Document:

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                                                                    EXHIBIT 10.1

                                 ALLERGAN, INC.

                          EMPLOYEE STOCK OWNERSHIP PLAN

RESTATED
2000

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                                TABLE OF CONTENTS

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ARTICLE I
NAME AND EFFECTIVE DATE..............................................................................1
1.1               Plan Name..........................................................................1
1.2               Effective Date of 2000 Restated Plan...............................................1
1.3               Plan Purpose.......................................................................1
1.4               Plan Intended to Qualify...........................................................1

ARTICLE II
DEFINITIONS..........................................................................................2
2.1               Affiliated Company.................................................................2
2.2               Beneficiary........................................................................2
2.3               Board of Directors.................................................................2
2.4               Break in Service...................................................................2
2.5               Code...............................................................................2
2.6               Committee..........................................................................2
2.7               Company............................................................................2
2.8               Company Stock......................................................................2
2.9               Compensation.......................................................................2
2.10              Computation Period.................................................................3
2.11              Credited Service...................................................................4
2.12              Disability.........................................................................5
2.13              Effective Date.....................................................................6
2.14              Eligible Employee..................................................................6
2.15              Eligible Retirement Plan...........................................................6
2.16              Eligible Rollover Distribution.....................................................6
2.17              Employee...........................................................................7
2.18              Employment Commencement Date.......................................................7
2.19              Entry Date.........................................................................7
2.20              ERISA..............................................................................7
2.21              ESOP Account.......................................................................7
2.22              Exempt Loan........................................................................7
2.23              Exempt Loan Suspense Subfund.......................................................8
2.24              415 Suspense Account...............................................................8
2.25              Highly Compensated Employee........................................................8
2.26              Hour of Service....................................................................9
2.27              Investment Manager.................................................................10
2.28              Leased Employee....................................................................10
2.29              Leave of Absence...................................................................10
2.30              Normal Retirement Age..............................................................11
2.31              Participant........................................................................11
2.32              Period of Severance................................................................11
2.33              Plan...............................................................................11
2.34              Plan Administrator.................................................................11
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                               TABLE OF CONTENTS

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2.35              Plan Year..........................................................................12
2.36              Reemployment Commencement Date.....................................................12
2.37              Severance..........................................................................12
2.38              Severance Date.....................................................................12
2.39              Sponsor............................................................................13
2.40              Trust..............................................................................13
2.41              Trust Agreement....................................................................13
2.42              Trustee............................................................................13
2.43              Valuation Date.....................................................................13

ARTICLE III
ELIGIBILITY AND PARTICIPATION........................................................................14
3.1               Commencement of Participation......................................................14
3.2               Participation after Reemployment...................................................14
3.3               Duration of Participation..........................................................14
3.4               Participation After Normal Retirement Age..........................................14

ARTICLE IV
CONTRIBUTIONS AND ALLOCATION TO ACCOUNTS.............................................................15
4.1               Contributions to the Trust Fund....................................................15
4.2               Allocation of Contributions to Trust Fund..........................................15
4.3               Forfeitures........................................................................17
4.4               Employee Contributions and Rollovers...............................................17

ARTICLE V
VESTING AND DISTRIBUTIONS............................................................................18
5.1               No Vested Rights Except as Herein Specified........................................18
5.2               Vesting............................................................................18
5.3               Severance When Less Than Fully Vested..............................................18
5.4               Distribution upon Severance........................................................19
5.5               Distribution upon Death............................................................19
5.6               Distribution upon Disability.......................................................20
5.7               Withdrawal upon Age 59-1/2.........................................................20
5.8               Designation of Beneficiary.........................................................20
5.9               Form of Distribution...............................................................21
5.10              Distribution Rules.................................................................22
5.11              Put Option for Company Stock Allocated to ESOP Accounts............................23
5.12              Diversification Rule...............................................................27
5.13              Lapsed Benefits....................................................................28
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                               TABLE OF CONTENTS

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ARTICLE VI
TRUST FUND AND INVESTMENTS...........................................................................30
6.1               General............................................................................30
6.2               Single Trust.......................................................................30
6.3               Investment of the Trust............................................................30
6.4               Certain Offers for Company Stock...................................................31
6.5               Securities Law Limitation..........................................................35
6.6               Accounting and Valuations..........................................................35
6.7               Dividends..........................................................................37
6.8               Non-Diversion of Trust Fund........................................................38
6.9               Company, Committee and Trustee Not Responsible for Adequacy of Trust Fund..........39
6.10              Distributions......................................................................39
6.11              Taxes..............................................................................39
6.12              Trustee Records to be Maintained...................................................39
6.13              Annual Report of Trustee...........................................................39
6.14              Appointment of Investment Manager..................................................40

ARTICLE VII
OPERATION AND ADMINISTRATION.........................................................................41
7.1               Appointment of Committee...........................................................41
7.2               Transaction of Business............................................................41
7.3               Voting.............................................................................41
7.4               Responsibility of Committee........................................................41
7.5               Committee Powers...................................................................42
7.6               Additional Powers of Committee.....................................................43
7.7               Claims Procedures..................................................................43
7.8               Appeals Procedures.................................................................44
7.9               Limitation on Liability............................................................45
7.10              Indemnification and Insurance......................................................45
7.11              Compensation of Committee and Plan Expenses........................................45
7.12              Resignation........................................................................45
7.13              Voting of Company Stock............................................................45
7.14              Reliance Upon Documents and Opinions...............................................47

ARTICLE VIII
AMENDMENT AND ADOPTION OF PLAN.......................................................................49
8.1               Right to Amend Plan................................................................49
8.2               Adoption of Plan by Affiliated Companies...........................................49
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                               TABLE OF CONTENTS

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ARTICLE IX
DISCONTINUANCE OF CONTRIBUTIONS......................................................................50

ARTICLE X
TERMINATION AND MERGER...............................................................................51
10.1              Right to Terminate Plan............................................................51
10.2              Effect on Trustee and Committee....................................................51
10.3              Merger Restriction.................................................................51
10.4              Effect of Reorganization, Transfer of Assets or Change in Control..................51

ARTICLE XI
LIMITATION ON ALLOCATIONS............................................................................55
11.1              General Rule.......................................................................55
11.2              Annual Additions...................................................................55
11.3              Other Defined Contribution Plans...................................................55
11.4              Defined Benefit Plans..............................................................56
11.5              Adjustments for Excess Annual Additions............................................56
11.6              Compensation.......................................................................57
11.7              Treatment of 415 Suspense Account Upon Termination.................................58

ARTICLE XII
TOP-HEAVY RULES......................................................................................59
12.1              Applicability......................................................................59
12.2              Definitions........................................................................59
12.3              Top-Heavy Status...................................................................60
12.4              Minimum Contributions..............................................................62
12.5              Maximum Annual Addition............................................................62
12.6              Minimum Vesting Rules..............................................................63
12.7              Non-Eligible Employees.............................................................63

ARTICLE XIII
RESTRICTION ON ASSIGNMENT OR OTHER ALIENATION OF PLAN BENEFITS.......................................64
13.1              General Restrictions Against Alienation............................................64
13.2              Qualified Domestic Relations Orders................................................64

ARTICLE XIV
MISCELLANEOUS PROVISIONS.............................................................................68
14.1              No Right of Employment Hereunder...................................................68
14.2              Limitation on Company Liability....................................................68
14.3              Effect of Article Headings.........................................................68
14.4              Gender.............................................................................68
14.5              Interpretation.....................................................................68
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                               TABLE OF CONTENTS

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14.6              Withholding For Taxes..............................................................68
14.7              California Law Controlling.........................................................68
14.8              Plan and Trust as One Instrument...................................................68
14.9              Invalid Provisions.................................................................68
14.10             Counterparts.......................................................................69
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                                 ALLERGAN, INC.
                          EMPLOYEE STOCK OWNERSHIP PLAN

                                    ARTICLE I
                             NAME AND EFFECTIVE DATE

         1.1. Plan Name. This document, made and entered into by Allergan, Inc.,
a Delaware corporation ("Allergan"), evidences the terms of a defined
contribution plan for Eligible Employees of Allergan and any Affiliated
Companies that are authorized by the Board of Directors to participate in the
plan, to be known hereafter as the "Allergan, Inc. Employee Stock Ownership Plan
(Restated 2000)" (the "Plan").

         1.2. Effective Date of 2000 Restated Plan. The "Allergan, Inc. Employee
Stock Ownership Plan (Restated 1996)" and the First, Second, Third, Fourth and
Fifth Amendments made thereto are hereby incorporated into the Plan. The
Effective Date of the 2000 Restated Plan shall be January 1, 1997 unless
otherwise stated in the Plan.

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

         1.4. Plan Intended to Qualify. The Plan is an employee benefit plan
that is intended to qualify under Code Section 401(a) as a qualified stock bonus
plan and under Code Section 4975(e)(7) as an employee stock ownership plan. The
provisions of the Plan are also intended to comply with all changes to the
qualification requirements made by the Uruguay Round Agreements Act (GATT), the
Uniformed Services Employment and Reemployment Rights Act of 1994, the Small
Business Job Protection Act of 1996, the Taxpayer Relief Act of 1997, and the
Internal Revenue Service Restructuring and Reform Act of 1998 including
qualification requirements that are effective on or after January 1, 1999.

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                                   ARTICLE II
                                   DEFINITIONS

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

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

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

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

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

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

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

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

         2.9. Compensation. "Compensation" shall mean the amounts paid during a
Plan Year to an Employee by the Company for services rendered, including base
earnings, commissions and similar incentive compensation, cost of living
allowances earned within the United States of

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America, holiday pay, overtime earnings, pay received for election board duty,
pay received for jury and witness duty, pay received for military service
(annual training), pay received for being available for work, if required
(call-in premium), amounts of salary reduction elected by the Participant under
a Code Section 401(k) cash or deferred arrangement, shift differential and
premium, sickness/accident related pay, vacation pay, vacation shift premium,
and bonus amounts paid under the following programs:

         (1) Sales bonus,

         (2) Management Bonus Plan or Executive Bonus Plan, either in cash or in
             restricted stock,

         (3) Group performance sharing payments, such as the "Partners for
             Success;"

but excluding business expense reimbursements; Company gifts or the value of
Company gifts; Company stock related options and payments; employee referral
awards; flexible compensation credits paid in cash; special overseas payments,
allowances and adjustments including, but not limited to, pay for cost of living
adjustments and differentials paid for service outside of the United States,
expatriate reimbursement payments, and tax equalization payments; forms of
imputed income; long-term disability pay; payment for loss of Company car;
Company car allowance; payments for patents or for writing articles; relocation
and moving expenses; retention and employment incentive payments; severance pay;
long-term incentive awards, bonuses or payments; "Impact Award" payments;
"Employee of the Year" payments; "Awards for Excellence" payments; special group
incentive payments and individual recognition payments which are nonrecurring in
nature; tuition reimbursement; and contributions by the Company under the Plan
or distributions hereunder, any contributions or distributions pursuant to any
other plan sponsored by the Company and qualified under Code Section 401(a)
(other than contributions constituting salary reduction amounts elected by the
Participant under a Code Section 401(k) cash or deferred arrangement), any
payments under a health or welfare plan sponsored by the Company, or premiums
paid by the Company under any insurance plan for the benefit of Employees.
Compensation taken into account for determining all benefits provided under the
Plan for any Plan Year shall not exceed $150,000 as adjusted at the time and in
such manner as permitted under Code Section 401(a)(17)(B). Notwithstanding the
foregoing, for purposes of applying the provisions of Articles XI and XII, an
Employee's Compensation shall be determined pursuant to the definition of
"Compensation" as set forth in Sections 11.6 or 12.2(i), as the case may be.

         2.10. Computation Period

                  (a) "Computation Period" shall mean the consecutive twelve
         (12) month period used for determining whether an Employee is eligible
         to participate in the Plan pursuant to Section 3.1.

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                  (b) An Employee's initial Computation Period shall be the
         twelve-month period commencing on his or her Employment Commencement
         Date or Reemployment Commencement Date (whichever is applicable).

