporation (available May 13, 1988) and Morgan Stanley and Co., Inc.
      (available June 5, 1991), as interpreted in the Commission's letter to
      Shearman & Sterling dated July 2, 1993, and similar no-action letters
      (including, if applicable, any no-action letter obtained pursuant to
      clause (i) above), and (2) must comply with the registration and
      prospectus delivery requirements of the Securities Act in connection with
      a secondary resale transaction and that such a secondary resale
      transaction must be covered by an effective registration statement
      containing the selling security holder information required by Item 507 or
      Item 508, as applicable, of Regulation S-K; and

            (iii) Prior to effectiveness of the Exchange Offer Registration
      Statement, the Company and Ribapharm shall provide a supplemental letter
      to the Commission (A) stating that the Company and Ribapharm are
      registering the Exchange Offer in reliance on the position of the
      Commission enunciated in Exxon Capital Holdings Corporation (available May
      13, 1988) and Morgan Stanley and Co., Inc. (available June 5, 1991) as
      interpreted in the Commission's letter to Shearman & Sterling dated July
      2, 1993, and, if applicable, any no-action letter obtained pursuant to
      clause (i) above, (B) including a representation that neither the Company
      nor Ribapharm has entered into any arrangement or understanding with any
      Person to distribute the Exchange Notes to be received in the Exchange
      Offer and that, to the best of the Company's and Ribapharm's information
      and belief, each Holder participating in the Exchange Offer is acquiring
      the Exchange Notes in its ordinary course of business and has no
      arrangement or understanding with any Person to participate in the
      distribution of the Exchange Notes received in the Exchange Offer and (C)
      any other undertaking or representation required by the Commission as set
      forth in any no-action letter obtained pursuant to clause (i) above, if
      applicable.

      (b)   Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Company and Ribapharm shall:

            (i)   comply with all the provisions of Section 6(c) below and use
      their reasonable best efforts to effect such registration to permit the
      sale of the Transfer Restricted Securities being sold in accordance with
      the intended method or methods of distribution thereof (as indicated in
      the information furnished to the Company pursuant to Section 4(b) hereof),
      and pursuant thereto the Company and Ribapharm will prepare and file with
      the Commission a Registration Statement relating to the registration on
      any appropriate form under the Securities Act, which form shall be
      available for the sale of the Transfer Restricted Securities in accordance
      with the intended method or methods of distribution thereof within the
      time periods and otherwise in accordance with the provisions hereof; and


                                      -8-

            (ii)  issue, upon the request of any Holder or purchaser of the
      Notes covered by any Shelf Registration Statement contemplated by this
      Agreement, Exchange Notes having an aggregate principal amount equal to
      the aggregate principal amount of Notes sold pursuant to the Shelf
      Registration Statement and surrendered to the Company for cancellation;
      the Company shall register Exchange Notes on the Shelf Registration
      Statement for this purpose and issue the Exchange Notes to the purchasers
      of securities subject to the Shelf Registration Statement in the names as
      such purchasers shall designate.

      (c)   General Provisions. In connection with any Registration Statement
and any related Prospectus required by this Agreement, the Company and Ribapharm
shall:

            (i)   use their respective reasonable best efforts to keep such
      Registration Statement continuously effective and provide all requisite
      financial statements for the period specified in Section 3 or Section 4 of
      this Agreement, as applicable. Upon the occurrence of any event that would
      cause any such Registration Statement or the Prospectus contained therein
      (A) to contain an untrue statement of material fact or omit to state any
      material fact necessary to make the statements therein not misleading or
      (B) not to be effective and usable for resale of Transfer Restricted
      Securities during the period required by this Agreement, the Company and
      Ribapharm shall file promptly, subject to Section 5(c), an appropriate
      amendment to such Registration Statement curing such defect, and, if
      Commission review is required, use their reasonable best efforts to cause
      such amendment to be declared effective as soon as practicable;

            (ii)  prepare and file with the Commission such amendments and
      post-effective amendments to the applicable Registration Statement as may
      be necessary to keep such Registration Statement effective for the
      applicable period set forth in Section 3 or Section 4 hereof, as the case
      may be; cause the Prospectus to be supplemented by any required Prospectus
      supplement, and as so supplemented to be filed pursuant to Rule 424 under
      the Securities Act, and to comply fully with Rules 424, 430A and 462, as
      applicable, under the Securities Act in a timely manner; and comply with
      the provisions of the Securities Act with respect to the disposition of
      all securities covered by such Registration Statement during the
      applicable period in accordance with the intended method or methods of
      distribution by the sellers thereof set forth in such Registration
      Statement or supplement to the Prospectus;

            (iii) advise each Holder promptly and, if requested by such Holder,
      confirm such advice in writing:

            (A)   when the Prospectus or any Prospectus supplement or
                  post-effective amendment has been filed with the Commission
                  and, with respect to any applicable Registration Statement or
                  any post-effective amendment thereto, when the same has become
                  effective, in each case making a public announcement thereof
                  by release made to Reuters Economic Services and Bloomberg
                  Business News;

