ICN PHARMACEUTICALS INC /DE/, PRE 14A, 1998-04-17

ICN PHARMACEUTICALS INC /DE/
PRE 14A, 1998-04-17
PHARMACEUTICAL PREPARATIONS

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<PAGE> 1

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:

<TABLE>
<S> <C>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
[ ] Definitive Proxy Statement Commission Only (as permitted by
[ ] Definitive Additional Materials Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
sec. 240.14a-11(c) or sec.
240.14a-12
</TABLE>

ICN PHARMACEUTICALS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] Fee not required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously.

Identify the previous filing by registration statement number, or the Form or
Schedule and the date of its filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:
<PAGE> 2

ICN PHARMACEUTICALS, INC.

April xx, 1998

To the Stockholders of
ICN Pharmaceuticals, Inc.:

Dear Stockholder:

You are cordially invited to attend the Annual Meeting of Stockholders of
ICN Pharmaceuticals, Inc., which will be held on May 27, 1998, at 11:00 a.m. at
the Weill Recital Hall at Carnegie Hall, 154 West 57th Street, New York, New
York 10019. Official Notice of the Meeting, a Proxy Statement and a form of
proxy accompany this letter.

The Company's Annual Report to Stockholders, including audited financial
statements, accompanies this Proxy Statement.

Please mark, date, sign and return the proxy in the enclosed envelope so
that your shares may be represented. This will not prevent you from voting in
person should you so desire, but will help secure a quorum necessary for the
transaction of business.

By Order of the Board of Directors,

/s/ MILAN PANIC
MILAN PANIC
Chairman of the Board
<PAGE> 3

ICN PHARMACEUTICALS, INC.
3300 HYLAND AVENUE
COSTA MESA, CALIFORNIA 92626
------------------------

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 27, 1998
------------------------

To the Stockholders of
ICN Pharmaceuticals, Inc.:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of ICN
Pharmaceuticals, Inc., a Delaware corporation (the "Company"), will be held at
Weill Recital Hall at Carnegie Hall, 154 West 57th Street, New York, New York
10019, on May 27, 1998, at 11:00 a.m., local time, for the following purposes:

1. To elect five directors, to hold office until the 2001 Annual Meeting of
Stockholders and thereafter until their successors are elected and
qualified.

2. To consider adoption of the ICN Pharmaceuticals, Inc. Amended and
Restated 1998 Stock Option Plan.

3. To consider an amendment to the Restated Certificate of Incorporation to
increase the authorized capital stock of the Company from 110,000,000
shares to 210,000,000 shares.

4. To consider a stockholder proposal to amend the By-laws of the Company
to provide for a mandatory retirement policy for directors of the
Company.

5. The transaction of such other business as may properly come before the
meeting or any adjournments thereof.

Only stockholders of record at the close of business on April 24, 1998 will
be entitled to notice of and to vote at the meeting and any adjournments
thereof.

By Order of the Board of Directors,

/s/ MILAN PANIC
MILAN PANIC
Chairman of the Board

/s/ DAVID C. WATT
DAVID C. WATT
Secretary

Dated: April , 1998

PLEASE MARK, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING
ENVELOPE, WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
<PAGE> 4

ICN PHARMACEUTICALS, INC.
3300 HYLAND AVENUE
COSTA MESA, CALIFORNIA 92626
------------------------

PROXY STATEMENT
------------------------

ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
MAY 27, 1998

This Proxy Statement is being mailed on or about April , 1998, to
stockholders of ICN Pharmaceuticals, Inc. (the "Company" or "ICN") in connection
with the solicitation of proxies by the Board of Directors for use at the Annual
Meeting of Stockholders to be held on May 27, 1998, or any adjournments or
postponements thereof, for the purposes set forth in this Proxy Statement and in
the accompanying Notice of Annual Meeting of Stockholders.

When a proxy in the form enclosed with this Proxy Statement is returned
properly executed, the shares represented thereby will be voted at the Annual
Meeting in accordance with the directions indicated thereon or, if no direction
is indicated, the shares will be voted in accordance with the recommendations of
the Board of Directors. A stockholder who executes and returns the enclosed
proxy may revoke it at any time prior to its exercise by giving written notice
of such revocation to the Chairman of the Board of the Company, at the address
of the Company, or by revoking it in person at the Annual Meeting. Attendance at
the Annual Meeting by a stockholder who has executed and returned the enclosed
proxy does not alone revoke the proxy.

The costs of preparing and mailing this Notice and Proxy Statement and the
enclosed form of proxy will be paid by the Company. In addition to soliciting
proxies by mail, employees of the Company may, at the Company's expense, solicit
proxies in person and by telephone or telegraph. The Company has retained
Georgeson & Company Inc. to assist in the solicitation of proxies. The Company
will pay fees estimated at $14,000, plus reasonable out-of-pocket expenses
incurred by them. The Company will pay brokers, nominees, fiduciaries and other
custodians their reasonable fees and expenses for forwarding solicitation
material to principals and for obtaining their instructions.

VOTING SECURITIES

As of the close of business on April 24, 1998, there were outstanding
shares of the Company's common stock, par value $.01 per share, (the
"Common Stock") held of record by approximately stockholders, each of
which shares is entitled to one vote at the Annual Meeting. In addition, there
are 821 shares of Series D Convertible Preferred Stock, which are convertible
into 615,750 shares of Common Stock which have voting rights equivalent to one
vote for each share issuable upon conversion. The Company has no other class of
voting securities outstanding.

MERGER

On November 1, 1994, the stockholders of ICN Pharmaceuticals, Inc. ("Old
ICN"), SPI Pharmaceuticals, Inc. ("SPI"), Viratek, Inc. ("Viratek"), and ICN
Biomedicals, Inc. ("Biomedicals") (collectively, the "Predecessor Companies")
approved a business combination involving the Predecessor Companies ("the
Merger"). On November 10, 1994, SPI, Old ICN and Viratek merged into ICN Merger
Corp. (then a wholly owned subsidiary of SPI), and Biomedicals merged into ICN
Subsidiary Corp., a wholly-owned subsidiary of ICN Merger Corp. In the Merger,
all of the stockholders of the Predecessor Companies (other than Old ICN)
received shares of Common Stock in exchange for the shares of common stock of
the predecessor companies at specified exchange rates for each of the
Predecessor Companies. In conjunction with the Merger, ICN Merger Corp. was
renamed ICN Pharmaceuticals, Inc. For accounting purposes, SPI is the acquiring
company and as a result, the Company reports the historical financial data of
SPI in its financial results for periods prior to the Merger.

1
<PAGE> 5

PROPOSAL NO. 1

ELECTION OF DIRECTORS

The Certificate of Incorporation of the Company provides that the Board of
Directors be divided into three classes of directors. Five directors are to be
elected at the 1998 Annual Meeting, each to serve until the 2001 Annual Meeting
of Stockholders and until his successor is elected and qualified. The nominees
are Weldon B. Jolley, Ph.D., Thomas H. Lenagh, Roberts A. Smith, Ph.D., Richard
Starr and Andrei Kozyrev, Ph.D., all of whom currently serve as directors of the
Company. If for any reason any nominee should not be available for election or
be unable to serve as a director, the accompanying proxy will be voted for the
election of such other person, if any, as the Board of Directors may designate.
The Board of Directors has no reason to believe that any nominee will be
unavailable for election or unable to serve. Mr. Dale Hanson, who has served as
a director from August 1995, is not standing for re-election.

The Board of Directors of the Company recommends that the stockholders vote
FOR the election of the five nominees for director named in this Proxy
Statement.

When a proxy in the form enclosed with this Proxy Statement is returned
properly executed, unless marked to the contrary, such proxy will be voted in
favor of the five nominees listed above. If any other matters are properly
presented at the Meeting for action, which is not presently contemplated, the
proxy holder will vote the proxies (which confer discretionary authority upon
such holder to vote on such matters) in accordance with their best judgment.

The presence, in person or by proxy, of the holders of a majority of the
Shares entitled to vote at the Annual Meeting is necessary to constitute a
quorum for the transaction of business at the Annual Meeting. The affirmative
vote of a plurality of the votes cast by the holders of the Shares present, in
person or represented by proxy, at the Annual Meeting and entitled to vote their
Shares is required to elect directors. Abstentions and broker non-votes in
connection with the election of directors shall have no effect on such matters
since directors are elected by a plurality of the votes cast at the Annual
Meeting.

INFORMATION CONCERNING NOMINEES AND DIRECTORS

The current Board of Directors consists of sixteen members: Messrs.,
Jolley, Lenagh, R. Smith and Starr are standing for re-election and Dr. Kozyrev,
appointed to the Board in February 1998, is standing for election; Messrs.
Barker, Bayh, Charles, Jerney and Moses will serve until the 1999 Annual Meeting
of Stockholders, and Messrs. Guillemin, Kurz, Manatt, Panic and M. Smith are
serving until the 2000 Annual Meeting of Stockholders. Mr. Dale Hanson is not
standing for re-election. Set forth below with respect to each director is
certain personal information, including the present principal occupation and
recent business experience, age, year commenced service as a director of the
Company (including service as a director of a Predecessor Company) and other
corporate directorships.