                  (c) An Employee's second Computation Period (and all
         subsequent Computation Periods) shall be the Plan Year that includes or
         begins on the first anniversary of such Employee's Employment
         Commencement Date or Reemployment Commencement Date (whichever is
         applicable) and each subsequent Plan Year.

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

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

                  (b) On and after the Effective Date, an Employee shall receive
         Credited Service credit for the elapsed period of time between each
         Employment Commencement Date (or Reemployment Commencement Date) of the
         Employee and the Severance Date which immediately follows that
         Employment Commencement Date (or Reemployment Commencement Date).
         Solely for the purpose of determining an Employee's Credited Service
         under this paragraph (b), in the case of an Employee who is employed on
         the Effective Date, that date shall be deemed to be an Employment
         Commencement Date of the Employee (with service credit for periods
         prior to the Effective Date to be determined under paragraph (a)
         above). An Employee who is absent from work on an authorized Leave of
         Absence shall be deemed to have incurred a Severance (if any) in
         accordance with the rules of Section 2.37.

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

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

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                  period commencing with his or her Severance Date and ending
                  with his or her subsequent Reemployment Commencement Date.

                           (ii) If an Employee is on an approved Leave of
                  Absence and then incurs a Severance by reason of a quit,
                  discharge or retirement during the Leave of Absence, or a
                  failure to return to work as scheduled following such Leave,
                  and such Employee is later reemployed by the Company within 12
                  months of the date on which he or she discontinued active
                  employment and commenced such Leave, he or she shall receive
                  Credited Service for the period commencing with his or her
                  Severance Date and ending with his or her subsequent
                  Reemployment Commencement Date. For such purposes an Employee
                  shall be deemed to have incurred a Severance (if any) in
                  accordance with the rules of Section 2.37.

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

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

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

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

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

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

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physician selected by the Committee, as to whether a Participant has incurred a
Disability shall be final and binding on all persons.

         2.13. Effective Date. "Effective Date" of this restated Plan shall mean
January 1, 1997 unless otherwise specified in the Plan. The original Effective
Date of the Plan was July 26, 1989.

         2.14. Eligible Employee. "Eligible Employee" shall mean any United
States-based payroll Employee of the Company and any expatriate Employee of the
Company who is a United States citizen or permanent resident, but excluding any
Employee of the Company who is employed at the Sponsor's facility in Puerto
Rico, any non-resident alien, any non-regular manufacturing site transition
Employee, any Leased Employee, and any Employee covered by a collective
bargaining agreement.

         2.15. Eligible Retirement Plan. "Eligible Retirement Plan" shall mean
an individual retirement account described in Code Section 408(a), an individual
retirement annuity described in Code Section 408(b), an annuity plan described
in Code Section 403(a), or a qualified trust described in Code Section 401(a)
that accepts an Eligible Rollover Distribution. However, in the case of an
Eligible Rollover Distribution to a surviving spouse, an Eligible Retirement
Plan is an individual retirement account or individual retirement annuity.

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

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

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

                  (c) any hardship distribution described in Code Section
         401(k)(2)(B)(I)(IV);

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

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

         For purposes of this Section, "Distributee" shall mean any Employee or
former Employee receiving a distribution from the Plan. A Distributee also
includes the Employee or former Employee's surviving spouse and the Employee's
or former Employee's spouse or former spouse

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<PAGE>   13

who is the Alternate Payee under a Qualified Domestic Relations Order (as
defined in Article XIII) are Distributees with regard to the interest of the
spouse or former spouse.

         2.17. Employee. "Employee" shall mean, for purposes of the Plan, any
person who is employed by the Sponsor or an Affiliated Company in any capacity,
any portion of whose income is subject to withholding of income tax and/or for
whom Social Security contribution are made by the Sponsor or an Affiliated
Company except that such term shall not include (i) any individual who performs
services for the Sponsor or an Affiliated Company and who is classified or paid
as an independent contractor as determined by the payroll records of the Sponsor
or Affiliated Company even if a court or administrative agency determines that
such individual is a common-law employee and not an independent contractor and
(ii) any individual who performs services for the Sponsor or an Affiliated
Company pursuant to an agreement between the Sponsor or an Affiliated Company
and any other person including a leasing organization except to the extent such
individual is a Leased Employee.(1)

         2.18. Employment Commencement Date. "Employment Commencement Date"
shall mean the date on which an Employee first performs an Hour of Service in
any capacity for the Sponsor or any Affiliated Company. Unless the Sponsor shall
expressly determine otherwise, and except as is expressly provided otherwise in
the Plan or in resolutions of the Board of Directors, an Employee shall not, for
the purpose of determining his or her Employment Commencement Date, be deemed to
have commenced employment with an Affiliated Company prior to the effective date
on which such entity became an Affiliated Company.

         2.19. Entry Date. "Entry Date" shall mean the first day of each
calendar quarter commencing each January 1, April 1, July 1, and October 1 of
each Plan Year.

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

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

         2.22. Exempt Loan. "Exempt Loan" shall mean any loan to the Plan or
Trust not prohibited by Code Section 4975(c), including a loan which meets the
requirements set forth in Code Section 4975(d)(3) and the regulations
promulgated thereunder, the proceeds of which are used to finance the
acquisition of Company Stock or to refinance such a loan.

--------
(1) Section 2.17 was amended effective October 1, 1997 as set forth in the
    Second Amendment to the Plan, amended effective January 1, 1999 as set forth
    in the Fourth Amendment to the Plan and is amended effective January 1, 2000
    as set forth above.

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

         2.24. 415 Suspense Account. "415 Suspense Account" shall mean the
account (if any) established and maintained in accordance with the provisions of
Article XI for the purpose of holding and accounting for allocations of excess
Annual Additions (as defined in Article XI).

         2.25. Highly Compensated Employee. "Highly Compensated Employee" shall
mean:

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

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

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

                  (b) For the purpose of this Section, the term "Compensation"
         means compensation as defined in Code Section 415(c)(3), as set forth
         in Section 11.6.

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

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

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

                                       8
<PAGE>   15

         2.26. Hour of Service.

                  (a) "Hour of Service" of an Employee shall mean the following:

                           (i) Each hour for which the Employee is paid by the
                  Company or an Affiliated Company or entitled to payment for
                  the performance of services as an Employee.

                           (ii) Each hour in or attributable to a period of time
                  during which the Employee performs no duties (irrespective of
                  whether he or she has terminated his or her Employment) due to
                  a vacation, holiday, illness, incapacity (including pregnancy
                  or disability), layoff, jury duty, military duty or a Leave of
                  Absence (if the Leave of Absence is an unpaid medical Leave of
                  Absence, the Employee will accrue hours for the duration of
                  such leave for the first six months of such leave), for which
                  he or she is so paid or so entitled to payment, whether direct
                  or indirect. However, no such hours shall be credited to an
                  Employee if (1) such Employee is directly or indirectly paid
                  or entitled to payment for such hours and (2) such payment or
                  entitlement is made or due under a plan maintained solely for
                  the purpose of complying with applicable worker's
                  compensation, unemployment compensation, or disability
                  insurance laws, or is a payment which solely reimburses the
                  Employee for medical or medically-related expenses incurred by
                  him/her.

                           (iii) Each hour for which he or she is entitled to
                  back pay, irrespective of mitigation of damages, whether
                  awarded or agreed to by the Company or an Affiliated Company,
                  provided that such Employee has not previously been credited
                  with an Hour of Service with respect to such hour under
                  subparagraphs (i) or (ii) above.

                  Hours of Service under paragraphs (a)(ii) and (a)(iii) shall
         be calculated in accordance with Department of Labor Regulation 29
         C.F.R. Section 2530.200b-2(b). All Hours of Service determined under
         the rules of paragraph (a) shall be credited to the Computation Period
         to which the payment relates, rather than the period in which it is
         made.

                  (b) In the event that an Employee is compensated for duties
         performed on a basis other than actual hours worked and no records of
         the Employee's actual working hours are maintained, the Employee shall
         be deemed to have completed ten (10) Hours of Service for each day, or
         portion thereof during which he or she is credited with an Hour of
         Service for the Company or an Affiliated Company.

                  (c) Unless the Company shall expressly determine otherwise,
         and except as may be expressly provided otherwise in the Plan, an
         Employee shall not receive credit for his or her Hours of Service
         completed with an Affiliated Company prior to the effective date on
         which the entity became an Affiliated Company.

                                       9
<PAGE>   16

         2.27. Investment Manager. "Investment Manager" shall mean the one or
more investment managers, if any, appointed pursuant to Section 6.15 and who
constitute investment managers under Section 3(38) of ERISA.

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

         2.29. Leave of Absence.

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

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

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

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

                                       10
<PAGE>   17

                  second anniversary of the date upon which such Maternity or
                  Paternity Leave commences.

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

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

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

         2.30. Normal Retirement Age. "Normal Retirement Age" shall mean a
Participant's sixty-fifth (65th) birthday.

         2.31. Participant. "Participant" shall mean any Eligible Employee who
has commenced participation in the Plan pursuant to Article III and who retains
rights under the Plan.

         2.32. Period of Severance. "Period of Severance" shall mean the period
of time commencing on an Employee's Severance Date and ending on the Employee's
subsequent Reemployment Commencement Date, if any.

         2.33. Plan. "Plan" shall mean the Allergan, Inc. Employee Stock
Ownership Plan (Restated 2000) described herein and as amended from time to
time.

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

                                       11
<PAGE>   18

         2.35. Plan Year. "Plan Year" shall mean the calendar year.

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

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

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

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

                  (c) Notwithstanding the foregoing, in the case of a
         Participant who is absent by reason of a Maternity or Paternity Leave,
         the provisions of Section 2.26(c)-(d) shall apply for purposes of
         determining whether such a Participant has incurred a Break in Service
         by reason of such Leave.

         2.38. Severance Date. "Severance Date" shall mean, in the case of any
Employee who incurs a Severance, the day on which such Employee is deemed to
have incurred said Severance as determined in accordance with the provisions of
Section 2.37, provided, however, that the special rule set forth under Section
2.26(c)-(d) shall apply with respect to determining whether a

                                       12
<PAGE>   19

Participant on a Maternity or Paternity Leave has incurred a Break in Service.
In the case of any Employee who incurs a Severance as provided under Section
2.37 and who is entitled to a subsequent payment of compensation for reasons
other than future services (e.g., as back pay for past services rendered or as
payments in the nature of severance pay), the Severance Date of such Employee
shall be as of the effective date of the Severance event (e.g., the date of his
or her death, effective date of a resignation or discharge, etc.), and the
subsequent payment of the aforementioned type of post-Severance compensation
shall not operate to postpone the timing of the Severance Date for purposes of
the Plan.

         2.39. Sponsor. "Sponsor" shall mean Allergan, Inc., a Delaware
corporation, and any successor corporation or entity.

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

         2.41. Trust Agreement. "Trust Agreement" shall mean the agreement
between the Trustee and the Sponsor pursuant to which the Trust is maintained.

         2.42. Trustee. "Trustee" shall mean the one or more trustees of the
Trust established pursuant to Section 6.1 hereof.

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

                                       13
<PAGE>   20

                                   ARTICLE III
                          ELIGIBILITY AND PARTICIPATION

         3.1. Commencement of Participation. Each Eligible Employee shall become
a Participant on the Entry Date that is concurrent with or immediately follows
the later of:

                  (a) The date such Eligible Employee performs an Hour of
         Service as an Eligible Employee; or

                  (b) The date such Eligible Employee completes six (6) months
         of Credited Service with a Sponsor or Affiliated Company as an
         Employee, provided such Eligible Employee is an Eligible Employee as of
         such Entry Date.

         Notwithstanding the foregoing, any Employee who is an Eligible Employee
on the Effective Date and who has satisfied the requirements of paragraphs (a)
and (b), above, as of the Effective Date shall become a Participant on the
Effective Date.

         3.2. Participation after Reemploymentt. Any Employee who is not a
Participant but who has completed the service requirement specified in Section
3.1(b) shall, if he or she incurs a Severance and is subsequently reemployed as
an Eligible Employee, become a Participant as of his or her Reemployment
Commencement Date as an Eligible Employee. Any Employee who has not completed
the service requirement specified in Section 3.1(b) shall, if he or she incurs a
Severance and is subsequently reemployed, become a Participant on the date
determined under Section 3.1 above.

