EXHIBIT 10.15

 

 

 

ALLERGAN, INC.

EMPLOYEE STOCK OWNERSHIP PLAN

 

 

 

 

 

RESTATED

2008

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TABLE OF CONTENTS

 

     PAGE

ARTICLE I

  

INTRODUCTION

   1

1.1

  

Plan Name

   1

1.2

  

Plan Purpose

   1

1.3

  

Effective Date of 2008 Restated Plan

   1

1.4

  

Amendments to Plan

   1

1.5

  

Plan Qualification

   2

ARTICLE II

  

DEFINITIONS

   3

2.1

  

Affiliated Company

   3

2.2

  

Beneficiary

   3

2.3

  

Board of Directors

   3

2.4

  

Break in Service

   3

2.5

  

Code

   3

2.6

  

Committee

   3

2.7

  

Company

   3

2.8

  

Company Stock

   3

2.9

  

Compensation

   3

2.10

  

Credited Service

   5

2.11

  

Disability

   6

2.12

  

Effective Date

   6

2.13

  

Eligible Employee

   7

2.14

  

Eligible Retirement Plan

   7

2.15

  

Eligible Rollover Distribution

   7

2.16

  

Employee

   7

2.17

  

Employment Commencement Date

   8

2.18

  

ERISA

   8

2.19

  

ESOP Account

   8

2.20

  

Exempt Loan

   8

2.21

  

Exempt Loan Suspense Subfund

   9

2.22

  

415 Suspense Account

   9

2.23

  

Highly Compensated Employee

   9

2.24

  

Hour of Service

   10

2.25

  

Investment Manager

   10

2.26

  

Leased Employee

   10

2.27

  

Leave of Absence

   10

2.28

  

Normal Retirement Age

   11

2.29

  

Participant

   11

2.30

  

Period of Severance

   12

2.31

  

Plan

   12

2.32

  

Plan Administrator

   12

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TABLE OF CONTENTS

 

     PAGE

2.33

  

Plan Year

   12

2.34

  

Reemployment Commencement Date

   12

2.35

  

Severance

   12

2.36

  

Severance Date

   13

2.37

  

Sponsor

   13

2.38

  

Trust

   13

2.39

  

Trust Agreement

   13

2.40

  

Trustee

   13

2.41

  

Valuation Date

   13

ARTICLE III

  

ELIGIBILITY AND PARTICIPATION

   14

3.1

  

Participation

   14

3.2

  

Duration of Participation

   14

3.3

  

Participation after Reemployment

   14

3.4

  

Participation After Normal Retirement Age

   14

ARTICLE IV

  

CONTRIBUTIONS AND ALLOCATION TO ACCOUNTS

   15

4.1

  

Contributions to the Trust Fund

   15

4.2

  

Allocation of Contributions to Trust Fund

   15

4.3

  

Forfeitures

   17

4.4

  

Employee Contributions and Rollovers

   17

ARTICLE V

  

VESTING AND DISTRIBUTIONS

   18

5.1

  

No Vested Rights Except as Herein Specified

   18

5.2

  

Vesting

   18

5.3

  

Severance When Less Than Fully Vested

   18

5.4

  

Distribution upon Severance

   19

5.5

  

Distribution upon Death

   19

5.6

  

Distribution upon Disability

   20

5.7

  

Withdrawal upon Age 59-1/2

   20

5.8

  

Designation of Beneficiary

   20

5.9

  

Form of Distribution

   21

5.10

  

Distribution Rules

   22

5.11

  

Put Option for Company Stock Allocated to ESOP Accounts

   24

5.12

  

Diversification Rule

   28

5.13

  

Lapsed Benefits

   30

 

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TABLE OF CONTENTS

 

     PAGE

ARTICLE VI

  

TRUST FUND AND INVESTMENTS

   32

6.1

  

General

   32

6.2

  

Single Trust

   32

6.3

  

Investment of the Trust

   32

6.4

  

Certain Offers for Company Stock

   34

6.5

  

Securities Law Limitation

   39

6.6

  

Accounting and Valuations

   39

6.7

  

Dividends

   40

6.8

  

Non-Diversion of Trust Fund

   42

6.9

  

Company, Committee and Trustee Not Responsible for Adequacy of Trust Fund

   42

6.10

  

Distributions

   43

6.11

  

Taxes

   43

6.12

  

Trustee Records to be Maintained

   43

6.13

  

Annual Report of Trustee

   43

6.14

  

Appointment of Investment Manager

   44

ARTICLE VII

  

OPERATION AND ADMINISTRATION

   45

7.1

  

Appointment of Committee

   45

7.2

  

Appointment of Investment Subcommittee

   45

7.3

  

Transaction of Business

   45

7.4

  

Voting

   46

7.5

  

Responsibility of Committees

   46

7.6

  

Committee Powers

   47

7.7

  

Additional Powers of Committee

   48

7.8

  

Investment Subcommittee Powers

   48

7.9

  

Periodic Review of Funding Policy

   49

7.10

  

Claims Procedures

   49

7.11

  

Appeals Procedures

   50

7.12

  

Limitation on Liability

   51

7.13

  

Indemnification and Insurance

   51

7.14

  

Compensation of Committees and Plan Expenses

   51

7.15

  

Resignation

   52

7.16

  

Voting of Company Stock

   52

7.17

  

Reliance Upon Documents and Opinions

   54

ARTICLE VIII

  

AMENDMENT AND ADOPTION OF PLAN

   55

8.1

  

Right to Amend Plan

   55

8.2

  

Adoption of Plan by Affiliated Companies

   55

 

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TABLE OF CONTENTS

 

     PAGE

ARTICLE IX

  

DISCONTINUANCE OF CONTRIBUTIONS

   56

ARTICLE X

  

TERMINATION AND MERGER

   57

10.1

  

Right to Terminate Plan

   57

10.2

  

Effect on Trustee and Committee

   57

10.3

  

Merger Restriction

   57

10.4

  

Effect of Reorganization, Transfer of Assets or Change in Control

   57

ARTICLE XI

  

LIMITATION ON ALLOCATIONS

   61

11.1

  

General Rule

   61

11.2

  

Annual Additions

   61

11.3

  

Other Defined Contribution Plans

   62

11.4

  

Adjustments for Excess Annual Additions

   62

11.5

  

Compensation

   63

11.6

  

Treatment of 415 Suspense Account Upon Termination

   63

ARTICLE XII

  

TOP-HEAVY RULES

   65

12.1

  

Applicability

   65

12.2

  

Definitions

   65

12.3

  

Top-Heavy Status

   66

12.4

  

Minimum Contributions

   67

12.5

  

Minimum Vesting Rules

   68

12.6

  

Non-Eligible Employees

   68

ARTICLE XIII

  

RESTRICTION ON ASSIGNMENT OR OTHER ALIENATION OF PLAN BENEFITS

   69

13.1

  

General Restrictions Against Alienation

   69

13.2

  

Qualified Domestic Relations Orders

   69

ARTICLE XIV

  

MISCELLANEOUS PROVISIONS

   73

14.1

  

No Right of Employment Hereunder

   73

14.2

  

Limitation on Company Liability

   73

14.3

  

Effect of Article Headings

   73

14.4

  

Gender

   73

 

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TABLE OF CONTENTS

 

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14.5

  

Interpretation

   73

14.6

  

Withholding For Taxes

   73

14.7

  

California Law Controlling

   73

14.8

  

Plan and Trust as One Instrument

   73

14.9

  

Invalid Provisions

   73

14.10

  

Counterparts

   74

 

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ALLERGAN, INC.

EMPLOYEE STOCK OWNERSHIP PLAN

ARTICLE I

INTRODUCTION

1.1        Plan Name.    This document, made and entered into by Allergan, Inc.,
a Delaware corporation (“Allergan”), amends and restates in its entirety the
Allergan, Inc. Employee Stock Ownership Plan (Restated 2005) and shall be known
hereafter as the “Allergan, Inc. Employee Stock Ownership Plan (Restated 2008).”

1.2        Plan Purpose.    The purpose of the Allergan, Inc. Employee Stock
Ownership Plan (Restated 2008), hereinafter referred to as the “Plan,” is to
offer Participants a systematic program for accumulation of beneficial ownership
interests in Company Stock and to encourage and develop employee interest and
involvement in the Company. Through the beneficial ownership of Company Stock,
enhanced by means of possible debt financed acquisition of Company Stock,
Allergan intends to provide Participants with a meaningful voice in matters
affecting both it and Participants as shareholders. In order to accomplish these
objectives, the Plan is expressly authorized and directed to acquire and hold
Company Stock as its primary investment. All assets acquired under the Plan
shall be administered, distributed, forfeited and otherwise governed by the
provisions of the Plan, which is to be administered by the Committee for the
exclusive benefit of Participants in the Plan and their Beneficiaries.

1.3        Effective Date of 2008 Restated Plan.    The Effective Date of this
amended and restated Plan shall be January 1, 2008 unless otherwise specified in
the Plan. The provisions of this Plan document apply generally only to Employees
who have completed at least one (1) Hour of Service for Allergan or any
Affiliated Companies on or after January 1, 2008 and the rights and benefits, if
any, of Employees or Participants whose employment with Allergan or any
Affiliated Companies terminated prior to January 1, 2008 shall be determined in
accordance with the provisions of the Plan then in effect unless otherwise
provided herein and subject to any modification provided herein that may affect
the holding or distribution of Participants’ Accounts.

1.4        Amendments to Plan.    The Plan has been amended from time to time
since its Original Effective Date of July 26, 1989 to reflect changes in the
Plan’s operations and applicable law including, but not limited to, the
following:

(a)        This Plan document that amends the Plan:  (i) to comply with all
changes made by the Economic Growth and Tax Relief Reconciliation Act of 2001
(with technical corrections made by the Job Creation and Worker Assistance Act
of 2002), the Pension Funding Equity Act of 2004, the American Jobs Creation Act
of 2004, and the Gulf Opportunity Zone Act of 2005 as well as the changes to the
qualification requirements listed on the “2006 Cumulative List of Changes in
Plan Qualification Requirements” as set forth in Notice 2007-3 and (ii) to
comply with a change made by the Pension

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Protection Act of 2006 by permitting non-spouse beneficiaries to elect direct
rollovers of lump sum distributions.

(b)        The Plan document for the Allergan, Inc. Employee Stock Ownership
Plan (Restated 2005) that incorporated the provisions of the amendments made
under the First, Second, and Third Amendments to the Allergan, Inc. Employee
Stock Ownership Plan (Restated 2003) and amended the Plan, effective March 28,
2005, so that the Plan’s mandatory distribution rule applies only to Accounts,
the vested portions of which, do not exceed $1,000.

(c)        Amendments to the Plan that (i) limited participation in the Plan to
those Employees who were Participants in the Plan as of December 31, 2002 and
(ii) in connection with the distribution of the stock of Advanced Medical
Optics, Inc. (“AMO”) by Allergan to its stockholders on June 29, 2002, provided
for the transfer of the assets and liabilities attributable to the ESOP Accounts
of “AMO Employees” (as defined in Section 2.16) from the Plan to the Advanced
Medical Optics, Inc. 401(k) Plan, a qualified profit sharing plan with a
qualified cash or deferred arrangement, in accordance with Code Section 414(l),
Regulation Section 1.414(1)-1, and Section 208 of ERISA, and the allocation of
AMO stock to Participants’ ESOP Accounts and the Exempt Loan Suspense Subfund
and the treatment of AMO stock not yet allocated to Participants’ ESOP Accounts.

1.5        Plan Qualification.    The Plan is an employee benefit plan that is
intended to qualify under Code Section 401(a) as a qualified stock bonus plan
and under Code Section 4975(e)(7) as an employee stock ownership plan. The
Plan’s last determination letter was issued by the Internal Revenue Service on
March 7, 2003 with respect to the Allergan, Inc. Employee Stock Ownership Plan
(Restated 2003). This Plan document is intended to reflect all law changes made
by the Economic Growth and Tax Relief Reconciliation Act of 2001 (with technical
corrections made by the Job Creation and Worker Assistance Act of 2002), the
Pension Funding Equity Act of 2004, the American Jobs Creation Act of 2004, and
the Gulf Opportunity Zone Act of 2005 as well as the changes to the
qualification requirements listed on the “2006 Cumulative List of Changes in
Plan Qualification Requirements” as set forth in Notice 2007-3.

 

2

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ARTICLE II

DEFINITIONS

2.1.        Affiliated Company.    “Affiliated Company” shall mean (i) any
corporation, other than the Sponsor, which is included in a controlled group of
corporations (within the meaning of Code Section 414(b)) of which the Sponsor is
a member, (ii) any trade or business, other than the Sponsor, which is under
common control (within the meaning of Code Section 414(c)) with the Sponsor,
(iii) any entity or organization, other than the Sponsor, which is a member of
an affiliated service group (within the meaning of Code Section 414(m)) of which
the Sponsor is a member, and (iv) any entity or organization, other than the
Sponsor, which is affiliated with the Sponsor under Code Section 414(o). An
entity shall be an Affiliated Company pursuant to this Section only during the
period of time in which such entity has the required relationship with the
Sponsor under clauses (i), (ii), (iii) or (iv) of this Section after the
Original Effective Date of the Plan.

2.2.        Beneficiary.    “Beneficiary” or “Beneficiaries” shall mean the
person or persons last designated by a Participant as set forth in Section 5.8
or, if there is no designated Beneficiary or surviving Beneficiary, the person
or persons designated pursuant to Section 5.8 to receive the interest of a
deceased Participant in such event.

2.3.        Board of Directors.    “Board of Directors” shall mean the Board of
Directors of the Sponsor (or its delegate) as it may from time to time be
constituted.

2.4.        Break in Service.    “Break in Service” shall mean, with respect to
an Employee, each period of 12 consecutive months during a Period of Severance
that commences on the Employee’s Severance Date or on any anniversary of such
Severance Date.

2.5.        Code.    “Code” shall mean the Internal Revenue Code of 1986 and the
regulations thereunder. Reference to a specific Code Section shall be deemed
also to refer to any applicable regulations under that Section, and shall also
include any comparable provisions of future legislation that amend, supplement
or supersede that specific Section.

2.6.        Committee.    “Committee” shall mean the committee appointed under
the provisions of Section 7.1.

2.7.        Company.    “Company” shall mean collectively the Sponsor and each
Affiliated Company that adopts the Plan in accordance with Section 8.2.

2.8.        Company Stock.    “Company Stock” shall mean any class of stock of
the Sponsor which both constitutes “qualifying employer securities” as defined
in Section 407(d)(5) of ERISA and “employer securities” as defined in Code
Section 409(1).

2.9.        Compensation.    “Compensation” shall mean the following:

 

3

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(a)        Compensation shall include amounts paid during a Plan Year to a
Participant by the Company for services rendered, including base earnings,
commissions and similar incentive compensation, cost of living allowances earned
within the United States of America, holiday pay, overtime earnings, pay
received for election board duty, pay received for jury and witness duty, pay
received for military service (annual training), pay received for being
available for work, if required (call-in premium), shift differential and
premium, sickness/accident related pay, vacation pay (other than as excluded in
paragraph (c) below), vacation shift premium, and bonus amounts paid under the
(i) Sales Bonus Program, (ii) Management Bonus Plan or Executive Bonus Plan,
either in cash or in restricted stock, and (iii) group performance sharing
payments, such as the “Partners for Success.”

(b)        Compensation shall include amounts of salary reduction elected by a
Participant under a Code Section 401(k) cash or deferred arrangement or a Code
Section 125 cafeteria plan.

(c)        Compensation shall not include business expense reimbursements;
Company gifts or the value of Company gifts; Company stock related options and
payments; employee referral awards; flexible compensation credits paid in cash;
special overseas payments, allowances and adjustments including, but not limited
to, pay for cost of living adjustments and differentials paid for service
outside of the United States, expatriate reimbursement payments, and tax
equalization payments; forms of imputed income; long-term disability pay;
payment for loss of Company car; Company car allowance; payments for patents or
for writing articles; relocation and moving expenses; retention and employment
incentive payments; severance pay; long-term incentive awards, bonuses or
payments; “Impact Award” payments; “Employee of the Year” payments; “Awards for
Excellence” payments; “Hidden Gem Award” payments; special group incentive
payments and individual recognition payments which are nonrecurring in nature;
tuition reimbursement; lump sum amounts paid to Employees under the Company’s
vacation buy-back policy on or after October 1, 2004; and contributions by the
Company under the Plan or distributions hereunder, any contributions or
distributions pursuant to any other plan sponsored by the Company and qualified
under Code Section 401(a) (other than contributions constituting salary
reduction amounts elected by the Participant under a Code Section 401(k) cash or
deferred arrangement), any payments under a health or welfare plan sponsored by
the Company, or premiums paid by the Company under any insurance plan for the
benefit of Employees.

(d)        Compensation for any Plan Year shall not include amounts in excess of
$210,000, as adjusted for cost-of-living increases in accordance with Code
Section 401(a)(17)(B) for purposes of determining all benefits provided under
the Plan for any Plan Year. Any cost-of-living adjustments in effect for a
calendar year shall apply to the Plan Year beginning with or within such
calendar year.

 

4

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(e)        Notwithstanding the foregoing, for purposes of applying the
provisions of Articles XI and XII, a Participant’s Compensation shall be
determined pursuant to the definition of “Compensation” as set forth in
Section 11.5 or 12.2(i), as the case may be.

2.10.      Credited Service.    “Credited Service” shall mean, with respect to
each Employee, his or her years and months of Credited Service determined in
accordance with the following rules:

(a)        In the case of any Employee who was employed by the Company on the
Original Effective Date, for the period prior to such Effective Date such
Employee shall be credited with Credited Service under the Plan equal to the
period (if any) of uninterrupted employment of such Employee with the Company up
to and including the day before the Original Effective Date. For purposes of
this paragraph (a), such a period of pre-Effective Date employment shall not be
deemed to have been interrupted by reason of (i) any break in or interruption of
employment which continued for less than one year, or (ii) any Leave of Absence
granted to such Employee under applicable Company policies regarding Leaves of
Absence.

(b)        On and after the Effective Date, an Employee shall receive Credited
Service credit for the elapsed period of time between each Employment
Commencement Date (or Reemployment Commencement Date) of the Employee and the
Severance Date which immediately follows that Employment Commencement Date (or
Reemployment Commencement Date). Solely for the purpose of determining an
Employee’s Credited Service under this paragraph (b), in the case of an Employee
who is employed on the Effective Date, that date shall be deemed to be an
Employment Commencement Date of the Employee (with service credit for periods
prior to the Effective Date to be determined under paragraph (a) above). An
Employee who is absent from work on an authorized Leave of Absence shall be
deemed to have incurred a Severance (if any) in accordance with the rules of
Section 2.35.

(c)        An Employee shall receive Credited Service credit for periods between
a Severance and his or her subsequent Reemployment Commencement Date in
accordance with the following rules:

(i)      If an Employee incurs a Severance by reason of a quit, discharge or
retirement (other than such a Severance occurring during an approved Leave of
Absence, which situation is covered under the provisions of subparagraph (ii)
below), and the Employee is later reemployed by the Company prior to his or her
incurring a Break in Service, he or she shall receive Credited Service for the
period commencing with his or her Severance Date and ending with his or her
subsequent Reemployment Commencement Date.

(ii)     If an Employee is on an approved Leave of Absence and then incurs a
Severance by reason of a quit, discharge or retirement during the Leave of
Absence, or a failure to return to work as scheduled following such Leave, and

 

5

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such Employee is later reemployed by the Company within 12 months of the date on
which he or she discontinued active employment and commenced such Leave, he or
she shall receive Credited Service for the period commencing with his or her
Severance Date and ending with his or her subsequent Reemployment Commencement
Date. For such purposes an Employee shall be deemed to have incurred a Severance
(if any) in accordance with the rules of Section 2.35.

(iii)    Other than as expressly set forth above in this paragraph (c), an
Employee shall receive no Credited Service with respect to periods between a
Severance and a subsequent Reemployment Commencement Date.

(d)        For all purposes of the Plan, an Employee’s total Credited Service
shall be determined by aggregating any separate periods of Credited Service
separated by any Breaks in Service.

(e)        An Employee shall be credited with Credited Service with respect to a
period of employment with an Affiliated Company, but only to the extent that
such period of employment would be so credited under the foregoing rules set
forth in this Section had such Employee been employed during such period by the
Company.

(f)        Notwithstanding the foregoing, unless the Sponsor shall so provide by
resolution of its Board of Directors, or unless otherwise expressly stated in
the Plan, an Employee shall not receive such Credited Service credit for any
period of employment with an Affiliated Company prior to such entity becoming an
Affiliated Company, except that Employees of Allergan Optical, Inc., Allergan
Humphrey, and Allergan Medical Optics shall receive Credited Service credit for
any period of employment with such companies prior to the time such companies
became Affiliated Companies.

(g)        Notwithstanding any provision of the Plan to the contrary,
contributions, benefits and service credit with respect to qualified military
service shall be provided in accordance with Code Section 414(u).

