Document:

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                                                                   EXHIBIT 10.22

                                 ALLERGAN, INC.

                      EXECUTIVE DEFERRED COMPENSATION PLAN

                              AMENDED AND RESTATED

                              As of January 1, 2003

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                                 ALLERGAN, INC.

                      EXECUTIVE DEFERRED COMPENSATION PLAN

                                    ARTICLE I

                                  INTRODUCTION

      1.1 Purpose. The Allergan, Inc. Executive Deferred Compensation Plan is
hereby established by the Board of Directors of Allergan, Inc., a Delaware
corporation ("Allergan"), to provide deferred compensation benefits to selected
executive and management employees of the Company as more fully provided herein.
The benefits provided under this Plan are intended to be in addition to other
employee benefit programs offered by the Company, including but not limited to
tax-qualified employee benefit plans.

      1.2 Effective Date and Term. This Plan was adopted effective as of January
1, 1995, and has been amended and restated as of January 1, 2003, and shall
continue in effect until terminated by the Board of Directors. The provisions of
this Plan prior to its amendment and restatement as of January 1, 2003 shall
apply to all individuals who terminated employment with the Company prior to
January 1, 2003 except as provided herein.

      1.3 Spin-Off of Advanced Medical Optics, Inc. In connection with the
distribution of the stock of Advanced Medical Optics, Inc. ("AMO") by Allergan
to its stockholders (the "AMO Spin-Off") and, effective as of the AMO Spin-Off
Date: (i) AMO Employees shall cease to be eligible to participate in the Plan
and their Deferral Elections for the 2002 Plan Year shall be terminated, and
(ii) the assets attributable to, and the liabilities relating to, arising out
of, or resulting from the Deferral Accounts of AMO Employees shall be
transferred to the Advanced Medical Optics, Inc. Deferred Compensation Plan. The
"AMO Spin-Off Date" shall be June 29, 2002 and "AMO Employees" shall be those
individuals whose employment is transferred from Allergan to AMO in connection
with the AMO Spin-Off, as reflected in the payroll records of Allergan or in the
Employee Matters Agreement entered into between Allergan and AMO.

      1.4 Applicability of ERISA. This Plan is intended to be a "top-hat" plan
-- that is, an unfunded plan maintained primarily for the purpose of providing
deferred compensation to a select group of management or highly compensated
employees within the meaning of ERISA.

                                   ARTICLE II

                                   DEFINITIONS

      2.1. Annual Deferral. "Annual Deferral" means the amount of Base Salary
and/or Bonuses which the Participant elects to defer in each Deferral Period
pursuant to Article 3.1 of the Plan.

      2.2 Base Salary. "Base Salary" means the Participant's annual basic rate
of pay from the Company (excluding Bonuses, commissions, and other non-regular
forms of compensation)

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before reductions for deferrals under this Plan, the Savings and Investment
Plan, or "cafeteria plan" under Section 125 of the Code.

      2.3 Beneficiary. "Beneficiary" means the person or persons or entity
designated as such in accordance with Article XVI of the Plan.

      2.4 Board; Board of Directors. "Board" and "Board of Directors" each mean
the Board of Directors of Allergan. The Organization and Compensation Committee
of the Board, or any successor thereto, shall exercise any and all rights,
duties and obligations that are retained by or assigned to the Board under the
Plan.

      2.5 Bonuses. "Bonuses" means non-salary amounts earned by the Participant
that are designated as bonuses or commissions. Bonuses shall be treated as
earned in the Deferral Period designated by the Committee even though they may
be paid in the subsequent Deferral Period in accordance with Company policy or
practice.

      2.6 Code. "Code" means the Internal Revenue Code of 1986, as amended.

      2.7 Committee. "Committee" means the committee authorized to administer
this Plan as set forth in Section 13.1 hereof.

      2.8 Company. "Company" means Allergan, Inc., a Delaware corporation, and
each Affiliated Company (as defined in the Savings and Investment Plan)
designated by the Board of Directors.

      2.9 Company Rate. "Company Rate" means one hundred twenty percent (120%)
of the ten-year Treasury Note one hundred twenty (120) month rolling average to
be determined on October 1 of each Plan Year and made applicable for the next
following Plan Year.

      2.10 Credited Service. "Credited Service" means the amount of service of a
Participant determined by the Committee based on the human resources records
maintained by the Company.

      2.11 Deferral Account. "Deferral Account" means the account established
for a Participant pursuant to Section 5.1 of the Plan.

      2.12 Deferral Election. "Deferral Election" means the election made by the
Participant pursuant to the terms of Section 4.1 of the Plan.

      2.13 Deferral Election Form. "Deferral Election Form" means the written
agreement to defer Salary or Bonuses made by the Participant. Such written
agreement shall be in a format designated by the Committee.

      2.14 Deferral Period. "Deferral Period" means the Plan Year.

      2.15 Disability. "Disability" means any injury, illness or condition that
constitutes a disability that qualifies for payment under the Company's
Long-Term Disability Plan.

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      2.16 Effective Date. "Effective Date" means January 1, 1995.

      2.17 Eligible Employee. "Eligible Employee" means an employee of the
Company who is a U.S. local or U.S. based expatriate that is either exempt grade
8E and above or is employed in another executive or management position as
approved by the Committee. An employee shall be treated as an Eligible Employee
only upon selection and notification in writing of such status by the Committee
and only if (i) he or she is not classified or paid as an independent contractor
(regardless of his or her classification for federal tax or other legal
purposes) by the Company and (ii) he or she does not perform services for the
Company pursuant to an agreement between the Company and any other person
including a leasing organization. An employee shall cease to be an Eligible
Employee if he or she is reclassified (i) below exempt grade 8E (unless employed
in another executive or management position as approved by the Committee), (ii)
as an independent contractor, or (iii) as a leased employee by the Company,
except that, upon reclassification below exempt grade 8E, any Deferral Election
which has been made (and deferrals having commenced) may be completed.

      2.18 Employee Stock Ownership Plan. "Employee Stock Ownership Plan" means
the Allergan, Inc. Employee Stock Ownership Plan, as amended.

      2.19 ERISA. "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.

      2.20 Fund Rate. "Fund Rate" means, with respect to any portion of a
Deferral Account for which the Fund Rate is applicable, the rate of return based
on the income, gains, losses and expenses of the insurance funds or other
investment vehicles (collectively called "Fund Media") selected by the
Participant in accordance with Section 5.4.

      2.21 Financial Hardship. "Financial Hardship" means an unexpected and
significant need for cash (which cannot be met reasonably and contemporaneously
from other sources) arising from an illness, casualty loss, sudden financial
reversal, or other such unforeseeable occurrence as determined by the Committee
in its sole discretion. Cash needs arising from foreseeable events or
discretionary expenditures such as the purchase of a residence or education
expenses for children shall not, alone, be considered a Financial Hardship.

      2.22 In-Service Distribution. "In-Service Distribution" means a
distribution elected by the Participant pursuant to Article X of the Plan.

      2.23 Investment Election Form. "Investment Election Form" means the form
prescribed by the Committee for the Participant to elect to have all or a
portion of his or her Deferral Account credited with a rate of return at the
Fund Rate or the Company Rate in accordance with Section 5.3 hereof, including
the selection of Fund Media.

      2.24 Participant. "Participant" means any Eligible Employee who commences
participation in this Plan as provided under Section 3.1 hereof.

      2.25 Participation Agreement. "Participation Agreement" means the written
agreement or form that an Eligible Employee must complete and submit in order to
commence

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participation or upon becoming a Participant in the Plan. Such written agreement
shall be in a format designated by the Committee.

      2.26 Pension Plan. "Pension Plan" means the Allergan, Inc. Pension Plan,
as amended.

      2.27 Plan. "Plan" means this Allergan, Inc. Executive Deferred
Compensation Plan adopted as of the Effective Date hereof and as it may be
amended from time to time.

      2.28 Plan Year. "Plan Year" means the calendar year.

      2.29 Restoration Credits. "Restoration Credits" means the amounts, if any,
credited to a Participant's Deferral Account pursuant to Section 5.1(b), (c), or
(d) of the Plan.

      2.30 Retirement Date. "Retirement Date" means (i) the later of the
Participant's fifty-fifth (55th) birthday or completion of at least five (5)
years of Credited Service; or (ii) in the case of a Participant who has elected
by August 31, 1998 (or such later date as approved by Allergan, Inc. but in no
event later than September 30, 1998) to participate in the Voluntary Early
Retirement Incentive program offered by Allergan, Inc., his or her retirement
date as set forth thereunder; or (iii) the later of the last day of the calendar
month in which the Participant's sixty-fifth (65th) birthday occurs or
completion of at least one (1) year of Credited Service.

      2.31 Savings and Investment Plan. "Savings and Investment Plan" means the
Allergan, Inc. Savings and Investment Plan, as amended.

      2.32 Termination; Termination of Employment. "Termination" or "Termination
of Employment" means the termination of a Participant's employment with the
Company for any reason whatsoever, whether voluntary or involuntary.

      2.33 Unscheduled Withdrawal. "Unscheduled Withdrawal" means a distribution
requested by the Participant and approved by the Committee pursuant to Article
XI of the Plan.

                                   ARTICLE III

                          ELIGIBILITY AND PARTICIPATION

      Participation in this Plan is open only to Eligible Employees of the
Company (as defined in Section 2.17). Each Eligible Employee who was a
Participant in the Plan as of December 31, 2002 shall continue as a Participant
so long as he or she is an Eligible Employee. Any other Eligible Employee, e.g,.
newly hired or promoted to an eligible category on or after January 1, 2003,
shall become a Participant as of the earlier of: (i) the first Deferral Period
for which he or she submits a properly completed Participation Agreement,
Deferral Election Form and Investment Election Form within the enrollment period
established by the Committee or (ii) the first Deferral Period in which he or
she is credited with a "Retirement Contribution Restoration Credit" pursuant to
Section 5.1(c). Upon notification of participation pursuant to clause (ii), an
Eligible Employee shall submit a properly completed Participation Agreement and
Investment Election Form within the enrollment period established by the
Committee.