         3.3. Duration of Participation. An Eligible Employee who becomes a
Participant shall remain an active Participant until he or she incurs a
Severance, at which time he or she shall become an inactive Participant until he
or she receives a distribution of his or her entire vested interest in his or
her ESOP Account. Once such a distribution is made, any Participant who incurs
such a Severance shall no longer be considered a Participant in the Plan. Any
Participant who (i) transfers out of employment with the Company but who remains
an Employee of an Affiliated Company that has not adopted the Plan pursuant to
Section 8.2, or (ii) remains an Employee of the Company but is no longer an
Eligible Employee, shall become an inactive Participant. Any Compensation of an
Employee while an inactive Participant shall not be included as Compensation for
the purpose of allocations based on Compensation made pursuant to Article IV.

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

                                       14
<PAGE>   21

                                   ARTICLE IV
                    CONTRIBUTIONS AND ALLOCATION TO ACCOUNTS

         4.1. Contributions to the Trust Fund. The Company may contribute to the
Trust Fund for each Plan Year an amount to be determined by the Board of
Directors solely in its discretion. Such amount shall be contributed in cash or
Company Stock and paid over to the Trustee for allocation to the Trust Fund not
later than the date prescribed for filing the Sponsor's federal income tax
return (including all extensions thereto) for its fiscal year corresponding to
such Plan Year. Contributions shall first be applied, if necessary, to reinstate
the ESOP Accounts of applicable reemployed Participants who had previously
forfeited their ESOP Accounts pursuant to Section 5.3 of the Plan, but only
after all forfeitures for the Plan Year have been so applied pursuant to Section
4.3. Some or all of the remaining contributions under this Section 4.1 may be
applied to repay any principal and/or interest outstanding on any Exempt Loan or
to pay Plan expenses as provided in Section 7.11. The determination of the
extent to which such contributions shall be used to repay such Exempt Loans or
pay Plan expenses shall be made at the sole discretion of the Committee. Company
Stock acquired by the Trust Fund through an Exempt Loan shall be added to and
maintained in the Exempt Loan Suspense Subfund and shall thereafter be released
from the Exempt Loan Suspense Subfund and allocated to Participants' ESOP
Accounts as provided in Section 4.2. Contributions in excess of amounts used for
other purposes described in this Section 4.1 shall be allocated to the ESOP
Accounts of Participants as provided in Section 4.2.

         4.2. Allocation of Contributions to Trust Fund.

                  (a) As of a date not later than the last day of each Plan
         Year, an allocation shall be made to the ESOP Account of each "Eligible
         Participant" of such Participant's allocable share for such Plan Year
         of (i) Company contributions of Company Stock contributed in kind to
         the Trust Fund and (ii) Company contributions in other than Company
         Stock, which are not used for other purposes described in Section 4.1.
         For the purposes of this Section 4.2, the term "Eligible Participant"
         shall include all Participants who are Eligible Employees on the last
         day of such Plan Year or who ceased to be Eligible Employees during
         such Plan Year due to death, Disability, or retirement at or after age
         55 (as such retirement is determined under the Allergan, Inc. Pension
         Plan). Such allocations shall be made in the same proportion that the
         Compensation for the Plan Year for such Eligible Participant bears to
         the total Compensation of all Eligible Participants for such Plan Year.

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

                           (i) For each Plan Year until the Exempt Loan is fully
                  repaid, the number of shares of Company Stock released from
                  the Exempt Loan Suspense Subfund shall equal the number of
                  unreleased shares immediately before such

                                       15
<PAGE>   22

                  release for the current Plan Year multiplied by the "Release
                  Fraction." As used herein, the Release Fraction shall be a
                  fraction, the numerator of which is the amount of principal
                  and interest paid on the Exempt Loan for such current Plan
                  Year, and the denominator of which is the sum of the numerator
                  plus the principal and interest to be paid on such Exempt Loan
                  for all future years during the duration of the term of such
                  Loan (determined without reference to any possible extensions
                  or renewals thereof). Notwithstanding the foregoing, in the
                  event such Loan shall be repaid with the proceeds of a
                  subsequent Exempt Loan (the "Substitute Loan"), such repayment
                  shall not operate to release all such Company Stock in the
                  Exempt Loan Suspense Subfund, but, rather, such release shall
                  be effected pursuant to the foregoing provisions of this
                  Section 4.2(b) on the basis of payments of principal and
                  interest on such Substitute Loan.

                           (ii) If the Committee so determines in its
                  discretion, then in lieu of applying the provisions of Section
                  4.2(b)(1) hereof with respect to such Exempt Loan or
                  Substitute Loan, shares shall be released from the Exempt Loan
                  Suspense Subfund as the principal amount of an Exempt Loan is
                  repaid (and without regard to interest payments), provided the
                  following three conditions are satisfied:

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

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

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

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

                  (c) Shares of Company Stock released from the Exempt Loan
         Suspense Subfund for a Plan Year in accordance with Section 4.2(b)
         hereof and Section 6.7(b)(1) shall be held in the Trust Fund on an
         unallocated basis until allocated by the Committee as of not later than
         the last day of that Plan Year. The allocation of such shares shall be
         made among the ESOP Accounts of Eligible Participants (as that term is
         defined in Section 4.2(a)). The number of shares allocable to each such
         Eligible Participant's ESOP Account shall be the number of shares which
         bears the same ratio to the total shares

                                       16
<PAGE>   23

         released for such Plan Year as the Compensation for the Plan Year for
         such Eligible Participant bears to the total Compensation of all
         Eligible Participants for such Plan Year.

                  (d) Notwithstanding the foregoing allocation rules, if the
         aggregate amount of contributions for a Plan Year allocated to ESOP
         Accounts pursuant to paragraphs (a) through (c) above of Participants
         who are Highly Compensated Employees exceed one-third of the aggregate
         contributions made for such Plan Year, amounts allocated to highly
         compensated employees in excess of one-third of such aggregate
         contributions shall be reallocated to other Eligible Participants (as
         that term is defined in Section 4.2(a)) who are not Highly Compensated
         Employees in the same proportion that the Compensation for such Plan
         Year of each such Eligible Participant bears to the total Compensation
         of all such Eligible Participants who are not Highly Compensated
         Employees for such Plan Year.

                  (e) For the 1998 Plan Year only, the term "Eligible
         Participant" as defined in Section 4.2(a) shall include any Participant
         who ceased to be an Eligible Employee during the 1998 Plan Year due to
         his or her election to participate in the Sponsor's Voluntary Early
         Retirement Incentive by August 31, 1998 (or such later date as approved
         by the Sponsor but in no event later than September 30, 1998).(1)

         4.3. Forfeitures. Any amount which is forfeited pursuant to Section 5.3
or 5.13 during a Plan Year shall be segregated from other amounts held under the
Plan and shall first be used to reinstate the ESOP Accounts of reemployed
Participants (or Beneficiaries, if applicable) who had previously forfeited such
ESOP Accounts and who have a right to reinstatement of their forfeited ESOP
Accounts pursuant to Section 5.3 or 5.13. Should any forfeitures then remain,
they may next be used to pay Plan expenses as provided under Section 7.11.
Should any forfeitures then remain, they shall be allocated as of the last day
of the Plan Year to the ESOP Accounts of Eligible Participants (as that term is
defined in Section 4.2(a)) based on Compensation in the same manner as
allocations under Section 4.2(a) and (c).

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

-------------
(1) Section 4.2(e) was added effective January 1, 1998 pursuant to the Third
    Amendment to the Plan as set forth above.

                                       17
<PAGE>   24

                                    ARTICLE V
                            VESTING AND DISTRIBUTIONS

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

         5.2. Vesting.

                  (a) The interest of a Participant in amounts allocated to his
         or her ESOP Account shall vest in accordance with the following
         schedule:

                  Year of Credited Service           Vested Percentage
                  ------------------------           -----------------
                      Less than 1                             0%
                      1 but less than 2                      20%
                      2 but less then 3                      40%
                      3 but less than 4                      60%
                      4 but less than 5                      80%
                      5 or more                             100%

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

         5.3. Severance When Less Than Fully Vested. A Participant who incurs a
Severance and who is not or does not become 100% vested pursuant to Section 5.2,
shall receive a distribution of the vested portion of his or her ESOP Account in
a single lump sum payment in the form prescribed by Section 5.9 hereof, as soon
as practicable following the Participant's Severance Date, but in no event later
than the last day of the Plan Year following the Plan Year in which the
Participant incurred the Severance. The non-vested portion of such Participant's
ESOP Account shall be forfeited in accordance with the following rules:

                  (a) In the event that a distribution of the entire vested
         portion of such a Participant's ESOP Account is made pursuant to this
         Section 5.3, the non-vested portion shall be forfeited as of such
         Participant's Severance Date. In the event such Participant is rehired
         by the Company prior to the date such Participant incurs five
         consecutive Breaks in Service, the amount so forfeited shall be
         reinstated to the Participant's ESOP Account as of the Participant's
         Reemployment Commencement Date (without regard to any interest or
         investment earnings on such amount). For the purpose of this paragraph
         (a), a Participant with no vested portion of his or her ESOP Account
         shall be deemed to have received a distribution pursuant to this
         paragraph (a).

                                       18
<PAGE>   25

                  (b) In the event such a Participant who incurs a Severance
         does not receive a distribution of the entire vested portion of his or
         her ESOP Account, such Participant's ESOP Account shall continue to be
         held by the Trustee. Thereafter, when the Participant incurs five
         consecutive Breaks in Service, the non-vested portion of such
         Participant's ESOP Account shall be forfeited.

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

                               X = P*(AB + D) - D

         For the purposes of applying the formula:

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

                  AB = the ESOP Account balance at the relevant time

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

         5.4. Distribution upon Severance. A Participant who incurs a Severance
on or after becoming 100% vested pursuant to Section 5.2, shall receive a
distribution of his or her ESOP Account, in a single lump-sum payment in the
form prescribed by Section 5.9 hereof, as soon as practicable following the
Participant's Severance Date, but in no event later than the last day of the
Plan Year following the Plan Year in which the Participant incurred the
Severance. Notwithstanding anything to the contrary, upon receipt of a Qualified
Domestic Relations Order on or after a Participant is 100% vested pursuant to
Section 5.2, the amount payable to an Alternate Payee (as such terms are
described in Section 13.2) shall be distributed to the Alternate Payee as soon
as administratively feasible regardless of whether the Participant incurs a
Severance.

         5.5. Distribution upon Death.

                  (a) Upon the death of a Participant while still an Employee,
         the Committee shall give such directions as may be necessary to cause a
         distribution of his or her ESOP Account to be made in a single lump-sum
         payment to the Beneficiary designated by the deceased Participant in
         the form prescribed in Section 5.9 hereof, as soon as practicable
         following the Participant's death, but in no event later than the last
         day of the Plan Year following the Plan Year in which the Participant
         died.

                  (b) Upon the death of a Participant after he or she ceases to
         be an Employee but before he or she receives his or her entire vested
         interest in the Trust, the Committee shall give such directions as may
         be necessary to cause a distribution, in the manner and

                                       19
<PAGE>   26

         time provided in Section 5.5(a) hereof, of any vested balance remaining
         in the Participant's ESOP Account to the Beneficiary designated by the
         Participant.

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

         5.6. Distribution upon Disability. In the event the Committee shall
determine that a Participant has suffered a Disability while an Employee, the
Committee shall proceed to cause a distribution to be made of such Participant's
ESOP Account in a single lump-sum payment in the form prescribed in Section 5.9
hereof as soon as practicable following the Committee's determination that the
Participant has incurred a Disability, but in no event later than the last day
of the Plan Year following the Plan Year in which the Committee makes such
determination.