            (B)   of any request by the Commission for amendments to the
                  Registration Statement or amendments or supplements to the
                  Prospectus included therein or for additional information
                  relating thereto;

            (C)   of the issuance by the Commission of any stop order suspending
                  the effectiveness of the Registration Statement under the
                  Securities Act or of the suspension by any state securities
                  commission of the qualification of the Transfer Restricted
                  Securities for offering or sale in any jurisdiction, or the
                  initiation of any proceedings for such purposes; and

            (D)   of the occurrence of any event or the existence of any state
                  of facts (but not as to the substance of any such event or
                  facts) that requires the making of any changes in the


                                      -9-

                  Registration Statement or the Prospectus included therein so
                  that, as of such date, such Registration Statement and
                  Prospectus do not contain an untrue statement of a material
                  fact and do not omit to state a material fact required to be
                  stated therein or necessary to make the statements therein (in
                  the case of the Prospectus, in light of the circumstances
                  under which they were made) not misleading.

            (iv)  subject to Section 5(c), if any fact or event contemplated by
      Section 6(c)(iii)(D) above shall exist or have occurred, prepare a
      supplement or post-effective amendment to the Registration Statement or
      related Prospectus or any document incorporated therein by reference or
      file any other required document so that, as thereafter delivered to the
      purchasers of Transfer Restricted Securities, the Prospectus will not
      contain an untrue statement of a material fact or omit to state any
      material fact necessary to make the statements therein, in the light of
      the circumstances under which they were made, not misleading;

            (v)   furnish to each Purchaser and each Holder named in the Shelf
      Registration Statement in connection with such exchange or sale, if any,
      before filing with the Commission, copies of any Registration Statement or
      any Prospectus included therein or any amendments or supplements to any
      such Registration Statement or Prospectus, which documents will be subject
      to the review and comment of such Persons in connection with such sale, if
      any, for a period of at least three business days, and the Company will
      not file any such Registration Statement or Prospectus or any amendment or
      supplement to any such Registration Statement or Prospectus to which such
      Persons shall reasonably object within three business days after the
      receipt thereof. A Holder shall be deemed to have reasonably objected to
      such filing only if such Registration Statement, amendment, Prospectus or
      supplement, as applicable, as proposed to be filed, contains an untrue
      statement of a material fact or omits to state any material fact necessary
      to make the statements therein not misleading or fails to comply with the
      applicable requirements of the Securities Act;

            (vi)  promptly prior to the filing of any document that is to be
      incorporated by reference into a Registration Statement or Prospectus,
      provide copies of such document to each Holder in connection with such
      exchange or sale, if any, make the Company's and Ribapharm's
      representatives available for discussion of such document and other
      customary due diligence matters, and include such information in such
      document prior to the filing thereof as such Holders may reasonably
      request;

            (vii) make available, at reasonable times, for inspection by each
      Holder and any attorney or accountant retained by such Holders, all
      financial and other records, pertinent corporate documents of the Company
      and Ribapharm and cause the Company's and Ribapharm's officers, directors
      and employees to supply all information reasonably requested by any such
      Holder, attorney or accountant in connection with such Registration
      Statement or any post-effective amendment thereto subsequent to the filing
      thereof and prior to its effectiveness;

            (viii) if requested by any Holders in connection with such exchange
      or sale, promptly include in any Registration Statement or Prospectus,
      pursuant to a supplement or post-effective amendment if necessary, such
      information as such Holders may reasonably request to have included
      therein, including, without limitation, information relating to the "Plan
      of Distribution" of the Transfer Restricted Securities; and make all
      required filings of such Prospectus supplement or post-effective amendment
      as soon as practicable after the Company is notified of the matters to be
      included in such Prospectus supplement or post-effective amendment;

            (ix)  furnish to each Holder, upon such Holder's request, in
      connection with such exchange or sale, without charge, at least one copy
      of the Registration Statement, as first filed with the Commission,


                                      -10-

      and of each amendment thereto, including, if such Holder so requests, all
      documents incorporated by reference therein and all exhibits (including
      exhibits incorporated therein by reference);

            (x)   deliver to each Holder, without charge, as many copies of the
      Prospectus (including each preliminary prospectus) and any amendment or
      supplement thereto as such Persons reasonably may request; the Company and
      Ribapharm hereby consent to the use (in accordance with law) of the
      Prospectus and any amendment or supplement thereto by each selling Holder
      in connection with the offering and the sale of the Transfer Restricted
      Securities covered by the Prospectus or any amendment or supplement
      thereto;

            (xi)  upon the request of (1) a Purchaser, but only in such firm's
      capacity as an Exchanging Dealer or(2) Holders who collectively hold an
      aggregate principal amount of the Transfer Restricted Securities in excess
      of 20% of the outstanding principal amount of the Transfer Restricted
      Securities (the "Requesting Holders"), enter into such agreements
      (including underwriting agreements) and make such representations and
      warranties and take all such other actions in connection therewith in
      order to expedite or facilitate the disposition of the Transfer Restricted
      Securities pursuant to any applicable Registration Statement contemplated
      by this Agreement as may be reasonably requested by any Holder in
      connection with any sale or resale pursuant to any applicable Registration
      Statement. In such connection, the Company and Ribapharm shall:

                  (A)   upon request of the Purchaser or the Requesting Holders,
            as applicable, furnish (or in the case of paragraphs (2) and (3),
            use its reasonable best efforts to cause to be furnished) to each
            Holder, upon Consummation of the Exchange Offer or upon the
            effectiveness of the Shelf Registration Statement, as the case may
            be:

                        (1)   a certificate, dated such date, signed on behalf
                  of the Company and Ribapharm by (x) the President or any Vice
                  President and (y) a principal financial or accounting officer
                  of the Company and Ribapharm, confirming, as of the date
                  thereof, the matters set forth in Sections 8(a), 8(b), 8(c)
                  and 8(d) of the Purchase Agreement and such other similar
                  matters as such Holders may reasonably request;

                        (2)   an opinion, dated the date of Consummation of the
                  Exchange Offer or the date of effectiveness of the Shelf
                  Registration Statement, as the case may be, of counsel for the
                  Company and Ribapharm covering matters similar to those set
                  forth in paragraph (h) of Section 8 of the Purchase Agreement
                  and such other matters as such the Purchaser or the Requesting
                  Holders may reasonably request, and in any event including a
                  statement to the effect that such counsel has participated in
                  conferences with officers and other representatives of the
                  Company and Ribapharm, representatives of the independent
                  public accountants for the Company and Ribapharm and have
                  considered the matters required to be stated therein and the
                  statements contained therein, although such counsel has not
                  independently verified the accuracy, completeness or fairness
                  of such statements; and that such counsel advises that, on the
                  basis of the foregoing (relying as to materiality to the
                  extent such counsel deems appropriate upon the statements of
                  officers and other representatives of the Company and
                  Ribapharm and without independent check or verification), no
                  facts came to such counsel's attention that caused such
                  counsel to believe that the applicable Registration Statement,
                  at the time such Registration Statement or any post-effective
                  amendment thereto became effective and, in the case of the
                  Exchange Offer Registration Statement, as of the date of
                  Consummation of the Exchange Offer, contained an untrue
                  statement of a material fact or omitted to state a material
                  fact required to be stated therein or necessary to make the
                  statements therein not misleading, or that the Prospectus
                  contained in such Registration Statement as of its date


                                      -11-

                  and, in the case of the opinion dated the date of Consummation
                  of the Exchange Offer, as of the date of Consummation,
                  contained an untrue statement of a material fact or omitted to
                  state a material fact necessary in order to make the
                  statements therein, in the light of the circumstances under
                  which they were made, not misleading. Without limiting the
                  foregoing, such counsel may state further that such counsel
                  assumes no responsibility for, and has not independently
                  verified, the accuracy, completeness or fairness of the
                  financial statements, notes and schedules and other financial
                  data included in any Registration Statement contemplated by
                  this Agreement or the related Prospectus; and

                        (3)   a customary comfort letter, dated the date of
                  Consummation of the Exchange Offer, or as of the date of
                  effectiveness of the Shelf Registration Statement, as the case
                  may be, from the Company's independent accountants, in the
                  customary form and covering matters of the type customarily
                  covered in comfort letters to underwriters in connection with
                  underwritten offerings, and affirming the matters set forth in
                  the comfort letters and agreed upon procedures letters, as
                  applicable, delivered pursuant to Section 7(e) of the Purchase
                  Agreement; and

                  (B)   deliver such other documents and certificates as may be
            reasonably requested by the selling Holders to evidence compliance
            with the matters covered in clause (A) above and with any customary
            conditions contained in the any agreement entered into by the
            Company and Ribapharm pursuant to this clause (xi);

            (xii) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders and their counsel in connection
with the registration and qualification of the Transfer Restricted Securities
under the securities or Blue Sky laws of such jurisdictions as the selling
Holders may request and do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of the Transfer
Restricted Securities covered by the applicable Registration Statement;
provided, however, that neither the Company nor Ribapharm shall be required to
register or qualify as a foreign corporation where it is not now so qualified or
to take any action that would subject it to the service of process in suits or
to taxation, other than as to matters and transactions relating to the
Registration Statement, in any jurisdiction where it is not now so subject;

            (xiii) in connection with any sale of Transfer Restricted Securities
that will result in such securities no longer being Transfer Restricted
Securities, cooperate with the Holders to facilitate the timely preparation and
delivery of certificates representing Transfer Restricted Securities to be sold
and not bearing any restrictive legends; and to register such Transfer
Restricted Securities in such denominations and such names as the selling
Holders may request at least two business days prior to such sale of Transfer
Restricted Securities;

            (xiv) use their reasonable best efforts to cause the disposition of
the Transfer Restricted Securities covered by the Registration Statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary to enable the seller or sellers thereof to consummate the
disposition of such Transfer Restricted Securities, subject to the proviso
contained in clause (xii) above;