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                                   ARTICLE IV

                               DEFERRAL ELECTIONS

      4.1 Deferral Election. For each Deferral Period after initial
participation commences, a Participant may make a Deferral Election on a
voluntary basis by properly completing and submitting a Deferral Election Form
and Investment Election Form prior to the first day (January 1) of the Deferral
Period for which the Deferral Election is effective. A Participant shall not be
obligated to make a Deferral Election in each Deferral Period, and (subject to
the requirements set forth in Sections 4.2 and 4.3 below) a Participant may
change the amount of each future Deferral Election. Once a Deferral Period
commences for which a Deferral Election is made, such Deferral Election shall
continue for the entire Deferral Period except that it shall terminate on
Termination of Employment or as otherwise provided in Section 4.4 or Article XI.

      4.2 Maximum Deferral Election. A Participant may elect in the Deferral
Election Form to defer up to one hundred percent (100%) of Base Salary and/or
one hundred percent (100%) of Bonuses earned during the Deferral Period. In its
sole discretion, the Committee may also provide other Deferral Election options,
including that a Participant may elect to defer a specified dollar amount or a
percentage of Bonuses earned during the Deferral Period but limited to the
extent such Bonuses exceed a specified dollar amount. A Deferral Election shall
be automatically reduced or adjusted if the Committee determines that such
action is necessary or appropriate to meet Federal or State tax withholding
obligations or to pay for benefits or other obligations arising from the
Participant's relationship with the Company.

      4.3 Minimum Deferral Election. In order for a Deferral Election Form to be
valid, the Participant must elect to defer at least five thousand dollars
($5,000) (or such other amount as may be designated by the Committee) in the
Deferral Period from either Base Salary or Bonuses or a combination of Base
Salary and Bonuses. Thus, Deferral Elections of Base Salary and Bonuses for the
same Deferral Period shall be aggregated for the purpose of determining whether
the Participant has elected at least the minimum Deferral Election.

      In determining, whether the Participant has made the minimum Deferral
Election, if the amount is stated in the form of a percentage of Base Salary or
Bonuses, the adequacy of the deferral shall be based on the Base Salary and
Bonuses earned by the Participant in the Plan Year immediately preceding the
Deferral Period. The Committee may, in its sole discretion, permit Participants
to elect to defer amounts in the form of a percentage based on anticipated Base
Salary and Bonuses.

      4.4 Termination of Deferral. If it is evident that a Participant has not
or will not actually defer the minimum Deferral Election required by Section 4.3
(whether due to Termination of Employment or otherwise), the Committee may, in
its sole discretion, terminate the Deferral Election and distribute the portion
of the Participant's Deferral Account attributable to such Deferral Election in
a single lump sum payment with investment earnings or interest credited to the
last day of the month preceding distribution at the Fund Rate or Company Rate,
as applicable.

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                                    ARTICLE V

                                DEFERRAL ACCOUNTS

      5.1 Deferral Accounts. Solely for record keeping purposes, a Deferral
Account shall be maintained for each Participant. For each Plan Year, a
Participant's Deferral Account shall be credited with the following:

      (a) Annual Deferrals. Annual Deferrals at the time such amounts would
otherwise have been paid to the Participant.

      (b) Matching Contribution Restoration Credit. If a Participant has
contributed the maximum "Before Tax Deposits" (as defined in the Savings and
Investment Plan) permitted under Section 4.2 of the Savings and Investment Plan
(but without regard to the catch-up provisions of Section 4.2(e) of the Savings
and Investment Plan and Code Section 414(v)) for the Plan Year, then such
Participant's Deferral Account shall be credited with a "Matching Contribution
Restoration Credit" equal to the excess of the dollar amount or value of (i) the
Participant's "Matching Contributions" (as defined in the Savings and Investment
Plan), without regard to trust income or earnings, based on such Participant's
"Matched Deposits" (as defined in the Savings and Investment Plan), and such
Participant's "Compensation" (as defined in the Savings and Investment Plan) as
increased by any Annual Deferrals made under this Plan up to the limitation
imposed by Code Section 401(a)(17), over (ii) the Participant's actual "Matching
Contributions" for the Plan Year under the Savings and Investment Plan. The
Matching Contribution Restoration Credit (if any) shall be credited to a
Participant's Deferral Account after the end of the Plan Year to which such
credit relates and after the Participant's "Matching Contributions" for such
Plan Year under the Savings and Investment Plan are determined, but not later
than the end of the Plan Year following the Plan Year to which such credit
relates. Notwithstanding the foregoing, for Plan Years beginning prior to
January 1, 2000, the Committee shall make the Matching Contribution Restoration
Credit contingent on vesting in such amounts under the Savings and Investment
Plan.

      (c) Retirement Contribution Restoration Credit. For Plan Years beginning
on or after January 1, 2003, if a Participant is a "Retirement Account
Participant" (as defined in the Savings and Investment Plan) and is eligible to
receive a Retirement Contribution allocation pursuant to Section 5.4 of the
Savings and Investment Plan for a Plan Year, e.g., employed by the Company on
the last day of the Plan Year, then such Participant's Deferral Account shall be
credited with a "Retirement Contribution Restoration Credit," the amount of
which is equal to the excess of the dollar amount of (i) such Participant's
"Retirement Contribution" (as defined in the Savings and Investment Plan),
without regard to trust income or earnings, based on the Participant's
"Compensation" (as defined in the Savings and Investment Plan) as increased by
any Annual Deferrals made under this Plan and without regard to the limitations
imposed by Code Sections 401(a)(4), 401(a)(17) and 415, over (ii) such
Participant's actual "Retirement Contribution" for such Plan Year under the
Savings and Investment Plan. The Retirement Contribution Restoration Credit (if
any) shall be credited to a Participant's Deferral Account after the end of the
Plan Year to which such credit relates and after the Participant's "Retirement
Contribution" for such Plan Year under the Savings and Investment Plan is
determined, but not later than the end of the Plan Year following the Plan Year
to which such credit relates.

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      (d) ESOP Restoration Credit. For Plan Years beginning prior to January 1,
2003, a Participant's Deferral Account shall be credited with an "ESOP
Restoration Credit" equal to a dollar amount that is one and one-half percent (1
1/2%) of the excess of (i) the Participant's "Compensation" (as defined in the
Employee Stock Ownership Plan) as increased by any Annual Deferrals made under
this Plan, the sum of which shall not exceed the limitation imposed by Code
Section 401(a)(17), over (ii) the Participant's actual "Compensation" used for
purposes of allocations for the Plan Year under the Employee Stock Ownership
Plan. Notwithstanding the foregoing, for Plan Years beginning prior to January
1, 2000, the Committee shall make the ESOP Restoration Credit contingent on
vesting in such amounts under the Employee Stock Ownership Plan.

      5.2 Interest and Investment Earnings on Deferral Accounts. The Deferral
Account of a Participant shall be credited with interest or investment earnings
at the Company Rate or Fund Rate as provided in Section 5.3. For any portion of
the Deferral Account to which the Company Rate is applicable, such portion of
the Deferral Account shall be credited each month with interest which shall be
compounded on an annual basis under rules determined by the Committee in its
sole discretion.

      5.3 Participant Investment Elections.

      (a) Deferrals and Restoration Credits on and after January 1, 2002. Any
Annual Deferrals made by a Participant and any Restoration Credits credited to a
Participant's Deferral Account with respect to a Deferral Period beginning on or
after January 1, 2002 shall be credited with investment earnings at the Fund
Rate and shall not be eligible to be credited with interest at the Company Rate.
The investment allocation of a Participant's Restoration Credits to Fund Media
shall be the allocation selected by the Participant in his or her most recent
Investment Election Form. If a Participant does not submit an Investment
Election Form or otherwise select the Fund Media for his or her Restoration
Credits, then such Restoration Credits shall be subject to the Travelers Money
Market Portfolio listed on Appendix A (or, if the Travelers Money Market
Portfolio is unavailable for any reason, then such Fund Media as the Committee
shall determine in its sole discretion), until superseded by a subsequent
Investment Election Form properly completed and submitted by such Participant.

      (b) Deferrals and Restoration Credits on and after January 1, 2000 and
prior to January 1, 2002. Except as otherwise provided in the next sentence
herein, any Annual Deferrals made by a Participant and any Restoration Credits
credited to a Participant's Deferral Account on or after January 1, 2000 shall
be credited with investment earnings at the Fund Rate and shall not be eligible
to be credited with interest at the Company Rate. Notwithstanding the preceding
sentence, any Eligible Employee who was a Participant as of November 1, 1999 and
who, prior to January 1, 2000, had attained the age of fifty-five (55) and had
completed at least five (5) years of Credited Service shall be entitled to elect
the investment of all or any portion of any Annual Deferrals made by such
Participant and any Restoration Credits credited to a Participant's Deferral
Account on or after January 1, 2000 and for Deferral Periods beginning prior to
January 1, 2002 at the Company Rate or the Fund Rate.

      (c) Transfers from Company Rate to Fund Rate on or after March 1, 2002.
Each Participant may request to change the investment of all or any portion of
his or her Deferral

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Account from the Company Rate to the Fund Rate as of each January 1 or July 1
("Transfer Date") subject to the following conditions:

            (1) An Investment Election Form, which includes the allocation among
      Fund Media, must be submitted prior to the Transfer Date by such time as
      may be established by the Committee from time to time.

            (2) For any Transfer Date, the amount of requests for investment
      transfers (when added to the amount of requests for Financial Hardship
      withdrawals and Unscheduled Withdrawals from portions of Deferral Accounts
      subject to the Company Rate) may not exceed 25% of the aggregate amount of
      all Deferral Accounts invested at the Company Rate. If the 25% aggregate
      limit is exceeded, requests will be granted under a hierarchy established
      by the Committee taking into account, in the following order of
      preference: (i) Financial Hardship withdrawals, (ii) Unscheduled
      Withdrawals, and (iii) investment transfers.