         5.7. Withdrawal upon Age 59-1/2. After attaining age 59-1/2, a
Participant who is still an Employee may, following such reasonable advance
notice as may be required by the Committee, withdraw the entire vested amount
credited to his or her ESOP Account. Such a withdrawal shall be in the same form
and using the same valuation methods as provided for distributions pursuant to
Section 5.9. For the 2000 Plan Year only, a Participant who is still an Employee
may withdraw the entire vested amount credited to his or her ESOP Account if
such Participant shall incur a Severance between June 19, 2000 and July 31,
2000, inclusive, on or after attaining age 55 and such Participant provides such
reasonable advance notice of his or her expected Severance as required by the
Committee.

         5.8. Designation of Beneficiary.

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

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

                                       20
<PAGE>   27

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

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

         5.9. Form of Distribution.

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

                  (b) A Participant may elect that all shares of Company Stock
         allocated to his or her ESOP Account be distributed in the form of
         Company Stock with cash in lieu of fractional shares. Any cash or other
         property in a Participant's ESOP Account ("non-stock assets") shall be
         used to acquire Company Stock for distribution only if such Participant
         further elects and only if such stock is available on the open market.
         If such Participant elects to receive the non-stock assets in his or
         her ESOP Account in Company Stock and such stock is available on the
         open market, the value of such non-stock assets shall be used to
         acquire such whole shares of Company Stock as may be acquired with such
         value and any remaining amount shall be distributed in cash.
         Notwithstanding the foregoing, if applicable corporate charter or bylaw
         provisions restrict ownership of substantially all outstanding Company
         Stock to Employees or to a plan or trust described in Code Section
         401(a), then any distribution of a Participant's ESOP Account shall
         only be in cash.

                                       21
<PAGE>   28

                  (c) Notwithstanding the foregoing, a Participant who elected
         to diversify the investment of a portion of his or her ESOP Account
         pursuant to Section 5.12(c) or (d) shall not have the right to receive
         such diversified portion in Company Stock, but, rather, shall receive
         any distribution of such diversified portion in cash.

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

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

                  (a) In no event shall any benefits under the Plan, including
         benefits upon retirement, termination of employment, or Disability, be
         paid to a Participant prior to the "Consent Date" (as defined herein)
         unless the Participant consents in writing to the payment of such
         benefits prior to said Consent Date. As used herein, the term "Consent
         Date" shall mean the later of (i) the Participant's 62nd birthday, or
         (ii) the Participant's Normal Retirement Age. Notwithstanding the
         foregoing, the provisions of this paragraph shall not apply (i)
         following the Participant's death, or (ii) with respect to a lump-sum
         distribution of the vested portion of a Participant's ESOP Account if
         the total amount of such vested portion does not exceed (1) $5,000 or
         did not exceed $5,000 at the time of any prior distribution ($3,500 for
         the 1997 Plan Year) or (2) for distributions after March 21, 1999, the
         total amount of such vested portion at the time of distribution does
         not exceed $5,000.(1)

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

                  (c) Notwithstanding paragraphs (a) or (b) above, distributions
         of the entire vested portion of a Participant's ESOP Accounts shall be
         made no later than the Participant's Required Beginning Date, or, if
         such distribution is to be made over the life of such Participant or
         over the lives of such Participant and a Beneficiary (or over a period
         not extending beyond the life expectancy of such Participant and
         Beneficiary) then such distribution shall commence no later than the
         Participant's Required Beginning Date. Required Beginning Date shall
         mean:

-------------
(1) Section 5.10(a) was amended effective January 1, 1998 as set forth in the
    Second Amendment to the Plan and is amended effective March 21, 1999 as set
    forth above.

                                       22
<PAGE>   29

                           (i) Participants attaining age 70-1/2 prior to 1999:
                  The Required Beginning Date of a Participant who attains age
                  70-1/2 prior to 1999 shall be April 1 of the calendar year
                  immediately following the year in which the Participant
                  attains age 70-1/2; provided, however, that a Participant,
                  other than a Five Percent Owner (as defined in Code Section
                  416(i) and applicable regulations), who attains age 70-1/2 in
                  1996, 1997, or 1998 may elect to defer the Required Beginning
                  Date until April 1 of the calendar year following the later of
                  the calendar year in which the Participant attains age 70-1/2
                  or retires.

                           (ii) Participants attaining age 70-1/2 after 1998:
                  The Required Beginning Date of a Participant who attains age
                  70-1/2 after 1998 shall be April 1 of the calendar year
                  immediately following the later of the calendar year in which
                  the Participant attains age 70-1/2 or retires; provided,
                  however, if such Participant is a Five Percent Owner (as
                  defined in Code Section 416(i) and applicable regulations)
                  with respect to the Plan Year ending in the calendar year in
                  which such Participant attains age 70-1/2, the Required
                  Beginning Date shall be April 1 of the calendar year
                  immediately following the year in which such Participant
                  attains age 70-1/2.(1)

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

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

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

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

-------------
(1) Section 5.10(c) was amended effective January 1, 1997 pursuant to the Second
    Amendment to the Plan adopted November 18, 1997 as set forth above.

                                       23
<PAGE>   30

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

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

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

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

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

                                       24
<PAGE>   31

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

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

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

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

                           (viii) Except as is expressly provided hereinabove
                  with respect to any distributed Company Stock that is readily
                  tradeable stock within the meaning of Code Section 409(h), no
                  Participant shall have any put option rights with respect to
                  Company Stock distributed under the Plan, and neither the
                  Company nor the Plan shall have any obligation whatsoever to
                  purchase any such distributed Company Stock from any
                  Participant or other Qualified Holder.

                                       25
<PAGE>   32

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

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

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

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

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

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

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

                                       26
<PAGE>   33

                  (c) The foregoing provisions of this Section shall be
         interpreted and applied in accordance with all applicable requirements
         of Code Section 409(h) and the regulations issued thereunder.

         5.12. Diversification Rule.

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

                           (i) "Qualified Participant" shall mean a Participant
                  who has attained age 55 and who has completed at least 10
                  years of participation in the Plan.

                           (ii) "Qualified Election Period" shall mean the six
                  Plan Year period beginning with the Plan Year in which the
                  Participant first becomes a Qualified Participant.

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

                  (b) Each Qualified Participant shall be permitted to direct
         the Plan as to the diversification of 25 percent of the value of the
         vested portion of the Participant's ESOP Account, in the manner
         provided under paragraphs (c) or (d) below, within 90 days after the
         last day of each Plan Year during the Participant's Qualified Election
         Period. Within 90 days after the close of the last Plan Year in the
         Participant's Qualified Election Period, a Qualified Participant may
         direct the Plan as to the diversification of 50 percent of the value of
         the vested portion of such ESOP Account.

                  (c) For Plan Years beginning on or after January 1, 2000, at
         the written election of a Qualified Participant, the Plan shall
         transfer to the Allergan, Inc. Savings and Investment Plan (the "SIP")
         that portion of the Participant's ESOP Account that is covered by the
         election within 90 days after the last day of the period during which
         the election can be made which shall be allocated to a rollover account
         maintained on behalf of the Qualified Participant. Under the SIP, the
         Qualified Participant may invest the amount so transferred under any of
         the investment options available under the SIP or may direct that the
         amount so transferred be distributed to him or her. Notwithstanding the
         foregoing and consistent with the requirements of Code Section
         401(a)(28), a Qualified Participant who is an Insider may only elect to
         diversify his or her ESOP Account if within six (6) months before the
         Participant's election, he or she has not made an election under the
         Allergan, Inc. Savings and Investment Plan or the provision of any
         company plan covered by Rule 16b-3 (promulgated pursuant to the
         Securities Exchange Act of

                                       27
<PAGE>   34

         1934) then in existence that would result in the transfer into a
         Company equity securities fund.(1)

                  (d) For Plan Years beginning prior to January 1, 2000, at the
         written election of a Qualified Participant, the Plan shall distribute
         (notwithstanding Code Section 409(d)) the portion of the Participant's
         ESOP Account that is covered by the election within 90 days after the
         last day of the period during which the election can be made. Such
         distribution shall be in such form as provided in Section 5.9. Such
         distribution shall be subject to such requirements of the Plan
         concerning put options as would otherwise apply to a distribution of
         Company Stock from the Plan. In lieu of such distribution, a Qualified
         Participant may elect that the Plan transfer the portion of the
         Participant's ESOP Account that is distributable and that is covered by
         such election to another qualified plan of the Company which accepts
         such transfers, provided that such plan permits employee-directed
         investment and does not invest in Company Stock to a substantial
         degree. Such transfer shall be made no later than 90 days after the
         last day of the period during which the election can be made. The
         Committee may also establish at least three investment options under
         this Plan for the purpose of diversification under this Section 5.12.
         If the Committee establishes such investment options, in lieu of
         distribution or transfer under this paragraph (d), a Qualified
         Participant may elect that the Plan invest the portion of the
         Participant's ESOP Account that is distributable in cash and that is
         covered by such election in any of the investment options established
         by the Committee. Such investment shall be made no later than 90 days
         after the last day of the period during which the election can be made.
         Notwithstanding the foregoing and consistent with the requirements of
         Code Section 401(a)(28), a Qualified Participant who is an Insider may
         only elect to diversify his or her ESOP Account if within six (6)
         months before the Participant's election, he or she has not made an
         election under the Allergan, Inc. Savings and Investment Plan or the
         provision of any company plan covered by Rule 16b-3 (promulgated
         pursuant to the Securities Exchange Act of 1934) then in existence that
         would result in the transfer into a Company equity securities fund.

         5.13. Lapsed Benefits.

                  (a) In the event that a benefit is payable under the Plan to a
         Participant and after reasonable efforts the Participant cannot be
         located for the purpose of paying the benefit during a period of three
         consecutive years, the Participant shall be presumed dead and the
         benefit shall, upon the termination of that three year period, be paid
         to the Participant's Beneficiary.

                  (b) If any eligible Beneficiary cannot be located for the
         purpose of paying the benefit for the following two years, then the
         benefit shall be forfeited and allocated to the ESOP Accounts of the
         other Participants for such Plan Year in accordance with Section 4.3.

-------------
(1) The last sentence of Section 5.12(c) was amended effective July 23, 1996
    pursuant to the First Amendment to the Plan as set forth above.

                                       28
<PAGE>   35

                  (c) If a Participant shall die prior to receiving a
         distribution of his or her entire benefit under the Plan (other than a
         Participant presumed to have died as provided above), if after
         reasonable efforts an eligible Beneficiary of the Participant cannot be
         located for the purpose of paying the benefit during a period of five
         consecutive years, the benefit shall, upon expiration of such five-year
         period, be forfeited and reallocated to the ESOP Accounts of the other
         Participants in accordance with Section 4.3.

                  (d) For purposes of this Section, the term "Beneficiary" shall
         include any person entitled under Section 5.8 to receive the interest
         of a deceased Participant or deceased designated Beneficiary. It is the
         intention of this provision that during the relevant waiting period
         (two years or five years) the benefit will be distributed to an
         eligible Beneficiary in a lower priority category under Section 5.8 if
         no eligible Beneficiary in a higher priority category can be located by
         the Committee after reasonable efforts have been made.

                  (e) Notwithstanding the foregoing rules, if after such a
         forfeiture the Participant or an eligible Beneficiary shall claim the
         forfeited benefit, the amount forfeited shall be reinstated (without
         regard to any interest or investment earnings on such amount) and paid
         to the claimant as soon as practical following the claimant's
         production of reasonable proof of his or her identity and entitlement
         to the benefit (determined pursuant to the Plan's normal claim review
         procedures under Section 7.8).

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

                                       29
<PAGE>   36

                                   ARTICLE VI
                           TRUST FUND AND INVESTMENTS

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

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

         6.3. Investment of the Trust.

                  (a) Subject to Sections 6.4 and 5.11 hereof, the Trust Fund
         shall be invested primarily in Company Stock and neither the Company
         nor the Committee nor the Trustee shall have any responsibility or duty
         to time any transaction involving Company Stock, in order to anticipate
         market conditions or changes in stock value, nor shall any such person
         have any responsibility or duty to sell Company Stock held in the Trust
         Fund (or otherwise to provide investment management for Company Stock
         held in the Trust Fund) in order to maximize return or minimize loss.
         The Committee may direct the Trustee to have the Plan enter into one or
         more Exempt Loans to finance the acquisition of Company Stock for the
         Trust Fund. Company contributions in cash, and other cash received or
         held by the Trustee, may be used to acquire shares of Company Stock
         from the Company, Company shareholders, from the ESOP Accounts of
         Participants about to receive distributions under the Plan, or on the
         open market.

