Exhibit 4.6


 


ADVANCED
MEDICAL OPTICS, INC.


2005
INCENTIVE COMPENSATION PLAN


 


ARTICLE I.


GENERAL
PROVISIONS


 


1.1 Purposes of the Plan


 


Advanced Medical Optics, Inc. (“AMO”) has
adopted this 2005 Incentive Compensation Plan (the “Plan”) to advance the
interests of AMO and its stockholders by affording its Directors, Employees and
Consultants an opportunity to acquire or increase a proprietary interest in AMO
or to otherwise benefit from the success of the Company through the grant to
such Directors, Employees and Consultants of Incentive Awards under the terms
and conditions set forth herein. By thus encouraging such Directors, Employees
and Consultants to become owners of AMO’s shares and by granting such
Directors, Employees and Consultants other incentive compensation that is
measured by the increased market value of AMO’s shares or another appropriate
measure of the success and profitability of the Company, the Company seeks to
attract, retain and motivate those highly competent individuals upon whose
judgment, initiative, leadership and continued efforts the success of the
Company in large measure depends.


 


1.2 Definitions


 


As used herein the following terms shall have the
meanings set forth below:


 


(a) “AMO”
means Advanced Medical Optics, Inc., a Delaware corporation, or any
successor thereto.


 


(b) “Board”
means the Board of Directors of AMO.


 


(c) “Cause”
means, with respect to the discharge by the Company of any Participant, any
conduct that under Company policies as set forth from time to time in the AMO Employee
Handbook (or any successor thereto) would be considered to constitute “serious
misconduct” that would justify immediate termination without benefit of a
counseling review or severance pay.


 


(d) “Change
in Control” means 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
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 AMO representing (i) 20% or more of the combined voting
power of AMO’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 (ii) 33%
or more of the combined voting power of AMO’s then outstanding voting
securities, without regard to whether such acquisition is approved by the
Incumbent Board;


 


(ii) Individuals
who, as of June 29, 2002, constituted the Board (the “Incumbent Board”),
cease for any reason to constitute at least a majority of the Board, provided
that any person becoming a Director subsequent to June 29, 2002, whose
election, or nomination for election by AMO’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 AMO, 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 AMO;


 


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


 


(A) a merger, consolidation
or reorganization which would result in the voting securities of AMO
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of another
entity) at least 55% of the combined voting power of the voting securities of
AMO 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 AMO’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 AMO representing 20% or more of
the combined voting power of AMO’s then outstanding voting securities; or


 


(iv) Complete
liquidation of AMO or a sale of all or substantially all of AMO’s assets.


 


Additionally, notwithstanding the preceding
provisions of this Paragraph (e), a Change in Control shall not be deemed to
have occurred if the Person described in the preceding provisions of this
Paragraph (e) is (1) an underwriter or underwriting syndicate that
has acquired any of AMO’s then outstanding voting securities solely in
connection with a public offering of AMO’s securities, (2) AMO or any
subsidiary of AMO or (3) an employee stock ownership plan or other
employee benefit plan maintained by the AMO or any of its subsidiaries that is
qualified under the provisions of the Code. In addition, notwithstanding the
preceding provisions of this Paragraph (e), a Change in Control shall not be
deemed to have occurred if the Person described in the preceding provisions of
this Paragraph (e) becomes a Beneficial Owner of more than the permitted
amount of outstanding securities as a result of the acquisition of voting
securities by AMO 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 AMO
or through a stock dividend or stock split), then a Change in Control shall
occur.


 


(e) “Code”
means the Internal Revenue Code of 1986, as amended. Where the context so
requires, a reference to a particular Code section shall also refer to any
successor provision of the Code to such section.


 


(f) “Committee”
means the committee appointed by the Board to administer the Plan. The
Committee shall be composed entirely of members who meet the requirements of Section 1.4(a) hereof.


 


(g) “Common
Stock” means the common stock of AMO, $0.01 par value.


 


(h) “Company”
means AMO and any Subsidiary, as determined from time to time.


 


(i) “Consultant”
means any consultant or adviser if:


 


(i) The
consultant or adviser renders bona fide services to the Company;


 


(ii) The
services rendered by the consultant or adviser are not in connection with the
offer or sale of securities in a capital-raising transaction and do not
directly or indirectly promote or maintain a market for the Company’s securities;
and


 


(iii) The
consultant or adviser is a natural person who has contracted directly with the
Company to render such services.


 


(j) “Director”
shall mean a member of the Board.


 


(k) “Dividend
Equivalent” means an amount payable in cash, Common Stock or a combination
thereof to a holder of a Stock Option, Stock Appreciation Right or other
Incentive Award denominated in shares of Common Stock that is equivalent to the
amount of dividends paid to stockholders with respect to a number of shares of
Common Stock equal to the number of shares upon which such Incentive Award is
based.


 


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(l) “Effective
Time” means the Effective Time as defined by the Merger Agreement.


 


(m) “Employee”
means any individual classified by the Company as a regular, full-time or
part-time employee of the Company, and with respect to individuals employed by
AMO or any of its U.S. Subsidiaries, whose income is subject to withholding of
income tax and/or for whom Social Security contributions are made by the
Company, except that such term shall not include any individual who (a) performs
services for the Company and who is classified or paid as an independent
contractor (regardless of his or her classification for federal tax or other
legal purposes) by the Company or (b) performs services for the Company
pursuant to an agreement between the Company and any other person including a
leasing organization.


 


(n) “Exchange
Act” means the Securities Exchange Act of 1934, as amended. Where the context
so requires, a reference to a particular section of the Exchange Act shall also
refer to any successor provision to such section.


 


(o) “Fair
Market Value” means: (a) the closing price of a share of Common Stock on
the principal exchange on which shares of Common Stock are then trading, if any
(or as reported on any composite index which includes such principal exchange),
on the trading day next preceding such date on which a trade occurred, or (b) if
Common Stock is not traded on an exchange but is quoted on Nasdaq or a
successor quotation system, the mean between the closing representative bid and
asked prices for the Common Stock on the trading day next preceding such date
as reported by Nasdaq or such successor quotation system, or (c) if Common
Stock is not publicly traded on an exchange and not quoted on Nasdaq or a
successor quotation system, the Fair Market Value of a share of Common Stock as
established by the Committee acting in good faith.


 


(p) “Incentive
Award” means any Stock Option, Dividend Equivalent, Restricted Stock,
Restricted Stock Unit, Stock Appreciation Right, Stock Payment, Performance
Award or other award granted or sold under the Plan.


 


(q) “Incentive
Stock Option” means an incentive stock option, as defined under Section 422
of the Code and the regulations thereunder.