            (3) An investment transfer from the Company Rate to the Fund Rate
      shall be irrevocable.

      (d) Transfers from Company Rate to Fund Rate prior to March 1, 2002. Each
Participant may elect to change the investment of all or any portion of his or
her Deferral Account from the Company Rate to the Fund Rate, but may not change
from the Fund Rate to the Company Rate. The Participant shall make such
election, including the allocation among Fund Media, by submitting an Investment
Election Form.

      (e) Allocation to Fund Media. With respect to any portion of the Deferral
Account to which the Fund Rate applies, the Participant may prospectively change
the investment allocation to Fund Media on a monthly basis in whole or part by
submitting an Investment Election Form or by using such electronic means and
under such procedures as the Committee may permit.

      5.4 Fund Media. The Fund Media under the Plan shall be as set forth on
Appendix A, attached hereto. The Committee may add or delete Fund Media in its
sole discretion from time to time. Participants must make an investment
allocation to Fund Media in whole percentages equal to one hundred percent
(100%), in the aggregate, of the amount invested in Deferral Accounts to which
the Fund Rate applies.

      5.5 Vesting of Deferral Account.

      (a) A Participant shall be fully vested in his or her Annual Deferrals,
Matching Contribution Restoration Credits, and ESOP Restoration Credits.

      (b) A Participant shall vest in his or her Retirement Contribution
Restoration Credits and any investment earnings thereon in accordance with the
following schedule:

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<TABLE>
<CAPTION>
                  Years of Service                                        Vested Percentage
                  ----------------                                        -----------------
<S>                                                                       <C>
                  Less than 1                                                     0%
                  1 but less than 2                                              20%
                  2 but less than 3                                              40%
                  3 but less than 4                                              60%
                  4 but less than 5                                              80%
                  5 or more                                                     100%
</TABLE>

      For purposes of this Section 5.5, a Participant's Years of Service under
the Plan shall be equal to the Participant's "Credited Service" (as defined in
the Savings and Investment Plan) credited to such Participant under the Savings
and Investment Plan.

      (c) Notwithstanding paragraph (b) above, a Participant shall become fully
vested in his or her Retirement Contribution Restoration Credits and any
investment earnings thereon, if while employed by the Company, (i) he or she
attains age 62, (ii) he or she dies, (iii) he or she incurs a "Severance" due to
a "Disability" (as each term is defined in the Savings and Investment Plan), or
(iv) a Change in Control occurs as defined in Section 14.2.

      5.6 Statement of Accounts. The Committee shall provide to each Participant
periodic statements setting forth the balance of the Deferral Account maintained
for such Participant. Notwithstanding anything contained in such statements, the
provisions of the Plan shall govern exclusively the actual rate of interest or
investment earnings to be credited and paid.

                                   ARTICLE VI

                               RETIREMENT BENEFITS

      6.1 Entitlement to Deferral Accounts. Upon Termination of Employment on or
after Retirement Date, the Company shall pay to the Participant a retirement
benefit, in the form and manner provided in Section 6.2 below, equal to the
balance of the Participant's Deferral Account with interest or investment
earnings credited at the Company Rate or the Fund Rate, as applicable.

      6.2 Form of Retirement Benefits. The retirement benefit shall be paid in
sixty (60) quarterly installments unless the Participant elects in the
Participation Agreement to have the retirement benefit paid in either a single
lump sum or in twenty (20) or forty (40) quarterly installments.

      6.3 Time of Commencement. A Participant may elect in the Participation
Agreement to have payments begin within sixty (60) days following, the date of
Termination of Employment or, alternatively, (i), on the first business day of
January of the next following calendar year or (ii) on the first business day of
January of a later year (not to exceed ten (10) years from the date of
Termination of Employment or, if earlier, the year in which the Participant
attains age seventy (70)). Payments that are scheduled to be made on the first
business day in

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January may be delayed (but not more than thirty (30) days) in order to complete
any necessary valuation or accounting with respect to the Deferral Account of
the Participant.

      6.4. Participation Agreement. In the case of a Participant who fails to
submit a Participant Agreement within the enrollment period established by the
Committee, such Participant shall be deemed to have submitted a Participation
Agreement that elects that his or her retirement benefit shall be paid in sixty
(60) quarterly installments and that the payment of his or her retirement
benefit shall commence within sixty (60) days following the date of Termination
of Employment.

      6.5 Change in Payout Timing. A Participant may change his or her
Participation Agreement or deemed Participation Agreement at any time prior to
Termination of Employment in order to revise the timing of retirement benefits
to another method (or over another period) permitted under Sections 6.2 and 6.3
above. If such a change is made within a period not greater than twelve (12)
months prior to Termination of Employment (unless Termination of Employment is
on account of Disability), there shall be a ten percent (10%) penalty charged at
the time of change against the Participant's Deferral Account.

                                   ARTICLE VII

                              TERMINATION BENEFITS

      7.1 Entitlement to Deferral Accounts. Upon Termination of Employment prior
to Retirement Date, the Company shall pay to the Participant a termination
benefit in the form and manner provided in Section 7.2 below, equal to the
vested balance of the Participant's Deferral Account with interest or investment
earnings credited at the Company Rate or the Fund Rate, as applicable.

      7.2 Form of Termination Benefits. The termination benefit shall be paid in
a single lump sum payment within sixty (60) days following the date of
Termination of Employment or, if otherwise elected in the Participation
Agreement, either (i) on the first business day of January following Termination
of Employment or (ii) if at least five (5) years of Credited Service has
elapsed, in five (5) annual installments. If installments are to be paid under
this Section 7.2, they shall commence within sixty (60) days following the date
of Termination of Employment. Payments that are scheduled to be made hereunder
may be delayed (but not more than thirty (30) days) in order to complete any
necessary valuation or accounting with respect to the Deferral Account of the
Participant. If (i) above is elected by the Participant, to the extent that the
Company Rate applies, the only interest to be credited after the date of
Termination of Employment shall be at eighty percent (80%) of the Company Rate
(however a Participant who is eligible to elect (ii) above shall be credited
with interest at the Company Rate, to the extent that the Company Rate applies,
regardless of whether he or she elects distribution under (i) or (ii)).
Notwithstanding the foregoing, the Company may, in its sole discretion (except
following a Change in Control as defined in Section 14.2), elect to revise the
payment of a single lump sum and instead to pay the termination benefits over a
period of three (3) years in annual installments.

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                                  ARTICLE VIII

                                 DEATH BENEFITS

      8.1 Death of Employee Prior to Retirement Date. If a Participant dies
prior to Termination of Employment and before reaching Retirement Date (i) the
balance of the Participant's Deferral Election applicable to Base Salary and
Bonuses earned through date of death, if any, will be credited to his or her
Deferral Account and (ii) the Participant's Beneficiary will receive payment of
the Participant's Deferral Account in a single lump sum if the balance is fifty
thousand dollars ($50,000) or less, and in either a single lump sum or in twenty
(20) or forty (40) quarterly installments (as elected by the Participant in his
or her Participation Agreement) if the balance is more than fifty thousand
dollars ($50,000). To the extent that the Company Rate applies, interest on the
Deferral Account not yet paid at death shall be credited at the Company Rate. To
the extent the Fund Rate applies, investment earnings on the Deferral Account
not yet paid at death shall be credited at the Fund Rate.

      8.2 Death of Employee On or After Retirement Date. If a Participant dies
prior to Termination of Employment and on or after reaching Retirement Date (i)
the balance of the Participant's Deferral Election applicable to Base Salary and
Bonuses earned through date of death, if any, will be credited to his or her
Deferral Account and (ii) the Participant's Beneficiary will receive payment of
the Participant's Deferral Account in a single lump sum payment or in twenty
(20), forty (40) or sixty (60) quarterly installments (as elected by the
Participant for distribution of retirement benefits in his or her Participation
Agreement). The Beneficiary may request that the Committee accelerate
installment payments into a single lump sum payment and the Committee shall
decide, in its sole discretion, whether to so accelerate based on factors, such
as the Beneficiary's needs and Plan liquidity, deemed appropriate under the
circumstances by the Committee. To the extent that the Company Rate applies,
interest on the Deferral Account not yet paid at death shall be credited at the
Company Rate. To the extent the Fund Rate applies, investment earnings on the
Deferral Account not yet paid at death shall be credited at the Fund Rate.

      8.3 Death After Termination of Employment. If a Participant dies after
Termination of Employment, the Participant's Beneficiary will receive payment of
the vested portion of the Participant's Deferral Account (or remaining unpaid
portion if distributions have already begun) in the same manner and in all
respects as the Participant was entitled to receive (if the Participant
continued to live) pursuant to the terms of Article VI (Retirement Benefits) or
Article VII (Termination Benefits) whichever is applicable. Notwithstanding the
foregoing, if, and only if, the Participant dies after having reached Retirement
Date at the time of Termination of Employment, the Beneficiary may request that
the Committee accelerate any remaining installment payments into a single lump
sum payment and the Committee shall decide, in its sole discretion, whether to
so accelerate based on factors, such as the Beneficiary's needs and Plan
liquidity, deemed appropriate under the circumstances by the Committee.

      8.4 Investments After Death. Notwithstanding Sections 8.1 through 8.3, to
the extent that the Fund Rate applies, the Committee shall transfer the
remaining unpaid portions of a deceased Participant's Deferral Account into one
of the Fund Media which is a fixed income investment at the time which is six
(6) months from the death of the Participant unless the

                                       11
<PAGE>

Committee receives other investment directions from a duly appointed
representative or executor of the deceased Participant. The Committee shall have
no liability or responsibility with respect to the absolute or relative return
of such Fund Media during the period commencing on the date that the amount is
so invested and ending on the date of payment of all amounts on deposit in the
Participant's Deferral Account to the Participant's Beneficiary.