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

                           (i)   to acquire Company Stock;

                           (ii)  to repay the same Exempt Loan; or

                           (iii) to repay any previous Exempt Loan.

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

                                       30
<PAGE>   37

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

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

                  (a) The Trustee shall have no discretion or authority to sell,
         exchange or transfer any Company Stock pursuant to an Offer except to
         the extent, and only to the extent that the Trustee is timely directed
         to do so in writing (i) with respect to any Company Stock held by the
         Trustee subject to such Offer and allocated to any Participant's ESOP
         Account, by each Participant to whose ESOP Account any of such Company
         Stock is allocated and (ii) with respect to any Company Stock held by
         the Trustee subject to such Offer and not allocated to any
         Participant's ESOP Account, by each Participant who is an Eligible
         Employee with respect to a number of shares (including fractional
         shares) of such unallocated Company Stock equal to the total number of
         shares of such unallocated Company Stock multiplied by a fraction the
         numerator of which is the annualized Compensation of such Participant
         for the calendar year in which such Offer is made and the denominator
         of which is the total annualized Compensation for the calendar year in
         which such Offer is made of all such Participants who are Eligible
         Employees.

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

                                       31
<PAGE>   38

         subsequent release and allocation of Company Stock held in the Exempt
         Loan Suspense Subfund).

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

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

                  (e) In the event that an Offer for fewer than all of the
         shares of Company Stock held by the Trustee in the Trust shall be
         received by the Trustee, each Participant shall be entitled to direct
         the Trustee as to the acceptance or rejection of such Offer (as set
         forth herein) with respect to the largest portion of such Company Stock
         as may be possible given the total number or amount of shares of
         Company Stock the Plan may sell, exchange or transfer pursuant to the
         Offer based upon the instructions received by the Trustee from all
         other Participants who shall timely instruct the Trustee pursuant to
         this paragraph to sell, exchange or transfer such shares pursuant to
         such Offer, each on a pro rata basis in accordance with the maximum
         number of shares each such Participant would have been permitted to
         direct under paragraph (a) had the Offer been for all shares of Company
         Stock held in the Trust.

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

                                       32
<PAGE>   39

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

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

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

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

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

                                       33
<PAGE>   40

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

                  (m) Each Participant shall be a named fiduciary (as that term
         is defined in Section 402(a)(2) of ERISA) with respect to Company Stock
         allocated to his or her ESOP Account under the Plan and with respect to
         his or her pro-rata portion of the unallocated Company Stock for which
         he or she is entitled to issue instructions in accordance with
         paragraph (a) of this Section solely for purposes of exercising the
         rights of a shareholder with respect to an Offer pursuant to this
         Section 6.4 and voting rights pursuant to Section 7.13.

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

                                       34
<PAGE>   41

         shall be subject to the limitations set forth in Article XI hereof. Any
         allocations to which Participants would be entitled under this Section
         6.4(l) but for the limitations of Article XI, shall be held in the 415
         Suspense Account and allocated to Participants in accordance with
         Article XI.

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

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

         6.6. Accounting and Valuations.

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

                           (i) Each Participant's ESOP Account shall consist of
                  a portion comprised of cash and all other assets except for
                  Company Stock (the "Non-Stock Subaccount") and a portion
                  comprised solely of Company Stock (the "Stock Subaccount").

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

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

                                       35
<PAGE>   42

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

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

                  (d) In making valuations required by the Plan, the Trustee
         shall value all assets of the Trust at fair market value. Such fair
         market value shall be determined from facts reasonably available to the
         Trustee. In making said determination, the Trustee may, but need not,
         select and rely upon the advice and opinions of appraisers, brokers,
         investment counsel, or any other persons believed by the Trustee to be
         competent. Any determination of value so made shall, for all purposes
         of the Plan, conclusively establish such value.

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

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

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

                                       36
<PAGE>   43

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

         6.7. Dividends.

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

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

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

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

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

                  (b) As determined by the Committee, dividends on shares of
         Company Stock held in the Exempt Loan Suspense Subfund or on shares of
         Company Stock contributed to the Trust Fund but not yet allocated to
         Participant's ESOP Accounts shall be either

                                       37
<PAGE>   44

         (i) applied to repay an Exempt Loan then outstanding or (ii) retained
         in the Trust. Any resulting allocation shall be made according to the
         following rules:

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

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

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

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

                  (a) In the case of a contribution which is made by a mistake
         of fact, that contribution, at the Company's election, may be returned
         to the Company within one year after it is made.

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

                  (c) Contributions to the Trust Fund are conditioned on
         deductibility under Code Section 404. In the event a deduction is
         disallowed for any such contribution, then such contribution may be
         returned to the Company within one year of the disallowance.

                  (d) The residue of the 415 Suspense Account that cannot be
         allocated to Participants upon a Plan termination may revert to the
         Company in accordance with the provisions of Section 11.7.

                                       38
<PAGE>   45

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

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

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

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

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

         6.13. Annual Report of Trustee. Promptly following the close of each
Plan Year (or such other period as may be agreed upon between the Trustee and
Committee), or promptly after receipt of a written request from the Company, the
Trustee shall prepare for the Company a

                                       39
<PAGE>   46

written account which will enable the Company to satisfy the annual financial
reporting requirements of ERISA, and which will set forth among other things all
investments, receipts, disbursements, and other transactions effected by the
Trustee during such Plan Year or during the period from the close of the last
Plan Year to the date of such request. Such account shall also describe all
securities and other investments purchased and sold during the period to which
it refers, the cost of acquisition or net proceeds of sale, the securities and
investments held as of the date of such account, and the cost of each item
thereof as carried on the books of the Trustee. All accounts so filed shall be
open to inspection during business hours by the Company, the Committee, and by
Participants and Beneficiaries of the Plan (subject to the provisions of Section
6.4(k)).

         6.14. Appointment of Investment Manager. From time to time the
Committee, in accordance with Section 7.6 hereof, may appoint one or more
Investment Managers who shall have investment management and control over assets
of the Trust not invested or to be invested in Company Stock. The Committee
shall notify the Trustee of such assets of the appointment of the Investment
Manager. In the event more than one Investment Manager is appointed, the
Committee shall determine which assets shall be subject to management and
control by each Investment Manager and shall also determine the proportion in
which funds withdrawn or disbursed shall be charged against the assets subject
to each Investment Manager's management and control. As shall be provided in any
contract between an Investment Manager and the Committee, such Investment
Manager shall hold a revocable proxy with respect to all securities which are
held under the management of such Investment Manager pursuant to such contract
(except for Company Stock), and such Investment Manager shall report the voting
of all securities subject to such proxy on an annual basis to the Committee.

                                       40
<PAGE>   47

                                   ARTICLE VII
                          OPERATION AND ADMINISTRATION

         7.1. Appointment of Committee. There is hereby created a committee (the
"Committee") which shall exercise such powers and have such duties in
administering the Plan as are hereinafter set forth. The Board of Directors
shall determine the number of members of such Committee. The members of the
Committee shall be appointed by the Board of Directors and such Board shall from
time to time fill all vacancies occurring in said Committee. The members of the
Committee shall constitute the Named Fiduciaries of the Plan within the meaning
of Section 402(a)(2) of ERISA; provided that solely for purposes of Section 6.4
hereof, Participants shall be Named Fiduciaries with respect to shares of
Company Stock for which they have the right to sell, transfer, or exchange
pursuant to Section 6.4 and solely for purposes of Section 7.13, Participants
shall be Named Fiduciaries with respect to shares of Company Stock on matters as
to which they are entitled to provide voting directions pursuant to Section
7.13.

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

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

         7.4. Responsibility of Committee. The authority to control and manage
the operation and administration of the Plan, the general administration of the
Plan, the responsibility for carrying out the Plan and the authority and
responsibility to control and manage the assets of the Trust are hereby
delegated by the Board of Directors to and vested in the Committee, except to
the extent reserved to the Board of Directors, the Sponsor, or the Company.
Subject to the

                                       41
<PAGE>   48

limitations of the Plan, the Committee shall, from time to time, establish rules
for the performance of its functions and the administration of the Plan. In the
performance of its functions, the Committee shall not discriminate in favor of
Highly Compensated Employees.

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

                  (a) To designate agents to carry out responsibilities relating
         to the Plan, other than fiduciary responsibilities as provided in
         Section 7.6.

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

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

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

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

                  (f) To direct the Trustee, in writing, from time to time, to
         invest and reinvest the Trust Fund, or any part thereof, or to
         purchase, exchange, or lease any property, real or personal, which the
         Committee may designate. This shall include the right to direct the
         investment of all or any part of the Trust in any one security or any
         one type of securities permitted hereunder. Among the securities which
         the Committee may direct the Trustee to purchase are "qualifying
         employer securities" as defined in Code Section 4975(e) or any
         successor statutes thereto.

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

                                       42
<PAGE>   49

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

         Any action taken in good faith by the Committee in the exercise of
discretionary power conferred upon it by the Plan shall be conclusive and
binding upon the Participants and their Beneficiaries. All discretionary powers
conferred upon the Committee shall be absolute; provided, however, that all such
discretionary power shall be exercised in a uniform and nondiscriminatory
manner.

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

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

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

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

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

                  (e) To direct the voting of any Company Stock or any other
         security held by the Trust subject to Section 7.13 hereof; and

                  (f) To exercise management and control over Plan assets and to
         direct the purchase and sale of Company Stock for the Trust.

         Any action under this Section 7.6 shall be taken in writing, and no
designation or allocation under Subsection (a), (b) or (c) shall be effective
until accepted in writing by the indicated responsible person.

         7.7. Claims Procedures. If a Participant believes that he or she is
being denied any rights or benefits under the Plan, such Participant (or his or
her beneficiary or duly appointed representative) may file a claim for benefits
in writing with the Committee. The Committee shall follow the procedures set
forth in this Section in processing a claim for benefits.

                  (a) Within 90 days following receipt by the Committee of a
         claim for benefits and all necessary documents and information, the
         Committee shall furnish the person claiming benefits under the Plan
         ("Claimant") with written notice of the decision rendered with respect
         to such claim. Should special circumstances require an extension of
         time for processing the claim, written notice of the extension shall be
         furnished to the

                                       43
<PAGE>   50

         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 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 application (together with an
         explanation why such material or information is necessary), and (iv) an
         explanation of the Plan's appeals procedures.

                  (c) If the Committee does not respond within 180 days, the
         Claimant may consider his or her claim denied.

         7.8. Appeals Procedures. A Claimant who wishes to appeal the denial of
his or her claim for benefits or to contest the amount of benefits payable 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.

                  (a) In order to appeal a decision rendered with respect to his
         or her claim for benefits or with respect to the amount of his or her
         benefits, a Claimant must file an appeal with the Committee in writing
         within 60 days after the date of notice of the decision with respect to
         the claim, or if the claim has neither been approved nor denied within
         the period provided in Section 7.7(a) above, then the appeal must be
         made within 60 days after the expiration of the period provided in
         Section 7.7(c).

                  (b) The Claimant may request that his or her appeal be given
         full and fair review by the Committee. The Claimant also may review all
         pertinent documents and submit issues and comments in writing in
         connection with the appeal. The decision of the Committee shall be made
         not later than 60 days after the Claimant has completed his or her
         submission to the Committee of his or her appeal and any documentation
         or other information to be submitted in support of such request. Should
         special circumstances require an extension of time for processing,
         written 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.

                  (c) The decision on the Claimant's appeal shall be in writing
         and shall include specific reasons for the decision, written in a
         manner calculated to be understood by the Claimant with specific
         reference to the pertinent Plan provisions upon which the decision is
         based.

                                       44
<PAGE>   51

                  (d) If the Committee does not respond within 120 days, the
         Claimant may consider his or her appeal denied.