DIRECTORS NOMINATED FOR ELECTION

2
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<TABLE>
<CAPTION>
YEAR
COMMENCED
SERVING AS
DIRECTOR OF
NAME AND PRINCIPAL OCCUPATION AGE THE COMPANY OTHER CORPORATE DIRECTORSHIPS
----------------------------- --- ----------- --------------------------------
<S> <C> <C> <C>
THOMAS H. LENAGH (a)(d)(e).................... 79 1979 Adams Express Company;
Mr. Lenagh is an independent financial U.S. Life Corporation; SCI
advisor. He was Chairman of the Board of Systems, Inc.; Gintel Funds;
Greiner Engineering, Inc. from 1982 to 1985. Irvine Sensors, Inc.; CML, Inc.;
Mr. Lenagh served as Financial Vice Clemente Global Funds; Franklin
President to the Aspen Institute from 1978 Quest; V Band Corp.
to 1980, and since then as an independent
financial consultant. From 1964 to 1978, he
was Treasurer of the Ford Foundation
ROBERTS A. SMITH, Ph.D. (f)(b)(c)............. 69 1960 Nucleic Acid Research Institute;
Dr. Smith was President of Viratek and Vice PLC Systems
President -- Research and Development of SPI
through 1992. For more than eleven years,
Dr. Smith was Professor of Chemistry and
Biochemistry at the University of California
at Los Angeles
RICHARD W. STARR (d).......................... 77 1983
Mr. Starr is the retired Executive Vice
President and Chief Credit Officer Worldwide
of First Interstate Bank of California. Mr.
Starr spent 31 years with First Interstate
before retiring in 1983 and has over 44
years of experience in commercial banking
ANDREI KOZYREV, Ph.D.......................... 47 1998
Dr. Kozyrev currently serves as a member of
the Russian Parliament. Dr. Kozyrev served
as the Minister of Foreign Affairs of the
first democratic government of the Russian
Federation from 1990 until 1992. After
dissolution of the Soviet Union, Dr. Kozyrev
was appointed Foreign Minister and served
until January, 1996. Dr. Kozyrev earned his
Ph.D. in History. He is also an author,
having published several works on the
Russian economy and international affairs.
</TABLE>

DIRECTORS WHOSE TERMS EXPIRE IN 1999

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<PAGE> 7

<TABLE>
<CAPTION>
YEAR
COMMENCED
SERVING AS
DIRECTOR OF
NAME AND PRINCIPAL OCCUPATION AGE THE COMPANY OTHER CORPORATE DIRECTORSHIPS
----------------------------- --- ----------- --------------------------------
<S> <C> <C> <C>
BIRCH E. BAYH, JR., ESQ. (f)(g)............... 70 1992 Acordia, Inc. and Simon
Mr. Bayh is a senior partner in the Property Group
Washington, D.C. law firm of Oppenheimer,
Wolff, Donnelly & Bayh, L.L.P. He previously
was head of the Washington office of Bayh,
Connaughton & Stewart, L.L.P. (1991 - 1997)
and Rivkin, Radler, Bayh, Hart & Kremer
(1985 - 1991), and a partner in the
Indianapolis, Indiana and Washington, D.C.
law firm of Bayh, Tabbert & Capehart
(1981 - 1985). Mr. Bayh served as a United
States Senator from the State of Indiana
from 1963 - 1981.
ALAN F. CHARLES (f)(e)........................ 60 1986
Mr. Charles was Vice Chancellor of
University Relations at the University of
California, Los Angeles from 1980 to 1993
and served in various Administrative
capacities at that University since 1972. He
is now an independent consultant in higher
education management.
ADAM JERNEY................................... 56 1992
Mr. Jerney is Chief Operating Officer and
President of ICN. He served as Chairman of
the Board and Chief Executive Officer of
ICN, SPI, Viratek and Biomedicals from July
14, 1992 to March 4, 1993 during Milan
Panic's leave of absence (as described
below). Mr. Jerney joined ICN in 1973 as
Director of Marketing Research in Europe and
assumed the position of General Manager of
ICN Netherlands in 1975. In 1981, he was
elected Vice President -- Operations and in
1987 he became President and Chief Operating
Officer of SPI. He became President of the
Company in 1997. Prior to joining ICN, he
spent four years with F. Hoffmann-LaRoche &
Company.
STEPHEN D. MOSES (f)(a)(e).................... 63 1988
Mr. Moses is Chairman of the Board of
Stephen Moses Interests. He was formerly
Chairman of the Board of National Investment
Development Corporation and Brentwood Bank
in Los Angeles, California and a member of
the National Advisory Board of the Center
for National Policy. Mr. Moses serves on the
Board of Visitors of Hebrew Union College,
as well as the Board of Trustees of Franklin
and Marshall College and the UCLA
Foundation. From 1967 to 1971, Mr. Moses was
an executive of the Boise Cascade
Corporation, serving in several capacities,
including President of Boise Cascade Home
and Land Corporation. In the early 1970's,
Mr. Moses was President of Flagg
Communities, Inc.
</TABLE>

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<PAGE> 8

DIRECTORS WHOSE TERMS EXPIRE IN 2000

<TABLE>
<CAPTION>
YEAR
COMMENCED
SERVING AS
DIRECTOR OF
NAME AND PRINCIPAL OCCUPATION AGE THE COMPANY OTHER CORPORATE DIRECTORSHIPS
----------------------------- --- ----------- --------------------------------
<S> <C> <C> <C>
ROGER GUILLEMIN, M.D., Ph.D. (b).............. 74 1989 Prizm Pharmaceuticals, Inc.
Dr. Guillemin has been an Adjunct Professor
of Medicine at the University of California
College of Medicine in San Diego since 1970.
He was a Distinguished Scientist at the
Whittier Institute in La Jolla, California
from March 1989 to 1995 and was Resident
Fellow and Chairman of the Laboratories for
Neuroendocrinology at the Salk Institute in
La Jolla, California. Dr. Guillemin was
awarded the Nobel Prize in Medicine in 1977
and, in the same year, was presented the
National Medal of Science by the President
of the United States. He was Affiliated with
the Department of Physiology at Baylor
College of Medicine in Houston, Texas from
1952 to 1970. Dr. Guillemin is a member of
the National Academy of Sciences, and a
Fellow of the American Association for the
Advancement of Science. He has also served
as President of the American Endocrine
Society.
JEAN-FRANCOIS KURZ (d)(c)..................... 63 1989 Board of Banque Pasche S.A.,
Mr. Kurz was a member of the Board of Geneva
Directors and the Executive Committee of the
Board of DG Bank Switzerland Ltd. from 1990
to 1992. In 1988 and 1989, Mr. Kurz served
as a General Manager of TDB American Express
Bank of Geneva and from 1969 to 1988, he was
Chief Executive Officer of Banque
Gutzweiler, Kurz, Bungener in Geneva. Mr.
Kurz is also Chairman of the Board of Banque
Pasche S.A., Geneva
CHARLES T. MANATT (d)(g)...................... 61 1992 Federal Express; Comsat
Mr. Manatt is a partner in the law firm of
Manatt, Phelps, Phillips, of which he was a
founder in 1965. Mr. Manatt served as
Chairman of the Democratic Party from
to .
MILAN PANIC (c)............................... 68 1960
Mr. Panic, the founder of ICN, has been
Chairman of the Board and Chief Executive
Officer of ICN since its inception in 1960
and served as President until 1997; except
for a leave of absence from July 14, 1992 to
March 4, 1993 while he was serving as Prime
Minister of Yugoslavia and a leave of
absence from October 1979 to June 1980. Mr.
Panic served as Chairman of the Board and
Chief Executive Officer of SPI, Viratek and
Biomedicals from their respective inceptions
(except for such leaves of absence) prior to
the Merger, and he may be deemed to be a
"control person" of the Company.
</TABLE>

5
<PAGE> 9

- ---------------

(a) Member of the Audit Committee

(b) Member of the Science and Technology Committee

(d) Member of the Finance Committee

(e) Member of the Communications Committee

(f) Member of the Compensation and Benefits Committee

(g) Member of the Corporate Governance Committee

None of the directors are related by blood or marriage to one another or to
an executive officer of the Company.

On October 7, 1991, Old ICN, Viratek, Milan Panic, as Chairman of the
Board, President and Chief Executive Officer of Old ICN and Dr. Weldon B.
Jolley, a director of Old ICN, entered into a settlement agreement in a form of
a Consent Decree with the Securities and Exchange Commission (the "Commission"),
ending the investigation of Old ICN and its subsidiaries which began in 1987 and
generally concerned Old ICN disclosures in 1986 and 1987 relating to the safety
and efficacy of Virazole(R) in treating certain AIDS-related conditions. Without
admitting or denying any violations of the securities laws, Old ICN, Viratek and
the individuals agreed not to violate securities laws in the future (which
obligations were assumed by ICN in the Merger).

COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS

The Board of Directors has a standing Executive Committee, Audit Committee,
Finance Committee, Science and Technology Committee, Compensation and Benefits
Committee, Communications Committee and Corporate Governance Committee, but does
not have a standing nominating committee.

The current members of the Executive Committee are Messrs. Panic, Jolley,
Kurz and R. Smith. This Committee is empowered to act upon any matter for the
Board of Directors, other than matters which may not be delegated under Delaware
law. The Executive Committee held no meetings during the year ended December 31,
1997.

The current members of the Audit Committee, which held eight meetings
during the year ended December 31, 1997, are Messrs. Lenagh, Jolley and Moses.
Its functions include recommending to the Board of Directors the selection of
the Company's independent public accountants and reviewing with such accountants
the plan and results of their audit, the scope and results of the Company's
internal audit procedures and the adequacy of the Company's systems of internal
accounting controls. In addition, the Audit Committee reviews the independence
of the independent public accountants and reviews the fees for audit and
non-audit services rendered to the Company by its independent public
accountants.

The Compensation and Benefits Committee recommends to the Board of
Directors the compensation and benefits for senior management and directors,
including the grant of stock options. The current members of

6
<PAGE> 10

this Committee are Messrs. Barker, Bayh, Charles, Moses, and R. Smith. This
Committee held eight meetings during the year ended December 31, 1997.

The Finance Committee oversees investment and commercial banking issues and
investment guidelines. The current members of this Committee are Messrs. Barker,
Kurz, Lenagh, Manatt and Starr. This Committee did not meet during the year
ended December 31, 1997.

The Science and Technology Committee formulates and oversees the scientific
and technology policy of the Company. The current members of this Committee are
Drs. Guillemin, Jolley, M. Smith and R. Smith. This Committee held five meetings
during the year ended December 31, 1997.

The Communications Committee oversees the development of external
communications policy for the Company in both the public relations and investor
relations disciplines. The current members of the Communications Committee are
Messrs. Charles, Lenagh and Moses. This Committee met two times during the year
ended December 31, 1997.

The Corporate Governance Committee was formed in July 1995 and oversees the
development of the Company's policies and procedures to insure the Company's
adherence to good corporate governance for the benefit of the stockholders of
the Company. The current members of this Committee are Messrs. Manatt, Barker
and Bayh. This Committee did not meet during the year ended December 31, 1997.

The Board of Directors met eight times during 1997 and all of the directors
attended at least 75% of the meetings (including meetings of committees on which
they serve) except for Dr. Guillemin and Mr. Kurz, who attended 63% and 50%,
respectively.