2.11.      Disability.    “Disability” shall mean any mental or physical
condition which, in the judgment of the Committee, based on such competent
medical evidence as the Committee may require, renders an individual unable to
engage in any substantial gainful activity for the Company for which he or she
is reasonably fitted by education, training, or experience and which condition
can be expected to result in death or which has lasted or can be expected to
last for a continuous period of at least 12 months. The determination by the
Committee, upon opinion of a physician selected by the Committee, as to whether
a Participant has incurred a Disability shall be final and binding on all
persons.

2.12.      Effective Date.    “Effective Date” of this restated Plan shall mean
January 1, 2008 unless otherwise specified in the Plan. The “Original Effective
Date” of the Plan shall mean July 26, 1989.

 

6

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2.13.      Eligible Employee.    “Eligible Employee” shall mean any Employee who
was a Participant in the Plan on December 31, 2002 and who has not incurred a
Severance on or after January 1, 2003.

2.14.      Eligible Retirement Plan.    “Eligible Retirement Plan” shall mean
(i) an individual retirement account or annuity described in Code Section 408(a)
or 408(b), (ii) a qualified retirement plan described in Code Section 401(a) or
403(a) that accepts Eligible Rollover Distributions, (iii) an annuity contract
described in Code Section 403(b) that accepts Eligible Rollover Distributions,
and (iv) an eligible plan described in Code Section 457(b) which is maintained
by a state, political subdivision of a state, or any agency or instrumentality
of a state or political subdivision of a state and which agrees to separately
account for amounts transferred into such plan from this Plan. Notwithstanding
the foregoing, “Eligible Retirement Plan” shall mean an individual retirement
account or annuity described in Code Section 408(a) or 408(b) with respect to a
non-spouse Beneficiary.

2.15.      Eligible Rollover Distribution.    “Eligible Rollover Distribution”
shall mean any distribution of all or any portion of the balance to the credit
of the Distributee, except that an Eligible Rollover Distribution does not
include:

(a)        any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the life (or life
expectancy) of the Distributee or the joint lives (or joint life expectancies)
of the Distributee and the Distributee’s designated beneficiary, or for a
specified period of ten years or more;

(b)        any distribution to the extent such distribution is required under
Code Section 401(a)(9); and

(c)        the portion of any distribution that is not includible in gross
income (determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).

(d)        any other distribution that is reasonably expected to total less than
$200 during the year.

For purposes of this Section, “Distributee” shall mean any Employee or former
Employee receiving a distribution from the Plan. A Distributee also includes the
Employee or former Employee’s surviving spouse and the Employee or former
Employee’s spouse or former spouse who is the Alternate Payee under a Qualified
Domestic Relations Order (as defined in Article XIII) with regard to the
interest of the spouse or former spouse and, on or after, January 1, 2007, the
Employee or former Employee’s Beneficiary.

2.16.      Employee.    “Employee” shall mean, for purposes of the Plan, any
individual who is employed by the Sponsor or an Affiliated Company in any
capacity, any portion of whose income is subject to withholding of income tax
and/or for whom Social Security contributions

 

7

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are made by the Sponsor or an Affiliated Company; provided, however, that such
term shall not include:

(a)        Any individual who performs services for the Sponsor or an Affiliated
Company and who is classified or paid as an independent contractor as determined
by the payroll records of the Sponsor or an Affiliated Company even if a court
or administrative agency determines that such individual is a common-law
employee and not an independent contractor;

(b)        Any individual who performs services for the Sponsor or an Affiliated
Company pursuant to an agreement between the Sponsor or an Affiliated Company
and any other person including a leasing organization except to the extent such
individual is a Leased Employee; and

(c)        Any individual whose employment is transferred from the Sponsor or an
Affiliated Company to Advanced Medical Optics, Inc. (“AMO”) in connection with
the distribution of the stock of AMO by the Sponsor to its stockholders,
effective as of the day following such transfer, hereinafter referred to as an
“AMO Employee.” An individual is an AMO Employee if classified or identified as
such in the payroll records of the Sponsor or an Affiliated Company or in the
Employee Matters Agreement entered into between the Sponsor and AMO.

2.17.      Employment Commencement Date.    “Employment Commencement Date” shall
mean the date on which an Employee is first credited with an Hour of Service for
the Sponsor or an Affiliated Company. An Employee shall not, for the purpose of
determining his or her Employment Commencement Date, be deemed to have commenced
employment with an Affiliated Company prior to the effective date on which the
entity became an Affiliated Company unless the Sponsor expressly determines
otherwise, and except as is expressly provided otherwise in the Plan or in
resolutions of the Board of Directors.

2.18.      ERISA.    “ERISA” shall mean the Employee Retirement Income Security
Act of 1974 and the regulations thereunder. Reference to a specific ERISA
Section shall be deemed also to refer to any applicable regulations under that
Section, and shall also include any comparable provisions of future legislation
that amend, supplement or supersede that specific Section.

2.19.      ESOP Account.    “ESOP Account” shall mean, with respect to each
Participant, the account established and maintained for purposes of holding and
accounting for the Participant’s allocated share of assets of the Plan,
including any subaccounts established thereunder from time to time (including
his or her Stock Subaccount and Non-Stock Subaccount established pursuant to
Section 6.6).

2.20.      Exempt Loan.    “Exempt Loan” shall mean any loan to the Plan or
Trust, the proceeds of which are used to finance the acquisition of Company
Stock or to refinance such a prior Exempt Loan, which is not prohibited by Code
Section 4975(c) and meets the requirements

 

8

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set forth in Code Section 4975(d)(3) and Treasury Regulation § 54.4975-7(b)(5),
including the requirements that (i) any collateral for such loan shall be
limited to Company Stock purchased with the proceeds of the loan or the proceeds
from any prior Exempt Loan, (ii) no person entitled to payment under the loan
shall have any right to Plan assets other than collateral given for such loan,
contributions (other than contributions of Company Stock) made to repay such
loan, and earnings attributable to such collateral and the investment of such
contributions, and (iii) any payments made with respect to such loan by the Plan
during a Plan Year must not exceed an amount equal to the sum of contributions
and earnings received during or prior to such Plan Year less such payments in
prior Plan Year.

2.21.      Exempt Loan Suspense Subfund.    “Exempt Loan Suspense Subfund” shall
mean the subfund established under Section 4.1 hereof as part of the Trust Fund
to hold Company Stock purchased with the proceeds of an Exempt Loan pending the
allocation of such Company Stock to individual ESOP Accounts.

2.22.      415 Suspense Account.    “415 Suspense Account” shall mean the
account (if any) established and maintained in accordance with the provisions of
Article XI for the purpose of holding and accounting for allocations of excess
Annual Additions (as defined in Article XI).

2.23.      Highly Compensated Employee.    “Highly Compensated Employee” shall
mean:

(a)        An Employee who performed services for the Employer during the Plan
Year or preceding Plan Year and is a member of one or more of the following
groups:

(i)      Employees who at any time during the Plan Year or preceding Plan Year
were Five Percent Owners (as defined in Section 12.2).

(ii)     Employees who received Compensation during the preceding Plan Year from
the Employer in excess of $80,000 (as adjusted in such manner as permitted under
Code Section 414(q)(1)).

(b)        For the purpose of this Section, the term “Compensation” means
compensation as defined in Code Section 415(c)(3), as set forth in Section 11.5.

(c)        The term “Highly Compensated Employee” includes a Former Highly
Compensated Employee. A Former Highly Compensated Employee is any Employee who
was (i) a Highly Compensated Employee when he or she terminated employment with
the Employer or (ii) a Highly Compensated Employee at any time after attaining
age 55. Notwithstanding the foregoing, an Employee who separated from service
prior to 1987 shall be treated as a Former Highly Compensated Former Employee
only if during the separation year (or year preceding the separation year) or
any year after the Employee attains age 55 (or the last year ending before the
Employee’s 55th birthday), the Employee either received Compensation in excess
of $50,000 or was a Five Percent Owner.

 

9

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(d)        For the purpose of this Section, the term “Employer” shall mean the
Sponsor and any Affiliated Company.

(e)        The determination of who is a Highly Compensated Employee, including
the determination of the Compensation that is considered, shall be made in
accordance with Code Section 414(q) and the regulations thereunder.

2.24.      Hour of Service.    “Hour of Service” shall mean an hour for which an
Employee is paid or entitled to payment for the performance of duties for the
Sponsor and any Affiliated Company.

2.25.      Investment Manager.    “Investment Manager” shall mean the one or
more investment managers, if any, appointed pursuant to Section 6.14 and who
constitute investment managers under Section 3(38) of ERISA.

2.26.      Leased Employee.    “Leased Employee” shall mean any person (other
than an Employee of the recipient) who pursuant to an agreement between the
recipient and any other person (“leasing organization”) has performed services
for the recipient (or for the recipient and related persons determined in
accordance with Code Section 414(n)(6)) on a substantially full time basis for a
period of at least one (1) year, and such services are performed under the
primary direction or control by recipient employer. Contributions or benefits
provided to a Leased Employee by a leasing organization which are attributable
to services performed for the recipient employer shall be treated as provided by
the recipient employer. A Leased Employee shall not be considered an Employee of
the recipient if Leased Employees do not constitute more than 20 percent of the
recipient’s nonhighly compensated workforce and such Leased Employee is covered
by a money purchase pension plan providing (i) a nonintegrated employer
contribution rate of at least ten (10) percent of compensation as defined under
Code Section 415(c)(3); (ii) immediate participation; and (iii) full and
immediate vesting.

2.27.      Leave of Absence.

(a)        “Leave of Absence”    shall mean any personal leave from active
employment (whether with or without pay) duly authorized by the Company under
the Company’s standard personnel practices. All persons under similar
circumstances shall be treated alike in the granting of such Leaves of Absence.
Leaves of Absence may be granted by the Company for reasons of health (including
temporary sickness or short term disability) or public service or for any other
reason determined by the Company to be in its best interests.

(b)        In addition to Leaves of Absence as defined in paragraph (a) above,
the term Leave of Absence shall also mean a Maternity or Paternity Leave, as
defined herein, but only to the extent and for the purposes required under
paragraph (c) below. As used herein, “Maternity or Paternity Leave” shall mean
an absence from work for any period (i) by reason of the pregnancy of the
Employee, (ii) by reason of the birth of a child of the Employee, (iii) by
reason of the placement of a child with the Employee in

 

10

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connection with the adoption of the child by the Employee, or (iv) for purposes
of caring for the child for a period beginning immediately following the birth
or placement referred to in clauses (ii) or (iii) above.

(c)        Subject to the provisions of paragraph (d) below, a Maternity or
Paternity Leave described in paragraph (b) above shall be deemed to constitute
an authorized Leave of Absence for purposes of the Plan only to the extent
consistent with the following rules:

(i)      For purposes of determining whether a Break in Service has occurred,
the Severance Date of a Participant who is absent by reason of a Maternity or
Paternity Leave shall not be deemed to occur any earlier than the second
anniversary of the date upon which such Maternity or Paternity Leave commences.

(ii)     The Maternity or Paternity Leave shall be treated as a Leave of Absence
solely for purposes of determining whether or not an Employee has incurred a
Break in Service. Accordingly, such a Maternity or Paternity Leave shall not
result in an accrual of Credited Service for purposes of the vesting provisions
of the Plan or for purposes of determining eligibility to participate in the
Plan (except only in determining whether a Break in Service has occurred).

(iii)    A Maternity or Paternity Leave shall not be treated as a Leave of
Absence unless the Employee provides such timely information as the Committee
may reasonably require to establish that the absence is for the reasons listed
in paragraph (b) above and to determine the number of days for which there was
such an absence.

(d)        Notwithstanding the limitations provided in paragraph (c) above, a
Maternity or Paternity Leave described in paragraph (b) above shall be treated
as an authorized Leave of Absence, as described in paragraph (a), for all
purposes of the Plan to the extent the period of absence is one authorized as a
Leave of Absence under the Company’s standard personnel practices and thus is
covered by the provisions of paragraph (a) above without reference to the
provisions of paragraph (b) above, provided, however, that the special rule
provided under this paragraph (d) shall not apply if it would result in a
Participant who is absent on a Maternity or Paternity Leave being deemed to have
incurred a Break in Service sooner than under the rules set forth in
paragraph (c).

2.28.      Normal Retirement Age.    “Normal Retirement Age” shall mean a
Participant’s sixty-fifth (65th) birthday.

2.29.      Participant.    “Participant” shall mean any Eligible Employee or
former Eligible Employee who has commenced participation in the Plan pursuant to
Section 3.1 and who retains rights under the Plan.

 

11

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2.30.      Period of Severance.    “Period of Severance” shall mean the period
of time commencing on an Employee’s Severance Date and ending on the Employee’s
subsequent Reemployment Commencement Date, if any.

2.31.      Plan.    “Plan” shall mean the Allergan, Inc. Employee Stock
Ownership Plan described herein and as amended from time to time.

2.32.      Plan Administrator.    “Plan Administrator” shall mean the
administrator of the Plan within the meaning of Section 3(16)(A) of ERISA. The
Plan Administrator shall be the Allergan Executive Committee whose members are
appointed by the Board of Directors pursuant to the provisions of Section 7.1 to
administer the Plan.

2.33.      Plan Year.    “Plan Year” shall mean the calendar year.

2.34.      Reemployment Commencement Date.    “Reemployment Commencement Date”
shall mean, in the case of an Employee who incurs a Severance and who is
subsequently reemployed by the Sponsor or an Affiliated Company, the first day
following the Severance on which the Employee is credited with an Hour of
Service for the Sponsor or an Affiliated Company with respect to which he or she
is compensated or entitled to compensation by the Sponsor or an Affiliated
Company. An Employee shall not, for the purpose of determining his or her
Reemployment Commencement Date, be deemed to have commenced employment with an
Affiliated Company prior to the effective date on which such entity becomes an
Affiliated Company unless the Sponsor shall expressly determine otherwise, and
except as is expressly provided otherwise in the Plan or in resolutions of the
Board of Directors.

2.35.      Severance.    “Severance” shall mean the termination of an Employee’s
employment with the Sponsor or an Affiliated Company by reason of such
Employee’s quit, discharge, Disability, death, retirement, or otherwise. For
purposes of determining whether an Employee has incurred a Severance, the
following rules shall apply:

(a)        An Employee shall not be deemed to have incurred a Severance
(i) because of his or her absence from employment with the Sponsor or an
Affiliated Company by reason of any paid vacation or holiday period, or (ii) by
reason of any Leave of Absence, subject to the provisions of paragraph (b)
below.

(b)        For purposes of the Plan, an Employee shall be deemed to have
incurred a Severance on the earlier of (i) the date on which he or she dies,
resigns, is discharged, or otherwise terminates his or her employment with the
Sponsor or an Affiliated Company; or (ii) the date on which he or she is
scheduled to return to work after the expiration of an approved Leave of
Absence, if he or she does not in fact return to work on the scheduled
expiration date of such Leave; or (iii) in the case of a Leave of Absence for
longer than one year, the first anniversary of the commencement of such Leave,
provided such Employee does not actually return to work on or before said first
anniversary date. In no event shall an Employee’s Severance be deemed to have
occurred before the last day on which such Employee performs any services for
the Sponsor or an Affiliated Company in

 

12

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the capacity of an Employee with respect to which he or she is compensated or
entitled to compensation by the Sponsor or an Affiliated Company.

(c)        Notwithstanding the foregoing, in the case of a Participant who is
absent by reason of a Maternity or Paternity Leave, the provisions of
Section 2.27(c)-(d) shall apply for purposes of determining whether such a
Participant has incurred a Break in Service by reason of such Leave.

2.36.      Severance Date.    “Severance Date” shall mean, in the case of any
Employee who incurs a Severance, the day on which such Employee is deemed to
have incurred said Severance as determined in accordance with the provisions of
Section 2.35, provided, however, that the special rule set forth under
Section 2.27(c)-(d) shall apply with respect to determining whether a
Participant on a Maternity or Paternity Leave has incurred a Break in Service.
In the case of any Employee who incurs a Severance as provided under
Section 2.35 and who is entitled to a subsequent payment of compensation for
reasons other than future services (e.g., as back pay for past services rendered
or as payments in the nature of severance pay), the Severance Date of such
Employee shall be as of the effective date of the Severance event (e.g., the
date of his or her death, effective date of a resignation or discharge, etc.),
and the subsequent payment of the aforementioned type of post-Severance
compensation shall not operate to postpone the timing of the Severance Date for
purposes of the Plan.

2.37.      Sponsor.    “Sponsor” shall mean Allergan, Inc., a Delaware
corporation, and any successor corporation or entity.

2.38.      Trust.    “Trust” or “Trust Fund” shall mean the trust maintained
pursuant to the Trust Agreement and as described in Section 6.1 hereof, which
shall hold all cash and securities and all other assets of whatsoever nature
deposited with or acquired by the Trustee in its capacity as Trustee hereunder,
together with accumulated net earnings.

2.39.      Trust Agreement.    “Trust Agreement” shall mean the agreement
between the Trustee and the Sponsor pursuant to which the Trust is maintained.

2.40.      Trustee.    “Trustee” shall mean the one or more trustees of the
Trust established pursuant to Section 6.1 hereof.

2.41.      Valuation Date.    “Valuation Date” shall mean the last day of each
Plan Year and any other date which the Committee may designate from time to
time.

 

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ARTICLE III

ELIGIBILITY AND PARTICIPATION

3.1.        Participation.    Each Employee or former Employee who was a
Participant in the Plan as of December 31, 2002 shall continue as a Participant.
Any other Employee shall not be eligible to participate in the Plan.

3.2.        Duration of Participation.    A Participant shall remain an active
Participant until he or she incurs a Severance, at which time he or she shall
become an inactive Participant until he or she receives a distribution of the
entire vested portion of his or her ESOP Account. Once such a distribution is
made, such Participant shall no longer be considered a Participant in the Plan.
Any Participant who (i) transfers out of employment with the Company but who
remains an Employee of an Affiliated Company that has not adopted the Plan
pursuant to Section 8.2, or (ii) remains an Employee of the Company but is no
longer an Eligible Employee, shall become an inactive Participant.

3.3.        Participation after Reemployment.    A Participant who incurs a
Severance after he or she is fully vested in his or her ESOP Account and who is
subsequently reemployed prior to receiving a distribution of his or her entire
ESOP Account shall continue as an inactive Participant (but shall not be
reinstated as an Eligible Participant as defined in Section 4.2(d)). A
Participant who incurs a Severance before he or she is fully vested in his or
her ESOP Account and who is subsequently reemployed shall be reinstated as an
inactive Participant (but shall not be reinstated as an Eligible Participant as
defined in Section 4.2(d)) as of his or her Reemployment Commencement Date;
provided, that such Participant has a right to reinstatement of his or her
forfeited ESOP Account upon his or her Reemployment Commencement Date pursuant
to Section 5.3. Any other Participant who incurs a Severance and who is
subsequently reemployed, including a Participant who incurs a Severance after he
or she is fully vested in his or her ESOP Account and who receives a
distribution of his or her entire ESOP Account, shall not be eligible to
participate in the Plan.

3.4.        Participation After Normal Retirement Age.    An Eligible Employee
may continue as a Participant after reaching his or her Normal Retirement Age in
the same manner as an Eligible Employee who has not reached his or her Normal
Retirement Age.

 

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ARTICLE IV

CONTRIBUTIONS AND ALLOCATION TO ACCOUNTS

4.1.        Contributions to the Trust Fund.    The Company may contribute to
the Trust Fund for each Plan Year an amount to be determined by the Board of
Directors solely in its discretion. Such amount shall be contributed in cash or
Company Stock and paid over to the Trustee for allocation to the Trust Fund not
later than the date prescribed for filing the Sponsor’s federal income tax
return (including all extensions thereto) for its fiscal year corresponding to
such Plan Year. Contributions shall first be applied, if necessary, to reinstate
the ESOP Accounts of applicable reemployed Participants who had previously
forfeited their ESOP Accounts pursuant to Section 5.3 of the Plan, but only
after all forfeitures for the Plan Year have been so applied pursuant to
Section 4.3. Some or all of the remaining contributions under this Section 4.1
may be applied to repay any principal and/or interest outstanding on any Exempt
Loan or to pay Plan expenses as provided in Section 7.14. The determination of
the extent to which such contributions shall be used to repay such Exempt Loans
or pay Plan expenses shall be made at the sole discretion of the Committee.
Company Stock acquired by the Trust Fund through an Exempt Loan shall be added
to and maintained in the Exempt Loan Suspense Subfund and shall thereafter be
released from the Exempt Loan Suspense Subfund and allocated to Participants’
ESOP Accounts as provided in Section 4.2. Contributions in excess of amounts
used for other purposes described in this Section 4.1 shall be allocated to the
ESOP Accounts of Participants as provided in Section 4.2.

4.2.        Allocation of Contributions to Trust Fund.

(a)        As of a date not later than the last day of each Plan Year, an
allocation shall be made to the ESOP Account of the allocable share of each
“Eligible Participant” as defined in paragraph (d) below for such Plan Year of
(i) Company contributions of Company Stock contributed in kind to the Trust Fund
and (ii) Company contributions in other than Company Stock, which are not used
for other purposes described in Section 4.1. Such allocations shall be made in
the same proportion that the Compensation for the Plan Year for such Eligible
Participant bears to the total Compensation of all Eligible Participants for
such Plan Year.