         7.9. Limitation on Liability. Each of the fiduciaries under the Plan
shall be solely responsible for its own acts and omissions and no fiduciary
shall be liable for any breach of fiduciary responsibility resulting from the
act or omission of any other fiduciary or person to whom fiduciary
responsibilities have been allocated or delegated pursuant to Section 7.6,
except as provided in Sections 405(a) and 405(c)(2)(A) or (B) of ERISA. The
Committee shall have no responsibility over assets as to which management and
control has been delegated to an Investment Manager appointed pursuant to
Section 6.15 hereof or as to which management and control has been retained by
the Trustee.

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

         7.11. Compensation of Committee and Plan Expenses. Members of the
Committee shall serve as such without compensation unless the Board of Directors
shall otherwise determine, but in no event shall any member of the Committee who
is an Employee receive compensation from the Plan for his or her services as a
member of the Committee. All members shall be reimbursed for any necessary
expenditures incurred in the discharge of duties as members of the Committee.
The compensation or fees, as the case may be, of all officers, agents, counsel,
the Trustee or other persons retained or employed by the Committee shall be
fixed by the Committee, subject to approval by the Board of Directors. The
expenses incurred in the administration and operation of the Plan, including but
not limited to the expenses incurred by the members of the Committee in
exercising their duties, shall be paid by the Plan from the Trust Fund, unless
paid by the Company, provided, however, that the Plan and not the Company shall
bear the cost of interest and normal brokerage charges which are included in the
cost of securities purchased by the Trust Fund (or charged to proceeds in the
case of sales). If such expenses are to be paid by the Plan from the Trust Fund,
the Committee may direct the Trustee to use forfeitures and dividends (and to
sell the shares of Company Stock that represent such forfeitures or dividends)
to pay such expenses.

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

         7.13. Voting of Company Stock. Notwithstanding any other provision of
the Plan to the contrary, the Trustee shall have no discretion or authority to
vote Company Stock held in the Trust on any matter presented for a vote by the
stockholders of the Company except in accordance with timely directions received
by the Trustee either from the Committee or from

                                       45
<PAGE>   52

Participants, depending on who has the right to direct the voting of such
Company Stock as provided in the following provisions of this Section 7.13.

                  (a) All Company Stock held in the Trust Fund shall be voted by
         the Trustee as the Committee directs in its absolute discretion, except
         as provided in this Section 7.13(a).

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

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

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

                                       46
<PAGE>   53

         opportunities and other similar matters, and the prospect of the
         Participants and prospective Participants for future benefits under the
         Plan.

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

                  (d) Each Participant shall be a named fiduciary (as that term
         is defined in Section 402(a)(2) of ERISA) with respect to Company Stock
         for which he or she has the right to direct the voting under the Plan
         but solely for the purpose of exercising voting rights pursuant to this
         Section 7.13 or certain Offers pursuant to Section 6.4.

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

         7.14. Reliance Upon Documents and Opinions. The members of the
Committee, the Board of Directors, the Company and any person delegated to carry
out any fiduciary responsibilities under the Plan (hereinafter a "delegated
fiduciary"), shall be entitled to rely upon any tables, valuations,
computations, estimates, certificates and reports furnished by any consultant,
or firm or corporation which employs one or more consultants, upon any opinions
furnished by legal counsel, and upon any reports furnished by the Trustee or any
Investment

                                       47
<PAGE>   54

Manager. The members of the Committee, the Board of Directors, the Company and
any delegated fiduciary shall be fully protected and shall not be liable in any
manner whatsoever for anything done or action taken or suffered in reliance upon
any such consultant, or firm or corporation which employs one or more
consultants, Trustee, Investment Manager, or counsel. Any and all such things
done or such action taken or suffered by the Committee, the Board of Directors,
the Company and any delegated fiduciary shall be conclusive and binding on all
Employees, Participants, Beneficiaries, and any other persons whomsoever, except
as otherwise provided by law. The Committee and any delegated fiduciary may, but
are not required to, rely upon all records of the Company with respect to any
matter or thing whatsoever, and may likewise treat such records as conclusive
with respect to all Employees, Participants, Beneficiaries, and any other
persons whomsoever, except as otherwise provided by law.

                                       48
<PAGE>   55

                                  ARTICLE VIII
                         AMENDMENT AND ADOPTION OF PLAN

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

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

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

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

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

         The Committee shall have the right to amend the Plan, subject to the
above provisions (a) through (d), in accordance with the provisions of Section
7.5(g).

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

                                       49
<PAGE>   56

                                   ARTICLE IX
                         DISCONTINUANCE OF CONTRIBUTIONS

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

                                       50
<PAGE>   57

                                    ARTICLE X
                             TERMINATION AND MERGER

         10.1. Right to Terminate Plan. In the event the Board of Directors
decides it is impossible or inadvisable for business reasons to continue the
Plan, then it may, by resolution, terminate the Plan. Upon and after the
effective date of such termination, the Company shall not make any further
contributions under the Plan. Upon the termination or partial termination of the
Plan for any reason, the interest in the Trust of each affected Participant
shall automatically become fully vested unless the Plan is continued after its
termination by conversion of the Plan into a comparable Plan through Plan
amendment or through merger. If, at the time of termination, there is any amount
outstanding in an Exempt Loan, any amount remaining in the Exempt Loan Suspense
Subfund shall be disposed of in a manner that provides for the repayment of
amounts outstanding in any such Exempt Loan. After the satisfaction of all
outstanding liabilities of the Plan to persons other than Participants and
Beneficiaries, all unallocated assets shall be allocated to the ESOP Accounts of
Participants to the maximum extent permitted by law. The Trust Fund may not be
fully or finally liquidated until all assets are allocated to ESOP Accounts;
alternatively any unallocated assets may be transferred to another defined
contribution plan maintained by the Sponsor or an Affiliated Company qualified
under Code Section 401 where such assets shall be allocated among the accounts
of Participants herein who are participants in such transferee plan. In no
event, however, shall any part of the Plan revert to or be recoverable by the
Company, or be used for or diverted to purposes other than for the exclusive
benefit of the Participants or their Beneficiaries. Notwithstanding the
foregoing, amounts held in the 415 Suspense Account may revert to the Company in
accordance with Section 11.7.

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

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

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

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

                                       51
<PAGE>   58

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

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

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

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

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

-------------
(1) Section 10.4(b) was amended effective January 1, 2000 pursuant to the Fifth
    Amendment to the Plan adopted on December 31, 1999 as set forth above.

                                       52
<PAGE>   59

                           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
                           the Sponsor or such other entity resulting from the
                           merger, consolidation or reorganization (the
                           "Surviving Corporation") outstanding immediately
                           after such merger, consolidation or reorganization
                           and being held in substantially the same proportion
                           as the ownership in the Sponsor's voting securities
                           immediately before such merger, consolidation or
                           reorganization, and

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

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

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

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

                                       53
<PAGE>   60

         funds that released from the Exempt Loan Suspense Subfund on account of
         repayment by the Company under this Section 10.4(c) shall be allocated,
         for the Plan Year in which the Change in Control occurs, in accordance
         with the formula set forth herein (consistent with the requirements
         imposed under Article XI, Section 4.2(d) and other requirements of the
         Code). Under the formula for allocation set forth herein, assets and
         funds that are released shall be allocated to Employees who are
         Participants as of the date of the Change in Control (or who would have
         been Participants but for their death, Disability or retirement at or
         after age 55 during the Plan Year) in the same ratio that each such
         Participant's Compensation for the Plan Year through the last pay
         period ending on or before the date of such Change in Control bears to
         the total Compensation of all such Participants for the Plan Year
         through their last pay periods ending on or before the date of such
         Change in Control.(1)

-------------
(1) Section 10.4(c) was amended effective July 23, 1996 as set forth in the
    First Amendment to the Plan and is amended effective January 1, 200 pursuant
    to the Fifth Amendment to the Plan as set forth above.

                                       54
<PAGE>   61

                                   ARTICLE XI
                            LIMITATION ON ALLOCATIONS

         11.1. General Rule.

                  (a) Subject to Sections 11.1(b) and 11.3 through 11.6 hereof,
         the total Annual Additions under the Plan to a Participant's ESOP
         Accounts for any Limitation Year shall not exceed the lesser of:

                           (i) Thirty Thousand Dollars ($30,000); or

                           (ii) Twenty-five percent (25%) of the Participant's
                  Compensation, from the Company for the Limitation Year. For
                  purposes of this Article XI, the "Limitation Year" shall mean
                  the Plan Year.

                  (b) For the purpose of this Article XI and XII only, the term
         "Company" shall mean the Sponsor and any Affiliated Company whether or
         not such Company has adopted the Plan pursuant to Section 8.2. Solely
         for purposes of this Article XI, an entity shall be considered an
         Affiliated Company by reference to Code Section 415(h).

         11.2. Annual Additions. For purposes of Section 11.1, the term "Annual
Additions" shall mean with respect to a Participant, for any Limitation Year
with respect to the Plan and each other defined contribution plan, within the
meaning of Code Section 415(k), maintained by the Company ("Defined Contribution
Plan"), the sum of the amounts determined under Sections 11.2(a), (b), (c), and
(d) hereof:

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

                  (b) All amounts contributed by the Participant.

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

                  (d) All amounts described in Code Sections 415(l)(1) and
         419A(d)(2).

         11.3. Other Defined Contribution Plans. If the Company maintains any
other Defined Contribution Plan, then each Participant's Annual Additions under
such Defined Contribution

                                       55
<PAGE>   62

Plan shall be aggregated with the Participant's Annual Additions under the Plan
for the purposes of applying the limitations of Section 11.1.

         11.4. Defined Benefit Plans. If a Participant in the Plan has also been
a participant in a defined benefit plan (as defined in Code Section 415(k))
maintained by the Company ("Defined Benefit Plan"), then in addition to the
limitation contained in Section 11.1 hereof, the sum of the "Defined Benefit
Fraction," as defined in Section 11.4(a) hereof, and the "Defined Contribution
Fraction," as defined in Section 11.4(b) hereof, for any Limitation Year shall
not exceed 1.0.

                  (a) "Defined Benefit Fraction" shall mean a fraction, the
         numerator of which is the total projected benefit of a Participant
         under all Defined Benefit Plans expressed as either an annual straight
         life annuity or a qualified joint and survivor annuity providing the
         maximum permissible survivor benefit (determined as of the close of the
         Limitation Year), and the denominator of which is the lesser of (i) the
         maximum dollar amount otherwise allowable for such Limitation Year
         under Code Section 415(b)(1)(A) times 1.25 or (ii) the percentage of
         compensation limit under Code Section 415(b)(1)(B) for such Limitation
         Year times 1.4.

                  (b) "Defined Contribution Fraction" shall mean a fraction, the
         numerator of which is the sum of the Participant's Annual Additions to
         the Plan and all other Defined Contribution Plans as of the end of a
         Limitation Year, and the denominator of which is the sum, determined
         for such Limitation Year and each prior Limitation Year of the
         Participant's service with the Company of the lesser of (i) the maximum
         dollar Annual Addition under Code Section 415(c)(1)(A) (determined
         without regard to Code Section 415(c)(6)) which could have been made
         for the Limitation Year times 1.25 or (ii) the amount determined under
         the percentage of compensation limit for such Limitation Year under
         Code Section 415(c)(1)(B) times 1.4. In computing the Defined
         Contribution Fraction under this Section 11.4(b) with respect to any
         Limitation Year ending after December 31, 1982, the special transition
         rule provided in Code Section 415(e)(6) shall be applicable.

         This Section shall not apply to Plan Years beginning on or after
January 1, 2000.

         11.5. Adjustment for Excess Annual Additions. To the extent that the
Annual Additions on behalf of any Participant in a Limitation Year to the Plan
and all other Defined Contribution Plans exceed the limitations set forth in
Sections 11.1 through 11.3 hereof, then excess Annual Additions shall be
eliminated in accordance with the following rules and in the following order:

                  (a) If the Annual Additions on behalf of a Participant in a
         Limitation Year to the Plan and all other Defined Contribution Plans
         would cause the sum of the Defined Contribution Fraction and Defined
         Benefit Fraction to exceed 1.0 as determined under Section 11.4 hereof,
         the excess shall be eliminated by first applying the provisions of such
         other Defined Benefit Plans or Defined Contribution Plans that are
         applicable to

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<PAGE>   63

         reduce the Annual Addition or annual benefit under such other plans
         (except to the extent that this may be prohibited by law or by the
         terms of such plans).