 


(r) “Independent
Director” shall mean a member of the Board who is not an Employee (or otherwise
an employee of the Company).


 


(s) “Merger
Agreement” means the Agreement and Plan of Merger, dated November 9, 2004,
among AMO, Vault Merger Corporation, and VISX, Incorporated (the “Merger
Agreement”).


 


(t) “Nonqualified
Stock Option” means a Stock Option other than an Incentive Stock Option.


 


(u) “Normal
Retirement” means any termination of an Employee’s employment (other than for
Cause or death or Total Disability) after such Employee has attained age 55 and
has been employed by the Company for a minimum of five (5) years. For
purposes of determining the number of years a Transferring Employee has been
employed by the Company, service with Allergan, Inc. and its subsidiaries
prior to June 29, 2002, and service with VISX, Incorporated and its
subsidiaries prior to the Effective Time, will be counted. Service with Pfizer
and its affiliates prior to June 26, 2004 for Transferring Employees
associated with acquisition of the Pfizer surgical ophthalmic business shall
also be counted. The Committee may grant service credit associated with
Transferring Employees in future acquisitions at its discretion.


 


(v) “Option”
or “Stock Option” means a right to purchase Common Stock and refers to both
Incentive Stock Options and Nonqualified Stock Options.


 


(w) “Participant”
means an individual who has received an Incentive Award pursuant to the Plan.


 


(x) “Payment
Event” means the event or events giving rise to the right to payment of a
Performance Award.


 


(y) “Performance
Award” means an award, payable in cash, Common Stock, Restricted Stock,
Restricted Stock Units or a combination thereof, the terms and conditions of
which may be determined by the Committee at the time the Performance Award is
granted.


 


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(z) “Performance
Criteria” shall mean the following business criteria with respect to the
Company, any Subsidiary or any division or operating unit thereof: (a) net
income, (b) pre-tax income, (c) operating income, (d) cash flow,
(e) earnings per share, (f) return on equity, (g) return on
invested capital or assets, (h) cost reductions or savings, (i) funds
from operations, (j) appreciation in the fair market value of Common
Stock, (k) earnings before any one or more of the following items:
interest, taxes, depreciation or amortization; each as determined in accordance
with generally accepted accounting principles, and (l) total shareholder
return (TSR).


 


(aa)
“Plan” means the Advanced Medical Optics, Inc. 2005 Incentive Compensation
Plan as set forth herein, as amended from time to time.


 


(bb)
“Purchase Price” means the purchase price (if any) to be paid by a Participant
for Restricted Stock or Restricted Stock Units as determined by the Committee
(which price shall be at least equal to the minimum price required under
applicable laws and regulations for the issuance of Common Stock which is
nontransferable and subject to a substantial risk of forfeiture until specific
conditions are met).


 


(cc)
“Restricted Stock” means Common Stock which is the subject of an Incentive
Award under this Plan and which is nontransferable and subject to a substantial
risk of forfeiture until specific conditions are met as set forth in this Plan
and in any instrument evidencing the grant of such Incentive Award.


 


(dd)
“Restricted Stock Unit” means a right granted pursuant to Section VI of
the Plan to receive a share of Common Stock at a future date set by the
Committee or over a vesting period established by the Committee.


 


(ee)
“Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act, as
such Rule may be amended from time to time.


 


(ff)
“Securities Act” means the Securities Act of 1933, as amended.


 


(gg)
“Stock Appreciation Right” or “Right” means a right granted pursuant to Section VII
of the Plan to receive a number of shares of Common Stock or, in the discretion
of the Committee, an amount of cash or a combination of shares of Common Stock
and cash, based on the increase in the Fair Market Value of the shares of
Common Stock subject to the right during such period as is specified by the
Committee.


 


(hh)
“Stock Payment” means a payment in shares of Common Stock to replace all or any
portion of the compensation (other than base salary) that would otherwise
become payable to any Employee.


 


(ii) “Subsidiary”
means any corporation in an unbroken chain of corporations beginning with AMO
if each of the corporations other than the last corporation in the unbroken
chain then owns stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.


 


(jj)
“Total Disability” means the inability of a person, by reason of mental or physical
illness or accident, to perform any and every duty of the occupation for the
Company for which such person was employed, engaged, appointed or elected when
such disability commenced, which disability is expected to continue for a
period of at least 12 months. Any determination as to the date and extent of
any disability shall be made by the Committee upon the basis of such
information as the Committee deems necessary or desirable including, without
limitation, a determination by the insurance provider with respect to a
Participant under the Company’s Insured Long Term Disability Program or a
disability award letter with respect to a Participant from the Social Security
Administration.


 


(kk)
“Transferring Employee” means (w) an individual who transferred employment
to the Company before or as of June 29, 2002, in accordance with the terms
of the Employee Matters Agreement effective as of June 29, 2002, between
Allergan, Inc. and AMO, (x) an individual employed by VISX,
Incorporated or its Subsidiaries as of the Effective Time, (y) an
individual who transferred employment to the Company as of June 26, 2004,
in accordance with the Stock and Asset Purchase Agreement between Pfizer Inc.
and the Company, dated April 21, 2004, and (z) individuals designated
by the Committee as Transferring Employees associated with future transactions.


 


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1.3 Shares of Common Stock Subject to the Plan


 


(a) Subject to the provisions of Section 1.3(c) and
Section 9.1 of the Plan, the maximum number of shares of Common Stock that
may be issued pursuant to Incentive Awards under the Plan shall be 5,000,000
shares. In no event will more than 5,000,000 shares of Common Stock be
available for issuance pursuant to the exercise of Incentive Stock Options.


 


(b) The Common Stock to be issued under this
Plan will be made available, at the discretion of the Board or the Committee,
either from authorized but unissued shares of Common Stock or from previously
issued shares of Common Stock reacquired by the Company, including shares
purchased on the open market.


 


(c) Shares of Common Stock subject to
unexercised portions of any Incentive Award granted under this Plan that
expires or is terminated, cancelled, or substituted or exchanged for an award
for a different kind of shares or other securities, and shares of Common Stock
issued pursuant to an Incentive Award under this Plan that are reacquired by
the Company pursuant to the terms of the Incentive Award under which such
shares were issued, will again become available for the grant of further
Incentive Awards under this Plan. Additionally, shares of Common Stock which are
delivered by an Employee (either actually or by attestation) or withheld by the
Company upon the exercise of any Incentive Award under the Plan, in payment of
the exercise price thereof or tax withholding thereon, may again be optioned,
granted or awarded hereunder.