ICN PROPOSAL NO. 2

APPROVAL OF ICN PHARMACEUTICALS, INC. AMENDED AND RESTATED 1998 ICN STOCK OPTION
PLAN

STOCK OPTION PLAN

The ICN Pharmaceuticals, Inc. Amended and Restated 1998 Stock Option Plan
(the "Stock Option Plan") was approved by the Board of Directors of the Company
in January 1998 subject to its approval by the stockholders of the Company. The
Stock Option Plan is an amendment and restatement of the Company's 1994 Stock
Option Plan (the "1994 Plan"). The Stock Option Plan increases the number of
shares of Common Stock which may be the subject of options to purchase common
stock of the Company (the "Options") granted under the Plan from 3,000,000 to
6,000,000 in the aggregate and from 1,500,000 to 2,000,000, to any individual
during the term of the Stock Option Plan. The other principal amendments to the
1994 Plan are that the Compensation and Benefits Committee (the "Committee") may
grant Options (other than to nonemployee directors) with an exercise price per
share less than the fair market value (as defined) of an underlying share of
common stock on the date of grant and that the Committee may grant Options that
are transferrable to immediate family members.

The Stock Option Plan provides for the granting of Options to key
employees, officers, directors, consultants and scientific advisors of ICN. The
principal provisions of the Stock Option Plan are summarized below; however,
this summary does not purport to be complete and is qualified in its entirety by
reference to the provisions of the Stock Option Plan. Terms not defined herein
shall have the meanings set forth in the Stock Option Plan.

PURPOSE OF THE STOCK OPTION PLAN

ICN believes that stock option plans advance the interests of ICN and
further its growth and development by encouraging and enabling key employees,
officers, directors, consultants and advisors of ICN to acquire an increased
personal and proprietary interest in its continued success and progress. ICN
believes that the Stock Option Plan aids in attracting and retaining directors,
officers and other key employees who are in a position to contribute materially
to the successful conduct of ICN's business and affairs.
7
<PAGE> 11

STOCK OPTION RIGHTS

Options granted under the Stock Option Plan are exercisable and expire in
accordance with the specific terms and conditions approved by the Committee as
to each Option and as set forth in a written stock option agreement. Under no
circumstances may an Option be exercised later than ten years after the date it
is granted. Participation in the Stock Option Plan does not confer any right of
a participant to continue in the employ of ICN or affect any right or power of
ICN to terminate the services of such participant at any time.

GRANTS TO NONEMPLOYEE DIRECTORS

The Stock Option Plan provides for automatic non-discretionary annual
grants of Director Options to Nonemployee Directors in respect of 22,500 Shares
on each April 18th. Director Options are granted at an exercise price per share
no less than 100% of the fair market value of the ICN Common Stock on the date
of grant. Each Director Option shall vest with respect to 25% of the Shares
subject thereto on each of the first four anniversaries of the grant date. If
the Nonemployee Director ceases to serve as a director for any reason, he or she
automatically forfeits any portion of the Director Options which are unvested.

DURATION AND MODIFICATIONS

The Stock Option Plan shall remain in effect until all Options granted
thereunder have been satisfied by the issuance of shares or the payment of cash
and/or shares, or terminated under the terms of the Stock Option Plan, provided
that no Options may be granted under the Stock Option Plan ten years from the
date the plan is approved by stockholders. The Board of Directors and the
Committee may, at any earlier time, amend, alter, suspend or discontinue the
Stock Option Plan as it may deem proper, except that no such action shall impair
the rights of any grantee under any Option previously granted under the Stock
Option Plan without the consent of the grantee. ICN may not, however, without
further approval by ICN's stockholders, take any action for which stockholder
approval is required as a matter of law.

SECURITIES SUBJECT TO THE STOCK OPTION PLAN

The maximum number of shares available for issuance under the Stock Option
Plan is 6,000,000, except as described below under the caption "Adjustment of
Shares and Price." The shares issued under the Stock Option Plan may be either
authorized and unissued shares or shares previously issued and reacquired by
ICN.

ADJUSTMENT OF SHARES AND PRICE

In the event of any stock split, stock dividend or similar transaction
which increases or decreases the number of outstanding shares, including under
certain circumstances a change in value of such shares, appropriate adjustment
will be made of both the number of shares or other stock or securities which may
be purchased under the Stock Option Plan in the aggregate and to any individual
and the number and price per share or other stock or securities which may be
purchased under any outstanding options. Except as otherwise provided in an
agreement, in the event of (i) the liquidation or dissolution of the Company or
(ii) a merger or consolidation of the Company (a "Transaction"), the Stock
Option Plan and the Options issued thereunder shall continue in effect in
accordance with their respective terms and each Optionee shall be entitled to
receive in respect of each share subject to any outstanding Options, upon
exercise of such Options, the same number and kind of stock, securities, cash,
property, or other consideration that each holder of a share was entitled to
receive in the Transaction in respect of a shares, provided that such stock,
securities, cash, property or other consideration shall remain subject to all
conditions and restrictions applicable to the Options.

EFFECT OF CHANGE IN CONTROL

In the event of a Change in Control, as defined in the Stock Option Plan,
all outstanding Options shall vest and be immediately exercisable.

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<PAGE> 12

ADMINISTRATION OF THE STOCK OPTION PLAN

The Stock Option Plan is administered by a committee of the Board of
Directors, which is comprised of not less than two directors each of whom are
"Nonemployee Directors" for purposes of Rule 16b-3 under the Exchange Act and
"Outside Directors" within the meaning of Section 162(m) of the Code and the
regulations promulgated thereunder.

No member of the Board of ICN receives additional compensation for his or
her services in administering the Stock Option Plan except insofar as such
members may receive $1,000 for each Committee meeting attended. The Board shall
from time to time appoint members of the Committee who are Nonemployee Directors
and Outside Directors for such terms as the Board shall determine, and members
of the Committee may be removed by the Board at any time with or without cause.

Subject to the provisions of the Stock Option Plan, the Committee has full
authority to implement and carry out the Stock Option Plan, including, but not
limited to, the following: to determine the individuals who will be granted
Options and the exercise prices and other terms thereof, to construe and
interpret the Stock Option Plan and to make all other determinations necessary
or advisable for the administration of the Stock Option Plan.

ELIGIBILITY AND EXTENT OF PARTICIPATION

Options may be granted and shares may be acquired pursuant to stock option
agreements under the Stock Option Plan for such number of shares and to such
employees, directors, advisors and consultants as the Committee may from time to
time determine. See "Administration of the Stock Option Plan." The maximum
number of shares with respect to which Options may be granted to any individual
during the term of the Stock Option Plan may not exceed 2,000,000 shares. All
Options are subject to the terms of option agreements executed by the Company
and the respective grantees. There are currently approximately 250 individuals
eligible to participate in the Stock Option Plan.

EXERCISE OF OPTIONS, DEATH, TERMINATION OF EMPLOYMENT

Unless otherwise determined by the Committee, Options are granted at an
exercise price per share equal to not less than 100% of the fair market value of
a share on the date of the grant (110% in the case of an incentive stock option
granted to a person who owns 10% or more of the outstanding shares of Common
Stock).

Shares purchased pursuant to exercise of an Option are paid for in full at
the time of exercise in cash or by surrender of shares or a combination thereof,
pursuant to the rules as determined by the Committee.

The times at which Options are exercisable will be determined by the
Committee at the time of grant, which shall in no event be more than ten years
from the date of grant. The Committee is authorized to determine the nature and
extent of any restrictions to be imposed on the shares which may be acquired
under the Stock Option Plan. The Committee may accelerate the exercisability of
Options at any time.

Options are nonassignable and nontransferable other than by will or by the
laws of descent and distribution or pursuant to a qualified domestic relations
order (as defined in the Exchange Act); provided, however, that the Committee
may provide at the time of grant or at any time thereafter that the Option may
be transferred to members of the Optionee's immediate family, to trusts solely
for the benefit of such immediate family members and to partnerships in which
such family members and/or trusts are the only partners. During the life of the
recipient, an incentive stock option shall be exercisable only by the recipient.

In the case of a Director Option, if the Optionee's service as a director
is terminated for any reason, other than death, disability (as defined) or cause
(as defined), the Option shall be exercisable within three months after such
termination, but only to the extent it was exercisable on the date of
termination, provided that if such Optionee should die during the three-month
period without having exercised his or her Option, his or her personal
representative, heirs or legatees, as the case may be, shall have the right to
exercise his or her option within twelve (12) months of the date of death, but
only to the extent it was exercisable at the date of

9
<PAGE> 13

termination. If such Optionee's service as a director terminates by reason of
disability, his or her options shall terminate one year after the date of
disability. In the event of the death of such Optionee, while a director, his or
her personal representative, heirs, legatees, as the case may be, shall have the
right to exercise such Option, to the extent it was exercisable on the date of
death, up to twelve (12) months from the date of death of the Optionee, but in
no event after the expiration of the exercise period. If such Optionee's service
as a director terminates for cause, the Option granted thereunder shall
immediately terminate in full and no rights may be exercised.

The terms and conditions applicable to each Option granted to employees,
advisors and consultants upon the termination of the Optionee's employment or
change in status of the employment shall be as the Committee determines in its
discretion at the time of grant or thereafter.

The Committee will determine all questions regarding termination of
employment and cause of termination, disability or retirement.

FORM OF OPTIONS

Each Option granted under the Stock Option Plan is evidenced by a written
stock option agreement in such form as the Committee shall have approved. The
holders of Options shall have no rights as stockholders with respect to any
shares covered by Options until the date of issuance of a stock certificate for
such shares.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES RELATING TO OPTIONS UNDER THE STOCK
OPTION PLAN

Incentive Stock Option ("ISO") In general, an Optionee will not recognize
taxable income upon the grant or exercise of an ISO, and the Company will not be
entitled to any business expense deduction with respect to the grant or exercise
of an ISO. (However, upon the exercise of an ISO, the excess of the fair market
value on the date of exercise of the shares received over the exercise price of
the option will be treated as an adjustment to alternative minimum taxable
income.) In order for the exercise of an ISO to qualify as an ISO, an Optionee
generally must be an employee of the Company or a subsidiary (within the meaning
of Section 422 of the Code) from the date the ISO is granted through the date
three months before the date of exercise (one year preceding the date of
exercise in the case of an Optionee whose employment is terminated due to
disability). The employment requirement does not apply where an Optionee's
employment is terminated due to his or her death.