            (xv)  provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of a Registration Statement covering such
Transfer Restricted Securities and provide the Trustee under the Indenture with
printed certificates for the Transfer Restricted Securities which are in a form
eligible for deposit with the Depository Trust Company;


                                      -12-

            (xvi) otherwise use their respective reasonable best efforts to
comply with all applicable rules and regulations of the Commission, and make
generally available to its security holders with regard to any applicable
Registration Statement, as soon as practicable, a consolidated earnings
statement meeting the requirements of Rule 158 under the Securities Act (which
need not be audited) covering a twelve-month period beginning after the
effective date of the Registration Statement (as such term is defined in
paragraph (c) of Rule 158 under the Securities Act);

            (xvii) cause the Indenture to be qualified under the TIA not later
than the effective date of the first Registration Statement required by this
Agreement and, in connection therewith, cooperate with the Trustee and the
Holders to effect such changes to the Indenture as may be required for such
Indenture to be so qualified in accordance with the terms of the TIA; and
execute and use its best efforts to cause the Trustee to execute, all documents
that may be required to effect such changes and all other forms and documents
required to be filed with the Commission to enable such Indenture to be so
qualified in a timely manner; and

            (xviii) provide promptly to each Holder, upon request, each document
filed with the Commission pursuant to the requirements of Section 13 or Section
15(d) of the Exchange Act.

      (d)   Restrictions on Holders. Each Holder agrees by acquisition of a
Transfer Restricted Security that, upon receipt of the notice referred to in
Section 6(c)(iii)(C) or any notice from the Company of the existence of any fact
of the kind described in Section 6(c)(iii)(D) hereof (in each case, a
"Suspension Notice"), such Holder will forthwith discontinue disposition of
Transfer Restricted Securities pursuant to the applicable Registration Statement
until (i) such Holder has received copies of the supplemented or amended
Prospectus contemplated by Section 6(c)(iv) hereof, or (ii) such Holder is
advised in writing by the Company that the use of the Prospectus may be resumed,
and has received copies of any additional or supplemental filings that are
incorporated by reference in the Prospectus (in each case, the "Recommencement
Date"). Each Holder receiving a Suspension Notice hereby agrees that it will
either (i) destroy any Prospectuses, other than permanent file copies, then in
such Holder's possession which have been replaced by the Company with more
recently dated Prospectuses or (ii) deliver to the Company (at the Company's
expense) all copies, other than permanent file copies, then in such Holder's
possession of the Prospectus covering such Transfer Restricted Securities that
was current at the time of receipt of the Suspension Notice. The time period
regarding the effectiveness of such Registration Statement set forth in Section
3 or Section 4 hereof, as applicable, shall be extended by a number of days
equal to the number of days in the period from and including the date of
delivery of the Suspension Notice to the date of delivery of the Recommencement
Date.

      7. Registration Expenses.

      (a)   All expenses incident to the Company's and Ribapharm's performance
of or compliance with this Agreement will be borne by the Company, regardless of
whether a Registration Statement becomes effective, including without
limitation: (i) all registration and filing fees and expenses; (ii) all fees and
expenses of compliance with federal securities and state Blue Sky or securities
laws; (iii) all expenses of printing (including printing certificates for the
Exchange Notes to be issued in the Exchange Offer and printing of Prospectuses),
messenger and delivery services and telephone; (iv) all fees and disbursements
of counsel for the Company and Ribapharm; (v) all application and filing fees in
connection with listing the Exchange Notes on a national securities exchange or
automated quotation system pursuant to the requirements hereof; and (vi) all
fees and disbursements of independent certified public accountants of the
Company and Ribapharm (including the expenses of any special audit and comfort
letters required by or incident to such performance).

      The Company will, in any event, bear its and Ribapharm's internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the


                                      -13-

expenses of any annual audit and the fees and expenses of any Person, including
special experts, retained by the Company or Ribapharm.

      (b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), regardless of whether a
Registration Statement becomes effective, the Company and Ribapharm will
reimburse the Purchasers and the Holders of Transfer Restricted Securities who
are tendering Notes into in the Exchange Offer and/or selling or reselling Notes
or Exchange Notes pursuant to the "Plan of Distribution" contained in the
Exchange Offer Registration Statement or the Shelf Registration Statement, as
applicable, for the reasonable fees and disbursements of not more than one
counsel, who shall be Skadden, Arps, Slate, Meagher and Flom LLP, unless another
firm shall be chosen by the Holders of a majority in principal amount of the
Transfer Restricted Securities for whose benefit such Registration Statement is
being prepared.

      8. Indemnification

      (a)   The Company and Ribapharm agree, jointly and severally, to indemnify
and hold harmless each Holder, its directors, officers and each Person, if any,
who controls such Holder (within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act), from and against any and all losses, claims,
damages, liabilities, judgments and expenses whatsoever (including without
limitation, any legal or other expenses reasonably incurred in connection with
investigating, preparing or defending against any investigation or litigation,
commenced or threatened, or any claim whatsoever, and any and all amounts paid
in settlement of any claim or litigation) caused by any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement, preliminary prospectus or Prospectus (or any amendment or supplement
thereto) provided by the Company to any Holder or any prospective purchaser of
Exchange Notes or registered Notes, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the Company
and Ribapharm shall not be liable to any such Holder in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in such Registration Statement or Prospectus, or amendment or
supplement, in reliance upon and in conformity with written information
furnished to the Company and Ribapharm by such Holder expressly for use therein.