 


(d) The maximum number of shares of Common
Stock with respect to which Incentive Awards may be granted to any individual
in any given calendar year is 500,000 shares. With respect to Performance
Awards made in cash, the maximum dollar amount which may be awarded in the
aggregate to any individual in any calendar year is $500,000.


 


1.4 Administration of the Plan


 


(a) The Plan will be administered by the
Committee, which will consist of two or more Independent Directors appointed by
the Board, each of whom is both a “non-employee director” as defined by Rule 16b-3
and an “outside director” for purposes of Section 162(m) of the Code.
Appointment of Committee members shall be effective upon acceptance of
appointment. Committee members may resign at any time by delivering written
notice to the Board. Vacancies in the Committee may be filled by the Board.


 


(b) The Committee has and may exercise such
powers and authority of the Board as may be necessary or appropriate for the
Committee to carry out its functions as described in the Plan Subject to the
provisions of the Plan, the Committee has authority in its discretion to select
the eligible Employees and Consultants to whom, and the time or times at which,
Incentive Awards shall be granted or sold, the nature of each Incentive Award,
the number of shares of Common Stock or the number of rights that make up each
Incentive Award, the period for the exercise of each Incentive Award, the
Performance Criteria (which need not be identical) utilized to measure the
value of Performance Awards and such other terms and conditions applicable to
each individual Incentive Award as the Committee shall determine. The Committee
may grant at any time new Incentive Awards to an Employee or Consultant who has
previously received Incentive Awards or other grants (including other stock
options) whether such prior Incentive Awards or such other grants are still
outstanding, have previously been exercised in whole or in part, or are
cancelled in connection with the issuance of new Incentive Awards. The
Committee may grant Incentive Awards singly or in combination or in tandem with
other Incentive Awards as it determines in its discretion. The purchase price
or initial value and any and all other terms and conditions of the Incentive
Awards may be established by the Committee without regard to existing Incentive
Awards or other grants. Further, the Committee may, with the consent of the
holder of an Incentive Award, amend in a manner consistent with the Plan the
terms of such Incentive Award. In its absolute discretion, the Board may at any
time and from time to time exercise any and all rights and duties of the
Committee under the Plan except with respect to matters which under Rule 16b-3
or Section 162(m) of the Code, or any regulations or rules issued
thereunder, are required to be determined in the sole discretion of the
Committee. Notwithstanding the foregoing, the full Board, acting by a majority
of its members in office, shall conduct the general administration of the Plan
with


 


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respect
to Incentive Awards granted to Independent Directors, in which case any
reference in the Plan to the “Committee” shall be deemed a reference to the
Board.


 


(c) Subject to the express provisions of the
Plan, the Committee has the authority to interpret the Plan, to determine the
terms and conditions of Incentive Awards and to make all other determinations
necessary or advisable for the administration of the Plan. The Committee has
authority to prescribe, amend and rescind rules and regulations relating
to the Plan. All interpretations, determinations and actions by the Committee
shall be final, conclusive and binding upon all parties. Any action of the
Committee with respect to the administration of the Plan shall be taken
pursuant to a majority vote or by the unanimous written consent of its members.


 


(d) Members of the Committee shall receive such
compensation, if any, for their services as members as may be determined by the
Board. All expenses and liabilities which members of the Committee incur in
connection with the administration of the Plan shall be borne by the Company.
The Committee may, with the approval of the Board, employ attorneys,
consultants, accountants, appraisers, brokers or other persons. The Committee,
the Company and the Company’s officers and Directors shall be entitled to rely
upon the advice, opinions or valuations of any such persons. No member of the
Board or the Committee nor any designee thereof will be liable for any action
or determination made in good faith by the Board or the Committee with respect
to the Plan or any transaction arising under the Plan.


 


(e) The Committee may, but need not, delegate
from time to time some or all of its authority to grant Incentive Awards under
the Plan to a committee consisting of one or more members of the Committee or
of one or more officers of AMO; provided,
however, that the Committee may not delegate to any such committee,
the Committee’s authority to grant Incentive Awards to officers. Any delegation
hereunder shall be subject to the restrictions and limits that the Committee
specifies at the time of such delegation of authority and may be rescinded at
any time by the Committee. At all times, any committee appointed under this Section 1.4(e) shall
serve in such capacity at the pleasure of the Committee.


 


1.5 Award Instrument


 


At the time of the grant of each Incentive Award
pursuant to this Plan, the Committee shall deliver, or cause to be delivered,
to the Participant to whom the Incentive Award is granted an instrument
evidencing the grant of the Incentive Award and setting forth such terms and
conditions applicable to the Incentive Award as the Committee may in its
discretion determine consistent with the Plan. For all purposes of this Plan,
electronic communications may be considered written instruments.


 


ARTICLE II.


DIVIDEND
EQUIVALENTS


 


2.1 Dividend Equivalents


 


Any holder of an Incentive Award may, in the
discretion of the Committee, be granted, at no additional cost, Dividend
Equivalents based on the dividends declared on the Common Stock on record dates
during the period between the date an Incentive Award is granted and the date
such Incentive Award is exercised (or expires, or is terminated or cancelled)
or such other period as is determined by the Committee and specified in the
instrument that evidences the grant of the Incentive Award. Such Dividend
Equivalents shall be converted to additional shares or cash by such formula as
may be determined by the Committee.


 


Dividend Equivalents shall be computed as of each
dividend record date in such manner as may be determined by the Committee and
shall be payable to Participants at such time or time as the Committee in its
discretion may determine.


 


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Dividend Equivalents granted with respect to Options
intended to be qualified performance-based compensation for purposes of Section 162(m) of
the Code shall be payable, with respect to pre-exercise periods, regardless of
whether such Option is subsequently exercised.


 


ARTICLE
III.


OPTION
GRANTS TO EMPLOYEES AND CONSULTANTS


 


3.1 Eligibility


 


Any Employee or Consultant selected by the Committee
shall be eligible to be granted an Option; provided,
however, that only Employees
shall be eligible to receive “incentive stock options” within the meaning of
Code Section 422 and the regulations promulgated thereunder.


 


3.2 Option Price


 


The purchase price of Common Stock under each Option
(the “Option Exercise Price”) will be determined by the Committee at the date
such Option is granted. The Option Exercise Price may not be less than the Fair
Market Value on the date of grant of the Common Stock subject to the Option.


 


3.3 Option Period


 


Options may be exercised as determined by the
Committee, but: (a) in the absence of specific action by the Committee, or
(b) in the case of an Incentive Stock Option, in no event after ten years
from the date of grant of such Option (or with respect to an Incentive Stock
Option, such other period as is necessary to enable such Option to be treated
as an “incentive stock option” within the meaning of Code Section 422 and
the regulations promulgated thereunder).