If an Optionee has held the shares acquired upon exercise of an ISO for at
least two years after the date of grant and for at least one year after the date
of exercise, when the Optionee disposes of the shares, the difference, if any,
between the sales price of the share and the exercise price of the Option will
be treated as long-term capital gain or loss subject to reduced rates of tax,
provided that any gain will be subject to further reduced rates of tax if shares
are held for more than eighteen months after the date of exercise. If an
Optionee disposes of the shares prior to satisfying these holding period
requirements (a "Disqualifying Disposition"), the Optionee will recognize
ordinary income (treated as compensation) at the time of the Disqualifying
Disposition, generally in an amount equal to the excess of the fair market value
of the shares at the time the Option was exercised over the exercise price of
the Option. The balance of the gain realized, if any, will be short-term or
long-term capital gain, depending upon whether the shares have been held for at
least twelve months after the date of exercise, with the lowest capital gain
rates available if shares are held for more than eighteen months after the date
of exercise. If the Optionee sells the shares in a Disqualifying Disposition at
a price below the fair market value of the shares at the time the option was
exercised, the amount of ordinary income (treated as compensation) will be
limited to the amount realized on the sale over the exercise price of the
option. In general, if the Company or its subsidiaries comply with applicable
income reporting requirements, the Company or its subsidiaries will be allowed a
business expense deduction to the extent an Optionee recognizes ordinary income.

Nonqualified Stock Option ("NQSO"). In general, an Optionee who receives an
"NQSO" will recognize no income at the time of the grant of the Option. In
general, upon exercise of an NQSO an Optionee will recognize ordinary income
(treated as compensation) in an amount equal to the excess of the fair market
value of the shares on the date of exercise over the exercise price of the
Option. The basis in shares
10
<PAGE> 14

acquired upon exercise of an NQSO will equal the fair market value of such
shares at the time of exercise, and the holding period of the shares (for
capital gain purposes) will begin on the date of exercise. In general, if the
Optionee includes the proper amount in income or the Company or its subsidiaries
comply with applicable income reporting requirements, the Company or its
subsidiaries will be entitled to a business expense deduction in the same amount
and at the same time as the Optionee recognizes ordinary income. In the event of
a sale of the shares received upon the exercise of an NQSO, any appreciation or
depreciation after the exercise date generally will be taxed as capital gain or
loss, provided that any gain will be subject to reduced rates of tax if the
shares were held for more than twelve months and will be subject to further
reduced rates if the shares were held for more than eighteen months.

Special rules may apply with respect to persons who may be subject to
Section 16(b) of the Exchange Act. Optionees who are or may become subject to
Section 16 of the Exchange Act should consult with their own tax advisors in
this regard.

Excise Taxes. Under certain circumstances, the accelerated vesting or
exercise of Options in connection with a change in control might be deemed an
"excess parachute payment" for purposes of the golden parachute tax provisions
of Section 280G of the Code. To the extent it is so considered, an Optionee may
be subject to a 20% excise tax and the Company and its Subsidiaries may be
denied a tax deduction.

Section 162(m) of the Internal Revenue Code generally disallows a federal
income tax deduction to any publicly-held corporation for compensation paid in
excess of $1,000,000 in any taxable year to the chief executive officer or any
of the four other most highly compensated executive officers who are employed by
the Company on the last day of the taxable year, but does not disallow a
deduction for qualified "performance-based compensation," the material terms of
which are disclosed to and approved by stockholders. The Company has established
and intends to administer the Stock Option Plan with the intention that
compensation resulting from Options with an exercise price per share no less
than the fair market value of an underlying share or the date of grant would
qualify as "performance-based compensation."

Option grants under the new amended and restated Stock Option Plan are
currently not determinable and will be made at the discretion of the Committee.
No grants have yet been made under the Stock Option Plan.

VOTE REQUIRED

Approval of the Stock Option Plan requires the favorable vote of the
holders of a majority of the shares of Common Stock present, in person or
represented by proxy at the Annual Meeting and entitled to vote generally for
the election of Directors. Proxies submitted by the Board of Directors will be
voted for the proposal unless a vote against the proposal or abstention is
specifically indicated.

ICN PROPOSAL NO. 3

APPROVAL OF AMENDED CERTIFICATE OF INCORPORATION AND BY LAWS TO INCREASE
AUTHORIZED CAPITAL STOCK FROM 110,000,000 TO 210,000,000 SHARES

AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION

The Company's Restated Certificate of Incorporation (the "Certificate")
currently in effect, provides that the Company is authorized to issue
110,000,000 shares of Capital Stock divided into two classes of which 10,000,000
shares, par value $.01 per share, shall be designated Preferred Stock and
100,000,000 shares, par value $.01 per share, shall be designated Common Stock.

Under the proposed amendment, the Fourth paragraph of the Certificate would
be amended to read as follows:

Fourth: The total number of shares of all classes of capital stock
which the Corporation shall have the authority to issue is Two Hundred and
Ten Million Shares (210,000,000) shares divided into two classes of which
Ten Million (10,000,000) shares, par value $.01 per share, shall be
designated Preferred

11
<PAGE> 15

Stock and Two Hundred Million (200,000,000) shares, par value $.01 per
share, shall be designated Common Stock.

As of March 31, 1998, 71,803,169 shares of Common Stock were issued and
outstanding. In addition, as of March 31, 1998, 9,568,699 shares were reserved
for future grant or for future issuance upon exercise of outstanding options
under the Company's 1994 Stock Option Plan.

PURPOSE AND EFFECT OF AMENDMENT

The Board of Directors' Recommendation and Comments on the Foregoing
Stockholder Proposal:

The principal purpose of the proposed amendment to the Certificate is to
authorize additional shares of Common Stock which will be available for issuance
under the Company's stock option and purchase plans and in the event that the
Board of Directors determines that it is necessary or appropriate to effect
future stock dividends or stock splits, to raise additional capital through the
sale of securities, to acquire another company or its business or assets through
the issuance of securities, or to establish a strategic relationship with a
corporate partner through the exchange of securities. In determining the
appropriate level of authorized shares of Common Stock, the Board of Directors
considered, among other factors, (i) that as of March 31, 1998, assuming
stockholder approval of Proposal No. 2, options to purchase 12,568,699 shares of
Common Stock were outstanding or reserved for issuance, pursuant to the
Company's stock option and purchase plans, (ii) that were the Company to effect
a two-for-one stock split in the future, a minimum of 171,132,474 authorized
shares would be required, and (iii) that in the Board's opinion, at least 10% to
15% of the Company's equity securities should be available for any of the
aforementioned potential strategic transactions. If the proposed amendment is
adopted, excluding the effect of any future stock split, 114,433,763 additional
shares of Common Stock will be available for issuance by the Board of Directors
without any further stockholder approval, although certain issuances of shares
may require stockholder approval in accordance with the requirements of the New
York Stock Exchange or the Delaware General Corporation Law. The holders of
Common Stock have no preemptive rights to purchase any stock of the Company. The
additional shares might be issued at such times and under such circumstances as
to have a dilutive effect on earnings per share and on the equity ownership of
the present common stockholders.

The flexibility of the Board of Directors to issue additional shares of
stock could enhance the Board's ability to negotiate on behalf of the
stockholders in a takeover situation. Although it is not the purpose of the
proposed amendment, the authorized but unissued shares of Common Stock (as well
as the authorized but unissued shares of Preferred Stock) also could be used by
the Board of Directors to discourage, delay or make more difficult a change in
the control of the Company. For example, such shares could be privately placed
with purchasers who might align themselves with the board in opposing a hostile
takeover bid. The issuance of additional shares might serve to dilute the stock
ownership of persons seeking to obtain control and thereby increase the cost of
acquiring a given percentage of the outstanding stock. The Company has
previously adopted certain measures that may have the effect of helping to
resist an unsolicited takeover attempt, including a dividend distributed to the
holders of the Company's Common Stock consisting of rights to purchase the
Company's Series A Preferred Stock upon the terms and conditions set forth in
the Rights Agreement approved by the Board of Directors, and provisions of the
Certificate authorizing the Board of Directors to issue up to 1,000,000 shares
of Preferred Stock with terms, provisions and rights fixed by the Board, and
provisions in the Certificate providing for the Board of Directors. The Board of
Directors is not aware of any pending or proposed effort to acquire control of
the Company.

VOTE REQUIRED

The approval of the amendment to the Certificate requires the affirmative
vote of a majority of the outstanding shares of Common Stock of the Company. An
abstention or broker nonvote is not an affirmative vote and, therefore, will
have the same effect as a vote against the proposal.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT TO THE COMPANY'S
RESTATED CERTIFICATE OF INCORPORATION TO AUTHORIZE AN

12
<PAGE> 16

ADDITIONAL 100,000,000 SHARES OF COMMON STOCK, FOR AN AGGREGATE OF 200,000,000
SHARES OF COMMON STOCK.

STOCKHOLDER PROPOSAL NO. 1

PROPOSAL TO AMEND THE COMPANY'S BY-LAWS TO PROVIDE FOR
A MANDATORY RETIREMENT POLICY FOR DIRECTORS OF THE COMPANY

The following proposal was submitted by Heartland Advisors, 790 North
Milwaukee St., Milwaukee, WI 53202.

Mandatory Retirement for Director Nominees at Age 70

RESOLVED, that the Bylaws of the Company be amended to provide for a
mandatory retirement policy for all members of the Board at age 70, and further
provided that if such policy is not adopted by the next regularly scheduled
annual meeting for stockholders, the Company shall adopt, commencing with
directors to be elected at the 1999 annual meeting, that the mandatory
retirement age for all nominees of the Board of Directors is set at age 70 and
no person shall be deemed qualified for nomination as a director whose term of
office as a director shall extend past his or her 70th birthday.

SUPPORTING STATEMENT

Certain members of the Company's Board of Directors may, if permitted,
remain entrenched in their director positions even though they may no longer be
capable of approaching their responsibilities with the vigor and flexible
outlook demanded of an effective Board member. In addition, the extended
entrenchment of Board members makes it more difficult to introduce new members,
with fresh ideas and innovations to the Board of Directors. The imposition of a
maximum age limit on nominees for election as Company directors will not only
reduce the possibility that a director's age will adversely affect his or her
ability to serve the Company, but will also facilitate periodic changes in the
composition of the Board that will help to bring new ideas and approaches to
bear on Company issues.

This proposal is designed to provide that vigorous, energetic and
innovative personnel can be brought into director positions and similar
proposals have been previously adopted by numerous public corporations.

Please vote "FOR" this proposal.

The Board of Directors' Recommendation and Comments on the Foregoing
Stockholder Proposal

We believe that it is not in the best interest of the stockholders to
prohibit qualified persons from serving as members of the Board of Directors
solely on the basis of age. As the United States and various state governments
have recognized in the passage of laws prohibiting age-related job
discrimination, there is no legitimate scientific or other basis for the
establishment of an arbitrary age for retirement. A policy mandating retirement
from the Board at the age of 70, without regard to the potential contributions
of the individual in question, could deprive the Corporation of the services of
extremely able and dedicated directors whose experiences and areas of expertise
contribute to the quality and diversity of the Board as a whole. We believe that
a Board member's ability to serve the Corporation is determined by such
individual's unique qualifications, in the context of the overall composition of
the Board and the Corporation's management needs, and not by such individual's
age.