      (b)   Each Holder of Transfer Restricted Securities agrees, severally and
not jointly, to indemnify and hold harmless the Company and Ribapharm, and their
respective directors, officers, partners, employees, representatives and agents,
and each person, if any, who controls (within the meaning of Section 15 of the
Section Act or Section 20 of the Exchange Act) the Company, or Ribapharm to the
same extent as the foregoing indemnity from the Company and Ribapharm set forth
in section (a) above, but only with reference to information relating to such
Holder furnished in writing to the Company by or on behalf of such Holder
expressly for use in any Registration Statement, preliminary prospectus or
Prospectus (or any amendment or supplement thereto.) In no event shall any
Holder, its directors, officers or any Person who controls such Holder be liable
or responsible for any amount in excess of the amount by which the total amount
received by such Holder with respect to its sale of the Transfer Restricted
Securities or Exchange Notes giving rise to such indemnification obligation
pursuant to a Registration Statement exceeds (i) the amount paid by such Holder
for such Transfer Restricted Securities and (ii) the amount of any damages that
such Holder, its directors, officers or any Person who controls such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.

      (c)   In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 8(a) or Section
8(b) (the "indemnified party"), the indemnified party shall promptly notify the
person against whom such indemnity may be sought (the "indemnifying person") in
writing of the commencement thereof (but the failure so to notify an
indemnifying party shall not relieve it from any liability


                                      -14-

which it may have under this Section 8 except to the extent that it has been
prejudiced in any material respect by such failure or from any liability which
it may otherwise have). In case any such action is brought against any
indemnified party, and such indemnified party notifies an indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent such indemnified party may elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid notice
from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party. Notwithstanding the
foregoing, the indemnified party or parties shall have the right to employ its
or their own counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of such indemnified party or parties unless (i) the
employment of such counsel shall have been authorized in writing by the
indemnifying parties in connection with the defense of such action, (ii) the
indemnifying parties shall not have employed counsel to take charge of the
defense of such action within a reasonable time after notice of commencement of
the action, or (iii) such indemnified party or parties shall have reasonably
concluded that there may be defenses available to it or them which are different
from or additional to those available to one or all of the indemnifying parties
(in which case the indemnifying party or parties shall not have the right to
direct the defense of such action on behalf of the indemnified party or
parties), in any of which events such fees and expenses of counsel shall be
borne by the indemnifying parties. In any such case, the indemnifying party
shall not, in connection with any one action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) for
all indemnified parties and all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by a majority of the
Holders, in the case of the parties indemnified pursuant to Section 8(a), and by
the Company and Ribapharm, in the case of parties indemnified pursuant to
Section 8(b). The indemnifying party shall indemnify and hold harmless the
indemnified party from and against any and all losses, claims, damages,
liabilities and judgments by reason of any settlement of any action (i) effected
with the indemnified party's written consent or (ii) effected without the
indemnified party's written consent if the settlement is entered into more than
twenty business days after the indemnifying party shall have received a request
from the indemnified party for reimbursement for the fees and expenses of
counsel (in any case where such fees and expenses are at the expense of the
indemnifying party) and, prior to the date of such settlement, the indemnifying
party shall have failed to comply with such reimbursement request. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement or compromise of, or consent to the entry of
judgment with respect to, any pending or threatened action in respect of which
the indemnified party is or could have been a party and indemnity or
contribution may be or could have been sought hereunder by the indemnified
party, unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability on claims that
are or could have been the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.

      (d)   To the extent that the indemnification provided for in this Section
8 is unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities or judgments referred to therein, then each indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or judgments (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and
Ribapharm, on the one hand, and the Holders, on the other hand, from their sale
of Transfer Restricted Securities or (ii) if the allocation provided by clause
8(d)(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
8(d)(i) above but also the relative fault of the Company and Ribapharm, on the
one hand, and of the Holder, on the other hand, in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or judgments, as well as any other relevant equitable
considerations. The relative fault of the Company and Ribapharm, on the one
hand, and of the Holder, on the other hand, shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or Ribapharm, on the one hand, or by the
Holder, on the other hand, and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or


                                      -15-

omission. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and judgments referred to above shall be deemed to
include, subject to the limitations set forth in the second paragraph of Section
8(a), any legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action or claim.