 


3.4 Exercise of Options


 


At the time of the exercise of an Option, the
purchase price shall be paid in full in cash or other equivalent consideration
acceptable to the Committee, in its sole discretion, consistent with the Plan’s
purpose and applicable law and as set forth in the instrument evidencing the
grant of the Option; provided,
however, that the Company shall not lend money to any Participant to finance an
option exercise. If the purchase price is paid in whole or in part, through the
delivery of shares of Common Stock duly endorsed for transfer to AMO with a
Fair Market Value on the date of delivery equal to the aggregate exercise price
of the Option or exercised portion thereof, and if such shares of Common Stock
were issued to the Participant directly from the Company, such shares must have
been owned by the Participant for at least six months. No fractional shares
will be issued pursuant to the exercise of an Option nor will any cash payment
be made in lieu of fractional shares.


 


3.5 Limitation on Exercise of Incentive Stock Options


 


The aggregate Fair Market Value (determined at the
time the Option is granted) with respect to which Incentive Stock Options are
exercisable for the first time by any Employee during any calendar year (under
all stock option plans of the Company) shall not exceed $100,000 or such other
limit as is prescribed by the Code. Any Options granted as Incentive Stock
Options pursuant to the Plan in excess of such limitation shall be treated as
Nonqualified Stock Options.


 


3.6 Termination of Employment


 


(a) Except
as otherwise provided in a written employment agreement or instrument between
the Company and the Employee evidencing the grant of the Option, in the event
of the termination of an Employee’s 


 


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employment
with the Company for Cause, all of the Employee’s unexercised Options shall
expire as of the date of such termination.


 


(b) Except as otherwise provided in a written
employment agreement or instrument between the Company and the Employee
evidencing the grant of the Option, in the event of an Employee’s termination
of employment for:


 


(i) Any
reason other than for Cause, death, Total Disability, Normal Retirement or Job
Elimination (as defined below), the Employee’s Options shall expire and become
unexercisable as of the earlier of (A) the date such Options expire in
accordance with their terms or (B) three calendar months after the date of
termination.


 


(ii) Death
or Total Disability, all of the Employee’s unvested Options shall become vested
as of the last date of employment, and the Employee (or his or her successor in
interest) shall have twelve (12) months after the date of termination within
which to exercise Options that have not expired on or before such date.


 


(iii) Normal
Retirement, the Employee’s Options shall expire and become unexercisable as of
the earlier of (A) the date such Options expire in accordance with their
terms or (B) three (3) years after the date of termination.


 


(iv) Job
Elimination, all of the Employee’s unvested Options shall become vested as of
the last date of employment, and the Employee’s Options shall expire and become
unexercisable as of the earlier of (A) the date such Options expire in
accordance with their terms or (B) three calendar months after the date of
termination. Notwithstanding the foregoing, if an Employee meets the
requirements for Normal Retirement at the time his or her employment is
terminated for Job Elimination, the Employee’s Options shall become vested as
of the last date of employment, and the Employee’s Options shall expire and
become unexercisable as of the earlier to occur of (Y) the date such
Options expire in accordance with their terms or (Z) three calendar years
after the date of termination. “Job Elimination” occurs when an Employee ceases
to be an Employee of the Company as a result of a reduction in force or transfer
to a new organization outside of the Company as a result of a divestiture,
other than a spin-off or other distribution to the Company’s stockholders. A “reduction
in force” occurs under the Plan when the Employee is terminated pursuant to a
plan to reduce headcount and is not offered an alternative job at the Company.
In order to receive the accelerated vesting set forth in this section (iv), the
Employee must sign and deliver to AMO a release and waiver with respect to any
and all claims relating to the Employee’s employment with or termination from
the Company in a form acceptable to AMO.


 


(c) Notwithstanding anything to the contrary in
Paragraphs (a) or (b) above, the Committee may in its discretion
designate such shorter or longer periods to exercise Options following an
Employee’s termination of employment; provided,
however, that any shorter periods determined by the Committee shall
be effective only if provided for in the instrument that evidences the grant to
the Employee of such Options or if such shorter period is agreed to in writing
by the Employee. In the case of an Incentive Stock Option, notwithstanding
anything to the contrary herein, in no event shall such Option be exercisable
after the expiration of ten years from the date such Option is granted (or such
other period as is provided in Code Section 422 and the regulations
promulgated thereunder). This Plan provides for automatic acceleration of
vesting of Options in the event of an Employee’s termination due to death or
Total Disability or Job Elimination. In all other situations, with the
exception of terminations for Cause, Options shall be exercisable by an
Employee (or his successor in interest) following such Employee’s termination
of employment only to the extent that installments thereof had become
exercisable on or prior to the date of such termination; provided, however, that the Committee, in
its discretion, may elect to accelerate the vesting of all or any portion of
any Options that had not become exercisable on or prior to the date of such
termination.


 


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3.7 Limitations on Exercise of Options Granted to Consultants


 


Unless otherwise prescribed by the Committee in the
instrument evidencing the grant of the Option, no Option granted to a
Consultant may be exercised to any extent by anyone after the first to occur of
the following events:


 


(a) The
expiration of 12 months from the date of the Consultant’s termination of
consultancy by reason of his or her death or Total Disability;


 


(b) The
expiration of three months from the date of the Consultant’s termination of
consultancy for any reason other than such Consultant’s death or his or her
Total Disability, unless the Consultant dies within said three-month period, in
which case the Option shall expire 12 months from the date of the Consultant’s
death; or


 


(c) The
expiration of 10 years from the date the Option was granted.


 


3.8 No Reload Rights


 


Options granted under this Plan shall not contain
any provision entitling the Employee or Consultant to the automatic grant of
additional options in connection with any exercise of the original Option.


 


ARTICLE IV.


DIRECTOR
OPTIONS


 


4.1 Discretionary Grants


 


Notwithstanding the foregoing, the Board may, in its
discretion, grant Options to Independent Directors at any time and from time to
time, the terms of which shall be determined by the Board. In the discretion of
the Board, Options granted hereunder to Independent Directors may be granted in
lieu of director fees.


 


4.2 Terms of Options Granted to Independent Directors


 


Unless otherwise prescribed by the Board in the
instrument evidencing the grant of the Option, the price per share of the
shares subject to each Option granted to an Independent Director shall equal
100% of the Fair Market Value of a share of Common Stock on the date the Option
is granted. Unless otherwise prescribed by the Board in the instrument
evidencing the grant of the Option, each Option granted to an Independent
Director shall become fully exercisable on the day immediately preceding the
date of the first annual meeting of stockholders subsequent to the date the
Option was granted, provided such person is an Independent Director as of such
date. Subject to Section 4.3, the term of each Option granted to an
Independent Director shall be 10 years from the date the Option is granted.  No portion of an Option which is
unexercisable at termination of directorship shall thereafter become
exercisable. Payment of the exercise price with respect to an Option granted to
an Independent Director shall be made in accordance with Section 3.4.
Notwithstanding the foregoing, in the event of a Change in Control, Options
granted to Independent Directors shall, as of the date of such Change in
Control, immediately become fully vested and exercisable. The limitations under
Section 3.8 shall apply to Options granted to Independent Directors.