The policy of the Board is to select nominees whom it believes to be best
qualified to oversee the management of the Corporation. A policy restricting the
discretion of the Board could have a negative impact on the quality and
diversity of the nominees eligible for election to the Board.

It should be noted that the portion of the foregoing stockholder proposal
pertaining to nominees is ambiguous as stated in that it does not specify by
what means the Corporation shall adopt the specified policy.

13
<PAGE> 17

Such portion may be intended as a proposal to amend the By-Laws or,
alternatively, as a precatory recommendation that the Board adopt such policy.

Accordingly, the Board of Directors recommends a vote AGAINST the foregoing
stockholder proposal.

Pursuant to the provisions of the Corporation's By-Laws, approval of the
foregoing stockholder proposal, insofar as it constitutes a proposal to amend
the By-Laws, would require the affirmative vote of not less than seventy-five
percent of the voting power of all securities of the Corporation entitled to
vote generally in the election of Directors. Otherwise, it would require the
affirmative vote of a majority of the voting power of the securities of the
Corporation represented at the Meeting and entitled to vote generally in the
election of Directors. When a proxy in the form enclosed with the Proxy
Statement is returned properly executed, such proxy will be voted against such
stockholder proposal unless marked to the contrary. In the case of a By-Law
amendment, abstentions and broker non-votes will have the effect of votes
against such stockholder proposal. In the case of a precatory recommendation,
abstentions will have the effect of votes against such stockholder proposal and
broker non-votes will have no effect since they will not be considered for this
purpose as shares represented at the Meeting.

EXECUTIVE OFFICERS

The executive officers of the Company are as follows:

<TABLE>
<CAPTION>
NAME AGE PRESENT POSITION WITH THE COMPANY
---- --- ---------------------------------
<S> <C> <C>
Milan Panic.............. 68 Chairman of the Board and Chief Executive
Officer
Adam Jerney.............. 56 Director, President and Chief Operating
Officer
John E. Giordani......... 55 Executive Vice President, Chief Financial
Officer and Corporate Controller
Bill A. MacDonald........ 50 Executive Vice President, Strategic Planning
David C. Watt............ 45 Executive Vice President, General Counsel and
Corporate Secretary
Jack L. Sholl............ 56 Senior Vice President, Human Resources
John Julian.............. 53 Senior Vice President, Worldwide Marketing
Devron Averett........... 48 Senior Vice President, Worldwide Manufacturing
</TABLE>

Mr. Panic is employed under an Employment Agreement (which was assumed by
the Company) which has been extended from its expiring date of November 30, 1994
to December 31, 1998. The Company also assumed, from the Predecessor Companies,
employment agreements with Messrs. Jerney, Giordani, MacDonald, Watt and Sholl.
Each of these agreements, which were entered into in March 1993, had an initial
term of three years and has been automatically extended through March 30, 1998.
The agreements will automatically renew for an additional one year period unless
either the Company or employee elects not to extend it. These agreements also
provide for certain payments if, after a change of control (as defined), the
employee's employment is terminated under certain circumstances. Executive
officers are elected annually.

Milan Panic, the founder of ICN, has been Chairman of the Board and Chief
Executive Officer of the Company since its inception in 1960 and President until
1997, except for a leave of absence from July 14, 1992 to March 4, 1993 while he
was serving as Prime Minister of Yugoslavia and a leave of absence from October
1979 to June 1980. Mr. Panic has also served as Chairman of the Board and Chief
Executive Officer of SPI, Viratek and Biomedicals since their respective
inceptions (except for such leaves of absence).

Adam Jerney has been President and Chief Operating Officer of the Company
since January 1997 and has served as a director of ICN since 1992. Prior to the
Merger, he had served as an officer of ICN, Viratek and Biomedicals since 1987,
and as President and Chief Operating Officer of SPI. He served as Chairman of
the Board and Chief Executive Officer of ICN, SPI, Viratek and Biomedicals from
July 14, 1992 to March 4, 1993 during Milan Panic's leave of absence (as
discussed above). Mr. Jerney joined ICN in 1973 as Director of Marketing
Research in Europe and assumed the position of General Manager of ICN
Netherlands in 1975.

14
<PAGE> 18

In 1981, he was elected Vice President Operations. Prior to joining ICN, he
spent four years with F. Hoffmann-LaRoche & Company.

John E. Giordani joined ICN in 1987 as Senior Vice President and Chief
Financial Officer. He has served as ICN's Corporate Controller and Executive
Vice President of Finance since January 1992. Prior to the Merger, he devoted
substantial time to Biomedicals and Viratek. Prior to joining ICN in 1986, Mr.
Giordani served as Vice President and Corporate Controller of Revlon, Inc. in
New York from 1982 through 1986 and Deputy and Assistant Corporate Controller
with Revlon from 1978 through 1982. He was with Peat, Marwick, Mitchell & Co.
from 1969 to 1978.

Bill A. MacDonald joined ICN in March 1982 as Director of Taxes. In 1983,
he became Vice President -- Taxes and Corporate Development. In 1987, he was
Senior Vice President -- Tax and Corporate Development, in 1992 Executive Vice
President Tax and Corporate Development and in 1995 Executive Vice President
Strategic Planning. Prior to the Merger in November 1994, he had been President
of Biomedicals since March 18, 1993. From 1980 to 1982, he served as the Tax
Manager of Pertec Computer Corporation. From 1973 to 1980, he was Tax Manager
and Assistant Treasurer of Republic Corporation.

David C. Watt joined ICN in March 1988 as Assistant General Counsel and
Secretary. He was elected Vice President Law and Secretary in December 1988. In
January 1992, Mr. Watt was promoted to Senior Vice President of ICN. On February
1, 1994, Mr. Watt was elected Executive Vice President, General Counsel and
Secretary of ICN. From 1986 to 1987, he was President and Chief Executive
Officer of Unitel Corporation. He also served as Executive Vice President and
General Counsel and Secretary of Unitel Corporation during 1986. From 1983 to
1986, he served with ICA Mortgage Corporation as Vice President, General Counsel
and Corporate Secretary. Prior to that time, he served with Central Savings
Association as Assistant Vice President and Associate Counsel from 1981 to 1983
and as Assistant Vice President from 1980 to 1981.

Jack L. Sholl joined ICN in August 1987 as Vice President, Public
Relations. Prior to the Merger, he was Senior Vice President of SPI. He was
elected Senior Vice President-Corporate Human Resources in September 1994. From
1979 to August 1987, he served as Director of Financial and Media Communications
with Warner-Lambert Company of Morris Plains, New Jersey, and from 1973 to 1979
as Manager, Department of Communications with Equibank, N.A. of Pittsburgh,
Pennsylvania. Prior to that time, he served on the Public Relations staff of the
New York Stock Exchange (1971 - 1973) and in editorial positions with The
Associated Press (1986 - 1971), the last as supervising Business and Financial
Editor in New York.

John R. Julian joined ICN in October 1994 as Vice President, Worldwide
Marketing and was promoted to Senior Vice President in May 1995. From 1989 to
1994 Mr. Julian served as Vice President of Marketing for the U.S. business of
Marion Merrell Dow. Prior to this appointment, he held various senior level
positions with Merrell Dow including Director, Global Commercial Development
(1985 - 1989), Director, U.S. Product Planning and Promotion (1983 - 1985), and
Product Group Director (1979 - 1983).

Devron R. Averett, Ph.D. joined ICN in May 1996 as Senior Vice President of
Research and Development. Dr. Averett is a 20-year veteran of research and
development programs at Burroughs Wellcome and Glaxo Wellcome, where from 1974
to 1996 he held positions of increasing responsibility. Prior to joining ICN,
Dr. Averett served as Director of Molecular and Cellular Virology at Glaxo
Wellcome. His work focused on nucleosides as chemotherapeutic agents, and he is
the author of numerous scientific articles and patents in this field. Dr.
Averett earned his Ph.D. degree in microbiology and immunology from the
University of North Carolina at Chapel Hill.

15
<PAGE> 19

OWNERSHIP OF THE COMPANY'S SECURITIES

PRINCIPAL STOCKHOLDERS

As of February 28, 1998, the following stockholders were known to
management to be beneficial owners of more than 5% of the outstanding shares of
the Common Stock:

<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF CLASS
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED OUTSTANDING(1)
------------------------------------ ------------------ ----------------
<S> <C> <C>
Heartland Advisors, Inc.(2).......................... 6,051,996 8.5%
Heartland Value Fund
790 North Milwaukee Street
Milwaukee, WI 53202
AMVESCAP PLC(3)...................................... 5,185,943 7.3%
11 Devonshire Square, London
EC2M 4YR England
Putnam Investments, Inc.(4) ......................... 3,673,994 5.1%
One Post Office Square
Boston, Mass. 02109
</TABLE>

- ---------------
(1) Total outstanding shares of Common Stock for purposes of this table include
71,479,689 shares outstanding on February 28, 1998 which includes the effect
of a 3 for 2 stock split effective March 16, 1998.

(2) As reported on Form 13G filed with the Commission 6,051,996 Shares may be
deemed beneficially owned within the meaning of Rule 13d-3 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), by Heartland
Advisors. The interests of Heartland Group, Inc., a services investment
company for which Heartland Advisors serves as investment advisor, relates
to more than 5% of the class.

(3) As reported on Form 13G filed with the Commission, 5,185,943 Shares may be
deemed beneficially owned within the meaning of Rule 13d-3 of the Securities
Exchange Act of 1934, as amended, by AMVESCAP PLC.

(4) As reported on Form 13G filed with the Commission, 3,673,994 shares may be
deemed beneficially owned within the meaning of Rule 13d-3 of the Securities
Exchange Act of 1934, as amended, by Putnam Investments, Inc.