      8.5. Special Death Benefits. There shall be a Special Death Benefit
payable from the Trust to Allergan, Inc. if a Participant dies prior to
termination of employment and such Participant is a Corporate Officer of
Allergan, Inc. on the date of his or her death. The term "Corporate Officer"
means the Corporation's President, Chief Executive Officer and each of the
Corporation's Corporate Vice Presidents (excluding any individual who is not
named as an insured person under a life insurance contract owned by the Trust
pursuant to Section 15.3). The Corporation's Board of Directors may change the
definition of Corporate Officer by Board resolution. The Special Death Benefit
shall be One Million Five Hundred Thousand Dollars ($1,500,000), unless such
amount is adjusted by the Board. Entitlement to the Special Death Benefit shall
be conditioned on such life insurance being in effect on the date of death and
to the extent the amount is sufficient to cover the Special Death Benefit. The
Special Death Benefit payable to the Beneficiary of a Participant of a Corporate
Officer shall no longer apply beginning on July 1, 2001.

                                   ARTICLE IX

                                   DISABILITY

      9.1 Continuation of Participation. If a Participant suffers a Disability,
the Participant shall be deemed not to incur a Termination of Employment if, and
only as long as, he or she continues on the payroll of the Company for Base
Salary or Bonuses. In such event, the Participant may continue participation in
the Plan on the same basis as other Participants, provided that payments to the
Participant made under programs of the Company for Short-Term Disability,
Long-Term Disability, or sick pay may not be treated as Base Salary or Bonuses
for purposes of a Deferral Election.

      9.2 Availability of Financial Hardship Withdrawals. Consistent with
Section 9.1, in determining the availability of a Financial Hardship withdrawal,
a Participant who suffers a Disability shall not be deemed to incur a
Termination of Employment until the time that he or she ceases to receive Base
Salary or Bonuses on the payroll of the Company.

                                    ARTICLE X

                            IN-SERVICE DISTRIBUTIONS

      10.1 Election to Take In-Service Distributions. A Participant may elect in
each Deferral Election Form, for that particular Deferral Election, to receive
in the future an In-Service Distribution of his or her Annual Deferral from his
or her Deferral Account.

      10.2 Maximum In-Service Distribution. An In-Service Distribution must be
equal to one hundred percent (100%) of the amount of the particular Deferral
Election. Interest on any In-Service Distributions shall be credited, to the
extent that the Company Rate applies, at the

                                       12
<PAGE>

Company Rate. Investment earnings on any In-Service Distribution shall be
credited, to the extent that the Fund Rate applies, at the Fund Rate.
Notwithstanding the election under this Article, if benefit payments with
respect to a Deferral Election are otherwise made at a time earlier than elected
under an In-Service Distribution, for example due to an Unscheduled Withdrawal,
the In-Service Distribution shall be superseded by such earlier distribution
event and shall be reduced or eliminated to such extent.

      10.3 Timing of In-Service Distribution. The In-Service Distribution shall
be paid to the Participant in a single lump sum, or in two (2), three (3) or
four (4) annual installments as elected by the Participant in the Deferral
Election Form. However, in no event shall the In-Service Distribution be paid or
commence at the time before the second (2nd) year following the first business
day of the Deferral Period to which the In-Service Distribution relates. A
Participant may elect to change the date on which an In-Service Distribution is
to be paid or commence provided that no more than two such changes shall be
permitted and provided further that the election must be made with at least
twelve (12) months advance notice under procedures adopted by the Committee.

                                   ARTICLE XI

                 UNSCHEDULED AND FINANCIAL HARDSHIP WITHDRAWALS

      11.1 Unscheduled Withdrawals. A Participant may take Unscheduled
Withdrawals (but no more than one in any Plan Year) of his or her Annual
Deferrals from his or her Deferral Account. The amount of any Unscheduled
Withdrawal shall be equal to the portion of the Deferral Account attributable to
one or more Deferral Elections that have been previously completed and shall
include (i) interest credited, to the extent that the Company Rate applies, at
the Company Rate, and (ii) investment earnings, to the extent that the Fund Rate
applies, at the Fund Rate. In any case where an Unscheduled Withdrawal occurs,
the Participant may select, if applicable, whether such amounts will be from the
portion of the Deferral Account invested at the Company Rate, if any, or the
Fund Rate. Effective March 1, 2002, to the extent a Participant selects his or
her Unscheduled Withdrawal from the portion of his or her Deferral Account
invested at the Company Rate, that portion of the withdrawal shall be paid at
the time and subject to the limits set forth in Section 5.3(c). The Committee
may establish the date by which an Unscheduled Withdrawal from the portion of
his or her Deferral Account invested at the Company Rate must be requested in
order to process the request in a timely manner.

      11.2 Financial Hardship Withdrawal. A Participant may request that the
Committee permit him or her to take a withdrawal or withdrawals of his or her
Annual Deferrals on account of Financial Hardship (as defined in Section 2.21).
In such event, the Committee shall determine in its sole discretion whether a
Financial Hardship exists and, if it so determines, whether the Participant
should be permitted to take such a withdrawal. The Committee shall also
determine the amount of the permitted withdrawal, which shall not exceed the
amount necessary to address the Financial Hardship, and whether the Participant
must reduce or cease a current Deferral Election, if any, as a condition for a
Financial Hardship withdrawal. Effective March 1, 2002, to the extent a
Financial Hardship withdrawal is from the portion of a Participant's Deferral
Account invested at the Company Rate, that portion of the withdrawal shall be
paid at the time subject to the limits set forth in Section 5.3(c). The
Committee may establish the date by which

                                       13
<PAGE>

a Financial Hardship withdrawal from the portion of his or her Deferral Account
invested at the Company Rate must be requested in order to process the request
in a timely manner.

      11.3 Penalty for Unscheduled Withdrawals. There shall be a penalty charged
against the Deferral Account of a Participant at the time of an Unscheduled
Withdrawal. The penalty shall be equal to ten percent (10%) of the Unscheduled
Withdrawal, except the penalty shall be five percent (5%) if the Unscheduled
Withdrawal is made within two (2) years following a Change in Control (as
defined in Section 14.2). In addition to the foregoing penalty, upon taking an
Unscheduled Withdrawal a Participant's current Deferral Election, if any, shall
automatically be deemed terminated and the Participant may not make a new
Deferral Election for the next following Deferral Period.

                                   ARTICLE XII

                        ADDITIONAL BENEFIT PAYMENT RULES

      12.1 Small Benefit Payments. Notwithstanding any other provision of the
Plan, in the event that the payment of a Deferral Account (or total remaining
installments under any method) to a Participant or Beneficiary is fifty thousand
dollars ($50,000) or less, the Company may, in its sole discretion, elect to
make such payment(s) in a single lump sum payment as soon as administratively
practicable.

      12.2 Constructive Receipt. The Committee may change any election or option
available under the Plan, or the form or timing of any benefit payment, if the
Committee determines, based on the advice of counsel or other consultants to the
Company, that such a change is necessary or advisable in order to avoid or limit
the risk of adverse tax consequences, to Participants or Beneficiaries based on
application of the doctrine of "constructive receipt" or a similar Federal or
State tax principle.

      12.3 Postponement of Payment. If a distribution of all or part of a
Deferral Account would not be deductible to the Company because of the
restrictions imposed by Section 162(m) of the Code (or any successor provision),
such distribution shall be postponed (to the extent necessary) to the first
business day of the first Plan Year in which the limitation on deductibility
would not apply. Any postponed distribution under this Section shall be credited
with interest or investment earnings at the rate otherwise applicable to the
Deferral Account at the time when the distribution was originally scheduled for
payment.

      12.4 Commencement Date and Investment and Interest Crediting for Benefit
Payments. Unless the Plan specifically provides otherwise, benefit payments
(whether a single lump sum payment or installments) shall commence to a
Participant or Beneficiary no later than sixty (60) days from the date of the
event, e.g., Termination of Employment or request for Unscheduled Withdrawal,
that gives rise to such payments. Installment payments shall be made on the same
day of each quarter or year (depending on whether quarterly or annual
installments apply) following the initial payment. With respect to amounts in a
Deferral Account subject to the Company Rate, interest on a single lump sum
payment or on a first installment payment shall be credited through the end of
the month in which the date of the event that gives rise to such payment occurs.
Interest on subsequent installment payments shall be credited through the end

                                       14
<PAGE>

of the month preceding payment. With respect to amounts in a Deferral Account
subject to the Fund Rate, investment earnings shall be credited to the date that
the Committee selects in its sole discretion for valuation for distribution
purposes and the Committee shall make appropriate adjustments to reflect
investment earnings where benefit payments are to be paid in installments.

                                  ARTICLE XIII

                           ADMINISTRATION OF THE PLAN

      13.1 Administration by Committee. This Plan shall be administered by 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 and such Board shall from time
to time fill all vacancies occurring in said Committee. A member of the
Committee may be a Participant in this Plan; provided, however, that any action
to be taken by the Committee solely with respect to the particular interest in
this Plan of a Committee member shall be taken by the remaining members of the
Committee.

      13.2 Committee Authority; Rules and Regulations. The Committee shall have
discretionary authority to (i) make, amend, interpret and enforce all
appropriate rules and regulations for the administration of the Plan, (ii)
decide or resolve any and all questions, including interpretations of the Plan,
as may arise in connection with the Plan, and (iii) take or approve all such
other actions relating to the Plan (other than amending or terminating the
Plan); provided, however, that the Board may, by written notice to the
Committee, withdraw all or any part of the Committee's authority at any time, in
which case such withdrawn authority shall immediately revest in the Board. The
decision or action of the Committee in respect of any question arising out of or
in connection with the administration, interpretation and application of this
Plan and the rules and regulations promulgated hereunder shall be final,
conclusive and binding upon all persons having any interest in the Plan.