 


4.3 Limitations on Exercise of Options Granted to Independent
Directors


 


Unless otherwise prescribed by the Board in the
instrument evidencing the grant of the Option, no Option granted to an
Independent Director may be exercised to any extent by anyone after the first
to occur of the following events:


 


(a) The
expiration of 12 months from the date of the Independent Director’s termination
of directorship by reason of his or her death or Total Disability;


 


9

















 


(b) The
expiration of three months from the date of the Independent Director’s
termination of directorship for any reason other than such Independent Director’s
death or his or her Total Disability, unless the Independent Director dies
within said three-month period, in which case the Option shall expire 12 months
from the date of the Independent Director’s death; or


 


(c) The
expiration of 10 years from the date the Option was granted.


 


ARTICLE V.


PERFORMANCE
AWARDS


 


5.1 Grant of Performance Awards


 


(a) Any Employee or Consultant selected by the
Committee may be granted one or more Performance Awards. At the time of grant,
the Committee shall determine the Performance Criteria (which need not be
identical) to be utilized to calculate the value of a Performance Award, the
term of such Performance Award, the Payment Event, the form of payment of the
Performance Award (in cash, shares of Common Stock, Restricted Stock Units or
shares of Restricted Stock) and the time of payment of the Performance Award.
The specific terms and conditions of each Performance Award shall be set forth
in a written statement evidencing the grant of such Performance Award (the “Performance
Award Agreement”).


 


(b) Notwithstanding any other provision of the
Plan or the applicable Performance Award Agreement, the Committee may, in its
sole discretion, reduce the amount of any Performance Award, whether it
provides for settlement in shares of Common Stock, Restricted Stock, Restricted
Stock Units or cash and regardless of the extent to which the Performance
Criteria specified in the Performance Award Agreement were attained, to an
amount less than the amount set forth in the Performance Award Agreement,
including zero. However, under no circumstances will the Committee have the
authority to increase the amount of a Performance Award that would otherwise be
payable under a Performance Award Agreement.


 


(c) The occurrence of the Payment Event shall
be tolled until the Committee certifies in writing whether and to the extent to
which the Performance Criteria specified in any Performance Award Agreement was
attained.


 


5.2 Payment of Award; Limitation


 


Upon the occurrence of a Payment Event, payment of a
Performance Award will be made to the Participant (in cash, shares of Common
Stock, shares of Restricted Stock, or Restricted Stock Units, as determined by
the Committee at the time of grant). The Committee may impose a limitation on
the amount payable upon the occurrence of a Payment Event, which limitation
shall be set forth in the written statement evidencing the grant of the
Performance Award; provided, however,
that such limitation shall not exceed the limit set forth in Section 1.3(d).


 


5.3 Expiration of Performance Award


 


If a Participant’s employment, or if applicable,
consultancy with the Company is terminated for any reason other than death,
Total Disability or, with respect to an Employee, Normal Retirement, prior to
the occurrence of the Payment Event, all of the Participant’s rights under the
Performance Award shall expire and terminate unless otherwise determined by the
Committee. In the event of termination of employment or consultancy by reason
of death, Total Disability or, with respect to an Employee, Normal Retirement,
the Committee, in its discretion, may determine what portions, if any, of the
Performance Award should be paid to the Participant.


 


10

















 


ARTICLE VI.


RESTRICTED
STOCK AND RESTRICTED STOCK UNITS


 


6.1 Award of Restricted Stock and Restricted Stock Units


 


The Committee may grant awards of Restricted Stock
and/or Restricted Stock Units to Employees, Consultants and Independent
Directors. The Committee shall determine the number of shares of Restricted
Stock or Restricted Stock Units awarded, Purchase Price (if any), the terms of
payment of the Purchase Price, the restrictions upon the Restricted Stock
and/or Restricted Stock Units, and when and under what circumstances such
restrictions shall lapse. The terms and conditions of the Restricted Stock
and/or Restricted Stock Units shall be set forth in the statement evidencing
the grant of such award of Restricted Stock and/or Restricted Stock Units.


 


6.2 Requirements


 


All shares of Restricted Stock and Restricted Stock
Units granted or sold, pursuant to the Plan will be subject to the following
conditions:


 


(a) The
Restricted Stock and Restricted Stock Units may not be sold, assigned,
transferred, pledged, hypothecated or otherwise disposed of, alienated or
encumbered until the restrictions are removed or expire;


 


(b) The
Committee may require that the certificates representing Restricted Stock
granted or sold to a Participant pursuant to the Plan remain in the physical
custody of an escrow holder or the Company until all restrictions are removed
or expire;


 


(c) Each
certificate representing Restricted Stock granted or sold to a Participant
pursuant to the Plan will bear such legend or legends making reference to the
restrictions imposed upon such Restricted Stock as the Committee in its
discretion deems necessary or appropriate to enforce such restrictions; and


 


(d) The
Committee may impose such other conditions on Restricted Stock and Restricted
Stock Units as the Committee may deem advisable including, without limitation,
restrictions under the Securities Act, under the Exchange Act, under the
requirements of any stock exchange upon which shares of the same class are then
listed and under any blue sky or other securities laws applicable to such
shares.


 


6.3 Lapse of Restrictions


 


The restrictions imposed upon Restricted Stock and
Restricted Stock Units pursuant to Section 6.2 above will lapse in
accordance with such schedule or other conditions as are determined by the
Committee and set forth in the statement evidencing the grant or sale.


 


6.4 Rights of Participant


 


Subject to the provisions of Section 6.2 or
restrictions imposed pursuant to Section 6.2, the Participant will have
all rights of a stockholder with respect to the Restricted Stock granted or
sold to such Participant under the Plan, including the right to vote the shares
and receive all dividends and other distributions paid or made with respect
thereto; provided, however, that
in the discretion of the Committee, any non-cash distributions with respect to
the Common Stock shall be subject to the restrictions set forth in Section 6.2.
Holders of Restricted Stock Units will have no rights of a stockholder until
shares of Common Stock are issued upon vesting of the units.