(b)        Company Stock acquired for the Trust Fund through an Exempt Loan
shall be released from the Exempt Loan Suspense Subfund as the Exempt Loan is
repaid, in accordance with the provisions of this Section 4.2(b).

(i)      For each Plan Year until the Exempt Loan is fully repaid, the number of
shares of Company Stock released from the Exempt Loan Suspense Subfund shall
equal the number of unreleased shares immediately before such release for the
current Plan Year multiplied by the “Release Fraction.” As used herein, the
Release Fraction shall be a fraction, the numerator of which is the amount of
principal and interest paid on the Exempt Loan for such current Plan Year, and
the denominator of which is the sum of the numerator plus the principal and
interest to be paid on such Exempt Loan for all future years during the

 

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duration of the term of such Loan (determined without reference to any possible
extensions or renewals thereof). Notwithstanding the foregoing, in the event
such Loan shall be repaid with the proceeds of a subsequent Exempt Loan (the
“Substitute Loan”), such repayment shall not operate to release all such Company
Stock in the Exempt Loan Suspense Subfund, but, rather, such release shall be
effected pursuant to the foregoing provisions of this Section 4.2(b) on the
basis of payments of principal and interest on such Substitute Loan.

(ii)     If the Committee so determines in its discretion, then in lieu of
applying the provisions of Section 4.2(b)(i) hereof with respect to such Exempt
Loan or Substitute Loan, shares shall be released from the Exempt Loan Suspense
Subfund as the principal amount of an Exempt Loan is repaid (and without regard
to interest payments), provided the following three conditions are satisfied:

(A)        The Exempt Loan must provide for annual payments of principal and
interest at a cumulative rate that is not less rapid at any time than level
annual payments of such amounts for ten years.

(B)        The interest portion of any payment is disregarded only to the extent
it would be treated as interest under standard loan amortization tables.

(C)        If the Exempt Loan is renewed, extended or refinanced, the sum of the
expired duration of the Exempt Loan and the renewal, extension or new Exempt
Loan period must not exceed ten years.

(iii)    It is intended that the provisions of this Section 4.2(b) shall be
applied and construed in a manner consistent with the requirements and
provisions of Treasury Regulation § 54.4975-7(b)(8), and any successor
regulation thereto. All Company Stock released from the Exempt Loan Suspense
Subfund during any Plan Year shall be allocated among Participants as prescribed
by Section 4.2(c) hereof, except to the extent provided in Section 6.7.

(c)        Shares of Company Stock released from the Exempt Loan Suspense
Subfund for a Plan Year in accordance with Section 4.2(b) hereof and
Section 6.7(b)(i) shall be held in the Trust Fund on an unallocated basis until
allocated by the Committee as of not later than the last day of that Plan Year.
The allocation of such shares shall be made among the ESOP Accounts of Eligible
Participants (as that term is defined in paragraph (d) below). The number of
shares allocable to each such Eligible Participant’s ESOP Account shall be the
number of shares which bears the same ratio to the total shares released for
such Plan Year as the Compensation for the Plan Year for such Eligible
Participant bears to the total Compensation of all Eligible Participants for
such Plan Year.

 

16

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(d)        For purposes of Section 4.2, an “Eligible Participant” shall mean any
Participant who is an Eligible Employee on the last business day of such Plan
Year or who ceased to be an Eligible Employee during such Plan Year due to
death, Disability, or retirement at or after age 55 (as such retirement is
determined under the Allergan, Inc. Pension Plan). Any Eligible Participant who,
on or after January 1, 2003, (i) incurs a Severance and is subsequently
reemployed or (ii) transfers out of employment with the Company to employment
with an Affiliated Company that has not adopted the Plan pursuant to Section 8.2
and is subsequently transferred back to employment with Company, shall not be an
Eligible Participant following his or her Reemployment Commencement Date or
transfer date.

4.3.        Forfeitures.    Any amount which is forfeited pursuant to
Section 5.3 or 5.13 during a Plan Year shall be segregated from other amounts
held under the Plan and shall first be used to reinstate the ESOP Accounts of
reemployed Participants (or Beneficiaries, if applicable) who had previously
forfeited such ESOP Accounts and who have a right to reinstatement of their
forfeited ESOP Accounts pursuant to Section 5.3 or 5.13. Should any forfeitures
then remain, they may next be used to pay Plan expenses as provided under
Section 7.14. Should any forfeitures then remain, they shall be allocated as of
the last day of the Plan Year to the ESOP Accounts of Eligible Participants (as
that term is defined in Section 4.2(d)) based on Compensation in the same manner
as allocations under Section 4.2(a) and (c).

4.4.        Employee Contributions and Rollovers.    No Employee contributions
are permitted under the Plan. No rollover contributions to the Plan are
permitted whether or not any such contributions would satisfy the applicable
requirements of Code Sections 402, 403, 408 or 409.

 

17

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ARTICLE V

VESTING AND DISTRIBUTIONS

5.1.        No Vested Rights Except as Herein Specified.    No Employee shall
have any vested right or interest in any assets of the Trust, except as provided
in this Article V. Neither the making of any allocations nor the credit to any
ESOP Account of a Participant in the Trust shall vest in any Participant any
right, title, or interest in or to any assets of the Trust except as provided in
this Article V.

5.2.        Vesting.

(a)        The interest of a Participant in amounts allocated to his or her ESOP
Account, including cash dividends on shares of Company Stock allocated to such
Participant’s ESOP Account, shall vest in accordance with the following
schedule:

 

Year of Credited Service

   Vested Percentage

Less than 1

       0%

1 but less than 2

     20%

2 but less then 3

     40%

3 but less than 4

     60%

4 but less than 5

     80%

5 or more

   100%

(b)        Notwithstanding the above, a Participant shall become fully vested in
his or her ESOP Account upon the occurrence of the death, Disability, or
attainment of age 62 of such Participant while an Employee, or upon the
occurrence of a Change in Control pursuant to Section 10.4(b).

5.3.        Severance When Less Than Fully Vested.    Subject to
Section 5.10(b), a Participant who incurs a Severance and who is not or does not
become 100% vested pursuant to Section 5.2, may elect to receive a distribution
of the vested portion of his or her ESOP Account in a single lump sum payment in
the form prescribed by Section 5.9 hereof, as soon as practicable following the
Participant’s Severance Date. The non-vested portion of such Participant’s ESOP
Account shall be forfeited in accordance with the following rules:

(a)        In the event a distribution of the entire vested portion of such
Participant’s ESOP Account is made pursuant to this Section 5.3, the non-vested
portion shall be forfeited as of such Participant’s distribution date. A
Participant who incurs a Severance when no portion of his or her ESOP Account is
vested shall be deemed to have received a distribution pursuant to this
paragraph (a) as of his or her Severance Date and his or her ESOP Account shall
be forfeited as of the Participant’s Severance Date. If the Participant is
rehired by the Company prior to the date such Participant incurs five
consecutive Breaks in Service, the amount forfeited under this paragraph (a)
shall be reinstated to the

 

18

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Participant’s ESOP Account as of the Participant’s Reemployment Commencement
Date (without regard to any interest or investment earnings on such amount).

(b)        In the event a distribution of the entire vested portion of such
Participant’s ESOP Account is not made pursuant to this Section 5.3, the
non-vested portion shall be forfeited as of such Participant’s Severance Date.
If the Participant is rehired by the Company prior to the date such Participant
incurs five consecutive Breaks in Service, the amount so forfeited plus an
amount equal to the rate of return that the amount forfeited would have received
but for forfeiture pursuant to this paragraph (b) shall be reinstated to the
Participant’s ESOP Account as of the Participant’s Reemployment Commencement
Date. The Company shall be obligated to contribute to the Trust Fund any amounts
necessary after application of Section 4.3 to reinstate a Participant’s ESOP
Account if reinstatement is required under the provisions of this paragraph.

(c)        At any relevant time after Severance pursuant to paragraphs (a) and
(b) above, the Participant’s vested portion of his or her ESOP Account shall be
equal to an amount (“X”) determined by the following formula:

X = P*(AB + D) - D

For the purposes of applying the formula:

P = the vested percentage at any relevant time determined pursuant to
Section 5.2

AB = the ESOP Account balance at the relevant time

D = the total amount of any distributions from the ESOP Account since such
Severance

5.4.        Distribution upon Severance.    Subject to Section 5.10(b), a
Participant who incurs a Severance on or after becoming 100% vested pursuant to
Section 5.2, may elect to receive a distribution of his or her ESOP Account, in
a single lump-sum payment in the form prescribed by Section 5.9 hereof, as soon
as practicable following the Participant’s Severance Date. Notwithstanding
anything to the contrary, upon receipt of a Qualified Domestic Relations Order
on or after a Participant is 100% vested pursuant to Section 5.2, the amount
payable to an Alternate Payee (as such terms are described in Section 13.2)
shall be distributed to the Alternate Payee as soon as administratively feasible
regardless of whether the Participant incurs a Severance.

5.5.        Distribution upon Death.

(a)        Upon the death of a Participant while still an Employee, the
Committee shall give such directions as may be necessary to cause a distribution
of his or her ESOP Account to be made in a single lump-sum payment to the
Beneficiary designated by the deceased Participant in the form prescribed in
Section 5.9 hereof, as soon as practicable

 

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following the Participant’s death, but in no event later than the last day of
the Plan Year following the Plan Year in which the Participant died.

(b)        Upon the death of a Participant after he or she ceases to be an
Employee but before he or she receives his or her entire vested interest in the
Trust, the Committee shall give such directions as may be necessary to cause a
distribution, in the manner and time provided in Section 5.5(a) hereof, of any
vested balance remaining in the Participant’s ESOP Account to the Beneficiary
designated by the Participant.

(c)        The Committee may require the execution and delivery of such
documents, papers and receipts as the Committee may determine necessary or
appropriate in order to establish the fact of death of the deceased Participant
and of the right and identity of any Beneficiary or other person or persons
claiming any benefits under this Section 5.5.

5.6.        Distribution upon Disability.    Subject to Section 5.10(b), in the
event the Committee shall determine that a Participant has suffered a Disability
while an Employee, the Committee shall proceed to cause a distribution to be
made of such Participant’s ESOP Account in a single lump-sum payment in the form
prescribed in Section 5.9 hereof as soon as practicable following the
Committee’s determination that the Participant has incurred a Disability.

5.7.        Withdrawal upon Age 59-1/2.    After attaining age 59-1/2, a
Participant who is still an Employee may, following such reasonable advance
notice as may be required by the Committee, withdraw the entire vested amount
credited to his or her ESOP Account. Such a withdrawal shall be in the same form
and using the same valuation methods as provided for distributions pursuant to
Section 5.9.

5.8.        Designation of Beneficiary.

(a)        At any time, and from time to time, each Participant shall have the
unrestricted right to designate the Beneficiary to receive the portion of his or
her death benefit and to revoke any such designation. Each such designation
shall be evidenced by a written instrument signed by the Participant and filed
with the Committee.

(b)        If the Participant is married and designates a Beneficiary other than
his or her spouse, said designation shall not be honored by the Committee unless
accompanied by the written consent of said spouse to said designation. Such
consent (i) must designate a Beneficiary which may not be changed without the
consent of the spouse (or the consent of the spouse expressly permits
designation by the Participant without any further consent by the spouse),
(ii) must acknowledge the effect of the designation, and (iii) must be witnessed
by a Plan representative or a notary public. No consent of such spouse shall be
necessary if it is established to the satisfaction of a Plan representative that
the consent required under this paragraph (b) cannot or need not be obtained
because (i) there is no spouse, (ii) the spouse cannot be located, or
(iii) there exist such other circumstances which, pursuant to regulations under
Code Section 417, permit a distribution to another

 

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Beneficiary. Any consent of a spouse obtained pursuant to this paragraph (b) or
any determination that the consent of the spouse cannot (or need not) be
obtained, shall be effective only with respect to that spouse. If a Participant
becomes married following his or her designation of a Beneficiary other than his
or her spouse, such designation shall be ineffective unless the spousal consent
requirements of this paragraph are satisfied with respect to such spouse
(subject, however, to the provisions of Article XIII regarding Qualified
Domestic Relations Orders).

(c)        If the Participant is married and does not designate a Beneficiary,
the Participant’s spouse shall be his or her Beneficiary for purposes of this
Section. If the deceased Participant is not married and shall have failed to
designate a Beneficiary, or if the Committee shall be unable to locate the
designated Beneficiary after reasonable efforts have been made, or if such
Beneficiary shall be deceased, distribution of the Participant’s death benefit
shall be made by payment of the deceased Participant’s entire interest in the
Trust to his or her personal representative in a single lump-sum payment. In the
event the deceased Participant is not a resident of California at the date of
his or her death, the Committee, in its discretion, may require the
establishment of ancillary administration in California. If the Committee cannot
locate a qualified personal representative of the deceased Participant, or if
administration of the deceased Participant’s estate is not otherwise required,
the Committee, in its discretion, may pay the deceased Participant’s interest in
the Trust to his or her heirs at law (determined in accordance with the laws of
the State of California as they existed at the date of the Participant’s death).

5.9.        Form of Distribution.

(a)        All shares of Company Stock or Advanced Medical Optics, Inc.
allocated to a Participant’s ESOP Account shall be distributed in the form of
cash, unless the Participant elects under paragraph (b) below to receive the
distribution in the form of Company Stock or Advanced Medical Optics, Inc.
stock, with cash in lieu of fractional shares. To the extent that Company Stock
or Advanced Medical Optics, Inc. stock must be valued to effect such a
distribution, such valuation shall be equal to the fair market value of such
stock determined as of the last Valuation Date prior to the date of
distribution.

(b)        A Participant may elect that all shares of Company Stock or Advanced
Medical Optics, Inc. allocated to his or her ESOP Account be distributed in the
form of Company Stock or in the form of Advanced Medical Optics, Inc. stock,
with cash in lieu of fractional shares. Notwithstanding the foregoing, if
applicable corporate charter or bylaw provisions restrict ownership of
substantially all outstanding Company Stock to Employees or to a plan or trust
described in Code Section 401(a), then any distribution of a Participant’s ESOP
Account shall only be in cash.

 

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(c)        Notwithstanding the foregoing, in the case of an Eligible Rollover
Distribution, a Participant may elect that an Eligible Rollover Distribution be
paid directly by the Trustee to the trustee of an Eligible Retirement Plan.

5.10.      Distribution Rules.    Notwithstanding the provisions of
Sections 5.3, 5.4, 5.5, 5.6, 5.7, and 5.9 of the Plan regarding distributions of
Participants’ ESOP Accounts, the following additional rules shall apply to all
such distributions.

(a)        In no event shall any benefits under the Plan, including benefits
upon retirement, termination of employment, or Disability, be paid to a
Participant prior to the “Consent Date” (as defined herein) unless the
Participant consents in writing to the payment of such benefits prior to said
Consent Date. As used herein, the term “Consent Date” shall mean the later of
(i) the Participant’s 62nd birthday, or (ii) the Participant’s Normal Retirement
Age. Notwithstanding the foregoing, the provisions of this paragraph shall not
apply (i) following the Participant’s death, or (ii) to the extent paragraph
(b) below applies.

(b)        Notwithstanding anything to the contrary in the Plan, if the total
amount of the vested portion of a Participant’s ESOP Account does not exceed
$1,000 ($5,000, prior to March 28, 2005), the vested portion of such
Participant’s ESOP Account shall be distributed, in a single lump-sum payment in
the form prescribed by Section 5.9 hereof, as soon as practicable following the
Participant’s Severance Date.

(c)        Unless the Participant elects otherwise pursuant to paragraph (a)
above, distributions of the vested portion of a Participant’s ESOP Accounts
shall commence no later than the 60th day after the close of the Plan Year in
which the latest of the following events occurs: (i) the Participant’s Normal
Retirement Age; (ii) the tenth anniversary of the year in which the Participant
commenced participation in the Plan; or (iii) the Participant’s Severance.

(d)        Minimum Required Distributions during Participant’s Lifetime.
Notwithstanding anything to the contrary in the Plan, unless the entire vested
portion of a Participant’s Accounts is distributed in a single sum on or before
the Required Beginning Date, distributions shall be made in accordance with this
paragraph (d) as of the first Distribution Calendar Year and the entire vested
portion of a Participant’s Accounts shall be distributed, or begin to be
distributed, to the Participant no later than the Participant’s Required
Beginning Date as set forth below:

(i)      Amount of Minimum Required Distribution for each Distribution Calendar
Year. During the Participant’s lifetime, the minimum amount that shall be
distributed for each Distribution Calendar Year is the lesser of:

(A)        the quotient obtained by dividing the Participant’s Account Balance
by the distribution period in the Uniform Lifetime Table set forth in Regulation
Section 1.401(a)(9)-9, using the

 

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Participant’s age as of the Participant’s birthday in the Distribution Calendar
Year; or

(B)        if the Participant’s sole Designated Beneficiary for the Distribution
Calendar Year is the Participant’s spouse, the quotient obtained by dividing the
Participant’s Account Balance by the number in the Joint and Last Survivor Table
set forth in Regulation Section 1.401(a)(9)-9, using the Participant’s and
spouse’s attained ages as of the Participant’s and spouse’s birthdays in the
Distribution Calendar Year.

(ii)     Lifetime Minimum Required Distributions continue through Year of
Participant’s Death. Minimum required distributions shall be determined under
this paragraph (d) beginning with the first Distribution Calendar Year and up to
and including the Distribution Calendar Year that includes the Participant’s
date of death.

(iii)    For purposes of this paragraph, the following definitions shall apply:

(A)        “Account Balance” shall mean the account balance of a Participant’s
Account as of the last valuation date in the calendar year immediately preceding
the Distribution Calendar Year (valuation calendar year) increased by the amount
of any contributions made and allocated or forfeitures allocated to a
Participant’s Accounts as of dates in the valuation calendar year after the
valuation date and decreased by distributions made in the valuation calendar
year after the valuation date. The Account Balance for the valuation calendar
year includes any amounts rolled over or transferred to the plan either in the
valuation calendar year or in the Distribution Calendar Year if distributed or
transferred in the valuation calendar year.

(B)        “Designated Beneficiary” shall mean the individual who is designated
as the Beneficiary under Section 5.8 and is the Designated Beneficiary under
Code Section 401(a)(9) and Regulation Section 1.401(a)(9)-1, Q&A-4.

(C)        “Distribution Calendar Year” shall mean a calendar year for which a
minimum distribution is required. For distributions beginning before the
Participant’s death, the first Distribution Calendar Year is the calendar year
immediately preceding the calendar year which contains the Participant’s
Required Beginning Date. The minimum required distribution for the Participant’s
first Distribution Calendar Year shall be made on or before the Participant’s
Required Beginning Date. The minimum required distribution for other

 

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Distribution Calendar Years, including the minimum required distribution for the
Distribution Calendar Year in which the Participant’s Required Beginning Date
occurs, shall be made on or before December 31 of that Distribution Calendar
Year.

(D)        “Life expectancy” shall mean as computed by use of the Single Life
Table in Regulation Section 1.401(a)(9)-9.

(E)        “Required Beginning Date” shall mean April 1 of the calendar year
immediately following the later of the calendar year in which the Participant
attains age 70-1/2 or incurs a Severance; provided, however, if such Participant
is a Five Percent Owner (as defined in Code Section 416(i) and applicable
regulations) with respect to the Plan Year ending in the calendar year in which
such Participant attains age 70-1/2, the Required Beginning Date shall be
April 1 of the calendar year immediately following the year in which such
Participant attains age 70-1/2.

(iv)     Treasury Regulations Incorporated by Reference. All distributions
required under this subsection shall be determined and made in accordance with
the Treasury Regulations under Code Section 401(a)(9).

(e)        Minimum Required Distributions following Participant’s Death. If a
Participant dies before the entire vested portion of his or her ESOP Account is
distributed, the entire vested portion of the Participant’s ESOP Account shall
be distributed as provided in Section 5.5.

(f)        If it is not administratively practical to calculate and commence
payments by the latest date specified in the rules of paragraphs (b), (c),
(d) and (e) above because the amount of the Participant’s benefit cannot be
calculated, or because the Committee is unable to locate the Participant after
making reasonable efforts to do so, the payment shall be made as soon as is
administratively possible (but not more than 60 days) after the Participant can
be located and the amount of the distributable benefit can be ascertained.

(g)        If any payee under the Plan is a minor or if the Committee reasonably
believes that any payee is legally incapable of giving a valid receipt and
discharge for any payment due him, the Committee may have such payment, or any
part thereof, made to the person (or persons or institution) whom it reasonably
believes is caring for or supporting such payee, or, if applicable, to any duly
appointed guardian or committee or other authorized representative of such
payee. Any such payment shall be a payment for the account of such payee and
shall, to the extent thereof, be a complete discharge of any liability under the
Plan to such payee.

5.11.      Put Option for Company Stock Allocated to ESOP Accounts.

 

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(a)        Solely in the event that a Participant receives a distribution
consisting in whole or in part of Company Stock that at the time of distribution
thereof is not readily tradable stock within the meaning of Code Section 409(h)
then such distributed Company Stock shall be made subject to a put option in the
hands of a Qualified Holder (as defined herein below), with such put option to
be subject to the following provisions:

(i)      As used herein, the term “Qualified Holder” shall mean the Participant
or Beneficiary receiving the distribution of such Company Stock, any other party
to whom such stock is transferred by gift or by reason of death, and also any
trustee of an Individual Retirement Account (as defined under Code Section 408)
to which all or any portion of such distributed Company Stock is transferred
pursuant to a tax-free “rollover” transaction satisfying the requirements of
Code Section 402.