                  (b) If, after the application of paragraph (a) above, excess
         Annual Additions on behalf of any Participant remain, such excess shall
         be eliminated by reducing the allocation to the Participant's ESOP
         Account by the amount of the excess and treating such amount as a
         forfeiture under Section 5.3 hereof and reallocating such amount
         proportionately to the ESOP Accounts of other Participants receiving
         allocations for the Limitation Year up to the limits set forth in
         Sections 11.1 through 11.3 hereof.

                  (c) After each Participant's ESOP Account has been credited
         under paragraph (b) with an amount bringing his or her ESOP Account up
         to his or her maximum Annual Addition (determined under the provisions
         of this Article XI), any remaining excess Annual Addition shall be
         transferred and credited to a 415 Suspense Account established for the
         purpose of this Section 11.5.

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

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

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

                  (b) Compensation shall include any elective deferral as
         defined in Code Section 402(g)(3) and any amount which is contributed
         or deferred by the Company at the election of the Employee and which is
         not includible in the gross income of the Employee by reason of Code
         Sections 125 or 457.

                  (c) Compensation shall not include (i) any employer
         contributions to a plan of deferred compensation which are not included
         in the Employee's gross income for the taxable year in which
         contributed, (ii) any distributions from a plan of deferred
         compensation, (iii) any amounts realized from the exercise of a
         non-qualified stock

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<PAGE>   64

         option or when restricted stock or property held by the Employee
         becomes either freely transferable or is no longer subject to a
         substantial risk of forfeiture under Code Section 83 if such option,
         stock, or property was granted to the Employee by the Company, (iv) any
         amounts realized from the sale, exchange, or other disposition of stock
         acquired under a qualified stock option, (v) any contribution for
         medical benefits (within the meaning of Code Section 419(f)(2) after
         termination of employment which is otherwise treated as an Annual
         Addition, and (vi) any amount otherwise treated as an Annual Addition
         under Code Section 415(l)(1).

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

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

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

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

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

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<PAGE>   65

                                   ARTICLE XII
                                 TOP-HEAVY RULES

         12.1. Applicability. Notwithstanding any provision in the Plan to the
contrary, and subject to the limitations set forth in Section 12.7, the
requirements of Sections 12.4, 12.5, and 12.6 shall apply under the Plan in the
case of any Plan Year in which the Plan is determined to be a Top-Heavy Plan
under the rules of Section 12.3. For the purpose of this Article XII and XI
only, the term "Company" shall mean the Sponsor and any Affiliated Company
whether or not such company has adopted the Plan pursuant to Section 8.2.

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

                  (a) The term "Key Employee" means any Employee or former
         Employee who, at any time during the Plan Year or any of the four
         preceding Plan Years, is or was:

                           (i) An officer of the Company having an annual
                  Compensation greater than 50% of the amount in effect under
                  Code Section 415(b)(1)(A) for the Plan Year; provided,
                  however, for such purposes no more than 50 Employees (or, if
                  lesser, the greater of three Employees or 10% of the
                  Employees) shall be treated as officers;

                           (ii) One of the ten Employees having annual
                  Compensation from the Company of more than the limitation in
                  effect under Code Section 415(c)(1)(A) and owning (or
                  considered as owning within the meaning of Code Section 318)
                  the largest interests in the Company. For this purpose, if two
                  Employees have the same interest in the Company, the Employee
                  having greater annual Compensation from the Company shall be
                  treated as having a larger interest;

                           (iii) A Five Percent Owner of the Company; or

                           (iv) A One Percent Owner of the Company having an
                  annual Compensation from the Company of more than $150,000.

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

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

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

                                       59
<PAGE>   66

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

                  (f) The term "Aggregation Group" means (i) each plan of the
         Company in which a Key Employee is a Participant, and (ii) each other
         plan of the Company which enables any plan described in clause (i) to
         meet the requirements of Code Sections 401(a)(4) or 410. Any plan not
         required to be included in an Aggregation Group under the preceding
         rules may be treated as being part of such group if the group would
         continue to meet the requirements of Code Sections 401(a)(4) and 410
         with the plan being taken into account.

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

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

                  (i) For purposes of this Article XII, an Employee's
         Compensation shall be determined in accordance with the rules of
         Section 11.6.

         12.3. Top-Heavy Status

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

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

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

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

                  In applying the foregoing provisions of this paragraph (a),
         the valuation date to be used in valuing Plan assets shall be (i) in
         the case of a defined benefit plan, the same date which is used for
         computing costs for minimum funding purposes, and (ii) in the case of a

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<PAGE>   67

         defined contribution plan, the most recent valuation date within a
         12-month period ending on the applicable Determination Date.

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

                  (c) The term "Top-Heavy Group" means any Aggregation Group if
         the sum (as of the Determination Date) of (i) the present value of the
         cumulative accrued benefits for Key Employees under all defined benefit
         plans included in the group, and (ii) the aggregate of the account
         balances of Key Employees under all defined contribution plans included
         in the group exceeds 60% of a similar sum determined for all Employees.
         For purposes of determining the present value of the cumulative accrued
         benefit of any Employee, or the amount of the account balance of any
         Employee, such present value or amount shall be increased by the
         aggregate distributions made with respect to the Employee under the
         plan during the five year period ending on the Determination Date. The
         preceding prior distribution rule shall also apply to distributions
         under a terminated plan that, if it had not been terminated, would have
         been required to be included in an Aggregation Group; provided,
         however, any rollover contribution or similar transfer initiated by the
         Employee and made after December 31, 1983, to a plan shall not be taken
         into account with respect to the transferee plan for purposes of
         determining whether such plan is a Top-Heavy Plan (or whether any
         Aggregation Group which includes such plan is a Top-Heavy Group).

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

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

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

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

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<PAGE>   68

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

                  (a) Except as provided below, the minimum contribution
         (including for Plan Years beginning after December 31, 1984, amounts
         deferred under a cash or deferred arrangement under Code Section
         401(k)) for each Non-Key Employee shall be not less than 3% of his or
         her compensation.

                  (b) Subject to the following rules of this paragraph (b), the
         percentage set forth in paragraph (a) above shall not be required to
         exceed the percentage at which contributions (including for Plan Years
         beginning after December 31, 1984, amounts deferred under a cash or
         deferred arrangement under Code Section 401(k)) are made (or are
         required to be made) under the Plan for the year for the Key Employee
         for whom the percentage is the highest for the year. This determination
         shall be made by dividing the contributions for each Key Employee by so
         much of his or her total compensation for the Plan Year as does not
         exceed the applicable Compensation limit. For purposes of this
         paragraph (b), all defined contribution plans required to be included
         in an Aggregation Group shall be treated as one plan. Notwithstanding
         the foregoing, the exceptions to paragraph (a) as provided under this
         paragraph (b) shall not apply to any plan required to be included in an
         Aggregation Group if the plan enables a defined benefit plan to meet
         the requirements of Code Sections 401(a)(4) or 410.

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

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

         12.5. Maximum Annual Addition.

                  (a) Except as set forth below, for any Plan Year in which the
         Plan is determined to be a Top-Heavy Plan, the rules of Section 11.4(b)
         and (c) shall be applied by substituting "1.0" for "1.25".

                  (b) The rule set forth in paragraph (a) above shall not apply
         if (i) the minimum contribution requirement of Section 12.4(a) above
         would be satisfied after substituting "4%" for "3%" where it appears
         therein, and (ii) the Plan would not be a Top-Heavy Plan if "90%" were
         substituted for "60%" each place it appears in Section 12.3(a).

                                       62
<PAGE>   69

                  (c) The rules of paragraph (a) shall not apply with respect to
         any Employee as long as there are no (i) Company Contributions
         (including amounts deferred under a cash or deferred arrangement under
         Code Section 401(k)), forfeitures, or voluntary nondeductible
         contributions allocated to the Employee under a defined contribution
         plan maintained by the Company, or (ii) accruals by the Employee under
         a defined benefit plan maintained by the Company.

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

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

                                       63
<PAGE>   70

                                  ARTICLE XIII
                       RESTRICTION ON ASSIGNMENT OR OTHER
                           ALIENATION OF PLAN BENEFITS

         13.1. General Restrictions Against Alienation.

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

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

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

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

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

                                       64
<PAGE>   71

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

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

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

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

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

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

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

                           (ii) The Plan to provide increased benefits; or

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

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

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

                                       65
<PAGE>   72

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

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

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

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

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

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

                                       66
<PAGE>   73

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

                                       67
<PAGE>   74

                                   ARTICLE XIV
                            MISCELLANEOUS PROVISIONS

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

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

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

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

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

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

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

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

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

                                       68
<PAGE>   75

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

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

                                       69
<PAGE>   76

         IN WITNESS WHEREOF, Allergan, Inc. hereby executes this instrument,
evidencing the terms of the Allergan, Inc. Employee Stock Ownership Plan as
restated this 21st day of June, 2000.

ALLERGAN, INC.

By  /s/ Francis R. Tunney, Jr.
    --------------------------
    Francis R. Tunney, Jr.
    Corporate Vice President, Administration
    General Counsel and Secretary of Allergan, Inc.

                                       70<PAGE>   1
                                                                    Exhibit 10.2

                  ALLERGAN, INC. EMPLOYEE STOCK OWNERSHIP PLAN
                                 TRUST AGREEMENT

<PAGE>   2

                                      TABLE

ARTICLE

FIRST: Acceptance of Property..................................................2

SECOND: Investment Powers......................................................2

THIRD: Payments................................................................8

FOURTH: Administrative Powers..................................................8

FIFTH: Insurance Company Contracts............................................13

SIXTH: Fiduciary Standards....................................................13

SEVENTH: Prohibition of Diversion.............................................14

EIGHTH: Hold Harmless.........................................................14

NINTH: Accounts...............................................................15

TENTH: Committee..............................................................16

ELEVENTH: Compensation and Expenses...........................................16

TWELFTH: Resignation of Trustee...............................................16

THIRTEENTH: Amendment.........................................................16

FOURTEENTH: Termination.......................................................17

FIFTEENTH: Plan-to-Plan Transfers; Rollovers..................................17

SIXTEENTH: Adopting Employers.................................................18

SEVENTEENTH: Alienation.......................................................18

EIGHTEENTH: Bond..............................................................18

NINETEENTH: Successors........................................................18

TWENTIETH: Severability.......................................................19

TWENTY-FIRST: Communications..................................................19

TWENTY-SECOND: Governing Law..................................................19

<PAGE>   3

                                 TRUST AGREEMENT

         WHEREAS, the Allergan, Inc. Employee Stock Ownership Plan, hereinafter
referred to as the "Plan," and the Trust Agreement for Allergan, Inc. Employee
Stock Ownership Plan was initially established with an effective date of July
27, 1989, by Allergan, Inc., hereinafter referred to as the "Sponsor," for the
purpose of providing retirement and related benefits to eligible employees of
the Sponsor and any Affiliated Company who adopts the Plan, hereinafter referred
to collectively as the "Company," and their beneficiaries, hereinafter referred
to as "Participants"; and

         WHEREAS, the Plan Committee, the members of which are "named
fiduciaries" as defined in the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), (which named fiduciaries are hereinafter referred to as
the "Committee") has general responsibility for administration of the Plan; and

         WHEREAS, the Plan provides for a trust to which contributions are to be
made by the Company to be held by a trustee and to be managed, invested and
reinvested for the exclusive benefit of Participants of the Plan and their
beneficiaries; and

         WHEREAS, the Plan and trust are intended to qualify as a plan and trust
that meet the applicable requirements of sections 401(a) and 501(a) of the
Internal Revenue Code of 1986, as amended, hereinafter referred to as the
"Code"; and

         WHEREAS, the current trustee(s) of the trust have been removed as
trustee(s) effective June 30, 2000; and

         WHEREAS, effective July 1, 2000, the Sponsor wishes to amend and
restate the existing agreement of trust, hereinafter referred to as the "Trust,"
in its entirety and appoint UMB Bank, N.A., a national banking association,
having its principal place of business at Kansas City, Missouri, hereinafter
referred to as the "Trustee"; and

         NOW, THEREFORE, in consideration of the promises and of the mutual
covenants herein contained, the Sponsor and the Trustee do hereby covenant and
agree as follows:

                                      -1-

<PAGE>   4

         FIRST: ACCEPTANCE OF PROPERTY.