 


6.5 Termination of Employment, Consultancy or Directorship


 


Upon a Participant’s termination of employment or,
if applicable, termination of consultancy or directorship, for death or Total
Disability, all of the restrictions imposed on the Participant’s Restricted Stock
shall lapse, and all of the Participant’s Restricted Stock Units will become
vested and payable, as of the


 


11

















 


Participant’s
last date of employment or, if applicable, consultancy or directorship. In all other
cases (other than a Job Elimination), unless the Committee in its discretion
determines otherwise, upon a Participant’s termination of employment or, if
applicable, termination of consultancy or directorship, for any reason, (i) all
of the Participant’s Restricted Stock that are unvested at that time shall be
repurchased by the Company at the Purchase Price (if any) and (ii) all of
the Participant’s Restricted Stock Units that are unvested at that time shall
expire.


 


6.6 Termination of Employment Due to Job Elimination


 


Upon an Employee’s termination of employment due to
Job Elimination, the terminating Employee shall have the restrictions lapse on
each grant of Restricted Stock in an amount equal to the difference between (i) the
total number of shares of Restricted Stock granted multiplied by a fraction,
the numerator of which is the number of full calendar months from the date of
grant until the Employee’s last day of employment and the denominator of which
is the total number of months of the vesting schedule pursuant to the original
award and (ii) any shares of Restricted Stock that vested prior to the
date of termination of employment, and any remaining shares of unvested
Restricted Stock shall be repurchased by the Company at the Purchase Price (if
any). With respect to Restricted Stock Units, upon an Employee’s termination of
employment due to Job Elimination, the terminating Employee shall become vested
in each award of Restricted Stock Units in an amount equal to the difference
between (y) the number of units awarded multiplied by a fraction, the
numerator of which is the number of full calendar months from the date of grant
until the Employee’s last day of employment and the denominator of which is the
total number of months of the vesting schedule pursuant to the original award
and (z) any Restricted Stock Units that vested prior to the date of
termination of employment, and any remaining unvested Restricted Stock Units
shall expire.


 


6.7 Payment of Restricted Stock Units


 


Following the end of the vesting period for a
Restricted Stock Unit (or at such other time as the applicable Restricted Stock
Unit Agreement may provide), the holder of a Restricted Stock Unit shall be
entitled to receive one share of Common Stock for each Restricted Stock Unit,
unless the Participant has elected otherwise, provided however, any such
election is valid in accordance with Code Section 409A or any successor
regulation.


 


ARTICLE
VII.


STOCK
APPRECIATION RIGHTS


 


7.1 Granting of Stock Appreciation Rights


 


The Committee may approve the grant to Employees or
Consultants of Stock Appreciation Rights related or unrelated to Options, at
any time:


 


(a) A
Stock Appreciation Right granted in connection with an Option granted under
this Plan will entitle the holder of the related Option, upon exercise of the
Stock Appreciation Right, to surrender such Option, or any portion thereof to
the extent unexercised, with respect to the number of shares as to which such
Stock Appreciation Right is exercised, and to receive payment of an amount
computed pursuant to Section 7.1(c). Such Option will, to the extent
surrendered, then cease to be exercisable.


 


(b) Subject
to Section 7.1(g), a Stock Appreciation Right granted in connection with
an Option hereunder will be exercisable at such time or times, and only to the
extent that, the related Option is exercisable, and will not be transferable
except to the extent that such related Option may be transferable.


 


(c) Upon
the exercise of a Stock Appreciation Right related to an Option, the holder
will be entitled to receive payment of an amount determined by multiplying: (i) the
difference obtained by subtracting the Option Exercise Price of a share of
Common Stock specified in the related Option from the Fair Market Value of a
share of Common Stock on the date of exercise of such Stock  Appreciation Right (or as of such other date
or as of the occurrence of such event as may have been specified in the
instrument evidencing the


 


12
















 


grant of the Stock
Appreciation Right), by (ii) the number of shares as to which such Stock
Appreciation Right is exercised.


 


(d) The
Committee may grant Stock Appreciation Rights unrelated to Options to eligible
Employees or Consultants. Section 7.1(c) shall be used to determine
the amount payable at exercise under such Stock Appreciation Right, except that
in lieu of the Option Exercise Price specified in the related Option the
initial base amount specified in the Incentive Award shall be used.


 


(e) Notwithstanding
the foregoing, the Committee, in its discretion, may place a dollar limitation
on the maximum amount that will be payable upon the exercise of a Stock
Appreciation Right under the Plan.


 


(f) Payment
of the amount determined under the foregoing provisions of this Section 7.1
may be made solely in whole shares of Common Stock valued at their Fair Market
Value on the date of exercise of the Stock Appreciation Right or,
alternatively, at the sole discretion of the Committee, in cash or in a
combination of cash and shares of Common Stock as the Committee deems
advisable. The Committee is hereby vested with full discretion to determine the
form in which payment of a Stock Appreciation Right will be made and to consent
to or disapprove the election of a Participant to receive cash in full or
partial settlement of a Stock Appreciation Right. If the Committee decides to
make full payment in shares of Common Stock and the amount payable results in a
fractional share, payment for the fractional share will be made in cash.


 


(g) The
Committee may, at the time a Stock Appreciation Right is granted, impose such
conditions on the exercise of the Stock Appreciation Right as may be required
to satisfy the requirements of Rule 16b-3 (or any other comparable
provisions in effect at the time or times in question).


 


7.2 Termination of Employment or Consultancy


 


Sections 3.6 and 3.7 will govern the treatment of
Stock Appreciation Rights upon the termination of a Participant’s employment or
consultancy, as applicable, with the Company.


 


ARTICLE
VIII.


STOCK
PAYMENTS


 


8.1 Stock Payments


 


The Committee may approve Stock Payments of Common
Stock to any Employee or Consultant for all or any portion of the compensation
(other than base salary with respect to an Employee) that would otherwise
become payable to an Employee or Consultant in cash.


 


ARTICLE IX.


OTHER
PROVISIONS


 


9.1 Adjustment Provisions


 


(a) Subject to Section 9.1(b) below, (i) if
the outstanding shares of Common Stock of the Company are increased, decreased
or exchanged for a different number or kind of shares or other securities, or
if additional shares or new or different shares or other securities are
distributed in respect of such shares of Common Stock (or any stock or
securities received with respect to such Common Stock), through merger,
consolidation, sale or exchange of all or substantially all of the properties
of the Company, reorganization, recapitalization, reclassification, stock
dividend, stock split, reverse stock split, spin-off or other distribution with
respect to such shares of Common Stock (or any stock or securities received
with respect to such Common Stock), or (ii) if the value of the
outstanding shares of Common Stock of the Company is reduced by reason of an
extraordinary cash dividend, an appropriate and proportionate adjustment shall
be made in (x) the maximum number and kind of


 


13

















 


shares
provided in Section 1.3 (including the maximum amounts referred to in Section 1.3(d)),
(y) the number and kind of shares or other securities subject to then
outstanding Incentive Awards, and (z) the price for each share or other
unit of any other securities subject to then outstanding Incentive Awards. No
fractional interests will be issued under the Plan resulting from any such
adjustments.