      The Company, Ribapharm and each Holder agree that it would not be just and
equitable if contribution pursuant to this Section 8(d) were determined by pro
rata allocation (even if the Holders were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any matter relating to such
losses, claims, damages, liabilities or judgments. Notwithstanding the
provisions of this Section 8, no Holder, its directors, its officers or any
Person, if any, who controls such Holder shall be required to contribute, in the
aggregate, any amount in excess of the amount by which the total received by
such Holder with respect to the sale of Transfer Restricted Securities pursuant
to a Registration Statement exceeds (i) the amount paid by such Holder for such
Transfer Restricted Securities and (ii) the amount of any damages which such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Holders' obligations to contribute pursuant to
this Section 8(d) are several in proportion to the respective principal amount
of Transfer Restricted Securities held by each Holder hereunder and not joint.

      9. Rule 144A AND Rule 144

      Each of the Company and Ribapharm agrees with each Holder, for so long as
any Transfer Restricted Securities remain outstanding and during any period in
which the Company or Ribapharm (i) is not subject to Section 13 or 15(d) of the
Exchange Act, to make available, upon request of any Holder, to such Holder or
beneficial owner of Transfer Restricted Securities in connection with any sale
thereof and any prospective purchaser of such Transfer Restricted Securities
designated by such Holder or beneficial owner, the information required by Rule
144A(d)(4) under the Securities Act in order to permit resales of such Transfer
Restricted Securities pursuant to Rule 144A, and (ii) is subject to Section 13
or 15 (d) of the Exchange Act, to make all filings required thereby in a timely
manner in order to permit resales of such Transfer Restricted Securities
pursuant to Rule 144.

      10. Miscellaneous.

      (a)   Specific Performance. The Company and Ribapharm acknowledge and
agree that any failure by the Company and/or Ribapharm to comply with their
respective obligations under Sections 3 and 4 hereof may result in material
irreparable injury to the Purchasers or the Holders for which there is no
adequate remedy at law, that it will not be possible to measure damages for such
injuries precisely and that, in the event of any such failure, the Purchasers or
any Holder may obtain such relief as may be required to specifically enforce the
Company's and Ribapharm's obligations under Sections 3 and 4 hereof. The Company
and Ribapharm further agree to waive the defense in any action for specific
performance that a remedy at law would be adequate.

      (b)   No Inconsistent Agreements. Neither the Company nor Ribapharm will,
on or after the date of this Agreement, enter into any agreement with respect to
its securities that is inconsistent with the rights granted to the Holders in
this Agreement or otherwise conflicts with the provisions hereof. Neither the
Company nor Ribapharm has previously entered into any agreement granting any
registration rights with respect to its securities to any Person. The rights
granted to the Holders hereunder do not in any way conflict with and are not


                                      -16-

inconsistent with the rights granted to the holders of the Company's and
Ribapharm's securities under any agreement in effect on the date hereof.

      (c)   Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 10(c)(i), the Company has obtained the written consent
of Holders of all outstanding Transfer Restricted Securities and (ii) in the
case of all other provisions hereof, the Company has obtained the written
consent of Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities (excluding Transfer Restricted Securities held by the
Company or its Affiliates). Notwithstanding the foregoing, a waiver or consent
to departure from the provisions hereof that relates exclusively to the rights
of Holders whose Transfer Restricted Securities are being tendered pursuant to
the Exchange Offer, and that does not affect directly or indirectly the rights
of other Holders whose Transfer Restricted Securities are not being tendered
pursuant to such Exchange Offer, may be given by the Holders of a majority of
the outstanding principal amount of Transfer Restricted Securities subject to
such Exchange Offer.

      (d)   Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company and
Ribapharm, on the one hand, and the Purchasers, on the other hand, and shall
have the right to enforce such agreements directly to the extent they may deem
such enforcement necessary or advisable to protect its rights or the rights of
Holders hereunder.

      (e)   Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), facsimile or air courier
guaranteeing overnight delivery:

            (i)   if to a Holder, at the address set forth on the records of the
      Registrar under the Indenture, with a copy to the Registrar under the
      Indenture; and

            (ii)  if to the Company or Ribapharm:

                        Valeant Pharmaceuticals International
                        3300 Hyland Avenue
                        Costa Mesa, California  92626-1503
                        Facsimile No.: (714) 556-0131
                        Attention: Corporate Secretary

      All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if sent by facsimile; and on the next business day, if timely
delivered to an air courier guaranteeing overnight delivery.

      Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.

      (d)   Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders; provided, that nothing herein shall be deemed to permit any assignment,
transfer or other disposition of Transfer Restricted Securities in violation of
the terms hereof or of the Purchase Agreement or the Indenture. If any
transferee of any Holder shall acquire Transfer Restricted Securities in any
manner, whether by operation of law or otherwise, such Transfer Restricted
Securities shall be held subject to all of the terms of this Agreement, and by
taking and holding such Transfer Restricted Securities such Person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this


                                      -17-

Agreement, including the restrictions on resale set forth in this Agreement and,
if applicable, the Purchase Agreement, and such Person shall be entitled to
receive the benefits hereof.

      (e)   Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

      (f)   Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

      (g)   Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.

      (h)   Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.

      (i)   Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.


                                      -18-

      IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.

                        VALEANT PHARMACEUTICALS INTERNATIONAL


                        /s/ Robert W. O'Leary
                        --------------------------------------------------------
                        By:
                           Names: Robert W. O'Leary
                           Title: Chairman of the Board, Chief Executive Officer


                        RIBAPHARM INC.