(ii)     During the sixty (60) day period following any distribution of such
Company Stock, a Qualified Holder shall have the right to require the Company to
purchase all or any portion of said distributed Company Stock held by said
Qualified Holder. A Qualified Holder shall exercise such right by giving written
notice to the Company within the aforesaid sixty (60) day period of the number
of shares of distributed Company Stock that such Qualified Holder intends to
sell to the Company. The purchase price to be paid for any such Company Stock
shall be its fair market value determined as of the Valuation Date coincident
with or immediately preceding the date of the distribution.

(iii)    If a Qualified Holder shall fail to exercise his or her put option
right under subparagraph (ii) above, such option right shall temporarily lapse
upon the expiration of the sixty (60) day period thereof. As soon as is
reasonably practicable following the last day of the Plan Year in which said
sixty (60) day option period expires, the Company shall notify each such
non-electing Qualified Holder who is then a shareholder of record of the
valuation of such Company Stock as of the most recent Valuation Date. During the
sixty (60) day period following receipt of such valuation notice, any such
Qualified Holder shall have the right to require the Company to purchase all or
any portion of such distributed Company Stock. The purchase price to be paid
therefor shall be based on the valuation of such Company Stock as of the
Valuation Date coinciding with or next preceding the exercise of the option
under this Section 5.11(c). If a Qualified Holder fails to exercise his or her
option right under this subparagraph (iii) with respect to any portion of such
distributed Company Stock, no further options shall be applicable under the Plan
and the Company shall have no further purchase obligations hereunder.

(iv)     In the event that a Qualified Holder shall exercise a put option under
this Section, then the Company shall have the option of paying the purchase
price of the Company Stock which is subject to such put option (hereafter the
“Option Stock”) under either of the following methods:

 

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(A)        A lump sum payment of the purchase price within ninety (90) days
after the date upon which such put option is exercised (the “Exercise Date”) or

(B)        A series of six equal installment payments, with the first such
payment to be made within thirty (30) days after the Exercise Date and the five
remaining payments to be made on the five anniversary dates of the Exercise
Date, so that the full amount shall be paid as of the fifth anniversary of such
Exercise Date. If the Company elects to pay the purchase price of the Option
Stock under the installment method provided in this clause (2), then the Company
shall, within thirty (30) days after the Exercise Date, give the Qualified
Holder who is exercising the put option the Company’s promissory note for the
full unpaid balance of the option price. Such note shall, at a minimum, provide
adequate security (if required under applicable regulations), state a rate of
interest reasonable under the circumstances (but at least equal to the imputed
compound rate in effect as of the Exercise Date pursuant to the regulations
promulgated under Code Sections 483 or 1274, whichever shall be applicable) and
provide that the full amount of such note shall accelerate and become due
immediately in the event that the Company defaults in the payment of a scheduled
installment payment.

(v)      The put options under subparagraphs (ii)and (iii) above shall be
effective solely against the Company and shall not obligate the Plan in any
manner; provided, however, with the Company’s consent, the Plan may elect to
purchase any Company Stock that otherwise must be purchased by the Company
pursuant to a Qualified Holder’s exercise of any such option.

(vi)     If at the time of any distribution of said Company Stock it is known
that any applicable Federal or State law would be violated by the Company’s
honoring of such a put option as provided under this Section, the Company shall
designate another entity that will honor such put option. Such other entity
shall be one having a substantial net worth at the time such loan is made and
whose net worth is reasonably expected to remain substantial.

(vii)    In the event that a Qualified Holder is unable to exercise the put
option provided hereunder because the Company (or other entity bound by such put
option) is prohibited from honoring it by reason of any applicable Federal or
State law, then the sixty (60) day option periods during which such put option
is exercisable under subparagraphs (ii) and (iii) shall not include any such
time during which said put option may not be exercised due to such reason.

(viii)   Except as is expressly provided herein above with respect to any
distributed Company Stock that is readily tradeable stock within the meaning of

 

26

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Code Section 409(h), no Participant shall have any put option rights with
respect to Company Stock distributed under the Plan, and neither the Company nor
the Plan shall have any obligation whatsoever to purchase any such distributed
Company Stock from any Participant or other Qualified Holder.

(ix)     At the time of distribution of Company Stock that is not readily
tradable stock within the meaning of Code Section 409(h), to a Participant or
Beneficiary, the Company shall furnish to such Participant or Beneficiary the
most recent annual certificate of value prepared by the Company with respect to
such Stock. In addition, the Company shall furnish to such Participant or
Beneficiary a copy of each subsequent annual certificate of value until the put
options provided for in this Section with respect to such distributed Company
Stock shall expire.

(b)        Notwithstanding any other provisions of the Plan regarding a
Participant’s right to exercise a put option, the put option described in
paragraph (a) above shall be subject to the following additional provisions:

(i)      If the distribution constitutes a Total Distribution (as defined
below), in the event that a Qualified Holder exercises a put option under this
Section, then the Company shall have the right to pay the purchase price of the
Option Stock under either of the following methods:

(A)        A lump sum payment of the purchase price within thirty (30) days
after the Exercise Date; or

(B)        A series of five substantially equal annual payments with the first
such payment to be made within thirty (30) days after the Exercise Date. If the
Company elects to pay the purchase price of the Option Stock under the
installment method provided in this clause (2), then the Company shall, within
30 days after the Exercise Date, give the Qualified Holder who is exercising the
put option the Company’s promissory note for the full unpaid balance of the
option price. Such note shall, at a minimum, provide adequate security, state a
rate of interest reasonable under the circumstances (but at least equal to the
imputed compound rate in effect as of the Exercise Date pursuant to the
regulations promulgated under Code Sections 483 or 1274, whichever shall be
applicable) and provide that the full amount of such note shall accelerate and
become due immediately in the event that the Company defaults in the payment of
a scheduled installment payment.

(ii)     If the distribution does not constitute a Total Distribution (as
defined below), in the event that a Qualified Holder exercises a put option
under this Section, then the Company shall pay the purchase price of the Option
Stock in a lump sum within thirty (30) days after the Exercise Date.

 

27

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For purposes of this Section, “Total Distribution” shall mean a distribution to
a Participant (or his or her Beneficiary, if applicable) within one taxable year
of such recipient of the entire balance to the credit of the Participant.

(c)        This Section shall be applied to any securities of the Company held
by the Plan to the extent required under Code Section 401(a)(23) and the
regulations issued thereunder and its provisions shall be interpreted and
applied in accordance with all applicable requirements of Code Section 409(h)
and the regulations issued thereunder.

5.12.      Diversification Rule.

(a)        For the purpose of Section 5.12 only, the following definitions shall
apply:

(i)      “Qualified Participant” shall mean a Participant who is fully vested in
his or her ESOP Account as determined under Section 5.2.

(ii)     “Insider” shall mean any Participant who is directly or indirectly the
beneficial owner of more than 10% of any class of any equity security (other
than an exempted security) of the Sponsor (or the Company) which is registered
pursuant to Section 12 of the Securities Exchange Act of 1934, or who is a
“director” or an “officer” of the sponsor or the Company as those terms are
interpreted under the Securities Exchange Act of 1934 for the purpose of
determining persons subject to Section 16 of such Act.

(b)        Effective as of September 1, 2002 or as soon as administratively
practicable thereafter, a Participant may elect to diversify his or her ESOP
Account as follows:

(i)      Any Participant who is a Qualified Participant may elect to diversify
up to 50% of the Company Stock allocated to his or her ESOP Account.

(ii)     The number of shares of Company Stock that may be diversified shall be
determined by applying the diversification percentage of 50% to the total number
of shares allocated to a Participant’s ESOP Account and reducing such number by
the number of shares of Company Stock previously diversified under this Section.

(c)        Notwithstanding the foregoing, effective as of January 1, 2002 and
ending on the effective date of the diversification rules set forth in
subsection (b) above, a Participant may elect to diversify his or her ESOP
Account as follows:

(i)      Any Participant who is a Qualified Participant as of December 31, 2001
may elect to diversify up to 50% of the Company Stock allocated to his or her
ESOP Account in accordance with the following schedule that increases the
Diversification Percentage over the following three Plan Years:

 

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      Plan Year    Diversification Percentage

2002

   up to 25%

2003

   up to 40%

2004 and thereafter

   up to 50%

(ii)     Any Participant who becomes a Qualified Participant on or after
January 1, 2002 may elect to diversify up to 50% of the Company Stock allocated
to his or her ESOP Account in accordance with the following schedule that
increases the Diversification Percentage over the following three Plan Years:

 

      Plan Year    Diversification Percentage

Plan Year after becoming a Qualified Participant

   up to 25%

Next succeeding Plan Year

   up to 40%

Next succeeding Plan Year and thereafter

   up to 50%

(iii)    The number of shares of Company Stock that may be diversified in any
given Plan Year shall be determined by applying the Diversification Percentage
in the above schedules to the total number of shares allocated to a
Participant’s ESOP Account as of the beginning of the Plan Year and reducing
such number by the number of shares of Company Stock previously diversified
under this Section.

(d)        For Plan Years prior to the 2002 Plan Year, each Qualified
Participant shall be permitted to direct the Plan as to the diversification of
25 percent of the value of the vested portion of the Participant’s ESOP Account
within 90 days after the last day of each Plan Year during the Participant’s
Qualified Election Period. For the purpose of this paragraph (d), the term
“Qualified Participant” means a Participant who has attained age 55 and who has
completed at least 10 years of participation in the Plan and the term “Qualified
Election Period” shall mean the six Plan Year period beginning with the Plan
Year in which the Participant first becomes a Qualified Participant. Within 90
days after the close of the last Plan Year in the Participant’s Qualified
Election Period, a Qualified Participant may direct the Plan as to the
diversification of 50 percent of the value of the vested portion of such ESOP
Account. Upon such direction by a Qualified Participant, the Plan shall transfer
to the Allergan, Inc. Savings and Investment Plan (the “SIP”) that portion of
the Participant’s ESOP Account that is covered by the election within 90 days
after the last day of the period during which the election can be made which
shall be allocated to a rollover account maintained on behalf of the Qualified
Participant. Under the SIP, the Qualified Participant may invest the amount so
transferred under any of the investment options available under the SIP or may
direct that the amount so transferred be distributed to him or her.

 

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(e)        A Qualified Participant who elects to diversify his or her ESOP
Account as provided under this Section shall do so by transferring diversified
amounts to any of the investment funds currently offered and currently available
to Participants as determined by the Committee pursuant to Section 6.3(c);
provided, however, that any allocations among the investment funds shall be made
in 1% increments. Any election to diversify shall be effective as soon as
administratively feasible and subject to paragraph (f) below. A Qualified
Participant shall effect a diversification election under procedures established
by the Committee for this purpose.

(f)        For purposes of this Section and consistent with the requirements of
Code Section 401(a)(28) if applicable, a Qualified Participant who is an Insider
may only elect to diversify his or her ESOP Account if within six (6) months
before the Participant’s election, he or she has not made an election under the
Allergan, Inc. Savings and Investment Plan or the provision of any company plan
covered by Rule 16b-3 (promulgated pursuant to the Securities Exchange Act of
1934) then in existence that would result in the transfer into a Company equity
securities fund.

5.13.      Lapsed Benefits.

(a)        In the event that a Participant’s ESOP Account is payable under the
Plan and after reasonable efforts the Participant cannot be located for the
purpose of paying his or her ESOP Account during a period of three consecutive
years, the Participant shall be presumed dead and his or her ESOP Account shall,
upon the expiration of that three year period, be paid to the Participant’s
Beneficiary. If the Participant’s Beneficiary cannot be located for the purpose
of paying the Participant’s ESOP Account for the following two years, then the
Participant’s ESOP Account shall, upon expiration of such two-year period, be
forfeited and reallocated to the ESOP Accounts of other Participants as provided
in Section 4.3.

(b)        If a Participant dies prior to receiving a distribution of the entire
vested portion of his or her ESOP Account (other than a Participant presumed to
have died as provided above) and if after reasonable efforts the Beneficiary of
the Participant cannot be located for the purpose of paying the Participant’s
ESOP Account during a period of five consecutive years, the benefit shall, upon
expiration of such five-year period, be forfeited and reallocated to the ESOP
Accounts of the other Participants as provided in Section 4.3.

(c)        For purposes of this Section, the term “Beneficiary” shall include
any person entitled under Section 5.8 to receive the vested interest of a
deceased Participant or deceased designated Beneficiary. It is the intention of
this Section that during the relevant waiting period (two years or five years)
the vested portion of a Participant’s ESOP Account shall be distributed to a
Beneficiary in a lower priority category under Section 5.8 if no Beneficiary in
a higher priority category can be located by the Committee after reasonable
efforts have been made.

 

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(d)        Notwithstanding the foregoing rules, if after such a forfeiture the
Participant or a Beneficiary claims the forfeited ESOP Account, the amount
forfeited shall be reinstated (without regard to any interest or investment
earnings on such amount) and paid to the Participant or Beneficiary as soon as
practical following the production of reasonable proof of the identity of the
Participant or Beneficiary and his or her entitlement to the amounts forfeited
(determined pursuant to the Plan’s normal claim procedures under Section 7.10).

(e)        The Committee shall direct the Trustee with respect to the procedures
to be followed concerning a missing Participant (or Beneficiary), and the
Company shall be obligated to contribute to the Trust Fund any amounts necessary
after the application of Section 4.3 to pay any reinstated benefit after it has
been forfeited pursuant to the provisions of this Section.

 

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ARTICLE VI

TRUST FUND AND INVESTMENTS

6.1.        General.    All contributions made under the Plan and investments
made and property of any kind or character acquired with any such funds or
otherwise contributed, and all income, profits, and proceeds derived therefrom,
shall be held in Trust and shall be held and administered by the Trustee in
accordance with the provisions of the Plan and Trust Agreement.

6.2.        Single Trust.    Assets of the Trust shall be held in a separate
fund which shall consist of the Trust Fund. Individual Participant interests in
the Trust Fund shall be reflected in the ESOP Accounts maintained for the
Participants. Notwithstanding the foregoing, the Trust Fund shall be treated as
a single trust for purposes of investment and administration, and nothing
contained herein shall require a physical segregation of assets for any fund or
for any Account maintained under the Plan.

6.3.        Investment of the Trust.

(a)        Subject to paragraph (c) below and Sections 6.4 and 5.12 hereof, the
Trust Fund shall be invested primarily in Company Stock and neither the Company
nor the Committee nor the Trustee shall have any responsibility or duty to time
any transaction involving Company Stock, in order to anticipate market
conditions or changes in stock value, nor shall any such person have any
responsibility or duty to sell Company Stock held in the Trust Fund (or
otherwise to provide investment management for Company Stock held in the Trust
Fund) in order to maximize return or minimize loss. The Committee may direct the
Trustee to have the Plan enter into one or more Exempt Loans to finance the
acquisition of Company Stock for the Trust Fund. Company contributions in cash,
and other cash received or held by the Trustee, may be used to acquire shares of
Company Stock from the Company, Company shareholders, from the ESOP Accounts of
Participants about to receive distributions under the Plan, or on the open
market.

(b)        Notwithstanding anything contained herein to the contrary, proceeds
of an Exempt Loan shall be used, within a reasonable time after receipt by the
Trust, only for the following purposes:

(i)      to acquire Company Stock;

(ii)     to repay the same Exempt Loan; or

(iii)    to repay any previous Exempt Loan.

An Exempt Loan shall be repaid only from amounts loaned to the Trust and the
proceeds of such loans, from Company contributions in cash and earnings
attributable thereto, from any collateral given for the loan (including, in the
case where the Exempt Loan is a refinancing of a prior Exempt Loan, unallocated
Company Stock acquired with

 

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the proceeds of the prior Exempt Loan), and from dividends paid on Company Stock
acquired with proceeds of the Exempt Loan. Except as provided in Section 5.11 or
as otherwise required by applicable law, no Company Stock acquired with the
proceeds of an Exempt Loan may be subject to a put, call, or other option or
buy-sell or similar arrangement while held by and when distributed from the
Plan.

(c)        Notwithstanding paragraph (a) above, the Committee may establish
separate investment funds under the Plan, with each fund representing an
investment alternative available to Participants for the investment of their
ESOP Accounts as provided in paragraph (d) below and Section 5.12. Each
Participant shall have a subaccount under the Plan corresponding to the
Participant’s interest which is allocated to each investment fund. Each such
subaccount may be valued separately. The manner in which assets of the Trust
shall be invested in such investment funds, including the establishment of
alternative investment funds, the elimination of any previously established
funds, or the placement of limitations on the availability of an investment fund
to Participants, shall be chosen by the Committee at its discretion. Amounts
invested in any one of the investment funds shall not share in gains and losses
experienced by any other fund. Notwithstanding the establishment of separate
investment funds within the Trust, the Trust shall at all times constitute a
single trust.

(d)        A Participant may elect at any time to transfer any cash or other
property, including shares of Advanced Medical Optics, Inc. (“non-Company Stock
assets”) or amounts previously diversified under Section 5.12, accumulated in
his or her ESOP Account among any of the investment funds currently offered and
currently available to Participants as determined by the Committee pursuant to
paragraph (c) above; provided, however, the total amount transferred shall be
made in 1% increments of the amount accumulated in such funds. Any transfer
among investment funds shall be effective as soon as administratively feasible.
A Participant shall effect a transfer election under procedures established by
the Committee for this purpose.

(e)        Notwithstanding anything in the Plan to the contrary, the following
additional transfer restrictions shall apply to all Participants who are
Insiders as defined in Section 5.12.

(i)      Any Insider who transfers amounts invested in Company Stock and into
another fund or withdraws cash in a transaction that results in the liquidation
of Company Stock (pursuant to Sections 5.7 or to the extent applicable under
Section 5.12), may not for a period of six months following the Participant’s
election to so transfer funds or withdraw cash, as the case may be, make an
election to transfer amounts from another fund and invest in Company Stock.

(ii)     Any Insider who transfers amounts invested in a non-Company Stock fund
to invest in Company Stock, may not for a period of six months following the
Participant’s election to so transfer funds make an election to (1) sell Company
Stock and transfer the proceeds to another fund, (2) withdraw

 

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cash that results in the liquidation of Company Stock or (3) make a
diversification election under Section 5.12 subject to the requirements of Code
Section 401(a)(28), if applicable or (4) utilize the Allergan Inc. Savings and
Investment Plan or the provision of any Company plan covered by Rule 16b-3
(promulgated pursuant to the Exchange Act) then in existence that would result
in the transfer out of a Company equity securities fund.

(f)        It is intended that to the extent a Participant may diversify or
direct the investment of his or her ESOP Account under the Plan that the Plan
constitute a plan described in Section 404(c) of ERISA and the regulations
thereunder, and neither the Company, Committee, nor any fiduciary with respect
to the Plan who is employed by the Company shall be liable for investment losses
sustained by any Participant or Beneficiary as a direct and necessary result of
the investment instructions given by such Participant or Beneficiary. Such
fiduciaries set forth in the preceding sentence shall be under no duty to
question the investment direction of the Participant or Beneficiary or to advise
a Participant or Beneficiary as to the manner in which his or her ESOP Account
is to be invested. The fact that an investment option is offered shall not be
construed to be a recommendation of investment.

(g)        On June 29, 2002, Allergan spun-off AMO and distributed the stock of
AMO (referred to in the Plan as “AMO Stock”) to its shareholders. The following
provisions of the Plan shall apply to AMO Stock as if the term “AMO Stock” was
substituted for the term “Company Stock”: Section 6.4 (Certain Offers for
Company Stock); Section 6.5 (Securities Law Limitation); Section 6.7
(Dividends); Section 6.14 (Appointment of Investment Manager); Section 7.1
(Appointment of Committee); Section 7.2 (Appointment of Investment
Subcommittee); Section 7.7 (Additional Powers of Committee); Section 7.8
(Investment Subcommittee Powers); Section 7.14 (Compensation of Committees and
Plan Expenses); and Section 7.16 (Voting of Company Stock), as applicable.

6.4.        Certain Offers for Company Stock.    Notwithstanding any other
provision of the Plan to the contrary, in the event an offer shall be received
by the Trustee (including but not limited to a tender offer or exchange offer
within the meaning of the Securities Exchange Act of 1934, as from time to time
amended and in effect) to acquire any or all shares of Company Stock held by the
Trust (an “Offer”), whether or not such Company Stock is allocated to
Participants’ ESOP Accounts, the discretion or authority to sell, exchange or
transfer any of such shares of Company Stock shall be determined in accordance
with the following rules:

(a)        The Trustee shall have no discretion or authority to sell, exchange
or transfer any Company Stock pursuant to an Offer except to the extent, and
only to the extent that the Trustee is timely directed to do so in writing
(i) with respect to any Company Stock held by the Trustee subject to such Offer
and allocated to any Participant’s ESOP Account, by each Participant to whose
ESOP Account any of such Company Stock is allocated and (ii) with respect to any
Company Stock held by the Trustee subject to such Offer and not allocated to any
Participant’s ESOP Account, by

 

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each Participant who is an Eligible Employee with respect to a number of shares
(including fractional shares) of such unallocated Company Stock equal to the
total number of shares of such unallocated Company Stock multiplied by a
fraction the numerator of which is the annualized Compensation of such
Participant for the calendar year in which such Offer is made and the
denominator of which is the total annualized Compensation for the calendar year
in which such Offer is made of all such Participants who are Eligible Employees.