      13.3 Appointment of Agents. In the administration of the Plan, the Board
and the Committee may from time to time employ agents (which may include
officers and employees or the Company) and delegate to them such administrative
duties as it sees fit and may from time to time consult with counsel who may be
counsel to the Company.

      13.4 Application of Benefits. The Committee may require any person
claiming benefits under the Plan to submit an application therefor, together
with such documents and information as the Committee may require. In the case of
any person suffering from a disability or other condition which prevents such
person from making personal application for benefits, the Committee may, in its
discretion, permit application to be made by another person acting on his or her
behalf. Notwithstanding the foregoing, if the Committee shall have all
information necessary to determine the amount and form of Plan benefits payable
to a Participant or Beneficiary who is entitled to benefit payments under this
Plan (including, to the extent applicable and without limiting the generality of
the foregoing, the name, age, sex and proper mailing address of all parties
entitled to benefit payments), then the failure of a Participant or Beneficiary
to file an application for benefits shall not cause the Committee to defer the

                                       15
<PAGE>

commencement of benefit payments beyond the benefit commencement date required
under this Plan.

      13.5 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 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 13.6 below.

      13.6 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.

                                       16
<PAGE>

      (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.

      (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.

                                   ARTICLE XIV

                                CHANGE IN CONTROL

      14.1 Effect of a Change in Control. Notwithstanding any other provision of
the Plan, in the event that a Change in Control (as defined in Section 14.2)
occurs on or after the Effective Date hereof, the Company may not amend or
terminate the Plan in any manner in order to (i) change downward the method of
determining the interest rate to be credited to the Deferral Accounts of
Participants thereafter without the written consent of such Participants or (ii)
modify or eliminate any distribution method, selection of Fund Media, option or
election (including all such methods, options and elections set forth in
Articles V through XII of the Plan) available to Participants with respect to
Deferral Accounts and Deferral Elections that exist on the date such Change in
Control occurs.

      14.2 Change in Control. As used in this Plan, "Change in Control" shall
mean the following and shall be deemed to occur if any of the following events
occur:

      (a) 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"),

                                       17
<PAGE>

directly or indirectly, of securities of Allergan representing (i) 20% or more
of the combined voting power of Allergan'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 Allergan's then
outstanding voting securities, without regard to whether such acquisition is
approved by the Incumbent Board;

      (b) Individuals who, as of the Effective 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 Effective Date hereof whose election, or nomination
for election by Allergan'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 Allergan, 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 Allergan;

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

            (1) a merger, consolidation or reorganization which would result in
      the voting securities of Allergan 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 Allergan 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 Allergan's voting securities immediately
      before such merger, consolidation or reorganization, and

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

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

      Notwithstanding the preceding provisions of this Section 14.2, a Change in
Control shall not be deemed to have occurred if the Person described in the
preceding provisions of this Section 14.2 is (i) an underwriter or underwriting
syndicate that has acquired the ownership of any of Allergan's then outstanding
voting securities solely in connection with a public offering of Allergan's
securities, (ii) Allergan or any subsidiary of Allergan or (iii) an employee
stock ownership plan or other employee benefit plan maintained by Allergan (or
any of its affiliated

                                       18
<PAGE>

companies) that is qualified under the provisions of the Code. In addition,
notwithstanding the preceding provisions of this Section 14.2, a Change in
Control shall not be deemed to have occurred, (i) if the Person described in the
preceding provisions of this Section 14.2 becomes a Beneficial Owner of more
than the permitted amount of outstanding securities as a result of the
acquisition of voting securities by Allergan 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 Company or
through a stock dividend or stock split), then a Change in Control shall occur,
and (ii) upon the distribution of the stock of Advanced Medical Optics, Inc. on
June 29, 2002 by Allergan to its stockholders.

                                   ARTICLE XV

                 ESTABLISHMENT OF TRUST AND INSURANCE CONTRACTS

      15.1 Establishment of Trust. Contemporaneous with the adoption of this
Plan, the Company has established the Trust Agreement for Allergan, Inc.
Executive Deferred Compensation Plan (the "Trust" or "Trust Agreement"). The
Trust created thereunder is a grantor trust within the meaning of subpart E,
part I, subchapter J, chapter 1, subtitle A of the Code. Mellon Bank, N.A. has
been named as Trustee under such Trust Agreement. The provisions of the Trust
Agreement are incorporated herein by reference.

      15.2 Funding of Trust. All amounts of Base Salary or Bonuses that are
subject to Deferral Elections by Participants under this Plan shall be
contributed by the Company to the Trust (or directly to insurance contracts or
other investment vehicles to be held by the Trustee as part of the Trust's
assets) at or about the same time as such amounts are credited to the Deferral
Accounts of Participants.

      15.3 Investment in Insurance Contracts. The Committee shall direct the
Trustee to invest the majority or all of the assets of the Trust in life
insurance contracts, to be selected by the Committee, on the lives of
Participants. In order for a Participant's Participation Agreement to be
effective, the Committee may require that each Participant cooperate in signing
an insurance application, submit to medical examination, and provide any
relevant information to third parties, including the insurance company(ies) or
outside consultants. Such information shall be held in confidence by those who
receive it and such information shall not be provided to the Committee or the
Company. Participation shall not be denied to an Eligible Employee because he or
she is not insurable or must be rated in order for insurance to be issued.
Notwithstanding any other provision in this Plan, if insurance is denied or
discontinued because a Participant fails to disclose (or makes a material
misrepresentation of) medical or other information, or if the Participant
commits suicide during the first two (2) years of participation in the Plan, any
amounts which are deferred by the Participant under a Deferral Election shall be
repaid to the Participant with interest credited at eighty percent (80%) of the
Company Rate to the extent the Company Rate applies, and with investment
earnings credited at the Fund Rate to the extent that the Fund Rate applies, and
no other benefits shall be due to the Participant.

                                       19
<PAGE>

      15.4 Investment in Fund Media. With respect to assets of the Trust
attributable to Deferral Elections where the Fund Rate applies, the Committee
may provide, in its sole discretion, methods by electronic means or otherwise
for Participants (or the Committee where the Plan so provides) to make or change
investment decisions consistent with the terms of the Plan.

                                   ARTICLE XVI

                            MISCELLANEOUS PROVISIONS

      16.1 Designation of Beneficiary. A Participant shall be entitled to
designate one or more individuals or entities, in any combination, as his or her
"Beneficiary" or "Beneficiaries" to receive any Plan payments to which such
Participant is entitled as of, or by reason of, his or her death. Any such
designation may be made or changed at any time prior to the Participant's death
by written notice filed with the Committee, with such written notice to be in
such form and contain such information as the Committee may from time to time
determine. In the event that either (i) a Beneficiary designation is not on file
at the date of a Participant's death, (ii) no Beneficiary survives the
Participant, or (iii) no Beneficiary is living at the time any payment becomes
payable under this Plan, then, for purposes of making any further payment of any
unpaid benefits under this Plan, such Participant's Beneficiary or Beneficiaries
shall be deemed to be the estate of the Participant.

      16.2 Payments During Incapacity. In the event a Participant (or
Beneficiary) is under mental or physical incapacity at the time of any payment
to be made to such Participant (or Beneficiary) pursuant to this Plan, any such
payment may be made to the conservator or other legally appointed personal
representative having authority over and responsibility for the person or estate
of such Participant (or Beneficiary), as the case may be, and for purposes of
such payment references in this Plan to the Participant (or Beneficiary) shall
mean and refer to such conservator or other personal representative, whichever
is applicable. In the absence or any lawfully appointed conservator or other
personal representative of the person or estate of the Participant (or
Beneficiary), any such payment may be made to any person or institution that has
apparent responsibility for the person and/or estate or the Participant (or
Beneficiary) as determined by the Committee. Any payment made in accordance with
the provisions of this Section 16.2 to a person or institution other than the
Participant (or Beneficiary) shall be deemed for all purposes of this Plan as
the equivalent of a payment to such Participant (or Beneficiary), and the
Company shall have no further obligation or responsibility with respect to such
payment.

      16.3 Prohibition Against Assignment. Except as otherwise expressly
provided in Sections 16.1 and 16.2 hereof, the rights, interests and benefits of
a Participant under this Plan (i) may not be sold, assigned, transferred,
pledged, hypothecated, gifted, bequeathed or otherwise disposed of to any other
party by such Participant or any Beneficiary, executor, administrator, heir,
distributee or other person claiming under such Participant, and (ii) shall not
be subject to execution, attachment or similar process. Any attempted sale,
assignment, transfer, pledge, hypothecation, gift, bequest or other disposition
of such rights, interests or benefits contrary to the foregoing provisions of
this Section 16.3 shall be null and void and without effect.

                                       20
<PAGE>

      16.4 Binding Effect. The provisions of this Plan shall be binding upon the
Company, the Participants and any successor-in-interest to the Company or to any
Participant.

      16.5 No Transfer of Interest. Other than as provided in Article XV and in
the Trust Agreement, benefits under this Plan shall be payable solely from the
general assets of the Company and no person shall be entitled to look to any
source for payment of such benefits other than the general assets of the
Company. The Company shall have and possess all title to, and beneficial
interest in, any and all funds or reserves maintained or held by the Company on
account of any obligation to pay benefits as required under this Plan, whether
or not earmarked by the Company as a fund or reserve for such purpose; any such
funds or reserves shall be subject to the claims of the creditors of the
Company, and the provisions of this Plan are not intended to create, and shall
not be interpreted as vesting, in any Participant, Beneficiary or other person,
any right to or beneficial interest in any such funds or reserves.

      16.6 Amendment or Termination of the Plan. The Company, by action of its
Board of Directors, may amend this Plan from time to time in any respect that it
deems appropriate or desirable, and may terminate this Plan at any time;
provided, however, that any such Plan amendment or Plan termination shall not,
without a Participant's written consent, be given effect with respect to such
Participant to the extent such Plan amendment or Plan termination operates to
reduce or eliminate (except to the extent that amounts are distributed under the
Plan) such Participant's Deferral Account as of the date of such amendment or
termination. In addition, if the Board amends the Plan so as to make a change in
the formula for determining the interest rate to be credited under the Plan,
such amendment shall not become effective until thirty (30) days advance written
notice is given to Participants.