16
<PAGE> 20

OWNERSHIP BY MANAGEMENT

The following table sets forth, as of March 31, 1998, certain information
regarding the beneficial ownership of the Common Stock and the percent of shares
owned beneficially by each Director and each Named Executive Officer (as defined
below) and all directors and executive officers of the Company as a group:

<TABLE>
<CAPTION>
NUMBER OF SHARES
AND NATURE OF
BENEFICIAL
OWNERSHIP
OF ICN PERCENTAGE
IDENTITY OF OWNER OR GROUP COMMON STOCK(1) OF CLASS
-------------------------- ---------------- ----------
<S> <C> <C>
Norman Barker, Jr. ...................................... 91,194(3) (2)
Birch E. Bayh, Jr. ...................................... 77,858(4) (2)
Alan F. Charles.......................................... 46,841(5) (2)
Roger Guillemin, M.D., Ph.D. ............................ 141,627(6) (2)
Dale Hanson.............................................. 16,875(7) (2)
Adam Jerney.............................................. 1,070,653(8) 1.5%
Weldon B. Jolley, Ph.D. ................................. 213,413(9) (2)
Andrei Kozyrev........................................... -- (2)
Jean-Francois Kurz....................................... 57,717(10) (2)
Thomas H. Lenagh......................................... 64,205(11) (2)
Charles T. Manatt........................................ 90,807(12) (2)
Stephen D. Moses......................................... 52,709(13) (2)
Milan Panic.............................................. 2,502,085(14) 3.4%
Michael Smith, Ph.D...................................... 60,902(15) (2)
Roberts A. Smith, Ph.D................................... 248,296(16) (2)
Richard W. Starr......................................... 91,691(17) (2)
John E. Giordani......................................... 92,050(18) (2)
Bill A. MacDonald........................................ 67,123(19) (2)
David C. Watt............................................ 190,539(20) (2)
Directors and executive officers of the Company as a
group (27 persons)..................................... 5,499,321(21) 7.2%
</TABLE>

- ---------------
(1) Except as indicated otherwise in the following notes, shares shown as
beneficially owned are those as to which the named persons possess sole
voting and investment power. However, under the laws of California and
certain other states, personal property owned by a married person may be
community property which either spouse may manage and control, and the
Company has no information as to whether any shares shown in this table are
subject to community property laws.

(2) Less than 1%.

(3) Includes 87,062 shares of Common Stock which Mr. Barker has the right to
acquire within 60 days upon the exercise of stock options.

(4) Includes 69,380 shares of Common Stock which Mr. Bayh has the right to
acquire within 60 days upon the exercise of stock options.

(5) Includes 46,772 shares of Common Stock which Mr. Charles has the right to
acquire within 60 days upon the exercise of stock options.

(6) Includes 140,799 shares of Common Stock which Dr. Guillemin has the right
to acquire within 60 days upon the exercise of stock options.

(7) Includes 16,875 shares of Common Stock which Mr. Hanson has the right to
acquire within 60 days upon the exercise of stock options.

17
<PAGE> 21

(8) Includes 1,010,651 shares of Common Stock which Mr. Jerney has the right to
acquire within 60 days upon the exercise of stock options.

(9) Includes 159,715 shares of Common Stock which Dr. Jolley has the right to
acquire within 60 days upon the exercise of stock options.

(10) Includes 57,717 shares of Common Stock which Mr. Kurz has the right to
acquire within 60 days upon the exercise of stock options.

(11) Includes 57,717 shares of Common Stock which Mr. Lenagh has the right to
acquire within 60 days upon the exercise of stock options.

(12) Includes 87,770 shares of Common Stock which Mr. Manatt has the right to
acquire within 60 days upon the exercise of stock options.

(13) Includes 52,406 shares of Common Stock which Mr. Moses has the right to
acquire within 60 days upon the exercise of stock options.

(14) Includes 2,123,528 shares of Common Stock which Mr. Panic has the right to
acquire within 60 days upon the exercise of stock options.

(15) Includes 60,902 shares of Common Stock which Dr. Michael Smith has the
right to acquire within 60 days upon the exercise of stock options.

(16) Includes 240,318 shares of Common Stock which Dr. Roberts A. Smith has the
right to acquire within 60 days upon the exercise of stock options.

(17) Includes 60,903 shares of Common Stock which Mr. Starr has the right to
acquire within 60 days upon the exercise of stock options.

(18) Includes 92,049 shares of Common Stock which Mr. Giordani has the right to
acquire within 60 days upon the exercise of stock options.

(19) Includes 53,553 shares of Common Stock which Mr. MacDonald has the right to
acquire within 60 days upon the exercise of stock options.

(20) Includes 187,546 shares of Common Stock which Mr. Watt has the right to
acquire within 60 days upon the exercise of stock options.

(21) Includes 4,921,949 shares of Common Stock which directors and executive
officers have the right to acquire within 60 days upon the exercise of
stock options.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Section 16(a) of the Exchange Act requires ICN's executive officers and
directors, and persons who own more than ten percent of the outstanding shares
of Common Stock, to file reports of ownership and changes in ownership with the
Commission and the New York Stock Exchange. Such executive officers, directors
and stockholders are required by Commission regulation to furnish ICN with
copies of all Section 16(a) forms they file.

Based on its review of the copies of such forms received, or written
representations from certain reporting persons that no Forms 5 were required for
those persons, ICN believes that during fiscal year 1997 all filing requirements
applicable to its executive officers, directors and ten percent beneficial
owners were timely satisfied, with the exception of Birch Bayh and Charles
Manatt, directors of the Company, who each filed one late report of a required
Form 4 for the reporting of disposition of securities.

18
<PAGE> 22

EXECUTIVE COMPENSATION AND RELATED MATTERS

SUMMARY COMPENSATION TABLE

The following table sets forth the annual and long-term compensation
awarded to, earned by, or paid to the Chief Executive Officer and the four most
highly paid executive officers of the Company (the "Named Executive Officers"),
for services rendered to the Company in all capacities during the years ended
December 31, 1997, 1996 and 1995.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
OTHER LONG-TERM
ANNUAL COMPENSATION ANNUAL COMPENSATION ALL OTHER
NAME AND ---------------------------- COMPENSATION AWARDS COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1) OPTIONS(#)(2) ($)(3)
------------------ ---- --------- --------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Milan Panic.................... 1997 644,680 1,787,000 279,000 190,473(4)
Chairman and 1996 612,500 750,000 150,000 73,893
Chief Executive Officer 1995 572,500 275,000 -- 92,500
Adam Jerney.................... 1997 402,800 669,200 111,600 26,729(5)
President and 1996 380,000 160,000 -- 22,400
Chief Operating Officer 1995 380,000 200,000 -- 66,400
John E. Giordani............... 1997 297,500 376,800 69,750 15,499(6)
Executive Vice President, 1996 278,000 127,000 -- 16,300
Chief Financial Officer 1995 238,707 100,000 -- 30,187
and Corporate Controller
Bill A. MacDonald.............. 1997 212,000 444,324 69,750 3,502(7)
Executive Vice President, 1996 200,000 141,000 -- 15,600
Strategic Planning 1995 200,000 100,000 -- 3,067
David Watt..................... 1997 214,000 562,000 69,750 4,657(8)
Executive Vice President, 1996 200,000 269,000 -- 3,000
General Counsel, 1995 200,000 100,000 -- 2,607
Corporate Secretary
</TABLE>

- ---------------
(1) Unless otherwise indicated, with respect to any individual named in the
above table, the aggregate amount of perquisites and other personal
benefits, securities or property was less than either $50,000 or 10% of the
total annual salary and bonus reported for the named executive officer.

(2) Includes grants of options to purchase shares of the Common Stock.

(3) Except where otherwise indicated, the amounts in this column represent
matching contributions to the Company's 401(k) plan, amounts accrued under
an executive deferral plan and medical and life insurance premiums.

(4) In 1997, the $190,473 of "All Other Compensation" Mr. Panic received
consisted of the following: executive medical ($3,244), life insurance
($8,424), and interest paid pursuant to a collateral agreement (as described
below) ($178,805).

(5) In 1997, the $26,729 of "All Other Compensation" Mr. Jerney received
consisted of the following: accounting-tax ($19,705), executive medical
($3,332), tennis club ($420) and life insurance ($3,272).

(6) In 1997, the $15,499 of "All Other Compensation" Mr. Giordani received
consisted of the following: executive medical ($12,539) and life insurance
($2,960).

(6) In 1997, the $3,502 of "All Other Compensation" Mr. MacDonald received
consisted of the following: executive medical ($1,718) and life insurance
($1,784).

(8) In 1997, the $4,657 of "All Other Compensation" Mr. Watt received consisted
of the following: executive medical ($3,301) and life insurance ($1,356).

In April 1997, the Company made a short-term advance of $327,000 to Mr.
Panic, which was repaid, with interest at the rate of 8.5% in 1997.

19
<PAGE> 23

In August 1996, the Company loaned Mr. Panic $428,000 in regards to tax
matters relating to the exercise of stock options. This loan along with accrued
interest was repaid in November 1996.

In June 1996, the Company made a short-term loan to Mr. Panic in the amount
of $3,500,000 for certain personal obligations. During August 1996, this amount
was repaid to the Company. In connection with this transaction, the Company
guaranteed $3,600,000 of debt of Mr. Panic with a third party bank. In addition
to the guarantee, the Company deposited $3,600,000 with this bank as collateral
to Mr. Panic's debt. This deposit is recorded as a long-term asset on the
balance sheet. The Chairman has provided collateral to the Company's guarantee
in the form of a right to the proceeds of the exercise of stock options in the
amount of 150,000 options with an exercise price of $15.17 and the rights to a
$4,000,000 life insurance policy provided by the Company. In the event of any
default on the debt to the bank, the Company has recourse that is limited to the
collateral described above. Both the transaction and the sufficiency of the
collateral for the guarantee were approved by the Board of Directors.

In July 1995 and February 1996, the Company loaned Mr. Jerney $93,000 and
$389,000, respectively, for the exercise of stock options. These amounts were
subsequently repaid with interest.

In January 1995, the Company advanced Mr. Panic $1,406,682, in regards to
tax matter relating to the exercise of stock options. The advance, plus accrued
interest at Bank of America's Reference Rate thereon, was fully paid by March
1995 with cash of $1,271,013 and shares of the Common Stock having a market
value at the time of $147,183.

OPTION GRANT INFORMATION

The following table sets forth information with respect to options to
purchase shares of Common Stock granted to Named Executive Officers in 1997.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION GRANT DATE
NAME GRANTED(1) FISCAL YEAR(2) PRICE DATE PRESENT VALUE(3)
---- ---------- -------------- -------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Milan Panic............................ 279,000 12% $13.67 4/25/07 $1,657,111
Adam Jerney............................ 111,600 5% $13.67 4/25/07 $ 662,844
John E. Giordani....................... 69,750 3% $13.67 4/25/07 $ 414,278
Bill A. MacDonald...................... 69,750 3% $13.67 4/25/07 $ 414,278
David C. Watt.......................... 69,750 3% $13.67 4/25/07 $ 414,278
</TABLE>

- ---------------
(1) The options granted have ten year terms. The options vest according to the
following schedule: 25% on the first anniversary of the date of grant and
25% on each of the next succeeding three anniversary dates of the grant
date. The options were granted with an exercise price equal to the fair
market value of the underlying shares on the date of grant.