(b)        To the extent there remains any residual fiduciary responsibility
with respect to Company Stock pursuant to an Offer after application of
paragraph (a) above, the Trustee shall sell, exchange or transfer such Company
Stock as directed by the Committee or as directed by an independent fiduciary if
duly appointed by the Sponsor. To the extent the Committee or an independent
fiduciary is required to exercise any residual fiduciary responsibility with
respect to an Offer, the Committee or independent fiduciary shall take into
account in exercising its fiduciary judgment, unless it is clearly imprudent to
do so, directions timely received from Participants, as such directions are most
indicative of what action is in the best interests of Participants. Further, the
Committee or independent fiduciary, in addition to taking into consideration any
relevant financial factors bearing on any such decision, shall take into
consideration any relevant non-financial factors, including, but not limited to,
the continuing job security of Participants as employees of the Sponsor or any
Affiliated Company, conditions of employment, employment opportunities and other
similar matters, and the prospect of the Participants and prospective
Participants for future benefits under the Plan (including any subsequent
release and allocation of Company Stock held in the Exempt Loan Suspense
Subfund).

(c)        Upon timely receipt of such instructions, the Trustee shall, subject
to the provisions of paragraphs (e) and (o) of this Section, sell, exchange or
transfer pursuant to such Offer, only such shares as to which such instructions
were given. The Committee shall use its best efforts to communicate or cause to
be communicated to each Participant the consequences of any failure to provide
timely instructions to the Trustee.

(d)        In the event, under the terms of an Offer or otherwise, any shares of
Company Stock tendered for sale, exchange or transfer pursuant to such Offer may
be withdrawn from such Offer, the Trustee shall follow such instructions
respecting the withdrawal of such shares from such Offer in the same manner and
the same proportion as shall be timely received by the Trustee from the
Participants entitled under this Section to give instructions as to the sale,
exchange or transfer of shares pursuant to such Offer.

(e)        In the event that an Offer for fewer than all of the shares of
Company Stock held by the Trustee in the Trust shall be received by the Trustee,
each Participant shall be entitled to direct the Trustee as to the acceptance or
rejection of such Offer (as set forth herein) with respect to the largest
portion of such Company Stock as may be possible given the total number or
amount of shares of Company Stock the Plan may sell, exchange or transfer
pursuant to the Offer based upon the instructions received by the

 

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Trustee from all other Participants who shall timely instruct the Trustee
pursuant to this paragraph to sell, exchange or transfer such shares pursuant to
such Offer, each on a pro rata basis in accordance with the maximum number of
shares each such Participant would have been permitted to direct under
paragraph (a) had the Offer been for all shares of Company Stock held in the
Trust.

(f)        In the event an Offer is received by the Trustee and instructions
have been solicited from Participants regarding such Offer, and prior to
termination of such Offer, another Offer is received by the Trustee for the
Company Stock subject to the first Offer, the Trustee shall inform the Committee
of such other Offer and the Committee shall use its best efforts under the
circumstances to solicit instructions from the Participants (i) with respect to
securities tendered for sale, exchange or transfer pursuant to the first Offer,
whether to withdraw such tender, if possible, and, if withdrawn, whether to
tender any Company Stock so withdrawn for sale, exchange or transfer pursuant to
the second Offer and (ii) with respect to Company Stock not tendered for sale,
exchange or transfer pursuant to the first Offer, whether to tender or not to
tender such Company Stock for sale, exchange or transfer pursuant to the second
Offer. The Trustee shall follow all such instructions received in a timely
manner from Participants in the same manner and in the same proportion as
provided in paragraph (a) of this Section. With respect to any further Offer for
any Company Stock received by the Trustee and subject to any earlier Offer
(including successive Offers from one or more existing offers), the Trustee
shall act in the same manner as described above.

(g)        With respect to any Offer received by the Trustee, the Trustee shall
inform the Sponsor of such Offer and the Sponsor shall distribute, at its
expense, copies of all relevant material including but not limited to material
filed with the Securities and Exchange Commission with such Offer or regarding
such Offer, which shall seek confidential written instructions from each
Participant who is entitled to respond to such Offer pursuant to paragraph (a).
The identities of Participants, the amount of Company Stock allocated to their
ESOP Accounts, and the Compensation of each Participant shall be determined from
the list of Participants delivered to the Sponsor by the Committee which shall
take all reasonable steps necessary to provide the Sponsor with the latest
possible information.

(h)        The Sponsor shall distribute and/or make available to each
Participant who is entitled to respond to an Offer pursuant to paragraphs (a),
an instruction form to be used by each such Participant who wishes to instruct
the Trustee. The instruction form shall state that (i) if the Participant fails
to return an instruction form to the Trustee by the indicated deadline, the
Company Stock with respect to which he or she is entitled to give instructions
shall not be sold, exchanged or transferred pursuant to such Offer unless the
Trustee is directed otherwise as provided in paragraph (b) above, (ii) the
Participant shall be a named fiduciary (as described in paragraph (m) below)
with respect to all shares of Company Stock for which he or she is entitled to
give instructions, and (iii) the Company acknowledges and agrees to honor the
confidentiality of the Participant’s instructions to the Trustee.

 

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(i)        Each Participant may choose to instruct the Trustee in one of the
following two ways: (i) not to sell, exchange or transfer any shares of Company
Stock for which he or she is entitled to give instructions, or (ii) to sell,
exchange or transfer all Company Stock for which he or she is entitled to give
instructions. The Sponsor shall follow up with additional mailings and postings
of bulletins, as reasonable under the time constraints then prevailing, to
obtain instructions from Participants not otherwise responding to such requests
for instructions. Subject to paragraph (e), the Trustee shall then sell,
exchange or transfer shares according to instructions from Participants, except
that shares for which no instructions are received shall not be sold, exchanged
or transferred unless directed otherwise as provided in paragraph (b) above.

(j)        The Sponsor shall furnish former Participants who have received
distributions of Company Stock so recently as to not be shareholders of record
with the information given to Participants pursuant to paragraphs (g), (h) and
(i) of this Section. The Trustee shall then sell, exchange or transfer shares
according to instructions from such former Participants, except that shares for
which no instructions are received shall not be sold, exchanged or transferred.

(k)        Neither the Company, the Committee nor the Trustee shall express any
opinion or give any advice or recommendation to any Participant concerning the
Offer, nor shall they have any authority or responsibility to do so.

(l)        The Trustee shall not reveal or release a Participant’s instructions
to the Company, its officers, directors, employees, or representatives. If some
but not all Company Stock held by the Trust is sold, exchanged, or transferred
pursuant to an Offer, the Company, with the Trustee’s cooperation, shall take
such action as is necessary to maintain the confidentiality of Participant’s
records including, without limitation, establishment of a security system and
procedures which restrict access to Participant records and retention of an
independent agent to maintain such records. If an independent record keeping
agent is retained, such agent must agree, as a condition of its retention by the
Sponsor, not to disclose the composition of any Participant ESOP Accounts to the
Company, its officers, directors, employees, or representatives. The Company
acknowledges and agrees to honor the confidentiality of Participants’
instructions to the Trustee.

(m)        Each Participant shall be a named fiduciary (as that term is defined
in Section 402(a)(2) of ERISA) with respect to Company Stock allocated to his or
her ESOP Account under the Plan and with respect to his or her pro-rata portion
of the unallocated Company Stock for which he or she is entitled to issue
instructions in accordance with paragraph (a) of this Section solely for
purposes of exercising the rights of a shareholder with respect to an Offer
pursuant to this Section 6.4 and voting rights pursuant to Section 7.16.

 

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(n)        To the extent that an Offer results in the sale of Company Stock in
the Trust and allocated to the ESOP Accounts of Participants, the Committee
shall instruct the Trustee as to the investment of the proceeds of such sale. To
the extent that an Offer results in the sale of Company Stock in the Trust and
not allocated to the ESOP Accounts of any Participant, the proceeds from such
sale shall first be applied to repay the fullest extent possible, all Exempt
Loans then outstanding. To effect such repayment, the Trustee shall seek such
consents and approvals from lenders under any Exempt Loans as may be necessary
or convenient to permit the tender of shares of Company Stock held in the Exempt
Loan Suspense Subfund. To the extent that proceeds from the sale of shares held
in the Exempt Loan Suspense Subfund exceed the outstanding principal and
interest of all Exempt Loans, such excess proceeds shall be allocated to each
Eligible Participant’s (as defined in Section 4.2(d)) Non-Stock Subaccount in
the same manner as allocations under Section 4.2(a); provided, however, that
only an Eligible Participant who is employed on the date of the closing of the
sale pursuant to the Offer shall be deemed an Eligible Participant entitled to
an allocation of excess sale proceeds for purposes of this Section 6.4(n) only.
To the extent that less than all of the shares of Company Stock held in the
Exempt Loan Suspense Subfund are tendered in an Offer and repayment of an Exempt
Loan results in a release of shares of Company Stock from the Exempt Loan
Suspense Subfund in excess of those tendered in such Offer, the excess released
shares of Company Stock shall be allocated to each Eligible Participant’s ESOP
Account in the same manner as allocations under Section 4.2(c); provided,
however, that only an Eligible Participant who is employed on the date of the
closing of the sale pursuant to the Offer shall be deemed an Eligible
Participant entitled to an allocation of Company Stock for purposes of
this Section 6.4(n) only. To the extent that allocations to Eligible
Participants under this Section 6.4(n) constitute Annual Additions, all such
allocations shall be subject to the limitations set forth in Article XI hereof.
Any allocations to which Eligible Participants would be entitled under this
Section 6.4(n) but for the limitations of Article XI, shall be held in the 415
Suspense Account and allocated to Eligible Participants in accordance with
Article XI.

(o)        In the event a court of competent jurisdiction shall issue to the
Plan, the Committee, the Sponsor or the Trustee an opinion or order, which
shall, in the opinion of counsel to the Committee, the Sponsor or the Trustee,
invalidate, in all circumstances or in any particular circumstances, any
provision or provisions of this Section regarding the determination to be made
as to whether or not Company Stock held by the Trustee shall be sold, exchanged
or transferred pursuant to an Offer or cause any such provision or provisions to
conflict with securities laws, then, upon notice thereof to the Committee, the
Sponsor or the Trustee, as the case may be, such invalid or conflicting
provisions of this Section shall be given no further force or effect. In such
circumstances, the Trustee shall continue to follow instructions received from
Participants, to the extent such instructions have not been invalidated by such
order or opinion. To the extent the Trustee is required by such opinion or order
to exercise any residual fiduciary responsibility with respect to such Offer,
the Sponsor shall appoint an independent fiduciary who shall exercise such
residual fiduciary responsibility as provided in paragraph (b) above and

 

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shall direct the Trustee as to whether or not Company Stock held by the Trustee
shall be sold, exchanged or transferred pursuant to such Offer.

6.5.        Securities Law Limitation.    Neither the Committee nor the Trustee
shall be required to engage in any transaction, including without limitation,
directing the purchase or sale of Company Stock, which either determines in its
sole discretion might tend to subject itself, its members, the Plan, the
Company, or any Participant or Beneficiary to a liability under federal or state
securities laws.

6.6.        Accounting and Valuations.

(a)        The following special accounting rules shall apply to the Trust Fund.

(i)      Each Participant’s ESOP Account shall consist of (1) a portion
comprised of cash and all other assets except for Company Stock and AMO Stock
(the “Non-Stock Subaccount”); (2) a portion comprised solely of AMO Stock (the
“AMO Subaccount”); and (3) a portion comprised solely of Company Stock (the
“Stock Subaccount”).

(ii)     Gains or losses on Non-Stock Subaccounts shall be credited in
accordance with this Section as if the Non-Stock Subaccounts collectively
constituted a separate pooled investment fund.

(iii)    Stock Subaccounts shall be credited with a specific number of shares of
Company Stock rather than an individual interest in a pool of Company Stock.

(iv)     AMO Subaccounts shall be credited with a specific number of shares of
AMO Stock rather than an individual interest in a pool of AMO Stock.

(b)        Non-Stock Subaccounts may be invested in Company Stock from time to
time, and Company Stock so acquired shall be allocated among Stock Subaccounts
in proportion to the amount debited to the corresponding Non-Stock Subaccounts.

(c)        As of each Valuation Date each Participant’s Non-Stock Subaccount
shall be credited (debited) with the “allocable share” of the net income (loss)
of the non-Company Stock portion of the Trust Fund valued as of such Valuation
Date in proportion to Non-Stock Subaccount balances. For this purpose, except as
provided in Section 6.7, the net income (loss) of the Trust Fund shall not
include any income with respect to securities in the Exempt Loan Suspense
Subfund acquired with the proceeds of an Exempt Loan.

(d)        In making valuations required by the Plan, the Trustee shall value
all assets of the Trust at fair market value. Such fair market value shall be
determined from facts reasonably available to the Trustee. In making said
determination, the Trustee may,

 

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but need not, select and rely upon the advice and opinions of appraisers,
brokers, investment counsel, or any other persons believed by the Trustee to be
competent. Any determination of value so made shall, for all purposes of the
Plan, conclusively establish such value.

(e)        If Company Stock is readily tradeable stock (as that term is used
under Code Section 409(h)), valuation of each Participant’s Stock Subaccount
shall, at any relevant times, be worth the fair market value on that date of the
shares of Company Stock credited to it. Valuations of any Company Stock held by
the Trust which is not readily tradable stock shall be performed by an
independent appraiser or valuation consultant.

(f)        The Committee shall establish accounting procedures for the purpose
of making the allocations, valuations and adjustments to Participants’ ESOP
Accounts provided for in Article VI hereof. Such accounting procedures shall
include adequate records of the cost basis of Company Stock allocated to ESOP
Accounts and the identity of shares acquired with the proceeds of an Exempt
Loan. From time to time, the Committee may modify its accounting procedures for
the purpose of achieving equitable and nondiscriminatory allocations among the
ESOP Accounts of Participants in accordance with the provisions of the Plan.

(g)        In the event any rights, warrants, or options are issued with respect
to Company Stock held in Stock Subaccounts, the Committee shall direct the
Trustee as to whether such rights, warrants, or options shall be exercised for
such Subaccounts using cash as may be available in corresponding Non-Stock
Subaccounts. Company Stock so acquired shall be credited to corresponding Stock
Subaccounts in proportion to the amount of cash withdrawn from the corresponding
Non-Stock Subaccounts. A Participant shall have no right to request, direct, or
demand that the Trust exercise on his or her behalf rights to purchase Company
Stock.

(h)        The Participants and their Beneficiaries shall assume all risks in
connection with any decrease in the value of any assets invested in the Trust
Fund which are allocated to their ESOP Accounts.

(i)        Paragraphs (e) and (g) of this Section 6.6 shall apply to AMO Stock
as if the term “AMO Stock” was substituted for the term “Company Stock” and the
term “AMO Subaccount” was substituted for the term “Stock Subaccount,” as
applicable.

6.7.        Dividends.

(a)        As determined by the Committee, dividends on shares of Company Stock
allocated to ESOP Accounts shall be either (i) applied to repay an Exempt Loan
then outstanding; (ii) paid directly to Participants or Beneficiaries; or
(iii) retained in the Trust and treated as net income of the Trust. Any
resulting allocation shall be made according to the following rules:

 

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(i)      If cash dividends are used to repay an Exempt Loan, the appropriate
number of shares of Company Stock shall be released from the Exempt Loan
Suspense Subfund pursuant to Section 4.2(b). Notwithstanding the foregoing, if
the fair market value of the shares released pursuant to Section 4.2(b) from the
application of cash dividends to repay an Exempt Loan under this
Section 6.7(a)(i) is less than such cash dividends, additional shares shall be
released from the Exempt Loan Suspense Subfund until the fair market value of
such released shares equals the amount of such cash dividends. Such Company
Stock shall be allocated to Participants’ Stock Subaccounts in proportion to the
number of shares of Company Stock allocated to Participants’ Stock Subaccounts
for which such cash dividend was paid.

(ii)     If cash dividends are retained in the Trust and are not used to pay
expenses of the Plan, such dividends shall be allocated as of the date specified
by the Committee to Non-Stock Subaccounts in proportion to the shares of Company
Stock held in corresponding Stock Subaccounts for which such dividends were
distributed to the Trust.

(iii)    If stock dividends are retained in the Trust and are not used to pay
expenses of the Plan, such dividends shall be credited on the date specified by
the Committee to Stock Subaccounts in proportion to the shares of Company Stock
held in such Subaccounts for which such dividends were distributed to the Trust.

(iv)     If the Committee determines that cash or stock dividends shall be
distributed directly to Participants or Beneficiaries, such dividends shall be
distributed on the date specified by the Committee in proportion to the shares
of Company Stock held in such Participant’s or Beneficiary’s Stock Subaccount
for which such dividends were distributed.

(v)     If cash dividends are received by the Trust on or after January 1, 2002,
such dividends to the extent received on shares of Company Stock allocable to a
Participant’s ESOP Account shall be reinvested in Company Stock and held in such
Participant’s or Beneficiary’s Stock Subaccounts, or to the extent such
dividends are vested, shall be distributed to the Participant or Beneficiary not
later than 90 days after the close of the Plan Year in which such dividends are
paid if so elected by the Participant or Beneficiary.

(b)        As determined by the Committee, dividends on shares of Company Stock
held in the Exempt Loan Suspense Subfund or on shares of Company Stock
contributed to the Trust Fund but not yet allocated to Participant’s ESOP
Accounts shall be either (i) applied to repay an Exempt Loan then outstanding or
(ii) retained in the Trust. Any resulting allocation shall be made according to
the following rules:

 

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(i)      If cash or stock dividends are used to repay an Exempt Loan, the
appropriate number of shares of Company Stock shall be released from the Exempt
Loan Suspense Subfund pursuant to Section 4.2(b). Such Company Stock shall be
allocated to Participants Stock Subaccounts pursuant to Section 4.2(c).

(ii)     If cash dividends are not used to repay an Exempt Loan, they shall be
considered income of the Trust and, if not used to pay expenses of the Plan,
shall be allocated to Participants’ ESOP Accounts in proportion to their
respective ESOP Account balances.

(iii)    If stock dividends are not used to repay an Exempt Loan or used to pay
expenses of the Plan, they shall be retained in the Exempt Loan Suspense Subfund
until released from such Subfund pursuant to Section 4.2(b) and allocated to
Participants Stock Subaccounts pursuant to Section 4.2(c).

6.8.        Non-Diversion of Trust Fund.    Except as hereinafter provided, all
assets of the Trust shall be held by the Trustee for the exclusive benefit of
Plan Participants and Beneficiaries. At no time shall any part of the Trust be
used for or diverted to purposes other than for the exclusive benefit of the
Participants and Beneficiaries under the Plan except as follows:

(a)        In the case of a contribution which is made by a mistake of fact,
that contribution at the Sponsor’s written request, shall be returned to the
Company as directed by the Sponsor within one (1) year after it is made.

(b)        All contributions to the Trust are hereby conditioned upon the Plan
satisfying all of the requirements of Code Section 401(a), as evidenced by the
issuance by the Internal Revenue Service of a favorable determination letter
with respect to the Plan. If the Plan does not qualify, the Plan may be revoked
at the Sponsor’s written election, and any or all such contributions with
respect to the portion revoked may be returned to the Company within one year
after the date of the Internal Revenue Service’s denial of the qualification of
the Plan or a portion thereof. Upon such a revocation the affairs of the Plan
and Trust shall be terminated and wound up as the Sponsor shall direct.

(c)        Contributions to the Trust Fund are conditioned on deductibility
under Code Section 404. To the extent a deduction is disallowed and at the
Sponsor’s written request, such contributions shall be returned to the Company
as directed by the Sponsor within one year after the disallowance.

(d)        The residue of the 415 Suspense Account that cannot be allocated to
Participants upon a Plan termination shall revert to the Company as directed by
the Sponsor in accordance with the provisions of Section 11.6.

6.9.        Company, Committee and Trustee Not Responsible for Adequacy of Trust
Fund.    Neither any member of the Committee, any Trustee nor the Company shall
be liable or

 

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responsible for the adequacy of the Trust to meet and discharge any or all
payments and liabilities hereunder. All Plan benefits will be paid only from the
Trust assets, and neither any member of the Committee, any Trustee, nor the
Company shall have any duty or liability to furnish the Trust with any funds,
securities or other assets except as expressly provided in the Plan. Except as
required under the Plan or Trust or under Part 4 of Subtitle B, Title I of
ERISA, the Company shall not be responsible for any decision, act, or omission
of a Trustee or a member of the Committee or any Investment Manager (if
applicable), or responsible for the application of any moneys, securities,
investments, or other property paid or delivered to the Trustee.

