EXHIBIT 4.26


                                January 22, 2001


Leiner Health Products Inc.
901 East 233rd Street
Carson, California 90745
Attention:  William B. Towne
Facsimile No.:  (310) 952-7768

Vita Health Products Inc.
150 Beghin Avenue
Winnipeg, Manitoba
Attention:  Rachel Cahill
Facsimile No.:  (204) 633-8386

North Castle Partners I, L.L.C.
11 Meadowcroft Lane
Greenwich, Connecticut 06830
Attention:  Charles Baird, Jr.
Facsimile No.:  (203) 869-4311

                           NOTICE OF EVENTS OF DEFAULT
                            AND RESERVATION OF RIGHTS

Gentlemen and Ladies:

         We refer to the Amended and Restated Credit Agreement, dated as of
May 15, 1998 (as further amended, supplemented, amended and restated or
otherwise modified, the "CREDIT AGREEMENT"), among Leiner Health Products
Inc., a Delaware corporation (the "U.S. BORROWER"), Vita Health Products
Inc., a Manitoba corporation (the "CANADIAN BORROWER", and together with the
U.S. Borrower, the "BORROWERS), the various financial institutions as are or
may become parties thereto which extend a Commitment under the U.S. Facility
(collectively, the "U.S. LENDERS"), the various financial institutions as are
or may become parties thereto which extend a Commitment under the Canadian
Facility (collectively, the "CANADIAN LENDERS", and together with the U.S.
Lenders, the "LENDERS"), The Bank of Nova Scotia ("SCOTIABANK") as agent for
the U.S. Lenders under the U.S. Facility (in such capacity, the "U.S.
AGENT"), Scotiabank, as agent for the Canadian Lenders under the Canadian
Facility (in such capacity, the "CANADIAN AGENT", and together with the U.S.
Agent, collectively, the "AGENTS"), Merrill Lynch Capital Corporation, as
Documentation Agent, and Salomon Brothers Holding Company Inc., as
Syndication Agent. Unless otherwise defined herein or the context otherwise
requires, terms used herein have the meanings provided in the Credit
Agreement.



         The Borrowers have informed us on January 18, 2001 that Events of
Default have occurred and are continuing under the Loan Documents. Among
other things, the Borrowers have informed us that the U.S. Borrower will not
be in compliance with certain financial covenants set forth in Section 9.2.4
of the Credit Agreement for the Fiscal Quarter ending December 31, 2000.
Furthermore, we believe that the Borrowers have breached representations
under the Loan Documents. As a result of these (and other) Events of Default,
the Borrowers are not able to satisfy the conditions precedent to making
Credit Extensions, and as a result the Commitments are suspended until
further notice. Pursuant to Sections 2.4 and 3.4 of the Credit Agreement, the
outstanding principal amount of all Loans may not be continued as (or
converted into) LIBO Rate Loans or Canadian BAs, as applicable.

         Furthermore, as a result of the Events of Default the Borrowers are
prohibited from, among other things, redeeming shares of Capital Stock as set
forth in clause (iii) of Section 9.2.6 of the Credit Agreement, consummating
acquisitions in accordance with clause (b) of Section 9.2.10 or paying any
fees in accordance with clause (b) of Section 9.2.13 of the Credit Agreement.

         The Agents, on behalf of the Lenders, hereby inform you that neither
they nor any of the Lenders waive or have waived any Default or Event of
Default and expressly reserve the rights of the Agents and the Lenders to
take any and all actions, and exercise any and all remedies at any time,
under each Loan Document and under applicable law as a result of the
occurrence of any and all Events of Default. Nothing contained herein shall
be deemed to be a waiver of any such rights or remedies, or of any Event of
Default which may occur or has already occurred, under the Loan Document.

         Please be further advised that any prior, current or future discussions
or course of conduct among us and/or the Lenders and you and/or any of your
Affiliates or officers or directors, and any failure or delay by us or by any
Lender in exercising any right, power or privilege arising under applicable law
or under the Loan Documents, is not intended to and shall not constitute a
waiver of any such right, power or privilege or an amendment or other
modification of any Loan Document. Moreover, no circulation of any draft waivers
or other documents shall be deemed to constitute a waiver of any such Events of
Default or any such amendment or modification. We expressly reserve, on behalf
of the Lenders, the right at any time to take any action permitted by law, the
Credit Agreement or any other Loan Document as a consequence of the Events of
Default.






                         Sincerely,

                         THE BANK OF NOVA SCOTIA, as the U.S
                         Agent


                         By  /s/  John Quick
                           ------------------------------------------
                                Title.


                         THE BANK OF NOVA SCOTIA, as the Canadian Agent


                         By   /s/  John Quick
                            -----------------------------------------
                                Title.



Cc:  Leiner Industries Inc. Bank Syndicates