(2) A total of 2,267,000 options were granted to employees including executive
officers during fiscal 1997.

(3) Based on the Black-Scholes option pricing model adapted for use in valuing
executive stock options. The actual value, if any, an executive may realize
will depend on the excess of the stock price over the exercise price on the
date the option is exercised, so that there is no assurance the value
realized by an executive will be at or near the value estimated by the
Black-Scholes model. The estimated values under that model are based on
arbitrary assumptions as to variables such as interest rates, stock price
volatility and future dividend yield.

20
<PAGE> 24

AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES

The following table sets forth information regarding (i) stock option
exercises by the Named Executive Officers during 1997 and (ii) unexercised stock
options held by the Named Executive Officers at December 31, 1997:

AGGREGATED OPTION EXERCISES
IN 1997 AND DECEMBER 31, 1997 OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED
SECURITIES UNDERLYING VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
SHARES DECEMBER 31, 1997 AT DECEMBER 31, 1997(2)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Milan Panic.............. -- $ -- 1,831,793 538,485 $31,010,860 $10,612,730
Adam Jerney.............. -- -- 956,809 137,542 22,310,820 2,738,699
John E. Giordani......... 104,293 2,140,592 51,024 83,962 789,167 1,678,443
Bill A. MacDonald........ 235,309 4,225,620 12,527 83,963 234,756 1,678,443
David Watt............... 50,250 1,193,242 146,518 83,965 3,120,521 1,678,659
</TABLE>

- ---------------
(1) Difference between the fair market value of the shares of Common Stock at
the date of exercise and the exercise price.

(2) Difference between the fair market value of the shares of Common Stock on
December 31, 1997 and the exercise price.

COMPENSATION OF DIRECTORS OF ICN

Members of the Board of Directors of ICN, other than employees, were paid
an annual fee of $30,000, payable quarterly, plus a fee of $1,000 for every
Board meeting attended and an additional fee of $1,000 for every committee
meeting attended, and were reimbursed for their out-of-pocket expenses in
attending meetings. During 1997, Mr. Bayh, or the law firm with which he is
affiliated, received legal or consulting fees from ICN in the amount of $33,440.
In addition, Drs. Guillemin, M. Smith and R. Smith and Messrs. Charles and Moses
received $75,000, $50,000, $12,000, $48,000 and $48,000, respectively, in 1997
from ICN for consulting services rendered. In addition, non-employee directors
on each April 18th are granted options to purchase 22,500 Shares.

CERTAIN EMPLOYMENT AGREEMENTS

On March 18, 1993, the Board of Directors of ICN adopted Employment
Agreements ("Employment Agreements") which contained "Change in Control"
benefits for five then current key senior executive officers of ICN. The
executives include Messrs. Jerney, Giordani, MacDonald and Watt, then officers
of ICN, and Mr. Sholl, then officer of SPI. The Employment Agreements were
assumed by ICN in connection with the Merger. In addition, the Company entered
into an employment contract in May 1995 with John Julian, Senior Vice President,
and with Dr. Devron Averett dated June 14, 1996, containing identical provisions
to the "Employment Agreements".

The Employment Agreements are intended to retain the services of these
executives and provide for continuity of management in the event of any actual
or threatened Change in Control. Each agreement with Messrs. Jerney, Giordani,
MacDonald, Watt and Sholl had an initial term which ended March 30, 1996 and
were extended through March 30, 1998. The Agreements with Mr. Julian and Dr.
Averett had initial terms extending through May 30, 1996 and June 30, 1997,
respectively. The Employment Agreements of Mr. Julian and Dr. Averett currently
extend through May 30, 1998 and June 30, 1998, respectively. The Employment
Agreements automatically extend for one year terms each year thereafter unless
either the executive or ICN elects not to extend it (provided that any notice by
ICN not to extend the agreement cannot cause the agreement to be terminated
prior to the expiration of the third anniversary of the date of any Change in
Control). These Employment Agreements provide that each executive shall receive
severance benefits equal

21
<PAGE> 25

to three times salary and bonus (and certain other benefits) if the executive's
employment is terminated without cause, if the executive terminates employment
for certain enumerated reasons following a Change in Control of ICN (including a
significant reduction in the executive's compensation, duties, title or
reporting responsibilities or a change in the executive's job location), or the
executive leaves ICN for any reason or without reason during a sixty day period
commencing six months after the Change in Control. The executive is under no
obligation to mitigate amounts payable under the Employment Agreements.

For purposes of the Employment Agreements, a "Change in Control" means any
of the following events: (i) the acquisition (other than from ICN) by any
person, subject to certain exceptions, of beneficial ownership, directly or
indirectly, of 20% or more of the combined voting power of ICN's then
outstanding voting securities; (ii) the existing Board of Directors cease for
any reason to constitute at least two-thirds of the Board, unless the election,
or nomination for election by ICN's stockholders, of any new director was
approved by a vote of at least two-thirds of the existing Board of Directors; or
(iii) approval by stockholders of ICN of (a) a merger or consolidation involving
ICN if the stockholders of ICN, immediately before such merger or consolidation,
do not, as a result of such merger or consolidation, own, directly or
indirectly, more than 80% of the combined voting power of the then outstanding
voting securities of the corporation resulting from such merger or consolidation
in substantially the same proportion as their ownership of the combined voting
power of the voting securities of ICN outstanding immediately before such merger
or consolidation, or (b) a complete liquidation or dissolution of ICN or an
agreement for the sale or other disposition of all or substantially all of the
assets of ICN. Removal of ICN's Board of Directors would also constitute a
Change in Control under the Employment Agreements. If the employment of such key
senior executives is terminated under any of the circumstances described above
the executives would be entitled to receive the following approximate amounts
(based upon present compensation): Adam Jerney $1,877,600; John Giordani
$1,269,300; Bill MacDonald $1,080,324; David Watt $1,204,000; Jack Sholl
$784,362; John Julian $957,100; and Devron Averett $778,600. In addition, the
vesting of certain options granted to the executives would be accelerated. The
value of the accelerated options would depend upon the market price of the
shares of Common Stock at that time.

PANIC EMPLOYMENT AGREEMENT

ICN and Milan Panic entered into an Employment Agreement effective October
1, 1988, which, as amended and extended, terminates on December 31, 1998 (the
"Panic Employment Agreement"). The base amount of salary for Mr. Panic was
determined by the Compensation Committee of the Board of Directors of ICN in
1988. In setting the base amount, the Compensation Committee took into
consideration Mr. Panic's then-current base salary, the base salaries of chief
executives of companies of similar scope and complexity and the Compensation
Committee's desire to retain Mr. Panic's services, given his role as founder of
ICN. Upon consummation of the Merger, the Panic Employment Agreement was assumed
by ICN. The Panic Employment Agreement provides for an annual salary, currently
$689,807, with an annual 7% increase payable under certain circumstances. The
Panic Employment Agreement provides that during the period of his employment,
Mr. Panic will not engage in businesses competitive with ICN without the
approval of the Board of Directors. Under the Panic Employment Agreement, Mr.
Panic agreed to waive and eliminate retirement benefits contained in his prior
employment contract with ICN. Instead, Mr. Panic may, at his option, retire upon
termination of the Panic Employment Agreement.

Upon retirement, Mr. Panic has agreed to provide consulting services to ICN
for $120,000 per year, which amount is subject to annual cost-of-living
adjustments from the base year of 1967 until the date of retirement not to
exceed his salary at the date of retirement (currently estimated to be in excess
of $577,000 per year, as adjusted). Mr. Panic's agreement to provide consulting
services to ICN is a lifetime agreement. The consulting fee shall not at any
time exceed the highest annual compensation, as adjusted, paid to Mr. Panic
during his employment by ICN. Upon Mr. Panic's retirement, the consulting fee
shall not be subject to further cost-of-living adjustments. Mr. Panic is
entitled to participate in the Company's medical and dental plans when serving
as a consultant. The Panic Employment Agreement includes a severance
compensation provision in the event of a Change in Control (as defined above).
The Panic Employment Agreement provides that if within two years after a Change
in Control of ICN, Mr. Panic's employment with

22
<PAGE> 26

ICN is terminated, except as a result of death, disability or illness, or if Mr.
Panic leaves the employ of ICN within such two-year period, then Mr. Panic will
receive as severance compensation, five times his annual salary, as adjusted,
and Mr. Panic will be deemed to have retired and will receive the same
consulting fees to which he would otherwise have been entitled under the Panic
Employment Agreement. A Change in Control of ICN would occur, for purposes of
the Panic Employment Agreement, if (i) a Change in Control shall occur of a
nature which would be required to be reported in response to Item 6(e) of
Schedule 14A under the Exchange Act (for purposes of that Item, "control" is
defined as the power to direct or cause the direction of the management and
policies of ICN, whether through the ownership of voting securities, by
contract, or otherwise) unless two-thirds of the Existing Board of Directors, as
defined below, decide in their discretion that no Change in Control has occurred
for purposes of the agreement; (ii) any person is or becomes the beneficial
owner, directly or indirectly, of securities of ICN representing 15% or more of
the combined voting power of ICN's then outstanding securities; (iii) the
persons constituting the Existing Board of Directors, as defined below, cease
for any reason to constitute a majority of ICN's Board of Directors; or (iv)
shares of ICN common stock cease to be registered under the Exchange Act.
"Existing Board of Directors" is defined in the Panic Employment Agreement as
those persons constituting the Board of Directors at the date of the Panic
Employment Agreement, together with each new director whose election or
nomination for election by ICN's stockholders was previously approved, or is
approved within thirty days of such election or nomination, by a vote of at
least two-thirds of the directors in office prior to such person's election as a
director. If Mr. Panic's employment is terminated under any of the circumstances
described above following such a Change in Control, in addition to the
consulting fee as described above, Mr. Panic would be entitled to receive (based
upon present compensation) $3,223,400.

COMPENSATION REPORT

The Compensation and Benefits Committee ("Committee") is composed of
Messrs. Barker, Bayh, Charles, R. Smith and Moses each of whom is a non-employee
director for purposes of Rule 16b-3 of the Exchange Act.

The following statement made by the members of the Committee shall not be
deemed incorporated by reference into any filing under the Securities Act of
1933 or under the Securities Exchange Act of 1934 and shall not otherwise be
deemed filed under such Acts.