6.10.      Distributions.    Money and property of the Trust shall be paid out,
disbursed, or applied by the Trustee for the benefit of Participants and
Beneficiaries under the Plan in accordance with directions received by the
Trustee from the Committee. Upon direction of the Committee, the Trustee may pay
money or deliver property from the Trust for any purpose authorized under the
Plan. The Trustee shall be fully protected in paying out money or delivering
property from the Trust from time to time upon written order of the Committee
and shall not be liable for the application of such money or property by the
Committee.

The Trustee shall not be required to determine or to make any investigation to
determine the identity or mailing address of any person entitled to benefits
hereunder and shall have discharged its obligation in that respect when it shall
have sent checks or other property by first-class mail to such persons at their
respective addresses as may be certified to it by the Committee.

6.11.      Taxes.    If the whole or any part of the Trust, or the proceeds
thereof, shall become liable for the payment of any estate, inheritance, income
or other tax, charge, or assessment which the Trustee shall be required to pay,
the Trustee shall have full power and authority to pay such tax, charge, or
assessment out of any moneys or other property in its hands for the account of
the person whose interests hereunder are so liable, but at least ten (10) days
prior to making any such payment, the Trustee shall mail notice to the Committee
of its intention to make such payment. Prior to making any transfers or
distributions of any of the Trust, the Trustee may require such releases or
other documents from any lawful taxing authority as it shall deem necessary.

6.12.      Trustee Records to be Maintained.     The Trustee shall keep accurate
and detailed accounts of all investments, receipts, disbursements, and other
transactions hereunder, and all accounts, books, and records relating thereto
shall be open to inspection and audit at all reasonable times by any person
designated by the Company (subject to the provisions of Sections 6.4(1) and
7.13(c)).

6.13.      Annual Report of Trustee.    Promptly following the close of each
Plan Year (or such other period as may be agreed upon between the Trustee and
Committee), or promptly after receipt of a written request from the Company, the
Trustee shall prepare for the Company a written account which will enable the
Company to satisfy the annual financial reporting requirements of ERISA, and
which will set forth among other things all investments, receipts,
disbursements, and other transactions effected by the Trustee during such Plan
Year or during the

 

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period from the close of the last Plan Year to the date of such request. Such
account shall also describe all securities and other investments purchased and
sold during the period to which it refers, the cost of acquisition or net
proceeds of sale, the securities and investments held as of the date of such
account, and the cost of each item thereof as carried on the books of the
Trustee. All accounts so filed shall be open to inspection during business hours
by the Company, the Committee, and by Participants and Beneficiaries of the Plan
(subject to the provisions of Sections 6.4(1) and 7.13(c)).

6.14.      Appointment of Investment Manager.    From time to time the
Committee, in accordance with Section 7.7 hereof, may appoint one or more
Investment Managers who shall have investment management and control over assets
of the Trust not invested or to be invested in Company Stock. The Committee
shall notify the Trustee of such assets of the appointment of the Investment
Manager. In the event more than one Investment Manager is appointed, the
Committee shall determine which assets shall be subject to management and
control by each Investment Manager and shall also determine the proportion in
which funds withdrawn or disbursed shall be charged against the assets subject
to each Investment Manager’s management and control. As shall be provided in any
contract between an Investment Manager and the Committee, such Investment
Manager shall hold a revocable proxy with respect to all securities which are
held under the management of such Investment Manager pursuant to such contract
(except for Company Stock), and such Investment Manager shall report the voting
of all securities subject to such proxy on an annual basis to the Committee.

 

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ARTICLE VII

OPERATION AND ADMINISTRATION

7.1.        Appointment of Committee.    There is hereby created a committee
(the “Committee”) which shall exercise such powers and have such duties in
administering the Plan as are hereinafter set forth. The Board of Directors
shall determine the number of members of such Committee. The members of the
Committee shall be appointed by the Board of Directors and such Board shall from
time to time fill all vacancies occurring in said Committee. The members of the
Committee shall constitute the Named Fiduciaries of the Plan within the meaning
of Section 402(a)(2) of ERISA; provided that solely for purposes of Section 6.4
hereof, Participants shall be Named Fiduciaries with respect to shares of
Company Stock for which they have the right to sell, transfer, or exchange
pursuant to Section 6.4 and solely for purposes of Section 7.16, Participants
shall be Named Fiduciaries with respect to shares of Company Stock on matters as
to which they are entitled to provide voting directions pursuant to
Section 7.16.

7.2.        Appointment of Investment Subcommittee.    There is hereby created
an investment subcommittee of the Committee (hereinafter referred to as the
“Investment Subcommittee” for purposes of this Article VII) which shall exercise
management and control over the assets of the Trust. The Board of Directors,
acting through its Organization and Compensation Committee, shall determine the
number of members of the Investment Subcommittee. The members of the Investment
Subcommittee shall be appointed by the Board of Directors, acting through its
Organization and Compensation Committee, and shall from time to time appoint
such members to or fill any vacancies in the Investment Subcommittee. The
members of the Investment Subcommittee shall constitute the Named Fiduciaries of
the Plan within the meaning of Section 402(a)(2) of ERISA with respect to the
management and control of the assets of the Trust; provided that solely for
purposes of Section 6.4 hereof, Participants shall be Named Fiduciaries with
respect to shares of Company Stock for which they have the right to sell,
transfer, or exchange pursuant to Section 6.4 and solely for purposes of
Section 7.16, Participants shall be Named Fiduciaries with respect to shares of
Company Stock on matters as to which they are entitled to provide voting
directions pursuant to Section 7.16.

7.3.        Transaction of Business.    The Committee and Investment
Subcommittee shall transact business as provided in paragraphs (a) and (b),
respectively:

(a)        A majority of the Committee shall constitute a quorum for the
transaction of business. Actions of the Committee may be taken either by vote at
a meeting or in writing without a meeting. All action taken by the Committee at
any meeting shall be by a vote of the majority of those present at such meeting.
All action taken in writing without a meeting shall be by a vote of the majority
of those responding in writing. All notices, advices, directions and
instructions to be transmitted by the Committee shall be in writing and signed
by or in the name of the Committee. In all its communications with the Trustee,
the Committee may, by either of the majority actions specified above, authorize
any one or more of its members to execute any document or documents on behalf of
the Committee, in which event it shall notify the Trustee in writing of such

 

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action and the name or names of its members so designated and the Trustee shall
thereafter accept and rely upon any documents executed by such member or members
as representing action by the Committee until the Committee shall file with the
Trustee a written revocation of such designation.

(b)        A majority of the Investment Subcommittee shall constitute a quorum
for the transaction of business. Actions of the Investment Subcommittee may be
taken either by vote at a meeting or in writing without a meeting. All action
taken by the Investment Subcommittee at any meeting shall be by a vote of the
majority of those present at such meeting. All action taken in writing without a
meeting shall be by a vote of the majority of those responding in writing. All
notices, advices, directions and instructions to be transmitted by the
Investment Subcommittee shall be in writing and signed by or in the name of the
Investment Subcommittee. In all its communications with the Trustee, the
Investment Subcommittee may, by action specified above, authorize any one or
more of its members to execute any document or documents on behalf of the
Investment Subcommittee, in which event it shall notify the Trustee in writing
of such action and the name or names of its members so designated and the
Trustee shall thereafter accept and rely upon any documents executed by such
member or members as representing action by the Investment Subcommittee until
the Investment Subcommittee shall file with the Trustee a written revocation of
such designation.

7.4.        Voting.    Any member of the Committee who is also a Participant
hereunder shall not be qualified to act or vote on any matter relating solely to
himself or herself, and upon such matter his or her presence at a meeting shall
not be counted for the purpose of determining a quorum. If, at any time a member
of the Committee is not so qualified to act or vote and the qualified members of
the Committee shall be reduced below two (2), the Board of Directors shall
promptly appoint one or more special members to the Committee so that there
shall be at least one qualified member to act upon the matter in question. Such
special Committee members shall have power to act only upon the matter for which
they were especially appointed and their tenure shall cease as soon as they have
acted upon the matter for which they were especially appointed.

7.5.        Responsibility of Committees.    The responsibilities of the
Committee and Investment Subcommittee shall be as provided in paragraphs (a) and
(b), respectively:

(a)        The authority to manage and control the operation and administration
of the Plan, the general administration of the Plan, the responsibility for
carrying out the Plan, and to the extent provided in Section 7.7(f), the
authority and responsibility to manage and control the assets of the Trust are
hereby delegated by the Board of Directors to and vested in the Committee except
to the extent reserved to the Board of Directors, the Sponsor, or the Company.
Subject to the limitations of the Plan, the Committee shall, from time to time,
establish rules for the performance of its functions and the administration of
the Plan. In the performance of its functions, the Committee shall not
discriminate in favor of Highly Compensated Employees.

 

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(b)        The authority and responsibility to manage and control the assets of
the Trust are hereby delegated by the Board of Directors, acting through its
Organization and Compensation Committee, to and vested in the Investment
Subcommittee except to the extent reserved to the Board of Directors or the
Board of Directors, acting through its Organization and Compensation Committee,
or the Sponsor. Subject to the limitations of the Plan, the Investment
Subcommittee shall, from time to time, establish rules for the performance of
its functions.

7.6.        Committee Powers.    The Committee shall have all discretionary
powers necessary to supervise the administration of the Plan and control its
operations. In addition to any discretionary powers and authority conferred on
the Committee elsewhere in the Plan or by law, the Committee shall have, but not
by way of limitation, the following discretionary powers and authority:

(a)        To designate agents to carry out responsibilities relating to the
Plan, other than fiduciary responsibilities as provided in Section 7.7.

(b)        To employ such legal, actuarial, medical, accounting, clerical, and
other assistance as it may deem appropriate in carrying out the provisions of
the Plan, including one or more persons to render advice with regard to any
responsibility any Named Fiduciary or any other fiduciary may have under the
Plan.

(c)        To establish rules and regulations from time to time for the conduct
of the Committee’s business and the administration and effectuation of the Plan.

(d)        To administer, interpret, construe, and apply the Plan and to decide
all questions which may arise or which may be raised under the Plan by any
Employee, Participant, former Participant, Beneficiary or other person
whatsoever, including but not limited to all questions relating to eligibility
to participate in the Plan, the amount of Credited Service of any Participant,
and the amount of benefits to which any Participant or his or her Beneficiary
may be entitled.

(e)        To determine the manner in which the assets of the Plan, or any part
thereof, shall be disbursed.

(f)        Subject to provisions (a) through (d) of Section 8.1, to make
administrative amendments to the Plan that do not cause a substantial increase
or decrease in benefit accruals to Participants and that do not cause a
substantial increase in the cost of administering the Plan.

(g)        To perform or cause to be performed such further acts as it may deem
to be necessary, appropriate or convenient in the efficient administration of
the Plan.

Any action taken in good faith by the Committee in the exercise of discretionary
power conferred upon it by the Plan shall be conclusive and binding upon the
Participants and their

 

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Beneficiaries. All discretionary powers conferred upon the Committee shall be
absolute; provided, however, that all such discretionary power shall be
exercised in a uniform and nondiscriminatory manner.

7.7.        Additional Powers of Committee.    In addition to any discretionary
powers or authority conferred on the Committee elsewhere in the Plan or by law,
such Committee shall have the following discretionary powers and authority:

(a)        To appoint one or more Investment Managers to manage and control any
or all of the assets of the Trust not invested or to be invested in Company
Stock.

(b)        To designate persons (other than the members of the Committee) to
carry out fiduciary responsibilities, other than any responsibility to manage or
control the assets of the Trust;

(c)        To allocate fiduciary responsibilities among the members of the
Committee, other than any responsibility to manage or control the assets of the
Trust;

(d)        To cancel any such designation or allocation at any time for any
reason;

(e)        To direct the voting of any Company Stock or any other security held
by the Trust subject to Section 7.16 hereof; and

(f)        To exercise management and control over the assets of the Trust to
the extent provided in paragraph (a) above and in Section 7.9 (relating to
review by the Committee of the long-run and short-run financial needs of the
Plan and the determination of the funding policy for the Plan).

Any action under this Section 7.7 shall be taken in writing, and no designation
or allocation under Subsection (a), (b) or (c) shall be effective until accepted
in writing by the indicated responsible person.

7.8.        Investment Subcommittee Powers.    The Investment Subcommittee shall
have all discretionary powers necessary to manage and control the assets of the
Trust, including but not limited to, the following:

(a)        To exercise management and control over the assets of the Trust
except to the extent the Committee appoints an Investment Manager pursuant to
Section 7.7(a) and subject to the requirement that all action taken by the
Investment Subcommittee shall be in accordance and consistent with the funding
policy established by the Committee and shall be communicated to the Committee
at periodic intervals.

(b)        To employ consulting, actuarial, and other assistance as it may deem
appropriate in carrying out its responsibilities under the Plan, including one
or more

 

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persons to render advice with regard to any fiduciary responsibility the
Investment Subcommittee may have under the Plan.

(c)        To establish rules and regulations from time to time for the conduct
of the Investment Subcommittee’s business.

(d)        To direct the Trustee, in writing, from time to time, to invest and
reinvest the Trust Fund, or any part thereof, or to purchase, exchange, or lease
any property, real or personal, which the Investment Subcommittee may designate.
This shall include the right to direct the investment of all or any part of the
Trust in any one security or any one type of securities permitted hereunder.

(e)        To direct the purchase and sale of Company Stock (and any other
securities that are “qualifying employer securities” as defined in Code
Section 4975(e)) for the Trust.

Any action taken in good faith by the Investment Subcommittee in the exercise of
discretionary powers conferred upon it by the Plan shall be conclusive and
binding upon the Participants and their Beneficiaries.

7.9.        Periodic Review of Funding Policy.    Notwithstanding the delegation
of authority and responsibility to manage and control the assets of the Trust to
the Investment Subcommittee, the Committee, at periodic intervals, shall review
the long-run and short-run financial needs of the Plan and shall determine a
funding policy for the Plan consistent with the objectives of the Plan and the
minimum funding standards of ERISA, if applicable. In determining such funding
policy the Committee shall take into account, at a minimum, not only the
long-term investment objectives of the Trust Fund consistent with the prudent
management of the assets thereof, but also the short-run needs of the Plan to
pay benefits. All actions taken by the Committee with respect to the funding
policy of the Plan, including the reasons therefor, shall be fully reflected in
the minutes of the Committee.

7.10.      Claims Procedures.    If a Participant or his or her Beneficiary
believes that he or she is being denied any rights or benefits under the Plan,
the Participant, Beneficiary, or in either case, his or her authorized
representative (the “Claimant”) shall follow the administrative procedures for
filing a claim for benefits as set forth in this Section. A claim for benefits
shall be in writing and shall be reviewed by the Committee or a claims official
designated by the Committee. The Committee or claims official shall review a
claim for benefits in accordance with the procedures established by the
Committee subject to the following administrative procedures set forth in this
Section.

(a)        The Committee shall furnish the Claimant with written or electronic
notice of the decision rendered with respect to a claim for benefits within
90 days following receipt by the Committee (or its delegate) of the claim unless
the Committee determines that special circumstances require an extension of time
for processing the claim. In the event an extension is necessary, written or
electronic notice of the extension shall be

 

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furnished to the Claimant prior to the expiration of the initial 90 day period.
The notice shall indicate the special circumstances requiring an extension of
time and the date by which a final decision is expected to be rendered. In no
event shall the period of the extension exceed 90 days from the end of the
initial 90 day period.

(b)        In the case of a denial of the Claimant’s claim, the written or
electronic notice of such denial shall set forth (i) the specific reasons for
the denial, (ii) references to the Plan provisions upon which the denial is
based, (iii) a description of any additional information or material necessary
for perfection of the claim (together with an explanation why such material or
information is necessary), (iv) an explanation of the Plan’s appeals procedures,
and (v) a statement of the Claimant’s right to bring a civil action under
Section 502(a) of ERISA if his or her claim is denied upon appeal.

(c)        In the case of a denial of a claim, a Claimant who wishes to appeal
the decision shall follow the administrative procedures for an appeal as set
forth in Section 7.11 below.

7.11.      Appeals Procedures.    A Claimant who wishes to appeal the denial of
his or her claim for benefits shall follow the administrative procedures for an
appeal as set forth in this Section and shall exhaust such administrative
procedures prior to seeking any other form of relief. Appeals shall be reviewed
in accordance with the procedures established by the Committee subject to the
following administrative procedures set forth in this Section.

(a)    In order to appeal a decision rendered with respect to his or her claim
for benefits, a Claimant must file an appeal with the Committee in writing
within 60 days following his or her receipt of the notice of denial with respect
to the claim.

(b)    The Claimant’s appeal may include written comments, documents, records
and other information relating to his or her claim. The Claimant may review all
pertinent documents and, upon request, shall have reasonable access to or be
provided free of charge, copies of all documents, records, and other information
relevant to his or her claim.

(c)    The Committee shall provide a full and fair review of the appeal and
shall take into account all claim related comments, documents, records, and
other information submitted by the Claimant without regard to whether such
information was submitted or considered under the initial determination or
review of the initial determination. Where appropriate, the Committee will
overturn a notice of denial if it determines that an error was made in the
interpretation of the controlling plan documents or if the Committee determines
that an existing interpretation of the controlling plan documents should be
changed on a prospective basis. In the event the Claimant is a subordinate, as
determined by the Committee, to an individual conducting the review, such
individual shall recuse himself or herself from the review of the appeal.

 

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(d)        The Committee shall furnish the Claimant with written or electronic
notice of the decision rendered with respect to an appeal within 60 days
following receipt by the Committee of the appeal unless the Committee determines
that special circumstances require an extension of time for processing the
appeal. In the event an extension is necessary, written or electronic notice of
the extension shall be furnished to the Claimant prior to the expiration of the
initial 60 day period. The notice shall indicate the special circumstances
requiring an extension of time and the date by which a final decision is
expected to be rendered. In no event shall the period of the extension exceed
60 days from the end of the initial 60 day period.

(e)        In the case of a denial of an appeal, the written or electronic
notice of such denial shall set forth (i) the specific reasons for the denial,
(ii) references to the Plan provisions upon which the denial is based, (iii) a
statement that the Claimant is entitled to receive, upon request and free of
charge, reasonable access to, and copies of, all documents, records, and other
information relating to his or her claim for benefits, and (iv) a statement of
the Claimant’s right to bring a civil action under Section 502(a) of ERISA.

7.12.      Limitation on Liability.    Each of the fiduciaries under the Plan
shall be solely responsible for its own acts and omissions and no fiduciary
shall be liable for any breach of fiduciary responsibility resulting from the
act or omission of any other fiduciary or person to whom fiduciary
responsibilities have been allocated or delegated pursuant to Section 7.2 or
7.7, except as provided in Sections 405(a) and 405(c)(2)(A) or (B) of ERISA.
Neither the Committee nor the Investment Subcommittee shall have responsibility
over assets as to which management and control has been delegated to an
Investment Manager appointed pursuant to Section 6.14 hereof or as to which
management and control has been retained by the Trustee.

7.13.      Indemnification and Insurance.    To the extent permitted by law, the
Company shall indemnify and hold harmless the Committee, the Investment
Subcommittee and each member thereof, the Board of Directors and each member
thereof, and such other persons as the Board of Directors may specify, from the
effects and consequences of his or her acts, omissions, and conduct in his or
her official capacity in connection with the Plan and Trust. To the extent
permitted by law, the Company may also purchase liability insurance for such
persons.

7.14.      Compensation of Committees and Plan Expenses.    Members of the
Committee and the Investment Subcommittee shall serve as such without
compensation unless the Board of Directors shall otherwise determine, but in no
event shall any member of the Committee or Investment Subcommittee who is an
Employee receive compensation from the Plan for his or her services as a member
of the Committee or the Investment Subcommittee. All members shall be reimbursed
for any necessary expenditures incurred in the discharge of duties as members of
the Committee or the Investment Subcommittee. The compensation or fees, as the
case may be, of all officers, agents, counsel, the Trustee or other persons
retained or employed by the Committee or the Investment Subcommittee shall be
fixed by the Committee, subject to approval by the Board of Directors. The
expenses incurred in the administration and operation of the Plan, including but
not limited to the expenses incurred by the members of the Committee or the

 

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Investment Subcommittee in exercising their duties, shall be paid by the Plan
from the Trust Fund, unless paid by the Company, provided, however, that the
Plan and not the Company shall bear the cost of interest and normal brokerage
charges which are included in the cost of securities purchased by the Trust Fund
(or charged to proceeds in the case of sales). If such expenses are to be paid
by the Plan from the Trust Fund, the Investment Subcommittee may direct the
Trustee to use forfeitures and dividends (and to sell the shares of Company
Stock that represent such forfeitures or dividends) to pay such expenses.

7.15.      Resignation.    Any member of the Committee or Investment
Subcommittee may resign by giving fifteen (15) days notice to the Board of
Directors, and any member shall resign forthwith upon receipt of the written
request of the Board of Directors, whether or not said member is at that time
the only member of the Committee or the Investment Subcommittee.

7.16.      Voting of Company Stock.    Notwithstanding any other provision of
the Plan to the contrary, the Trustee shall have no discretion or authority to
vote Company Stock held in the Trust on any matter presented for a vote by the
stockholders of the Company except in accordance with timely directions received
by the Trustee either from the Committee or from Participants, depending on who
has the right to direct the voting of such Company Stock as provided in the
following provisions of this Section 7.16.