      16.7 No Right to Employment. This Plan is voluntary on the part of the
Company, and the Plan shall not be deemed to constitute an employment contract
between the Company and any Participant, nor shall the adoption or existence of
the Plan or any provision contained in the Plan be deemed to be a required
condition of the employment of any Participant. Nothing contained in this Plan
shall be deemed to give any Participant the right to continued employment with
the Company, and the Company may terminate any Participant at any time, in which
case the Participant's rights arising under this Plan shall be only those
expressly provided under the terms of this Plan.

      16.8 Notices. All notices, requests, or other communications (hereinafter
collectively referred to as "Notices") required or permitted to be given
hereunder or which are given with respect to this Plan shall be in writing and
may be personally delivered, or may be deposited in the United States mail,
postage prepaid and addressed as follows:

              To the Company            Allergan, Inc.
              or the Committee at:      Attention: Corporate Benefits Committee
                                        (Executive Deferred Compensation Plan)
                                        2525 Dupont Drive
                                        Irvine, CA  92612
                                        cc: General Counsel

                                       21
<PAGE>

              To Participant at:        The Participant's residential mailing
                                        address as reflected in the Company's
                                        employment records

A Notice which is delivered personally shall be deemed given as of the date or
personal delivery, and a Notice mailed as provided herein shall be deemed given
on the second business day following the date so mailed. Any Participant may
change his or her address for purposes of Notices hereunder pursuant to a Notice
to the Committee, given as provided herein, advising the Committee of such
change. The Company and/or the Committee may at any time change its address for
purposes of Notices hereunder pursuant to a Notice to all Participants, given as
provided herein, advising the Participants of such change.

      16.9 Governing Law. This Plan shall be governed by, interpreted under, and
construed and enforced in accordance with ERISA and, to the extent applicable,
the internal laws (and not the laws pertaining to conflicts or choice of laws),
of the State of California applicable to agreements made and to be performed
wholly within the State of California.

      16.10 Titles and Headings; Gender of Terms. Article and Section headings
herein are for reference purposes only and shall not be deemed to be part of the
substance of this Plan or in any way to enlarge or limit the meaning or
interpretation of any provision in this Plan. Use in this Plan of the masculine,
feminine or neuter gender shall be deemed to include each of the omitted genders
if the context so requires.

      16.11 Severability. In the event that any provision of this Plan is found
to be invalid or otherwise unenforceable by a court or other tribunal of
competent jurisdiction, such invalidity or unenforceability shall not be
construed as rendering any other provision contained herein invalid or
unenforceable, and all such other provisions shall be given full force and
effect to the same extent as though the invalid and unenforceable provision was
not contained herein.

      16.12 Tax Effect of Plan. The Company does not warrant any tax benefit nor
any financial benefit under the Plan. Without limiting the foregoing, directors,
officers, and employees of the Company (other than in their capacity as
Participants) shall be held harmless by the Company from, and shall not be
subject to any liability on account of, any Federal or State tax consequences or
any consequences under ERISA of any determination as to the amount of Plan
benefits to be paid, the method by which Plan benefits are paid, the persons to
whom Plan benefits are paid, or the commencement or termination of the payment
of Plan benefits.

      IN WITNESS WHEREOF, Allergan, Inc. hereby executes this instrument,
evidencing the terms of the Allergan, Inc. Executive Deferred Compensation Plan
as restated this 18th day of December, 2002.

ALLERGAN, INC.

By  /s/ Douglas S. Ingram
    -------------------------------------------------------
    Douglas Ingram
    Corporate Vice President, General Counsel and Secretary

                                       22
<PAGE>

                                   APPENDIX A

                                   FUND MEDIA

      The following are designated as the Fund Media as of the adoption date of
this restated Plan subject to addition or deletion as set forth in Section 5.4
of the Plan:

Scudder VIT EAFE Equity Index
Putnam VT Small Cap Value - Class 1B Shares
Capital Appreciation Fund (Janus)
Equity Index Class I
Equity Income (Fidelity)
Fidelity VIP II Asset Manager Portfolio - Initial Class
Pimco Total Return - Admin Class
Travelers Money Market Portfolio

      This Appendix A shall be changed automatically to reflect the current Fund
Media when the Committee adds or deletes Fund Media in accordance with Section
5.4 of the Plan.

                                       1exv10w72

 

EXHIBIT 10.72

STOCK PURCHASE AGREEMENT

between

ROCCO A. ORTENZIO,

an individual

- Seller -

and

SELECT MEDICAL CORPORATION,

a Delaware corporation

- Buyer -

and joined in by

SELECT TRANSPORT, INC.,

a Delaware corporation

- Company -

Dated: November 20, 2002

 

 

STOCK PURCHASE AGREEMENT

     THIS AGREEMENT is made and entered into as of the 20th day of November,
2002, by and among ROCCO A. ORTENZIO, an individual (the “Seller”), on the one
hand, and SELECT MEDICAL CORPORATION, a Delaware corporation (“Buyer”), on the
other hand, and joined in by SELECT TRANSPORT, INC., a Delaware corporation
(“Company”).

BACKGROUND

     A.       The Seller is the record and beneficial owner of 1,000 shares of the
common stock of Company with a par value of $1.00 per share (“Common Stock”),
constituting all of Company’s outstanding and issued capital stock. Each
Seller owns the number of shares of Common Stock set forth opposite such
Seller’s name on Exhibit “A” attached hereto and made a part hereof (such
shares are hereinafter collectively referred to as the “Shares”).

     B.       Company owns a hangar located at 604 Airport Drive, Harrisburg
International Airport, Lower Swatara Township, Dauphin County, Pennsylvania.
And certain items of personal property located within the hanger building
(collectively, the “Hangar”).

     C.       The Seller desires to sell to Buyer, and Buyer desires to buy from the
Seller, all of the Shares. This Agreement sets forth the terms and conditions
pursuant to which the Seller will sell the Shares to Buyer.

     NOW, THEREFORE, in consideration of the mutual terms and conditions herein
contained, and intending to be legally bound hereby, it is agreed among the
parties hereto as follows:

ARTICLE 1. PURCHASE AND SALE OF THE SHARES

     1.1        The Shares. Subject to the terms and conditions hereof and on the
basis of and in reliance upon the covenants, agreements, and representations
and warranties set forth herein, the Seller shall, on the Closing Date (as
hereinafter defined), sell, transfer, assign and deliver to Buyer, or to one or
more corporations, partnerships or other legal entities owned or controlled by
Buyer and designated to the Seller by Buyer (each, a “Permitted Assignee”), and
Buyer shall purchase, accept and receive all right, title and interest in and
to all of the Shares. The certificates representing the Shares will be duly
authorized in blank by the Seller, or accompanied by stock powers duly endorsed
in blank.

 

ARTICLE 2. PURCHASE PRICE

     2.1        Purchase Price. In exchange for the Shares, and in reliance upon the
covenants, agreements, and representations and warranties set forth herein,
Buyer shall pay to the Seller at Closing (as hereinafter defined) the sum of
One Million Seven Thousand Eight Hundred Fifty Dollars ($1,007,850) (the
“Purchase Price”). The Purchase Price shall be adjusted by an amount equal to
the Additional Amount (as hereinafter defined). The “Additional Amount” shall
mean the amount of cash received or collected, on or before January 15, 2003,
by the Buyer or the Company relating to the Company’s pre-Closing operations
{to include the Company’s bank accounts the control of which are transferred to
the Buyer and the Company’s accounts receivable converted to cash}, less any
amounts expended or incurred by the Buyer or the Company after the Closing
relating to the Company’s pre-Closing operations {to include liabilities not
disclosed to, or specifically assumed by, the Buyer hereunder}. The Additional
Amount, if positive, shall be paid by the Buyer to the Seller, or, if negative,
shall be paid by the Seller to the Buyer, on or before January 15, 2003.

ARTICLE 3. THE CLOSING

     3.1        Place and Time of the Closing. The closing of the purchase and sale
of the Shares and other transactions contemplated by this Agreement (the
“Closing”) shall take place at the offices of Buyer located at 4716 Old
Gettysburg Road, Mechanicsburg, Pennsylvania 17055 on the date hereof (the date
of Closing is hereinafter called the “Closing Date”).

     ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF COMPANY AND THE SELLERS

     Company and the Seller, jointly and severally, represent and warrant to
Buyer as follows:

     4.1        Organization and Standing. (a) Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Company has the corporate power and authority, and all governmental
licenses, authorizations, consents and approvals, to own all of its properties
and assets, carry on its business, and execute and deliver this Agreement. The
copies of the articles of incorporation and bylaws (and other applicable
organizational documentation) of Company, as amended to date, that have been
delivered to Buyer are complete and correct, and the stock books and minute
books of Company delivered to Buyer on or before Closing will be complete and
accurate.

     4.2        Federal Employer Identification Numbers and Addresses. Company’s
Federal Employer Identification Number is 23-2872898 and its mailing address is
4716 Old Gettysburg Road, Mechanicsburg, Pennsylvania 17055.

     4.3        Power and Authority. (a) Each Seller has the requisite legal
capacity and authority, and has obtained and all governmental licenses,
authorizations, consents and approvals, to execute and deliver this Agreement
and the other documents required to be delivered by such Seller (collectively,
the “Sale Documents”), perform such Seller’s obligations

2

 

under this Agreement and the Sale Documents, and carry out the
transactions contemplated hereby.

     (b)  Company has the corporate power and authority to execute and deliver
this Agreement and the other documents required to be delivered by Company
(collectively, the “Transaction Documents”), and perform its obligations under
this Agreement and the Transaction Documents.