Compensation Philosophy

The Board of Directors adopts an annual budget and financial plan which
incorporates the goals and objectives to be achieved by the Company and the
specific operating units. The goals focus on growth in operating income and
growth in earnings per share. Each executive is responsible for the performance
of their unit in relation to the plan. Specific goals and objectives for each
executive are reviewed by the executive and their supervisor. In reviewing the
annual performance which will determine the executive's compensation, the
supervisor assesses a performance grade based on the pre-set performance
objectives. This assessment is used to determine base salary for the following
fiscal year. Eligibility for bonus awards was based on the pre-set performance
guidelines and growth in operating income and earnings per share. However,
bonuses may be paid even when these objective standards are not met if specific
contributions by an employee merit a bonus or the reasons for failure to meet
the objective standards are beyond the control of the Company and/or the
employee. Stock options are granted based on a program developed for the Company
by Towers Perrin, a compensation consulting company. Each individual's base
number of options is derived from a formula which ties to their base salary. The
Committee may then consider the achievement of individual as well as corporate
performance goals in determining the ultimate number of options granted.

The compensation of executives consists of salary, a bonus plan to reward
performance and a long-term incentive stock option program.

Base Salary

Salaries are paid within certain grades which are established by the Human
Resources Department of the Company reviewing data of other like companies in
the same industry. The Company reviewed salary surveys
23
<PAGE> 27

prepared by Towers Perrin. These surveys did not state which companies
participated in the surveys. The salary levels were in the median of
compensation for similar positions. Grades are updated to reflect changes in the
marketplace. The salaries of executives are reviewed on an annual basis by
supervisory managers and the Committee.

Bonus Plan

The Company has adopted an Incentive Bonus Plan which is based on target
goals of growth in both operating income and earnings per share. Individual
performance goals are compared against the target goals established.
Recommendations are made by individual supervisors and approved by the
Committee.

Long Term Stock Incentive Plans

Stock options are granted as long range incentives to executives. Options
vest over a ten year period. Options are granted at fair market value. The
amount of options granted is tied to salary and performance and each grant is
evaluated. No grant to executives is automatic. On May 29, 1996, at the
Company's 1996 Annual Meeting of Stockholders, the stockholders approved a Long
Term Incentive Plan ("LTIP") which provides for restricted stock awards to be
granted to certain key officers and employees of the Company. Eligibility for
awards under the LTIP requires that the Company's stock performance exceeds that
of the Standard and Poor's 500 Index.

Chief Executive Officer Compensation

The Committee determines the compensation of the Chief Executive Officer
based on a number of factors. The goal of the Committee is to grant compensation
consistent with compensation granted to other chief executive officers of
companies in the same industry. The Chief Executive Officer's compensation is
based on an employment agreement with ICN (see "Executive Compensation")
comprised of a base salary and a bonus based on the Company's performance.
Special one time bonuses will be paid, at the Committee's discretion, based on
special contributions made to the Company. Substantial bonuses are approved by
the Board of Directors.

Internal Revenue Code Section 162(m)

Section 162(m) of the Internal Revenue Code (the "Code"), which was enacted
in 1993, generally disallows a federal income tax deduction to any publicly-held
corporation for compensation paid in excess of $1,000,000 in any taxable year
beginning after January 1, 1994 to the chief executive officer and any of the
four other most highly compensated executive officers who are employed by ICN on
the last day of the taxable year. Section 162(m), however, does not disallow a
federal income tax deduction for qualified "performance-based compensation," the
material terms of which are disclosed to and approved by the stockholders. The
application of Section 162(m) is not expected to have a material impact on the
federal income tax liability of ICN.

Compensation Committee Interlocks and Insider Participation

Bayh, Connaughton & Stewart P.C received fees in 1997 from ICN for legal
services in the amount of $33,440. Mr. Birch E. Bayh, Jr. was formerly senior
partner in the firm. Mr. Bayh is now a senior partner in the firm of
Oppenheimer, Wolff, Donnelly & Bayh.

Compensation and Benefits Committee

Norman Barker, Jr.
Senator Birch Bayh
Alan F. Charles
Roberts A. Smith
Stephen D. Moses

24
<PAGE> 28

PERFORMANCE GRAPH

The following compares ICN's cumulative total stock return on the shares
with the cumulative return on the Standard & Poor's 500 Stock Index and the
5-Stock Custom Composite Index for the five years ended December 31, 1997. The
graph assumes that the value of the investment of the ICN Common Stock in each
index as $100 at December 31, 1992 and that all dividends were reinvested. The
cumulative total return for the Company is based on an initial investment in SPI
(the predecessor for accounting purposes to the Company) on December 31, 1992
(and taking into account the conversion of shares of SPI common stock into
shares in the Merger on November 11, 1994 on a one for one basis).

CUMULATIVE TOTAL RETURN
BASED ON REINVESTMENT OF $100 BEGINNING DECEMBER 31, 1992

<TABLE>
<CAPTION>
ICN
MEASUREMENT PERIOD PHARMACEUTICALS CUSTOM COMPOSITE
(FISCAL YEAR COVERED) INC. S&P 500 INDEX (5 STOCKS)
<S> <C> <C> <C>
DEC-92 100 100 100
DEC-93 145 110 76
DEC-94 184 112 95
DEC-95 221 153 157
DEC-96 227 189 146
DEC-97 574 252 150
</TABLE>

The 5-Stock Custom Composite Index consists of Allergan Inc., Amgen Inc.,
Carter Wallace Inc., Forest Laboratories -- Class A, and Syntex Corp.
Performance for Syntex calculated through September 1994 after which the company
was acquired.

CERTAIN TRANSACTIONS

Loans and advances were made to certain executive officers of the Company
during 1995, 1996 and 1997. See "Executive Compensation and Related Matters."

Certain outside directors have provided legal and other consultation
services to ICN which amounted to approximately $266,440 during 1997. See
"Executive Compensation of Related Matters -- Compensation of Directors of ICN."

25
<PAGE> 29

INDEPENDENT PUBLIC ACCOUNTANTS

Coopers & Lybrand L.L.P. was selected as the Company's independent public
accountants for fiscal 1997. Coopers & Lybrand L.L.P. will be present at the
Annual Meeting and such representative will have an opportunity to make a
statement if desired. Further, such representative will be available to respond
to appropriate stockholder questions directed to him or her.

STOCKHOLDER PROPOSALS

Any stockholder wishing to submit a proposal to be presented to all
stockholders at the Company's 1999 Annual Meeting must submit such proposal to
the Company so that it is received by the Company at its principal executive
offices no later than January 30, 1999.

ANNUAL REPORT

The Annual Report to Stockholders for the year ended December 31, 1997
(including audited financial statements) is being mailed to stockholders with
this Proxy Statement. The Annual Report does not form part of the material for
the solicitation of proxies.

MISCELLANEOUS

The Board of Directors knows of no other matters which are likely to come
before the Annual Meeting. If any other matters, of which the Board is not now
aware, should properly come before the Annual Meeting, it is intended that the
person named in the accompanying form of proxy will vote such proxy in
accordance with his best judgment on such matters.

By Order of the Board of Directors,

/s/ MILAN PANIC
Milan Panic
Chairman of the Board

Costa Mesa, California
April xx, 1998

THE COMPANY WILL MAIL WITHOUT CHARGE UPON WRITTEN REQUEST A COPY OF ITS
MOST RECENT ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS,
SCHEDULES AND A LIST OF EXHIBITS. REQUESTS SHOULD BE SENT TO: SECRETARY, ICN
PHARMACEUTICALS, INC., 3300 HYLAND AVENUE, COSTA MESA, CALIFORNIA 92626.

26
<PAGE> 30
ICN PHARMACEUTICALS, INC.
3300 HYLAND AVENUE, COSTA MESA, CALIFORNIA 92626

PROXY FOR ANNUAL MEETING OF STOCKHOLDERS ON MAY 28, 1998

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
ICN PHARMACEUTICALS, INC.

The undersigned hereby appoints Milan Panic and David C. Watt as Proxies, each
with the power to appoint his substitute, and hereby authorizes them to
represent and to vote, as designated below, all the shares of common stock of
ICN Pharmaceuticals, Inc. (the "Company") held of record by the undersigned on
April 24, 1998 at the annual meeting of stockholders to be held at 11:00 a.m.
E.D.T. on May 27, 1998 or any adjournments or postponements thereof.

This proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder. If no instructions are indicated herein, this proxy
will be treated as a grant of authority to vote "FOR" the nominees to the Board
of Directors listed on the reverse side of this proxy card.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2 and 3.

(Continued and to be signed on the reverse side.)

<PAGE> 31

[X] Please mark your vote as in this example.

The Board of Directors of the Company recommends a vote "FOR" proposal 1.

FOR ALL NOMINEES LISTED BELOW WITHHOLD AUTHORITY
[ ] [ ]

1. Election of nominees listed below to the Board of Directors of the Company.

Nominees: Weldon Jolley, Ph.D., Thomas H. Lenagh, Roberts A. Smith, Ph.D.,
Richard W. Starr, and Andrei Kozyrev, Ph.D.

2. Adoption of the ICN Pharmaceuticals, Inc. Amended and Restated 1998 Stock
Option Plan.

The Board of Directors recommends a vote "FOR" Proposal #2

FOR APPROVE AGAINST
[ ] [ ]

3. Adoption of the Restated Certificate of Incorporation to increase the
actual capital stock of the Company from 110,000,000 to 210,000,000 shares.

The Board of Directors recommends a vote "FOR" Proposal #3

FOR APPROVE AGAINST
[ ] [ ]

4. Adoption of a stockholder proposal to amend the By-Laws of the Company to
provide for a mandatory retirement policy for directors of the Company.

The Board of Directors recommends a vote "AGAINST" Proposal #4

FOR APPROVE AGAINST
[ ] [ ]

Please date this Proxy and sign exactly as your name appears herein. When there
is more than one owner, all must sign, when signatory or attorney, executor,
administrator, trustee, guardian, corporate officer or partner, sign full title
as such. If a corporation please sign in full corporate name by duly authorized
officer. If a partnership, please sign in partnership name by a duly authorized
person.

(Instruction: To withhold authority to vote for any individual nominee(s), write
the name(s) of such nominee(s) in the following space)

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The undersigned acknowledges receipt of
the copy of the Notice of Annual Meeting
and Proxy Statement (with all enclosures
and attachments) relating to the
meeting.

THE BOARD OF DIRECTORS OF THE COMPANY
RECOMMENDS THAT YOU SIGN, DATE AND MAIL
THE PROXY CARD TODAY.

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Signature(s) Date