(a)        All Company Stock held in the Trust Fund shall be voted by the
Trustee as the Committee directs in its absolute discretion, except as provided
in this Section 7.16(a).

(i)      If the Sponsor has a registration-type class of securities (as defined
in Code Section 409(e)(4)), then with respect to all corporate matters, (1) each
Participant shall be entitled to direct the Trustee as to the voting of all
Company Stock allocated and credited to his or her ESOP Account and (2) each
Participant who is an Eligible Employee shall be entitled to direct the Trustee
as to the voting of a portion of all Company Stock not allocated to the ESOP
Accounts of Participants, with such portion equal to the total number of shares
of such unallocated stock multiplied by a fraction the numerator of which is the
number of shares of Company Stock allocated and credited to his or her ESOP
account and the denominator of which is the total number of shares of Company
Stock allocated and credited to all ESOP Accounts of Participants.

(ii)     If the Sponsor does not have a registration-type class of securities,
then only with respect to such matters as the approval or disapproval of any
corporate merger or consolidation, recapitalization, reclassification,
liquidation, dissolution, sale of substantially all assets of trade or business,
or such similar transactions as may be prescribed in Code Section 409(e)(4) and
the regulations thereunder, (1) each Participant shall be entitled to direct the
Trustee as to the voting of all Company Stock allocated and credited to his or
her ESOP Account and (2) each Participant who is an Eligible Employee shall be
entitled to direct the Trustee as to the voting of a portion of all Company
Stock not allocated to the

 

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ESOP Accounts of Participants, with such portion determined in the same manner
as under paragraph (a)(i) above.

(b)        To the extent there remains any residual fiduciary responsibility
with respect to the voting of Company Stock after application of paragraph (a)
above, the Trustee shall vote such Company Stock as directed by the Committee or
as directed by an independent fiduciary if duly appointed by the Sponsor. To the
extent the Committee or an independent fiduciary is required to exercise any
residual fiduciary responsibility with respect to the voting of Company Stock,
the Committee or independent fiduciary shall take into account in exercising its
fiduciary judgment, unless it is clearly imprudent to do so, directions timely
received from Participants, as such directions are most indicative of what
action is in the best interests of Participants. Further, the Committee or
independent fiduciary, in addition to taking into consideration any relevant
financial factors bearing on any such decision, shall take into consideration
any relevant non-financial factors, including, but not limited to, the
continuing job security of Participants as employees of the Sponsor or any
Affiliated Company, conditions of employment, employment opportunities and other
similar matters, and the prospect of the Participants and prospective
Participants for future benefits under the Plan.

(c)        All Participants entitled to direct such voting shall be notified by
the Sponsor, pursuant to its normal communications with shareholders, of each
occasion for the exercise of such voting rights within a reasonable time before
such rights are to be exercised. Such notification shall include all information
distributed to shareholders either by the Sponsor or any other party regarding
the exercise of such rights. Such Participants shall be so entitled to direct
the voting of fractional shares (or fractional interests in shares); provided,
however, that the Trustee may, to the extent possible, vote the combined
fractional shares (or fractional interests in shares) so as to reflect the
aggregate direction of all Participants giving directions with respect to
fractional shares (or fractional interests in shares). To the extent that a
Participant shall fail to direct the Trustee as to the exercise of voting rights
arising under Company Stock credited to his or her ESOP Account, such Company
Stock shall not be voted unless the Trustee is directed otherwise as provided in
paragraph (b) above. The Trustee shall maintain confidentiality with respect to
the voting directions of all Participants.

(d)        Each Participant shall be a named fiduciary (as that term is defined
in Section 402(a)(2) of ERISA) with respect to Company Stock for which he or she
has the right to direct the voting under the Plan but solely for the purpose of
exercising voting rights pursuant to this Section 7.16 or certain Offers
pursuant to Section 6.4.

(e)        In the event a court of competent jurisdiction shall issue an opinion
or order to the Plan, the Committee, the Sponsor or the Trustee, which shall, in
the opinion of counsel to the Committee, the Sponsor or the Trustee, invalidate
under ERISA, in all circumstances or in any particular circumstances, any
provision or provisions of this paragraph regarding the manner in which Company
Stock held in the Trust shall be voted or cause any such provision or provisions
to conflict with ERISA, then, upon notice

 

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thereof to the Committee, the Sponsor or the Trustee, as the case may be, such
invalid or conflicting provisions of this Section shall be given no further
force or effect. In such circumstances the Trustee shall continue to follow
instructions received from Participants, to the extent such instructions have
not been invalidated by such order or opinion. To the extent the Trustee is
required by such opinion or order to exercise any residual fiduciary
responsibility with respect to voting, the Sponsor shall appoint an independent
fiduciary who shall exercise such residual fiduciary responsibility as provided
in paragraph (b) above and shall direct the Trustee as to the manner in which
Company Stock held by the Trustee shall be voted.

7.17.       Reliance Upon Documents and Opinions.    The members of the
Committee, the Investment Subcommittee, the Board of Directors, the Company and
any person delegated to carry out any fiduciary responsibilities under the Plan
(hereinafter a “delegated fiduciary”), shall be entitled to rely upon any
tables, valuations, computations, estimates, certificates and reports furnished
by any consultant, or firm or corporation which employs one or more consultants,
upon any opinions furnished by legal counsel, and upon any reports furnished by
the Trustee or any Investment Manager. The members of the Committee, the
Investment Subcommittee, the Board of Directors, the Company and any delegated
fiduciary shall be fully protected and shall not be liable in any manner
whatsoever for anything done or action taken or suffered in reliance upon any
such consultant, or firm or corporation which employs one or more consultants,
Trustee, Investment Manager, or counsel. Any and all such things done or such
action taken or suffered by the Committee, the Investment Subcommittee, the
Board of Directors, the Company and any delegated fiduciary shall be conclusive
and binding on all Employees, Participants, Beneficiaries, and any other persons
whomsoever, except as otherwise provided by law. The Committee, the Investment
Subcommittee, and any delegated fiduciary may, but are not required to, rely
upon all records of the Company with respect to any matter or thing whatsoever,
and may likewise treat such records as conclusive with respect to all Employees,
Participants, Beneficiaries, and any other persons whomsoever, except as
otherwise provided by law.

 

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ARTICLE VIII

AMENDMENT AND ADOPTION OF PLAN

8.1.        Right to Amend Plan.    The Sponsor, by resolution of the Board of
Directors, shall have the right to amend the Plan and Trust Agreement at any
time and from time to time and in such manner and to such extent as it may deem
advisable, including retroactively, subject to the following provisions:

(a)        No amendment shall have the effect of reducing any Participant’s
vested interest in the Plan or eliminating an optional form of distribution.

(b)        No amendment shall have the effect of diverting any part of the
assets of the Plan to persons or purposes other than the exclusive benefit of
the Participants or their Beneficiaries.

(c)        No amendment shall have the effect of increasing the duties or
responsibilities of a Trustee without its written consent.

(d)        No amendment shall result in discrimination in favor of officers,
shareholders, or other highly compensated or key employees.

The Committee shall have the right to amend the Plan, subject to paragraphs (a)
through (d), in accordance with the provisions of Section 7.6(f).

8.2.        Adoption of Plan by Affiliated Companies.    Subject to approval by
the Board of Directors and consistent with the provisions of ERISA, an
Affiliated Company may adopt the Plan for all or any specified group of its
Eligible Employees by entering into an adoption agreement in the form and
substance prescribed by the Committee. The adoption agreement may include such
modification of the Plan provisions with respect to such Eligible Employees as
the Committee approves after having determined that no prohibited discrimination
or other threat to the qualification of the Plan is likely to result. The Board
of Directors may prospectively revoke or modify an Affiliated Company’s
participation in the Plan at any time and for any or no reason, without regard
to the terms of the adoption agreement, or terminate the Plan with respect to
such Affiliated Company’s Eligible Employees and Participants. By execution of
an adoption agreement (each of which by this reference shall become part of the
Plan), the Affiliated Company agrees to be bound by all the terms and conditions
of the Plan.

 

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ARTICLE IX

DISCONTINUANCE OF CONTRIBUTIONS

In the event the Company decides it is impossible or inadvisable for business
reasons to continue to make contributions under the Plan, it may, by resolution
of the Board of Directors, discontinue contributions to the Plan. Upon the
permanent discontinuance of contributions to the Plan and notwithstanding any
other provisions of the Plan, the rights of Participants shall become fully
vested and nonforfeitable unless replaced by a comparable plan. The permanent
discontinuance of contributions on the part of the Company shall not terminate
the Plan as to the funds and assets then held in the Trust, or operate to
accelerate any payments of distributions to or for the benefit of Participants
or Beneficiaries, and the Trust shall continue to be administered in accordance
with the provisions hereof until the obligations hereunder shall have been
discharged and satisfied. If, at the time of discontinuance, there is any amount
outstanding on an Exempt Loan, any amount remaining in the Exempt Loan Suspense
Subfund shall be disposed of as provided in any applicable loan agreement.

 

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ARTICLE X

TERMINATION AND MERGER

10.1.      Right to Terminate Plan.    In the event the Board of Directors
decides it is impossible or inadvisable for business reasons to continue the
Plan, then it may, by resolution, terminate the Plan. Upon and after the
effective date of such termination, the Company shall not make any further
contributions under the Plan. Upon the termination or partial termination of the
Plan for any reason, the interest in the Trust of each affected Participant
shall automatically become fully vested unless the Plan is continued after its
termination by conversion of the Plan into a comparable Plan through Plan
amendment or through merger. If, at the time of termination, there is any amount
outstanding in an Exempt Loan, any amount remaining in the Exempt Loan Suspense
Subfund shall be disposed of in a manner that provides for the repayment of
amounts outstanding in any such Exempt Loan. After the satisfaction of all
outstanding liabilities of the Plan to persons other than Participants and
Beneficiaries, all unallocated assets shall be allocated to the ESOP Accounts of
Eligible Participants as defined in Section 4.2(d) to the maximum extent
permitted by law. The Trust Fund may not be fully or finally liquidated until
all assets are allocated to ESOP Accounts; alternatively any unallocated assets
may be transferred to another defined contribution plan maintained by the
Sponsor or an Affiliated Company qualified under Code Section 401 where such
assets shall be allocated among the accounts of Participants herein who are
participants in such transferee plan. In no event, however, shall any part of
the Plan revert to or be recoverable by the Company, or be used for or diverted
to purposes other than for the exclusive benefit of the Participants or their
Beneficiaries. Notwithstanding the foregoing, amounts held in the 415 Suspense
Account may revert to the Company in accordance with Section 11.6.

10.2.      Effect on Trustee and Committee.    The Trustee and the Committee
shall continue to function as such for such period of time as may be necessary
for the winding up of the Plan and for the making of distributions in the manner
prescribed by the Board of Directors at the time of termination of the Plan.

10.3.      Merger Restriction.    Notwithstanding any other provision in the
Plan, the Plan shall not in whole or in part merge or consolidate with, or
transfer its assets or liabilities to, any other plan unless each affected
Participant in the Plan would (if such other plan then terminated) receive a
benefit immediately after the merger, consolidation, or transfer which is equal
to or greater than the benefit he or she would have been entitled to receive
immediately before the merger, consolidation, or transfer (if the Plan had then
terminated).

10.4.      Effect of Reorganization, Transfer of Assets or Change in Control.

(a)        In the event of a consolidation or merger of the Company, or in the
event of a sale and/or any other transfer of the operating assets of the
Company, any ultimate successor or successors to the business of the Company may
continue the Plan in full force and effect by adopting the same by resolution of
its board of directors and by executing a proper supplemental or transfer
agreement with the Trustee.

 

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(b)        In the event of a Change in Control (as herein defined), all
Participants who were Participants on the date of such Change in Control shall
become 100% vested in any amounts allocated to their ESOP Accounts on the date
of such Change in Control and in any amounts allocated to their ESOP Accounts
subsequent to the date of the Change in Control. Notwithstanding the foregoing,
the Board of Directors may, at its discretion, amend or delete this paragraph
(b) in its entirety prior to the occurrence of any such Change in Control. For
the purpose of this paragraph (b) and prior to January 1, 2000, a “Change in
Control” shall be as defined in the Plan prior to this restatement. On or after
January 1, 2000, a “Change in Control” shall mean the following and shall be
deemed to occur if any of the following events occur:

(i)      Any “person,” as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) (a “Person”),
is or becomes the “beneficial owner,” as defined in Rule 13d-3 under the
Exchange Act (a “Beneficial Owner”), directly or indirectly, of securities of
the Sponsor representing (1) 20% or more of the combined voting power of the
Sponsor’s then outstanding voting securities, which acquisition is not approved
in advance of the acquisition or within 30 days after the acquisition by a
majority of the Incumbent Board (as hereinafter defined) or (2) 33% or more of
the combined voting power of the Sponsor’s then outstanding voting securities,
without regard to whether such acquisition is approved by the Incumbent Board;

(ii)     Individuals who, as of the date hereof, constitute the Board of
Directors (the “Incumbent Board”), cease for any reason to constitute at least a
majority of the Board of Directors, provided that any person becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Sponsor’s stockholders, is approved by a vote of at least a majority of the
directors then comprising the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the election of the
directors of the Sponsor, as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act) shall, for the purposes of this Plan, be
considered as though such person were a member of the Incumbent Board of the
Sponsor;

(iii)    The consummation of a merger, consolidation or reorganization involving
the Sponsor, other than one which satisfies both of the following conditions:

(A)        a merger, consolidation or reorganization which would result in the
voting securities of the Sponsor outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities

 

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of another entity) at least 55% of the combined voting power of the voting
securities of the Sponsor or such other entity resulting from the merger,
consolidation or reorganization (the “Surviving Corporation”) outstanding
immediately after such merger, consolidation or reorganization and being held in
substantially the same proportion as the ownership in the Sponsor’s voting
securities immediately before such merger, consolidation or reorganization, and

(B)        a merger, consolidation or reorganization in which no Person is or
becomes the Beneficial Owner, directly or indirectly, of securities of the
Sponsor representing 20% or more of the combined voting power of the Sponsor’s
then outstanding voting securities; or

(iv)     The stockholders of the Sponsor approve a plan of complete liquidation
of the Sponsor or an agreement for the sale or other disposition by the Sponsor
of all or substantially all of the Sponsor’s assets.

Notwithstanding the preceding provisions of this paragraph (b), a Change in
Control shall not be deemed to have occurred if the Person described in the
preceding provisions of this paragraph (b) is (i) an underwriter or underwriting
syndicate that has acquired any of the Sponsor’s then outstanding voting
securities solely in connection with a public offering of the Sponsor’s
securities, (ii) the Sponsor or any subsidiary of the Sponsor or (iii) an
employee stock ownership plan or other employee benefit plan maintained by the
Company or an Affiliated Company that is qualified under the provisions of the
Code. In addition, notwithstanding the preceding provisions of this
paragraph (b), a Change in Control shall not be deemed to have occurred if the
Person described in the preceding provisions of this paragraph (b) becomes a
Beneficial Owner of more than the permitted amount of outstanding securities as
a result of the acquisition of voting securities by the Company or an Affiliated
Company which, by reducing the number of voting securities outstanding,
increases the proportional number of shares beneficially owned by such Person,
provided, that if a Change in Control would occur but for the operation of this
sentence and such Person becomes the Beneficial Owner of any additional voting
securities (other than through the exercise of options granted under any stock
option plan of the Sponsor or through a stock dividend or stock split), then a
Change in Control shall occur.

(c)        In the event of a Change in Control (as defined in Section 10.4(b)
above), the Company shall be required to repay in full, solely from its own
funds and within thirty (30) days following the date of such Change in Control,
all Exempt Loans and Substitute Loans outstanding on the date of the Change in
Control. Notwithstanding any other provision of the Plan to the contrary, all
assets (including Company Stock) and funds that released from the Exempt Loan
Suspense Subfund on account of repayment by

 

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the Company under this Section 10.4(c) shall be allocated, for the Plan Year in
which the Change in Control occurs, in accordance with the formula set forth
herein (consistent with the requirements imposed under Article XI and other
requirements of the Code). Under the formula for allocation set forth herein,
assets and funds that are released shall be allocated to Employees who are
Eligible Participants (as defined in Section 4.2(d)) as of the date of the
Change in Control (or who would have been Eligible Participants but for their
death, Disability or retirement at or after age 55 during the Plan Year) in the
same ratio that each such Participant’s Compensation for the Plan Year through
the last pay period ending on or before the date of such Change in Control bears
to the total Compensation of all such Participants for the Plan Year through
their last pay periods ending on or before the date of such Change in Control.

(d)        For purposes of this Section 10.4, a Change of Control shall not be
deemed to have occurred upon the distribution of the stock of Advanced Medical
Optics, Inc. on June 29, 2002 by the Sponsor to its stockholders.

 

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ARTICLE XI

LIMITATION ON ALLOCATIONS

11.1.      General Rule.

(a)        The total Annual Additions under the Plan to a Participant’s ESOP
Account shall not exceed the lesser of:

(i)      Forty Thousand Dollars ($40,000), as adjusted for increases in the
cost-of-living under Code Section 415(d); or

(ii)     One Hundred Percent (100%) of the Participant’s Compensation (as
defined in Section 11.5), from the Company for the Limitation Year.

Notwithstanding the foregoing sentence, the compensation limit set forth in
subparagraph (ii) shall not apply to any contribution for medical benefits after
separation from service (within the meaning of Code Section 401(h) or Code
Section 419A(f)(2)) which is otherwise treated as an Annual Addition.

(b)        For the purpose of this Article XI, the term “Company” shall mean the
Sponsor and any Affiliated Company (determined by reference to Code
Section 415(h)) whether or not such Affiliated Company has adopted the Plan
pursuant to Section 8.2 and the term “Limitation Year” shall mean the Plan Year.

11.2.      Annual Additions.    For purposes of Section 11.1, the term “Annual
Additions” shall mean with respect to a Participant, for any Limitation Year
with respect to the Plan, the sum of the amounts described below:

(a)        All amounts contributed or deemed contributed by the Company, except
that the Annual Addition shall exclude the portion of the Company contribution
representing interest on an Exempt Loan, provided that no more than one-third of
the Company’s contributions to the Trust Fund deductible under Code
Section 404(a)(9) for a Limitation Year are allocated to Highly Compensated
Employees.

(b)        All amounts contributed by the Participant.

(c)        Forfeitures allocated to such Participant. For purposes of this
Section 11.2, forfeitures shall not include forfeitures of Company Stock
acquired through the Trust Fund with the proceeds of an Exempt Loan, provided
that no more than one-third of the Company’s contributions to the Trust Fund
deductible under Code Section 404(a)(9) for a Limitation Year are allocated to
Highly Compensated Employees.

 

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(d)        Any amounts allocated, after March 31, 1984, to an individual medical
account as defined in Code Section 415(l)(2) established under a pension or
annuity plan maintained by the Company.

(e)        Any amounts allocated for such Plan Year which amounts are derived
from contributions paid or accrued after December 31, 1985, in taxable years
ending after such date, which are attributable to postretirement medical
benefits allocated to the separate account of a key employee (as defined in Code
Section 419A(d)(3)) under a welfare benefit fund (as defined in Code
Section 419(e)) maintained by the Company.

11.3.      Other Defined Contribution Plans.    If the Company maintains any
other defined contribution plan, then each Participant’s Annual Additions under
such defined contribution plan shall be aggregated with the Participant’s Annual
Additions under the Plan for the purposes of applying the limitations of
Section 11.1.

11.4.      Adjustment for Excess Annual Additions.    If as a result of the
allocation of forfeitures, a reasonable error in estimating a Participant’s
Compensation, or under other limited facts and circumstances that the
Commissioner of Internal Revenue finds justify the availability of the rules set
forth in Regulation Section 1.415-6(b)(6), the Annual Additions on behalf of any
Participant in a Limitation Year to the Plan and all other defined contribution
plans maintained by the Company exceed the limitations set forth in
Section 11.1, then excess Annual Additions shall be eliminated in accordance
with the following rules and in the following order:

(a)        Excess Annual Additions shall be eliminated by reducing the
allocation to the Participant’s ESOP Account by the amount of the excess and
treating such amount as a forfeiture under Section 5.3 hereof and reallocating
such amount proportionately to the ESOP Accounts of other Participants receiving
allocations for the Limitation Year up to the limits set forth in Section 11.1.

(b)        After each Participant’s ESOP Account has been credited under
paragraph (a) with an amount bringing his or her ESOP Account up to his or her
maximum Annual Addition (determined under the provisions of this Article XI),
any remaining excess Annual Addition shall be transferred and credited to a 415
Suspense Account established for the purpose of this Section 11.4. This
paragraph shall only apply on or after January 1, 2008, if the establishment of
a 415 Suspense Account is permitted under Revenue Procedure 2006-27 (or its
successor).

(c)        Any amounts held in the 415 Suspense Account shall be treated as
Company contributions and allocated to the ESOP Accounts of Eligible
Participants (as defined in Section 4.2(d)) as of the last day of the next
succeeding Plan Year in accordance with the allocation formula applicable to
Company contributions provided in Section 4.2. The 415 Suspense Account shall be
exhausted before any Company contributions shall be allocated to the ESOP
Accounts of Participants subsequent to the date upon which any residue excess
Annual Addition as described in paragraph (c) is credited to the 415 Suspense
Account.