     4.4        Binding Agreement. (a) This Agreement has been duly and validly
executed and delivered by the Seller and constitutes the valid and binding
agreement of the Seller, enforceable against the Seller in accordance with its
terms, except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization or moratorium or other laws affecting the
enforcement of creditors’ rights generally, and (ii) the availability of
equitable remedies may be limited by equitable principles of general
applicability.

     (b)        The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
the Board of Directors of Company and approved by the stockholders of Company,
and no other corporate proceedings are necessary to authorize this Agreement
and the transaction contemplated hereby. This Agreement has been duly and
validly executed and delivered by Company and constitutes the valid and binding
agreement of Company, enforceable against Company in accordance with its terms.

     4.5        Absence of Conflicting Agreements. Neither the execution and delivery
of this Agreement by the Seller or Company, nor the execution and delivery of
the Sale Documents by the Seller or the Transaction Documents by Company, nor
the performance by any of them of the transactions contemplated thereby (a)
conflicts with, or constitutes a breach of or a default under (i) any
applicable law, or any applicable rule, judgment, order, writ, injunction or
decree of any court, or (ii) any applicable rule or regulation of any
administrative agency or other governmental authority to which the Seller or
Company is bound, or the property of any of them is or are subject; (b)
violates any provision of the articles of incorporation or bylaws of Company;
(c) violates any provision of or results in the breach of, or entitles any
party to accelerate or terminate (whether after the giving of notice or lapse
of time or both) an obligation under, any mortgage, deed of trust, indenture,
lien, lease, contract, commitment, understanding, arrangement, restriction,
note, bond, license, instrument or any other agreement to which either Seller
or Company is a party or to which any of their respective properties or assets,
or the Shares, are subject; or (d) results in the creation or imposition of any
lien, charge, pledge, security interest or other encumbrance upon any property
of the Seller or Company, including, but not limited to, the Shares.

     4.6        Consents. No license, consent, approval, waiver, order or
authorization of, or registration, declaration or filing with any person,
entity or governmental agency or authority is required in connection with the
execution and delivery of this Agreement by the Seller or Company or the
execution and delivery of the Sale Documents by the Seller or of the

3

 

Transaction Documents by Company, or for the consummation by them of the transactions
contemplated thereby.

     4.7        Assets and Liabilities. As of the date hereof, the Company owns no
assets other than the Hangar and the cash and accounts receivable listed on
Schedule 4.7 attached hereto, and has no existing liabilities or obligations,
whether absolute, accrued, contingent or otherwise, and there is no basis for
assertion against Company of any liability or obligation of any nature or
amount.

     4.8        Capital Stock. (a) The authorized capital stock of Company consists
of 1,000 shares of the Common Stock of Company, $1.00 par value per share, of
which 1,000 shares are issued and outstanding.

     (b)        All outstanding shares of the Common Stock are duly authorized,
validly issued, fully paid and non-assessable. There are no preemptive or
similar rights on the part of any holder of any class of securities of Company.
There are no outstanding offers, subscriptions, options, warrants, rights or
other agreements or commitments obligating Company or the Seller to issue or
sell, or cause to be issued or sold, any shares of the capital stock of Company
or any securities or obligations convertible into or exchangeable for (or
giving any person any right to acquire any shares of) such capital stock, or
obligating Company or the Seller to enter into any such agreement or
commitment.

     (c)        All of the shares of Company’s issued and outstanding capital stock
are, and always have been, owned beneficially and of record by the Seller, free
and clear of any security interest, liens, options, equities, claims,
restrictions, mortgages, deeds of trust, pledges or rights of another
whatsoever (collectively, “Encumbrances”), and no other party has, or ever has
had, any right, title or interest, whether legal or equitable, in said shares.
At the Closing, Buyer (or its assignee as permitted hereunder) shall acquire
good, valid and marketable title to the Shares, free and clear of any
Encumbrance whatsoever.

     4.9        Compliance with Laws. Company has operated in compliance with all
applicable federal, state, local and other governmental laws or ordinances, and
all applicable orders, rules and regulations of federal, state, local and other
governmental agencies, and neither the Seller nor Company has received any
claim or notice that the Business is not in compliance with any of the
foregoing.

     4.10        Legal Proceedings. There are no disputes, claims, actions, suits,
proceedings, arbitrations or investigations, either administrative or judicial,
pending or to the best knowledge of the Seller and Company, threatened or
contemplated against or affecting the Seller, Company or the Shares, either at
law or in equity or otherwise, before or by any court or governmental agency or
body, domestic or foreign, or before an arbitrator of any kind. Neither the
Seller nor Company is aware of any state of facts or the occurrence of any
event that might reasonably form the basis of any claim against the Seller or
Company which might have a materially adverse effect on the operations or
prospects of Company or might materially increase the insurance

4

 

premiums payable under any insurance policy. Company is not in default in
respect of any judgment, order, writ, injunction or decree of any court or any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality.

     4.11        Finders. No broker or finder has acted for the Seller or Company in
connection with the transactions contemplated by this Agreement, and no broker
or finder is entitled to any broker’s or finder’s fee or other commission in
respect thereof based in any way on agreements, understandings or arrangements
with the Seller or Company.

     4.12        Subsidiaries. Company does not (a) own, directly or indirectly, any
shares of capital stock or have any other equity interest in any corporation,
partnership, association, joint venture, or other entity or business
enterprise, (b) control, beneficially or otherwise, any other corporation,
partnership, association, joint venture, or other entity or business
organization, or (c) have any commitment to contribute to the capital of, make
loans or advances to, or share the losses of, any enterprise.

ARTICLE 5.

REPRESENTATIONS AND WARRANTIES OF BUYER

     Buyer represents and warrants to the Seller as follows:

     5.1        Organization. Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Buyer has the
corporate power and authority to execute and deliver this Agreement.

     5.2        Binding Agreement. This Agreement has been duly executed and
delivered by Buyer. This Agreement is the legal, valid and binding obligation
of Buyer, enforceable against Buyer in accordance with its terms, except as (i)
the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization or moratorium or other laws affecting the enforcement of
creditors’ rights generally, and (ii) the availability of equitable remedies
may be limited by equitable principles of general applicability.

     5.3        Absence of Conflicting Agreements. Neither the execution or delivery
of this Agreement by Buyer, nor the performance by Buyer of the transactions
contemplated hereby, conflicts with, or constitutes a breach of or a default
under (a) any applicable law or any applicable rule, judgment, order, writ,
injunction, or decree of any court, (b) any applicable rule or regulation of
any administrative agency or other governmental authority, (c) any applicable
agreement, indenture, contract or instrument to which Buyer is a party or by
which he is bound, or (d) violates any provision of the articles of
incorporation or bylaws of Buyer.

     5.4        Finders. No broker or finder has acted for Buyer in connection with
the transactions contemplated by this Agreement.

5

 

     5.5        Approvals. No consent, approval, order or authorization of, or
registration, declaration or filing with, any governmental authority is
required in connection with the execution and delivery of this Agreement by
Buyer and the consummation by Buyer of the transactions contemplated hereby.

ARTICLE 6. COVENANT OF BUYER

     6.1       Right of First Refusal. (a) At any time after the date hereof, in the
event Buyer proposes to sell either the Hangar or all of the Shares to a third
party (other than a Permitted Assignee) in a bona fide transaction, Buyer may
not transfer either the Hangar or any Shares, as the case may be, without first
offering to sell the Hangar or such Shares to Rocco A. Ortenzio pursuant to
this Section 6.1.

     (b)       Buyer shall deliver a written notice (a “Sale Notice”) to Rocco A.
Ortenzio describing in reasonable detail the material terms of the proposed
sale, including the name of the offeree and the purchase price being requested,
together with a copy of any proposed agreement or instrument pursuant to which
Buyer proposes to sell either the Hangar or the Shares, as the case may be, to
the offeree. Upon receipt of the Sale Notice, Rocco A. Ortenzio shall have the
right and option to purchase either the Hangar or the Shares, as the case may
be, at the price and on the terms of the proposed transfer set forth in the
Sale Notice. Within 15 days after receipt of the Sale Notice, Rocco A.
Ortenzio shall notify Buyer whether or not he wishes to purchase the Hangar or
the Shares, as the case may be.

     (c)       If Rocco A. Ortenzio elects to purchase either the Hangar or the
Shares pursuant to this Section 6.1, the closing of such purchase and sale
shall be held at the place and on the date established by Rocco A. Ortenzio in
his notice to Buyer in response to the Sale Notice, which in no event shall be
less than 10 nor more than 30 days from the date of such notice. In the event
that Rocco A. Ortenzio does not elect to purchase either the Hangar or the
Shares, as the case may be, Buyer may transfer either the Hangar or the Shares,
as the case may be, to the offeree specified in the Sale Notice at a price not
less than the price specified in the Sale Notice and on other terms no more
favorable to the transferee thereof than specified in the Sale Notice. Such
sale must occur during the 120 day period immediately following the last date
on which Rocco A. Ortenzio could have elected to purchase either the Hangar or
the Shares, as the case may be. Any transfer of either the Hangar or the
Shares not within such 120 day period will be subject to the provisions of this
Section 6.1 upon any subsequent transfer.