 


(b) In addition to the adjustments permitted by
Section 9.1(a) above, except as otherwise expressly provided in the
statement evidencing the grant of an Incentive Award, upon the occurrence of a
Change in Control any outstanding Incentive Awards not theretofore exercisable,
payable or free from restrictions, as the case may be, shall immediately become
exercisable, payable or free from restrictions (other than restrictions
required by applicable law or any national securities exchange upon which any
securities of the Company are then listed), as the case may be, in their
entirety and any shares of Common Stock acquired pursuant to an Incentive Award
which are not fully vested shall immediately become fully vested, notwithstanding
any of the other provisions of the Plan.


 


9.2 Continuation of Employment


 


(a) Nothing in the Plan or in any statement
evidencing the grant of an Incentive Award pursuant to the Plan shall be
construed to create or imply any contract of employment between any Employee
and the Company, to confer upon any Employee any right to continue in the
employ of the Company, or to confer upon the Company any right to require any
Employee’s continued employment. Except as expressly provided in the Plan or in
any statement evidencing the grant of an Incentive Award pursuant to the Plan,
the Company shall have the right to deal with each Employee in the same manner
as if the Plan and any such statement evidencing the grant of an Incentive
Award pursuant to the Plan did not exist, including, without limitation, with
respect to all matters related to the hiring, discharge, compensation and
conditions of the employment of the Employee. Unless otherwise expressly set
forth in a separate employment agreement between the Company and such Employee,
the Company may terminate the employment of any Employee with the Company at
any time for any reason, with or without cause.


 


(b) Any question(s) as to whether and when
there has been a termination of an Employee’s employment, the reason (if any)
for such termination, and/or the consequences thereof under the terms of the
Plan or any statement evidencing the grant of an Incentive Award pursuant to
the Plan shall be determined by the Committee and the Committee’s determination
thereof shall be final and binding.


 


9.3 Compliance with Government Regulations


 


No shares of Common Stock will be issued pursuant to
an Incentive Award unless and until all applicable requirements imposed by
federal and state securities and other laws, rules and regulations and by
any regulatory agencies having jurisdiction and by any stock exchanges upon
which the Common Stock may be listed have been fully met. As a condition
precedent to the issuance of shares of Common Stock pursuant to an Incentive
Award, the Company may require the Participant to take any reasonable action to
comply with such requirements.


 


9.4 Additional Conditions


 


The award of any benefit under this Plan may also be
subject to such other provisions (whether or not applicable to the benefit
award to any other Participant) as the Committee determines appropriate
including, without limitation, provisions to assist the Participant in
financing the purchase of Common Stock through the exercise of Stock Options,
provisions for the forfeiture of or restrictions on resale or other disposition
of shares of Common Stock acquired under any form of benefit, provisions giving
the Company the right to repurchase shares of Common Stock acquired under any
form of benefit in the event the Participant elects to dispose of such shares,
and provisions to comply with federal and state securities laws and federal and
state income tax withholding requirements.


 


14

















 


9.5 Privileges of Stock Ownership


 


No Participant and no beneficiary or other person
claiming under or through such Participant will have any right, title or
interest in or to any shares of Common Stock allocated or reserved under the
Plan or subject to any Incentive Award, except as to such shares of Common
Stock, if any, that have been issued to such Participant in accordance with the
terms and conditions of the applicable Incentive Award; provided, however, that Participants who
have received Restricted Stock shall have only those rights with respect to
such stock as are set forth in this Plan and the statement evidencing the grant
or sale of such Restricted Stock. No adjustment will be made for any dividends
or other rights where the record date is prior to the date shares of Common
Stock are issued.


 


9.6 Amendment and Termination of Plan, Amendment of Incentive
Awards


 


(a) The Board may alter, amend, suspend or
terminate the Plan at any time. No such action of the Board, unless taken with
the approval of the stockholders of the Company, may increase the maximum
number of shares that may be sold or issued under the Plan or alter the class
of Employees eligible to participate in the Plan. With respect to any other
amendments of the Plan, the Board may in its discretion determine that such
amendments shall only become effective upon approval by the stockholders of the
Company, if the Board determines that such stockholder approval may be
advisable, such as for the purpose of obtaining or retaining any statutory or
regulatory benefits under federal or state securities law, federal or state tax
law or any other laws or for the purposes of satisfying applicable stock
exchange listing requirements.


 


(b) The Committee may, with the consent of a
Participant, make such modifications in the terms and conditions of an
Incentive Award as it deems advisable; provided,
however, that the Committee may not reduce the exercise price of an
outstanding Option by amending the terms of such Option without first obtaining
approval from the AMO stockholders.


 


(c) Except as otherwise provided in this Plan
or in the statement evidencing the grant of the Incentive Award, no amendment,
suspension or termination of the Plan will, without the consent of the
Participant, alter, terminate, impair or adversely affect any right or obligation
under any Incentive Award previously granted under the Plan.


 


9.7 Not Transferable


 


(a) No Incentive Award under the Plan may be
sold, pledged, assigned or transferred in any manner other than by will or the
laws of descent and distribution or, subject to the consent of the Committee,
pursuant to a domestic relations order, unless and until such Award has been
exercised, or the shares underlying such Incentive Award have been issued, and
all restrictions applicable to such shares have lapsed. No Incentive Award or
interest or right therein shall be liable for the debts, contracts or
engagements of the Participant or his or her successors in interest or shall be
subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be
voluntary or involuntary or by operation of law by judgment, levy, attachment,
garnishment or any other legal or equitable proceedings (including bankruptcy),
and any attempted disposition thereof shall be null and void and of no effect,
except to the extent that such disposition is permitted by the preceding
sentence.


 


(b) During the lifetime of the Participant,
only he or she may exercise an Option or other Incentive Award (or any portion
thereof) granted to him or her under the Plan, unless it has been disposed of
with the consent of the Committee pursuant to a domestic relations order. After
the death of the Participant, any exercisable portion of an Option or other
Incentive Award may, prior to the time when such portion becomes unexercisable
under the Plan or the terms and conditions of such Incentive Award, be
exercised by his or her personal representative or by any person empowered to
do so under the deceased Participant’s will or under the then applicable laws
of descent and distribution.