                        /s/ Philip W. Loberg
                        --------------------------------------------------------
                        By:
                           Name:     Philip W. Loberg
                           Title:    Treasurer


BEAR, STEARNS & CO. INC.


By:/s/ Lawrence B. Alletto
   --------------------------------------
   Name:  Lawrence B. Alletto
   Title: Co-Head of Leveraged Finance


                                      -19-

EX-12

                                                                               .
                                                                               .
                                                                               .
                                                                      EXHIBIT 12

                       STATEMENT RE COMPUTATION OF RATIOS
                     (DOLLARS IN THOUSANDS, EXCEPT RATIOS)




                                                                                                            NINE MONTHS
                                                                YEAR ENDED DECEMBER 31,                        ENDED
                                              ----------------------------------------------------------   SEPTEMBER 30,
                                                 2002        2001        2000        1999        1998         2003 (1)
                                              ----------  ----------  ----------  ----------  ----------   -------------
                                                                                         
RATIO OF EARNINGS TO FIXED CHARGES:
Earnings:
  Income (loss) before income
    taxes, minority interest ...............  $  176,938  $  118,803  $  136,683  $  147,105  $ (342,809)   $  (18,538)
  Add: interest expense ....................      42,856      55,665      60,248      55,439      37,757        23,892
  IPR&D charges ............................          --          --          --          --          --       117,609
                                              ----------  ----------  ----------  ----------  ----------    ----------
                                              $  219,794  $  174,468  $  196,931  $  202,544  $ (305,052)   $  122,963
                                              ==========  ==========  ==========  ==========  ==========    ==========
Fixed Charges:
  Interest expense .........................  $   42,856  $   55,665  $   60,248  $   55,439  $   37,757    $   23,892
                                              ==========  ==========  ==========  ==========  ==========    ==========

Ratio of earnings to fixed charges
  (coverage deficiency) ....................        5.1x        3.1x        3.3x        3.7x  $ (305,052)         5.1x
                                              ==========  ==========  ==========  ==========  ==========    ==========


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

(1)   For the nine months ended September 30, 2003, non-cash charges of
      $117,609,000 related to acquired in-process research and development were
      excluded from the calculation.

EX-15

exv15

EX-23.1

                                                                    Exhibit 23.1

                       CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in this Registration
Statement on Form S-4 of our report dated March 28, 2003, relating to the
financial statements and financial statement schedule, which appears in Valeant
Pharmaceuticals International's (formerly known as ICN Pharmaceuticals, Inc.)
Annual Report on Form 10-K for the year ended December 31, 2002, and of our
report dated February 25, 2003, relating to the financial statements, which
appears in Ribapharm Inc.'s Annual Report on Form 10-K for the year ended
December 31, 2002. We also consent to the references to us under the headings,
"Experts" and "Independent Accountants", in such Registration Statement.



PricewaterhouseCoopers LLP

Los Angeles, California
February 11, 2004

EX-25

                                                                      EXHIBIT 25

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                            STATEMENT OF ELIGIBILITY
                    UNDER THE TRUST INDENTURE ACT OF 1939 OF
                   A CORPORATION DESIGNATED TO ACT AS TRUSTEE

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

                      CHECK IF AN APPLICATION TO DETERMINE
                      ELIGIBILITY OF A TRUSTEE PURSUANT TO
                               SECTION 305(b)(2)

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

                              THE BANK OF NEW YORK
              (Exact name of trustee as specified in its charter)
                                      
                 NEW YORK                              13-5160382
    (State of incorporation bank)        (I.R.S. employer if not a national
                                                  identification no.)


      ONE WALL STREET, NEW YORK, N.Y.                    10286
 (Address of principal executive offices)              (Zip Code)



                              -------------------
                     VALEANT PHARMACEUTICALS INTERNATIONAL

             DELAWARE                            33-0628076
     (State or other jurisdiction            (I.R.S. Employer incorporation
            of organization)                       Identification No.)

           3300 HYLAND AVENUE
             COSTA MESA, CA                              92626
(Address of principal executive offices)               (Zip Code)


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

                                 RIBAPHARM INC.
             DELAWARE                            95-4805655
       (State or other jurisdiction          (I.R.S. Employer incorporation
            of organization)                       Identification No.)


           3300 HYLAND AVENUE
             COSTA MESA, CA                              92626
(Address of principal executive offices)               (Zip Code)





                           7.0% SENIOR NOTES DUE 2011
                      (Title of the indenture securities)

1.   GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:

     (a)  NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
          IT IS SUBJECT.



              Name                                          Address
              ----                                          -------
                                    
Superintendent of Banks of the          2 Rector Street,
State of New York                       New York, N.Y. 10006, and
                                        Albany, N.Y. 12203

Federal Reserve Bank of New York        33 Liberty Plaza,
                                        New York, N.Y. 10045

Federal Deposit Insurance               Washington, D.C. 20429
Corporation

New York Clearing House                 New York, New York 10005
Association



     (b)  WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.