ARTICLE 7. INDEMNIFICATION

     7.1       Indemnification.

     (a)       Subject to the limitations contained elsewhere in this Article 7, the
Seller shall indemnify and hold harmless Buyer, and Buyer shall indemnify and
hold harmless the Seller (the party required to provide indemnification is
hereinafter referred to as the “indemnifying party” while the other party is
hereinafter referred to as the “indemnified party”) against any and all

6

 

losses, costs, expenses, claims, damages, actual liabilities or actions,
including the amount of any settlement approved by such indemnifying party and
expenses of enforcing this Agreement, which such indemnified party has
suffered, incurred or become subject to, and shall reimburse the indemnified
party for any legal, audit or other expenses incurred by it in connection with
investigating any claims and defending any actions, insofar as such losses,
costs, expenses, claims, damages, liabilities or actions arise out of or are
based upon (i) any false representations or the breach of any warranty made by
the indemnifying party herein or in any schedule, document, list, certificate
or other instrument delivered to the indemnified party pursuant to this
Agreement (hereinafter called a “Warranty Breach”); (ii) any breach or default
in the performance by the indemnifying party of any of its covenants or
agreements with the indemnified party contained herein (hereinafter called a
“Covenant Breach”); or (iii) any liabilities and expenses of Company resulting
from or incurred in the defense and/or settlement of any litigation or third
party claim which is filed or otherwise becomes known to Company or Buyer prior
to the expiration of the “Claims Period” (as defined pursuant to the first
sentence of subsection 7.1(d) below) that arises out of incidents or events
occurring prior to the Closing Date (hereinafter the claims referred to in this
clause (iii) of this subsection 7.1(a) are called the “Disclosed Litigation
Claims”). For purposes of the foregoing, any such losses, costs, expenses,
claims, damages, liabilities or actions incurred by Company shall be considered
losses, costs, expenses, claims, damages, liabilities or actions incurred by
Buyer for which Buyer shall be entitled to be indemnified. The losses, costs,
expenses, claims, damages, liabilities and actions described in this subsection
7.1(a) are hereinafter individually called a “Loss” and collectively “Losses.”

     (b)       If and whenever any party shall claim that it is entitled to
indemnification pursuant to the provisions hereof, such party shall send a
written notice to the party from whom it is seeking indemnification stating the
basis for such claim and the total amount of the Loss that the party seeking
indemnification claims to have incurred. If the party from whom
indemnification is sought shall object to such claim of Loss, such party shall
give written notice of its objection to the party asserting the claim. If no
such objection shall have been sent within 15 days after the party from whom
indemnification is sought has received the claim notice, the amount of the Loss
claimed by the party seeking indemnification shall be deemed to have been
“finally determined.” In the event that the party from whom indemnification is
sought makes a timely objection to the claim, and within 15 days thereafter the
parties are unable through negotiations to finally determine the Loss, then the
claim shall be submitted for final determination to a court of competent
jurisdiction located in the Commonwealth of Pennsylvania. The Seller and
Company hereby consent to the exclusive jurisdiction of the courts of the
Commonwealth of Pennsylvania or any United States federal court sitting in the
City of Harrisburg, Commonwealth of Pennsylvania with respect to the
adjudication of any claims arising under this Agreement or related in any way
whatsoever to the transactions contemplated under this Agreement.

     (c)       With respect to any claim made by a third party against which a party
hereto is seeking indemnification under Section 7.1(a), the party from whom
indemnification is sought shall have the right, at its own expense, to
participate in or assume control of the defense of such

7

 

claim, subject to the rights of the appropriate insurance company to
control the defense of any claim covered by insurance, and the party seeking
indemnification shall fully cooperate with the party from whom indemnification
is sought subject to reimbursement for actual out-of-pocket expenses incurred
as a result of such request by the party from whom indemnification is sought.
If the party from whom indemnification is sought either does not elect to
assume control (subject to the aforesaid rights of the insurance company to
control the defense of any claim covered by insurance) or otherwise participate
in the defense of any third-party claim, that party shall be bound by the
results obtained by the other with respect to such claim.

     (d)       Except as provided otherwise in this subsection, no claim for
indemnification under 7.1(a)(i) for Losses occurring by reason of a Warranty
Breach may be asserted by an indemnified party after the end of the “Claims
Period” which shall commence on the Closing Date and end on the third
anniversary of the Closing Date. This subsection does not apply to, and there
is no time limit on, claims for indemnification asserted by a party for Losses
occurring by reason of a Disclosed Litigation Claim of for Losses occurring by
reason of a Covenant Breach.

     (e)       There is no time limit within which claims for indemnification timely
asserted by an indemnified party for Losses arising out of Disclosed Litigation
claims or for Losses arising out of Covenant Breaches must be resolved. All
other claims for indemnification timely asserted by an indemnified party under
Section 7.1(a)(i) or shall be resolved prior to the end of the Claims Period
and the indemnified party and indemnifying party shall each use their best
efforts to resolve such claims in a fair and equitable manner. If such
resolution would not otherwise be possible within the Claims Period because the
claim was made against Buyer or Company by one or more third parties, then the
Seller and Buyer shall within the Claims Period make a reasonable valuation of
the potential liability of Buyer or Company with respect to such third party
claims, and such valuation shall be the amount of Loss for which Buyer shall be
indemnified.

     (f)       For the purposes of this Article 7, an indemnified party shall not be
deemed to have been damaged by a Loss to the extent that such indemnified party
has received payment from insurance in respect of such Loss or, in the case of
Buyer or Company, to the extent that such Loss was reserved against on the
Balance Sheet.

ARTICLE 8. MISCELLANEOUS

     8.1       Survival of Representations and Warranties. All representations,
warranties, covenants and agreements made by each party in this Agreement or in
any schedule, certificate, document or list delivered by any such party
pursuant hereto shall survive Closing and each party hereto shall be entitled
to rely upon the representations and warranties of the other party,
notwithstanding any investigation conducted before or after Closing or the
decision of any party to complete this transaction;

8

 

     8.2       Costs and Expenses. Except as expressly otherwise provided herein,
each party hereto shall bear its own costs and expenses in connection with this
Agreement and the transactions contemplated hereby, whether or not the
transactions herein provided shall be consummated.

     8.3       Bulk Sales Law. The Seller shall indemnify and hold Buyer harmless
from any loss, cost or liability (including reasonable attorney’s fees)
incurred by Buyer as a result of non-compliance with any applicable Bulk Sales
Law.

     8.4       Performance. In the event of a default on the part of either party,
the non-defaulting party shall have the right, in addition to any other
remedies which may be available, to obtain specific performance of the terms of
this Agreement. Should any party default in performance of any of the terms
and conditions of this Agreement or any other agreement referred to herein
which results in the filing of a lawsuit for damages, specific performance, or
other remedy, the prevailing party in such lawsuit shall be entitled to its
reasonable attorney’s fees and court costs from the losing party.

     8.5       Benefits and Assignment. This Agreement will be binding upon the
respective legal representatives, successors and permitted assigns of the
parties hereto. None of the parties hereto may assign its interests or
delegate its duties under this Agreement to any other person without the prior
written consent of the other parties. Notwithstanding the provisions of this
Section, Buyer shall be entitled to assign its rights set forth in this
Agreement to a Permitted Assignee, or to name one or more Permitted Assignees
to take title to the Shares without the prior written consent of either Seller.

     8.6       Effect and Construction of this Agreement. This Agreement and the
Schedules hereto embody the entire Agreement and understanding of the parties
and supersede any and all prior agreements, arrangements and understandings
relating to matters provided for herein. The captions are for convenience only
and will not control or affect the meaning or construction of the provisions of
this Agreement.

     8.7       Severability. If any provisions of this Agreement shall be declared
invalid or illegal for any reason whatsoever, the remaining terms and
provisions of this Agreement shall remain in full force and effect in the same
manner as if the invalid or illegal provision has not been contained herein.

     8.8       Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed to be properly given when personally delivered to
the party entitled to receive the notice or when sent by certified or
registered mail, postage prepaid, properly addressed to the

9

 

party entitled to receive such notice at the address stated below:

	 	 	 
	If to the Seller:
or Company	 	
Select Transport, Inc.

4716 Old Gettysburg Road

P.O. Box 2034

Mechanicsburg, PA 17055

Attn:   Michael E. Salerno
	 
	If to Buyer:	 	
Select Medical Corporation

4716 Old Gettysburg Road

P.O. Box 2034

Mechanicsburg, PA 17055

Attn:   Rocco A. Ortenzio
	 
	with a copy to:	 	
Select Medical Corporation

4716 Old Gettysburg Road

P.O. Box 2034

Mechanicsburg, PA 17055

Attn:   Michael E. Tarvin

or to such other addresses or entities as any party hereto may from time to
time direct.

     8.9       Further Assurances. Following Closing, at the request of Buyer, the
Seller shall deliver any further instruments of transfer and shall take any
action as may be necessary or appropriate to vest in the Buyer, or a Permitted
Assignee, good title to the Shares, or to otherwise effectuate the purposes of
this Agreement.

     8.10       Waiver, Discharge, Etc. This Agreement may not be released,
discharged, abandoned, changed, amended or modified in any manner, except by an
instrument in writing signed on behalf of each of the parties hereto by their
duly authorized officers or representatives. The failure of any party hereto
to enforce at any time any of the provisions of this Agreement shall in no way
be construed to be a waiver of any such provision, nor in any way to affect the
validity of this Agreement or any part thereof or the right of any party
thereafter to enforce each and every such provision. No waiver of any breach
of this Agreement shall be held to be a waiver of any other or subsequent
breach.

     8.11       Rights of Persons Not Parties . Nothing contained in this Agreement
shall be deemed to create rights in persons not parties thereto, other than the
successors and permitted assigns of the parties hereto.

     8.12       Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania without reference
to any conflict of laws provision.

10

 

     8.13       Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

     IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Agreement as of the day and year first above written.

	 	 
	The Seller:	 
	 
	/s/ Rocco A. Ortenzio

Rocco A. Ortenzio	 
	 
	Buyer:	 
	 
	SELECT MEDICAL CORPORATION, a Delaware

corporation	 
	 
	By: 	
/s/ Michael E. Tarvin

Michael E. Tarvin,

Senior Vice President
	 
	Company:	 
	 
	SELECT TRANSPORT, INC., a Delaware corporation	 
	 
	By: 	
/s/ Michael E. Salerno

Michael E. Salerno

11

 

EXHIBIT “A”

OWNERSHIP OF THE SHARES

	 	 	 
	Rocco A. Ortenzio	 	
1,000 shares

 

 

Schedule 4.7

Identification of Cash and Accounts Receivable

(as of November 20, 2002)

	 	 	 	 	 
	Cash
	 	$	33,629.67	 
	Accounts Receivable
	 	$	—

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