 

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11.5.      Compensation.    For the purpose of this Article XI, Compensation
shall mean a Participant’s earned income, wages, salaries, fees for professional
services, and other amounts received (without regard to whether or not an amount
is paid in cash) for personal services actually rendered in the course of
employment with the Company maintaining the Plan and shall be determined as
described below:

(a)        Compensation shall include to the extent that the amounts are
includible in gross income (including, but not limited to, commissions paid
salespeople, compensation for services on the basis of a percentage of profits,
commissions on insurance premiums, tips, bonuses, fringe benefits, and
reimbursements or other expense allowances under a nonaccountable plan as
described in Regulation 1.62-2(c)).

(b)        Compensation shall include any elective deferral as defined in Code
Section 402(g)(3), any amount which is contributed or deferred by the Company at
the election of the Employee that is excludable from an Employee’s gross income
under Code Sections 125 or 457 and, for Plan Years beginning on or after
January 1, 1998, any elective amount that is excludable from an Employee’s gross
income under Code Section 132(f)(4).

(d)        Compensation shall not include (i) any employer contributions to a
plan of deferred compensation which are not included in the Employee’s gross
income for the taxable year in which contributed, (ii) any distributions from a
plan of deferred compensation, (iii) any amounts realized from the exercise of a
non-qualified stock option or when restricted stock or property held by the
Employee becomes either freely transferable or is no longer subject to a
substantial risk of forfeiture under Code Section 83 if such option, stock, or
property was granted to the Employee by the Company, (iv) any amounts realized
from the sale, exchange, or other disposition of stock acquired under a
qualified stock option, (v) any contribution for medical benefits (within the
meaning of Code Section 419(f)(2) after termination of employment which is
otherwise treated as an Annual Addition, and (vi) any amount otherwise treated
as an Annual Addition under Code Section 415(l)(1).

(d)        Notwithstanding anything in the Plan to the contrary, Compensation
shall be determined in accordance with Code Section 415(c)(3) as in effect for
Plan Years beginning prior to January 1, 1998 where required by applicable law.

11.6.      Treatment of 415 Suspense Account Upon Termination.    In the event
the Plan shall terminate at a time when all amounts in the 415 Suspense Account
have not been allocated to the ESOP Accounts of the Participants, the 415
Suspense Account amounts shall be applied as follows:

(a)        The amount in the 415 Suspense Account shall first be allocated, as
of the Plan termination date, to Participants in accordance with the allocation
formula applicable to Company contributions provided under Section 4.2(a).

 

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(b)        If, after those allocations have been made, any further residue funds
remain in the 415 Suspense Account, the residue may revert to the Company in
accordance with applicable provisions of the Code, ERISA, and the regulations
thereunder.

(c)        Notwithstanding paragraphs (a) and (b) above, in the event that
termination of the plan occurs after a Change in Control, all amounts in the 415
Suspense Account shall be allocated to Participants only in accordance with
Section 10.4 hereof, and no part of the 415 Suspense Account shall revert to or
be recoverable by the Company, or be used for or diverted to purposes other than
for the exclusive benefit of the Participants or their Beneficiaries.

 

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ARTICLE XII

TOP-HEAVY RULES

12.1.    Applicability.    Notwithstanding any provision in the Plan to the
contrary, and subject to the limitations set forth in Section 12.6, the
requirements of Sections 12.4 and 12.5 shall apply under the Plan in the case of
any Plan Year in which the Plan is determined to be a Top-Heavy Plan under the
rules of Section 12.3. For the purpose of this Article XII, the term “Company”
shall mean the Sponsor and any Affiliated Company whether or not such Affiliated
Company has adopted the Plan.

12.2.    Definitions.    For purposes of this Article XII, the following special
definitions and rules shall apply:

(a)        The term “Key Employee” means any Employee or former Employee
(including any deceased Employee) who, at any time during the Plan Year that
includes the Determination Date, was an officer of the Company having annual
Compensation greater than $130,000 (as adjusted under Code Section 416(i)(1) for
Plan Years beginning after December 31, 2002), a Five Percent Owner of the
Company, or an One Percent Owner of the Company having annual Compensation of
more than $150,000.

(b)        The term “Five Percent Owner” means any person who owns (or is
considered as owning within the meaning of Code Section 318) more than 5% of the
outstanding stock of the Company or stock possessing more than 5% of the total
combined voting power of all stock of the Company.

(c)        The term “One Percent Owner” means any person who would be described
in paragraph (b) if “1%” were substituted for “5%” each place where it appears
therein.

(d)        The term “Non-Key Employee” means any Employee who is not a Key
Employee.

(e)        The term “Determination Date” means, with respect to any plan year,
the last day of the preceding plan year. In the case of the first plan year of
any plan, the term “Determination Date” shall mean the last day of that plan
year.

(f)        The term “Aggregation Group” means (i) each qualified plan of the
Company in which at least one Key Employee participates or participated at any
time during the determination period (regardless of whether the plan has
terminated), and (ii) any other qualified plan of the Company which enables a
plan described in clause (i) to meet the requirements of Code Sections 401(a)(4)
or 410. Any plan not required to be included in an Aggregation Group under the
preceding rules may be treated as being part of such group if the group would
continue to meet the requirements of Code Sections 401(a)(4) and 410 with the
plan being taken into account.

 

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(g)        For purposes of determining ownership under paragraphs (a), (b) and
(c) above, the following special rules shall apply: (i) Code
Section 318(a)(2)(C) shall be applied by substituting “5%” for “50%”, and
(ii) the aggregation rules of Code Sections 414(b), (c) and (m) shall not apply,
with the result that the ownership tests of this Section 12.2 shall apply
separately with respect to each Affiliated Company.

(h)        The terms “Key Employee” and “Non-Key Employee” shall include their
Beneficiaries, and the definitions provided under this Section 12.2 shall be
interpreted and applied in a manner consistent with the provisions of Code
Section 416(i) and the regulations thereunder.

(i)        For purposes of this Article XII, an Employee’s Compensation shall be
determined in accordance with the rules of Section 11.5.

12.3.      Top-Heavy Status

(a)        The term “Top-Heavy Plan” means, with respect to any Plan Year:

(i)      Any defined benefit plan if, as of the Determination Date, the present
value of the cumulative accrued benefits under the plan for Key Employees
exceeds 60% of the present value of the

(ii)     cumulative accrued benefits under the plan for all Employees; and

(iii)    Any defined contribution plan if, as of the Determination Date, the
aggregate of the account balances of Key Employees under the plan exceeds 60% of
the aggregate of the account balances of all Employees under the plan.

In applying the foregoing provisions of this paragraph (a), the valuation date
to be used in valuing Plan assets shall be (i) in the case of a defined benefit
plan, the same date which is used for computing costs for minimum funding
purposes, and (ii) in the case of a defined contribution plan, the most recent
valuation date within a 12-month period ending on the applicable Determination
Date.

(b)        Each plan maintained by the Company required to be included in an
Aggregation Group shall be treated as a Top-Heavy Plan if the Aggregation Group
is a Top-Heavy Group.

(c)        The term “Top-Heavy Group” means any Aggregation Group if the sum (as
of the Determination Date) of (i) the present value of the cumulative accrued
benefits for Key Employees under all defined benefit plans included in the
group, and (ii) the aggregate of the account balances of Key Employees under all
defined contribution plans included in the group exceeds 60% of a similar sum
determined for all Employees. For purposes of determining the present value of
the cumulative accrued benefit of any Employee, or the amount of the account
balance of any Employee, such present value or

 

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amount shall be increased by the aggregate distributions made with respect to
the Employee under the plan (including a terminated plan which, had it not been
terminated, would have been aggregated with the plan under Code
Section 416(g)(2)(A)(i))during the one year period ending on the Determination
Date. In the case of distributions made for a reason other than separation from
service, death, or disability, the preceding sentence shall be applied by
substituting “5-year period” for “l -year period.” Any rollover contribution or
similar transfer initiated by the Employee and made after December 31, 1983, to
a plan shall not be taken into account with respect to the transferee plan for
purposes of determining whether such plan is a Top-Heavy Plan (or whether any
Aggregation Group which includes such plan is a Top-Heavy Group).

(d)        If any individual is a Non-Key Employee with respect to any plan for
any plan year, but the individual was a Key Employee with respect to the plan
for any prior plan year, any accrued benefit for the individual (and the account
balance of the individual) shall not be taken into account for purposes of this
Section 12.3.

(e)        If any individual has not performed services for the Company at any
time during the one year period ending on the Determination Date, any accrued
benefit for such individual (and the account balance of the individual) shall
not be taken into account for purposes of this Section 12.3.

(f)        In applying the foregoing provisions of this Section, the accrued
benefit of a Non-Key Employee shall be determined (i) under the method, if any,
which is used for accrual purposes under all plans of the Company and any
Affiliated Companies, or (ii) if there is no such uniform method, as if such
benefit accrued not more rapidly than the slowest accrual rate permitted under
Code Section 411(b)(1)(C).

(g)        For all purposes of this Article XII, the definitions provided under
this Section 12.3 shall be applied and interpreted in a manner consistent with
the provisions of Code Section 416(g) and the regulations thereunder.

12.4.      Minimum Contributions.    For any Plan Year in which the Plan is
determined to be a Top-Heavy Plan, the minimum Company Contributions for that
year shall be determined in accordance with the rules of this Section 12.4.

(a)        Except as provided below, the minimum contribution for each Non-Key
Employee shall be not less than 3% of his or her compensation.

(b)        Subject to the following rules of this paragraph (b), the percentage
set forth in paragraph (a) above shall not be required to exceed the percentage
at which contributions are made (or are required to be made) under the Plan for
the year for the Key Employee for whom the percentage is the highest for the
year. This determination shall be made by dividing the contributions for each
Key Employee by so much of his or her total compensation for the Plan Year as
does not exceed the applicable Compensation limit. For purposes of this
paragraph (b), all defined contribution plans required to be

 

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included in an Aggregation Group shall be treated as one plan. Notwithstanding
the foregoing, the exceptions to paragraph (a) as provided under this
paragraph (b) shall not apply to any plan required to be included in an
Aggregation Group if the plan enables a defined benefit plan to meet the
requirements of Code Sections 401(a)(4) or 410.

(c)        The Participant’s minimum contribution determined under this
Section 12.4 shall be calculated without regard to any Social Security benefits
payable to the Participant.

(d)        In the event a Participant is covered by both a defined contribution
and a defined benefit plan maintained by the Company, both of which are
determined to be Top-Heavy Plans, the Company shall satisfy the minimum benefit
requirements of Code Section 416 by providing (in lieu of the minimum
contribution described in paragraph (a) above) a minimum benefit under the
defined benefit plan so as to prevent the duplication of required minimum
benefits hereunder.

12.5.      Minimum Vesting Rules.    For any Plan Year in which it is determined
that the Plan is a Top-Heavy Plan, the vesting schedule shall be the vesting
schedule set forth in Section 5.2.

12.6.      Non-Eligible Employees.    The rules of this Article XII shall not
apply to any Employee included in a unit of employees covered by a collective
bargaining agreement between employee representatives and one or more employers
if retirement benefits were the subject of good faith bargaining between such
employee representatives and the employer or employers.

 

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ARTICLE XIII

RESTRICTION ON ASSIGNMENT OR OTHER

ALIENATION OF PLAN BENEFITS

13.1.      General Restrictions Against Alienation.

(a)        The interest of any Participant or his or her Beneficiary in the
income, benefits, payments, claims or rights hereunder, or in the Trust Fund,
shall not in any event be subject to sale, assignment, hypothecation, or
transfer. Each Participant and Beneficiary is prohibited from anticipating,
encumbering, assigning, or in any manner alienating his or her interest under
the Trust Fund, and is without power to do so, except as may be permitted in
connection with providing security for a loan from the Plan to the Participant
pursuant to the provisions of the Plan as it may be amended from time to time.
The interest of any Participant or Beneficiary shall not be liable or subject to
his or her debts, liabilities, or obligations, now contracted, or which may
hereafter be contracted, and such interest shall be free from all claims,
liabilities, or other legal process now or hereafter incurred or arising.
Neither the interest of a Participant or Beneficiary, nor any part thereof,
shall be subject to any judgment rendered against any such Participant or
Beneficiary. Notwithstanding the foregoing, a Participant’s or Beneficiary’s
interest in the Plan may be subject to the enforcement of a Federal tax levy
made pursuant to Code Section 6331 or the collection by the United States on a
judgment resulting from an unpaid tax assessment.

(b)        In the event any person attempts to take any action contrary to this
Article XIII, such action shall be null and void and of no effect, and the
Company, the Committee, the Trustee and all Participants and their
Beneficiaries, may disregard such action and are not in any manner bound
thereby, and they, and each of them, shall suffer no liability for any such
disregard thereof, and shall be reimbursed on demand out of the Trust Fund for
the amount of any loss, cost or expense incurred as a result of disregarding or
of acting in disregard of such action.

(c)        The foregoing provisions of this Section shall be interpreted and
applied by the Committee in accordance with the requirements of Code
Section 401(a)(13) and Section 206(d) of ERISA as construed and interpreted by
authoritative judicial and administrative rulings and regulations.

13.2.      Qualified Domestic Relations Orders.    The rules set forth in
Section 13.1 above shall not apply with respect to a “Qualified Domestic
Relations Order” as described below.

(a)        A “Qualified Domestic Relations Order” is a judgment, decree, or
order (including approval of a property settlement agreement) that:

 

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(i)      Creates or recognizes the existence of an Alternate Payee’s right to,
or assigns to an Alternate Payee the right to, receive all or a portion of the
benefits payable under the Plan with respect to a Participant,

(ii)     Relates to the provision of child support, alimony payments, or marital
property rights to a spouse, former spouse, child or other dependent of a
Participant,

(iii)    Is made pursuant to a State domestic relations law (including a
community property law), and

(iv)     Clearly specifies: (1) the name and last known mailing address (if any)
of the Participant and the name and mailing address of each Alternate Payee
covered by the order (if the Committee does not have reason to know that address
independently of the order); (2) the amount or percentage of the Participant’s
benefits to be paid to each Alternate Payee, or the manner in which the amount
or percentage is to be determined; (3) the number of payments or period to which
the order applies; and (4) each plan to which the order applies.

For purposes of this Section 13.2, “Alternate Payee” means any spouse, former
spouse, child or other dependent of a Participant who is recognized by a
domestic relations order as having a right to receive all, or a portion of, the
benefits payable with respect to the Participant.

(b)        A domestic relations order is not a Qualified Domestic Relations
Order if it requires:

(i)      The Plan to provide any type or form of benefit, or any option, not
otherwise provided under the Plan;

(ii)     The Plan to provide increased benefits; or

(iii)    The payment of benefits to an Alternate Payee that are required to be
paid to another Alternate Payee under a previous Qualified Domestic Relations
Order.

(c)        A domestic relations order shall not be considered to fail to satisfy
the requirements of paragraph (b)(i) above with respect to any payment made
before a Participant has separated from service solely because the order
requires that payment of benefits be made to an Alternate Payee:

(i)      On or after the date on which the Participant attains (or would have
first attained) his or her earliest retirement age (as defined in Code
Section 414(p)(4)(B));

 

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(ii)     As if the Participant had retired on the date on which such payment is
to begin under such order (but taking into account only the present value of
accrued benefits and not taking into account the present value of any subsidy
for early retirement benefits); and

(iii)    In any form in which such benefits may be paid under the Plan to the
Participant (other than in the form of a joint and survivor annuity with respect
to the Alternate Payee and his or her subsequent spouse).

Notwithstanding the foregoing, if the Participant dies before his or her
earliest retirement age (as defined in Section 414(p)(4)(B)), the Alternate
Payee is entitled to benefits only if the Qualified Domestic Relations Order
requires survivor benefits to be paid to the Alternate Payee.

(d)        To the extent provided in any Qualified Domestic Relations Order, the
former spouse of a Participant shall be treated as a surviving Spouse of the
Participant for purposes of applying the rules (relating to minimum survivor
annuity requirements) of Code Sections 401(a)(11) and 417, and any current
spouse of the Participant shall not be treated as a spouse of the Participant
for such purposes.

(e)        In the case of any domestic relations order received by the Plan, the
Committee shall promptly notify the Participant and any Alternate Payee named in
the order that an order has been received and shall provide a copy of the Plan’s
procedures for determining the qualified status of domestic relations orders. An
Alternate Payee may designate a representative for receipt of copies of notices
and plan information that are sent to the Alternate Payee with respect to
domestic relations order. Within a reasonable period after the receipt of the
order, the Committee shall determine whether the order is a Qualified Domestic
Relations Order and shall notify the Participant and each Alternate Payee of
such determination.

(f)        The Committee shall establish reasonable procedures to determine the
qualified status of domestic relations orders and to administer distributions
under Qualified Domestic Relations Orders. During any period in which the issue
of whether a domestic relations order is a Qualified Domestic Relations Order is
being determined (by the Committee, by a court of competent jurisdiction, or
otherwise), the Committee shall direct the Trustee to segregate in a separate
account in the Plan (or in an escrow account) the amounts which would have been
payable to the Alternate Payee during the period if the order had been
determined to be a Qualified Domestic Relations Order. If within the 18 Month
Period (as defined below), the order (or modification thereof) is determined to
be a Qualified Domestic Relations Order, the Committee shall direct the Trustee
to pay the segregated amounts (plus any interest thereon) to the person or
persons entitled thereto. However, if within the 18 Month Period (i) it is
determined that the order is not a Qualified Domestic Relations Order, or
(ii) the issue as to whether the order is a Qualified Domestic Relations Order
is not resolved, then the Committee shall direct the Trustee to pay the
segregated amounts (plus any interest thereon) to the person or persons who

 

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would have been entitled to the amounts if there had been no order (assuming
such benefits were otherwise payable). Any determination that an order is a
Qualified Domestic Relations Order that is made after the close of the 18 Month
Period shall be applied prospectively only. For purposes of this Section 13.2,
the “18 Month Period” shall mean the 18 month period beginning with the date on
which the first payment would be required to be made under the domestic
relations order.

 

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ARTICLE XIV

MISCELLANEOUS PROVISIONS

14.1.      No Right of Employment Hereunder.    The adoption and maintenance of
the Plan and Trust shall not be deemed to constitute a contract of employment or
otherwise between the Company and any Employee or Participant, or to be a
consideration for, or an inducement or condition of, any employment. Nothing
contained herein shall be deemed to give any Employee the right to be retained
in the service of the Company or to interfere with the right of the Company to
discharge, with or without cause, any Employee or Participant at any time, which
right is hereby expressly reserved.

14.2.      Limitation on Company Liability.    Any benefits payable under the
Plan shall be paid or provided for solely from the Plan and the Company assumes
no liability or responsibility therefor.

14.3.      Effect of Article Headings.    Article headings are for convenient
reference only and shall not be deemed to be a part of the substance of this
instrument or in any way to enlarge or limit the contents of any Article.

14.4.      Gender.    Masculine gender shall include the feminine and the
singular shall include the plural unless the context clearly indicates
otherwise.

14.5.      Interpretation.    The provisions of the Plan shall in all cases be
interpreted in a manner that is consistent with the Plan satisfying (a) the
requirements of Code Section 401(a) and related statutes for qualification as a
stock bonus plan and (b) the requirements of Code Section 4975(e)(7) and related
statutes for qualification as an employee stock ownership plan and eligibility
for the prohibited transaction exemption provided under Code Section 4975(d)(3)
and its related statutes under ERISA.

14.6.      Withholding For Taxes.    Any payments from the Trust Fund may be
subject to withholding for taxes as may be required by any applicable federal or
state law.

14.7.      California Law Controlling.    All legal questions pertaining to the
Plan which are not controlled by ERISA shall be determined in accordance with
the laws of the State of California and all contributions made hereunder shall
be deemed to have been made in that State.

14.8.      Plan and Trust as One Instrument.    The Plan and the Trust Agreement
shall be construed together as one instrument. In the event that any conflict
arises between the terms and/or conditions of the Trust Agreement and the Plan,
the provisions of the Plan shall control, except that with respect to the duties
and responsibilities of the Trustee, the Trust Agreement shall control.

14.9.      Invalid Provisions.    If any paragraph, section, sentence, clause or
phrase contained in the Plan shall become illegal, null or void or against
public policy, for any reason, or shall be

 

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held by any court of competent jurisdiction to be incapable of being construed
or limited in a manner to make it enforceable, or is otherwise held by such
court to be illegal, null or void or against public policy, the remaining
paragraphs, sections, sentences, clauses or phrases contained in the Plan shall
not be affected thereby.

14.10.      Counterparts.    This instrument may be executed in one or more
counterparts each of which shall be legally binding and enforceable.

 

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IN WITNESS WHEREOF, Allergan, Inc. hereby executes this instrument, evidencing
the terms of the Allergan, Inc. Employee Stock Ownership Plan as restated this
29th day of January, 2008.

 

ALLERGAN, INC. By:   /s/ Douglas S. Ingram   Douglas S. Ingram  

Executive Vice President, Chief Administrative Officer, General Counsel

and Secretary

 

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