 


(c) Notwithstanding the foregoing, the Committee, in its sole
discretion, may determine to permit a Participant to transfer an Incentive
Award to any one or more Permitted Transferees (as defined below), subject


 


15

















 


to
the following terms and conditions: (i) an Incentive Award transferred to
a Permitted Transferee shall not be assignable or transferable by the Permitted
Transferee other than by will or the laws of descent and distribution; (ii) any
Incentive Award which is transferred to a Permitted Transferee shall continue
to be subject to all the terms and conditions of the Incentive Award as
applicable to the Participant (other than the ability to further transfer the
Incentive Award); and (iii) the Participant and the Permitted Transferee
shall execute any and all documents requested by the Committee, including,
without limitation documents to (A) confirm the status of the transferee
as a Permitted Transferee, (B) satisfy any requirements for an exemption
for the transfer under applicable federal and state securities laws and (C) evidence
the transfer. For purposes of this Section 9.7, “Permitted Transferee”
shall mean, with respect to a Participant, any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, any person sharing the Participant’s
household (other than a tenant or employee), a trust in which these persons (or
the Participant) control the management of assets, and any other entity in
which these persons (or the Participant) own more than fifty percent of the
voting interests, or any other transferee specifically approved by the
Committee after taking into account any state or federal tax or securities laws
applicable to transferable Incentive Award. Nothing contained in this Section 9.7(c) shall
be deemed to require or obligate the Committee to permit a Participant to
transfer an Incentive Award in the manner described herein.


 


9.8 Other Compensation Plans


 


The adoption of the Plan shall not affect any other
stock option, incentive or other compensation plans in effect for the Company,
nor shall the Plan preclude the Company from establishing any other forms of
incentive or other compensation for Employees or Directors of the Company.


 


9.9 Plan Binding on Successors


 


The Plan shall be binding upon the successors and
assigns of the Company.


 


9.10 Singular, Plural; Gender


 


Whenever used herein, nouns in the singular shall
include the plural, and the masculine pronoun shall include the feminine
gender.


 


9.11 Headings, Etc., No Part of Plan


 


Heading of Articles and Sections hereof are inserted
for convenience and reference; they constitute no part of the Plan.


 


9.12 Participation By Foreign Employees


 


Notwithstanding Section 9.6 of the Plan, the
Committee may, in order to fulfill the purposes of the Plan: (i) modify
grants of Incentive Awards to Participants who are foreign nationals or
employed outside of the United States to recognize differences in applicable
law, tax policy or local custom and/or (ii) amend the Plan from time to
time by adopting or modifying appendices to the Plan, which appendices shall
contain such terms and conditions with respect to the operation of the Plan in
one or more foreign jurisdictions as are necessary to bring the Plan into
compliance with applicable law, tax policy or local custom. Nothing contained
in this Section 9.12 shall be deemed to grant the Committee the authority
to: (i) increase the maximum number of shares that may be sold or issued
under the Plan, (ii) alter the class of Employees eligible to participate
in the Plan, (iii) reduce the minimum exercise price with respect to
Options as set forth in Sections 3.2 and 4.2, or (iv) increase the annual
award limits set forth in Section 1.3(d).


 


16

















 


9.13 Withholding


 


The Company shall be entitled to require payment in
cash or deduction from other compensation payable to each Participant of any
sums required by federal, state or local tax law to be withheld with respect to
the issuance, vesting, exercise or payment of any Incentive Award. The
Committee may in its discretion and in satisfaction of the foregoing
requirement allow such Participant to elect to have the Company withhold shares
of Common Stock otherwise issuable under such Incentive Award (or allow the
return of shares of Common Stock) having a Fair Market Value equal to the sums
required to be withheld. Notwithstanding any other provision of the Plan, the
number of shares of Common Stock which may be withheld with respect to the
issuance, vesting, exercise or payment of any Incentive Award (or which may be
repurchased from the Participant of such Incentive Award within six months
after such shares of Common Stock were acquired by the Participant from the
Company) in order to satisfy the Participant’s federal and state income and
payroll tax liabilities with respect to the issuance, vesting, exercise or
payment of the Incentive Award shall be limited to the number of shares which
have a Fair Market Value on the date of withholding or repurchase equal to the
aggregate amount of such liabilities based on the minimum statutory withholding
rates for federal and state tax income and payroll tax purposes that are
applicable to such supplemental taxable income.


 


9.14 Miscellaneous


 


(a) At the request of a Participant, and as
soon as practicable after any proper exercise of an Option (or any portion
thereof) in accordance with the provisions of the Plan, the Company shall
deliver to the Participant at the main office of the Company, or such place as
shall be mutually acceptable, a certificate or certificates representing the
shares of Common Stock to which the Participant is entitled by reason of
exercise of the Option (or portion thereof).


 


(b) No shares of Common Stock shall be issued
or delivered upon exercise of an Option unless and until there shall have been
compliance with all applicable requirements of the Securities Act, all
applicable listing requirements of any market or securities exchange on which
shares of Common Stock are then listed and any other requirement of law or of
any regulatory body having jurisdiction over such issuance and delivery. The
inability of the Company to obtain any required permits, authorizations or
approvals necessary for the lawful issuance and sale of any shares of Common
Stock hereunder on terms deemed reasonable by the Committee shall relieve the
Company, the Board and the Committee of any liability in respect of the
nonissuance or sale of such shares of Common Stock as to which such requisite
permits, authorizations or approvals shall not have been obtained.


 


(c) Each certificate representing shares of
Common Stock acquired pursuant to the Plan shall be endorsed with all legends,
if any, required by applicable federal and state securities laws to be placed
on the certificates. The determination of which legends, if any, shall be
placed upon the certificates shall be made by the Committee in its sole
discretion and such decision shall be final and binding.


 


17

















 


ARTICLE X.


EFFECTIVE
DATE


 


10.1 Effective Date and Duration of Plan


 


The Plan remains subject to, and contingent upon (a) approval
of AMO’s stockholders, and (b) the consummation of the merger transaction
set forth in the Merger Agreement. The Plan shall become effective on the on
the latter to occur of the approval of the Plan by AMO’s stockholders and the
Effective Time (the “Plan Effective Date”). The Plan shall terminate at such
time as the Board, in its discretion, shall determine. No Incentive Award may
be granted under the Plan after the date of such termination, but such
termination shall not affect any Incentive Award theretofore granted; provided, however, that in no event may
any Incentive Stock Option be granted under the Plan after December 31,
2014.


 


On the Plan Effective Date, the Company shall grant
no further awards to directors, employees or consultants under the Advanced
Medical Optics, Inc. 2002 Incentive Compensation Plan or any equity
incentive plans assumed by the Company at the Effective Time.


 


18