     Yes.

2.   AFFILIATIONS WITH THE OBLIGOR.

     IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
     AFFILIATION.

     None

16.  LIST OF EXHIBITS.

     EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION,
     ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO
     RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND
     17 C.F.R.229.10(d).

     1.   A copy of the Organization Certificate of The Bank of New York
          (formerly Irving Trust Company) as now in effect, which contains
          the authority to commence business and a grant of powers to exercise
          corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1,
          filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
          Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
          to Form T-1 filed with Registration Statement No. 33-29637.)


                                                                 t1-bony. 2
                                                                 t-1,


     4.  A copy of the existing By-Laws of the Trustees. (Exhibit 4 to Form T-1
         filed with Registration Statement No. 33-31019).

     6.  The consent of the Trustee required by Section 321(b) of the Act.
         (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)

     7.  A copy of the latest report of condition of the Trustee published
         pursuant to law or to the requirements of its supervising or examining
         authority.

                                   SIGNATURE

Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee,
The Bank of New York, a corporation organized and existing under the laws of the
State of New York, has duly caused this statement of eligibility to be signed on
its behalf by the undersigned, thereunto duly authorized, all in the City of New
York, and State of New York, on the 30th day of January, 2004.


                                              THE BANK OF NEW YORK


                                              By:  /s/ John Guiliano
                                                   ____________________
                                                   John Guiliano
                                                   Authorized Signer












                                                                       t1-bony.3
                                                                       t-1,

                                                                       EXHIBIT 7

                      Consolidated Report of Condition of

                              THE BANK OF NEW YORK

                    of One Wall Street, New York, N.Y. 10286
                     And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business September 30,
2003, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.



                                                            Dollar Amounts
ASSETS                                                        In Thousands
                                                        
Cash and balances due from depository institutions:
     Noninterest-bearing balances and currency
          and coin......................................     $ 3,688,426
     Interest-bearing balances..........................       4,380,259
Securities:
     Held-to-maturity securities........................         270,396
     Available-for-sale securities......................      21,509,356
Federal funds sold in domestic offices..................       1,269,945
Securities purchased under agreements to resell.........       5,320,737
Loans and lease financing receivables:
     Loans and leases held for sale.....................         629,178
     Loans and leases, net of unearned
          income...........38,241,326
     LESS: Allowance for loan and
          lease losses........813,502
     Loans and leases, net of unearned
          income and allowance..........................      37,427,824
Trading Assets..........................................       6,323,529
Premises and fixed assets (including
     capitalized leases)................................         938,488
Other real estate owned.................................             431
Investments in unconsolidated subsidiaries
     and associated companies...........................         256,230
Customers' liability to this bank on
     acceptances outstanding............................         191,307
Intangible assets.......................................
     Goodwill...........................................       2,562,478
     Other intangible assets............................         798,536
     Other assets.......................................       6,636,012
                                                             -----------


                                                                 
Total assets....................................................... $92,203,132
                                                                    ===========
LIABILITIES
Deposits:
     In domestic offices........................................... $35,637,801
     Noninterest-bearing...........  15,795,823
     Interest-bearing..............  19,841,978
     In foreign offices, Edge and Agreement
          subsidiaries, and IBFs...................................  23,759,599
     Noninterest-bearing...........     599,397
     Interest-bearing..............  23,160,202
Federal funds purchased in domestic offices........................     464,907
Securities sold under agreements to repurchase.....................     693,638
Trading liabilities................................................   2,634,445
Other borrowed money:
     (includes mortgage indebtedness and
     obligations under capitalized leases).........................  11,168,402
Bank's liability on acceptances executed and
     outstanding...................................................     193,690
Subordinated notes and debentures..................................   2,390,000
Other liabilities..................................................   6,573,955
                                                                    -----------
Total liabilities.................................................. $83,516,437
                                                                    ===========
Minority interest in consolidated subsidiaries.....................     519,418

EQUITY CAPITAL
Perpetual preferred stock and related surplus......................           0
Common stock.......................................................   1,135,284
Surplus............................................................   2,057,234
Retained earnings..................................................   4,892,597
Accumulated other comprehensive income.............................      82,162
Other equity capital components....................................           0
Total equity capital...............................................   8,167,277
                                                                    -----------
Total liabilities minority interest and equity capital............. $92,203,132
                                                                    ===========



     I, Thomas J. Mastro, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition is true and
correct to the best of my knowledge and belief.

                                                               Thomas J. Mastro,
                                           Senior Vice President and Comptroller

     We, the undersigned directors, attest to the correctness of this statement
of resources and liabilities. We declare that it has been examined by us, and
to the best of our knowledge and belief has been prepared in conformance with
the instructions and is true and correct.

                       _
Thomas A. Renyi         |
Gerald L. Hassell       |          Directors
Alan R. Griffith       _|

_______________________________________________________________________________

EX-99.1

Exhibit 99.1

EX-99.2

Exhibit 99.2

EX-99.3

Exhibit 99.3

EX-99.4

Exhibit 99.4