         The Trustee shall accept such cash and other property as is tendered to
it as contributions hereunder, and as is acceptable to it, hereinafter referred
to as the "Trust Fund," but shall not be under any duty to require the Company
to contribute to the Trust Fund or to determine whether the amount of any
contribution has been correctly computed under the terms of the Plan. In no
event shall the Trustee be considered a party to the Plan. The Trustee shall
have only such duties with respect to the Plan as are set forth in this
Agreement.

         SECOND: INVESTMENT POWERS.

         The Trustee shall invest the assets of the Trust Fund as directed by
the Sponsor, Committee, or Participants in accordance with the provisions of the
Plan. In doing so, the Trustee will be a directed trustee. The general
investment policy of the Plan is to invest primarily in employer securities as
that term is defined in section 407(d) of ERISA, hereinafter referred to as
"Company Stock." Accordingly, subject to the direction of the Committee, Trust
Fund assets other than Company Stock may be used to acquire additional Company
Stock. To the extent not so invested to acquire Company Stock, Trust Fund assets
other than Company Stock may be invested by the Trustee, subject to the
direction of the Committee, in regulated mutual funds or such funds may be held
in cash or cash equivalents pending distribution to Participants or other use by
the Trust. Subject to the general investment policy of the Plan, which is to
invest primarily in Company Stock, trust investments may also include, any fund
created for the collective investment of the assets of employee benefit trusts,
as long as such collective investment fund is a qualified trust under the
applicable provisions of the Code (and while any portion of the Trust Fund is so
invested, such collective investment fund shall constitute a part of the Plan,
and the instruments creating such fund shall constitute a part of this
Agreement). The Trustee shall have no independent investment duties or
responsibilities. The Trustee assumes no financial responsibility with respect
to the investment of the assets of the Trust Fund. If the Trustee properly
carries out such investment directions, the Trustee will have no liability for
any loss or diminution in value occasioned thereby.

         To the maximum extent permitted by law, the Trustee shall not be liable
for the acquisition, retention or disposition of any assets of the Trust Fund or
for any loss to or diminution of such assets unless due to the Trustee's own
negligence or willful misconduct.

         The Committee may appoint an "investment manager," as defined in
section 3(38) of ERISA. Any investment manager so appointed shall be (i) an
investment adviser registered as such under the Investment Advisers Act of 1940,
(ii) a bank, or (iii) an insurance company qualified to perform investment
management services under the laws of more than one state of the United States.
The Committee shall notify the Trustee of any such appointment by delivering to
the Trustee an executed copy of the instrument under which the investment
manager is appointed and evidencing the investment manager's acceptance of such
appointment, an acknowledgment by the investment manager that it is a fiduciary
of the Plan, and a certificate evidencing the investment manager's current
registration under the Investment Advisers Act of 1940 or other appropriate
qualification. The Committee shall specify to the Trustee the portion

                                      -2-

<PAGE>   5

of the Trust Fund that shall be subject to such investment management. The
Trustee shall invest and reinvest the portion of the Trust Fund subject to such
investment management only to the extent and in the manner directed by the
investment manager in writing. During the term of such appointment, the Trustee
shall have no liability for the acts or omissions of such investment manager,
and except as provided in the preceding sentence, shall be under no obligation
to invest or otherwise manage the portion of the Trust Fund subject to such
investment management. The Trustee may maintain separate accounts within the
Trust Fund for the assets of the Trust Fund subject to such investment
management. The Committee may terminate its appointment of an investment manager
at any time and shall notify the Trustee in writing of such termination. To the
maximum extent permitted by ERISA, the Trustee shall be protected in assuming
that the appointment of an investment manager remains in effect until it is
otherwise notified in writing by the Committee.

         In the event that the investment manager appointed hereunder is a bank
or a trust company, or an affiliate of a bank or a trust company, the Trustee
shall, upon the direction of the Committee, transfer funds to such bank, trust
company, or affiliate for investment through the medium of any fund created and
administered by such bank, trust company, or affiliate, acting as trustee
therefore, for the collective investment of the assets of employee benefit
trusts, provided that such fund is qualified under the applicable provisions of
the Code and that while any portion of the assets are so invested, such fund
shall constitute part of the applicable Plan or Plans, and the instrument
creating such fund shall constitute part of this Agreement. In order to
implement the provisions of this paragraph, the Trustee is authorized to enter
into any required ancillary trust, agency or other type of agreement with an
investment manager, or its affiliate, as described in the preceding sentence.

         The Trustee shall have no power or duty to sell, tender, exchange, or
otherwise dispose of any Company Stock held in the Fund, hereinafter referred to
as the "Company Stock Fund," except in the following circumstances: (i) in the
event of a tender or exchange offer as hereinafter provided, (ii) in the case of
fractional shares received in any stock dividend, stock split or other
recapitalization, (iii) as necessary to make any distribution or payment from
the Trust Fund, (iv) pursuant to the direction of the Sponsor, Committee, or a
Participant, or (v) where ERISA prohibits the limitation of the Trustee's power.
In the event that an offer (including but not limited to a tender offer or
exchange offer within the meaning of the Securities Exchange Act of 1934, as
from time to time amended and in effect) (the "Offer") whether or not such
Company Stock is allocated to Participants' ESOP accounts, is made for all or
any portion of the Company Stock held in the Company Stock Fund, and
notwithstanding any other provision of the Trust to the contrary, the Trustee's
discretion or authority to sell, exchange or transfer any of such Company Stock
held in the Company Stock Fund shall be determined in accordance with the
following rules:

         (1)  The Trustee shall have no discretion or authority to sell,
              exchange or transfer any Company Stock pursuant to an Offer except
              to the extent, and only to the extent that the Trustee is timely
              directed to do so in writing (i) with respect to any Company Stock
              held by the Trustee subject to such Offer and allocated to any
              Participant's ESOP account, by each Participant to whose ESOP
              account any of

                                      -3-

<PAGE>   6

              such Company Stock is allocated and (ii) with respect to any
              Company Stock held by the Trustee subject to such Offer and not
              allocated to any Participant's ESOP account, by each Participant
              who is an Eligible Employee with respect to a number of shares
              (including fractional shares) of such unallocated Company Stock
              equal to the total number of shares of such unallocated Company
              Stock multiplied by a fraction the numerator of which is the
              annualized Compensation of such Participant for the calendar year
              in which such Offer is made and the denominator of which is the
              total annualized Compensation for the calendar year in which such
              Offer is made of all such Participants who are Eligible Employees.
              A list of the Participants eligible to direct the sale, exchange
              or transfer of unallocated Company Stock and the number of shares
              subject to their direction shall be delivered to the Trustee by
              the Committee.

         (2)  To the extent there remains any residual fiduciary responsibility
              with respect to Company Stock pursuant to an Offer after
              application of subparagraph (1) above, the Trustee shall sell,
              exchange or transfer such Company Stock as directed by the
              Committee or as directed by an independent fiduciary if duly
              appointed by the Sponsor.

         (3)  Upon timely receipt of such instructions, the Trustee shall,
              subject to the provisions of subparagraphs (5) and (15) of this
              paragraph, sell, exchange or transfer pursuant to such Offer, only
              such shares of Company Stock as to which such instructions were
              given.

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

         (5)  In the event that an Offer for fewer than all of the shares of
              Company Stock held by the Trustee in the Trust shall be received
              by the Trustee, each Participant shall be entitled to direct the
              Trustee as to the acceptance or rejection of such Offer (as set
              forth herein) with respect to the largest portion of such Company
              Stock as may be possible given the total number or amount of
              shares of Company Stock the Plan may sell, exchange or transfer
              pursuant to the Offer based upon the instructions received by the
              Trustee from all other Participants who shall timely instruct the
              Trustee pursuant to this paragraph to sell, exchange or transfer
              such shares pursuant to such Offer, each on a pro rata basis in
              accordance with the maximum number of shares each such Participant
              would have been permitted to direct under subparagraph (1) had the
              Offer been for all shares of Company Stock held in the Trust.

                                      -4-

<PAGE>   7

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

         (7)  With respect to any Offer received by the Trustee, the Trustee
              shall inform the Sponsor of such Offer and the Sponsor shall
              distribute, at its expense, copies of all relevant material
              including but not limited to material filed with the Securities
              and Exchange Commission with such Offer or regarding such Offer,
              which shall seek confidential written instructions from each
              Participant who is entitled to respond to such Offer pursuant to
              subparagraph (1).

         (8)  The Sponsor shall distribute and/or make available to each
              Participant who is entitled to respond to an Offer pursuant to
              subparagraph (1), an instruction form to be used by each such
              Participant who wishes to instruct the Trustee. The instruction
              form shall state that (i) if the Participant fails to return an
              instruction form to the Trustee by the indicated deadline, the
              Company Stock with respect to which he or she is entitled to give
              instructions shall not be sold, exchanged or transferred pursuant
              to such Offer unless the Trustee is directed otherwise as provided
              in subparagraph (2) above, (ii) the Participant shall be a named
              fiduciary (as described in subparagraph (13) below) with respect
              to all shares of Company Stock for which he or she is entitled to
              give instructions, and (iii) the Company acknowledges and agrees
              to honor the confidentiality of the Participant's instructions to
              the Trustee.

         (9)  Each Participant may choose to instruct the Trustee in one of the
              following two ways: (i) not to sell, exchange or transfer any
              shares of Company Stock for which he or she is entitled to give
              instructions, or (ii) to sell, exchange or transfer all Company
              Stock for which he or she is entitled to give instructions. The
              Sponsor shall follow up with additional mailings and postings of
              bulletins, as reasonable under the time constraints then
              prevailing, to obtain instructions from Participants not otherwise
              responding to such requests for instructions. Subject to

                                      -5-

<PAGE>   8

              subparagraph (4), the Trustee shall then sell, exchange or
              transfer shares of Company Stock according to instructions from
              Participants, except that shares for which no instructions are
              received shall not be sold, exchanged or transferred unless
              directed otherwise as provided in subparagraph (2) above.

         (10) The Sponsor shall furnish former Participants who have received
              distributions of Company Stock so recently as to not be
              shareholders of record with the information given to Participants
              pursuant to subparagraphs (7), (8), and (9). The Trustee shall
              then sell, exchange or transfer shares according to instructions
              from such former Participants, except that shares for which no
              instructions are received shall not be sold, exchanged or
              transferred.

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

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

         (13) Each Participant shall be a named fiduciary (as that term is
              defined in section 402(a)(2) of ERISA) with respect to Company
              Stock allocated to his or her ESOP account under the Plan and with
              respect to his or her pro-rata portion of the unallocated Company
              Stock for which he or she is entitled to issue instructions in
              accordance with subparagraph (1) of this paragraph solely for
              purposes of exercising the rights of a shareholder with respect to
              an Offer pursuant to this paragraph.

         (14) To the extent that an Offer results in the sale of Company Stock
              in the Trust and allocated to the ESOP accounts of Participants,
              the Committee shall instruct the Trustee as to the investment of
              the proceeds of such sale.

         (15) In the event a court of competent jurisdiction shall issue to the
              Plan, the Committee, the Sponsor or the Trustee an opinion or
              order, which shall, in the opinion of counsel to the Committee,
              the Sponsor or the Trustee, invalidate, in all circumstances or in
              any particular circumstances, any provision or provisions of

                                      -6-

<PAGE>   9

              this paragraph regarding the determination to be made as to
              whether or not Company Stock held by the Trustee shall be sold,
              exchanged or transferred pursuant to an Offer or cause any such
              provision or provisions to conflict with securities laws, then,
              upon notice thereof to the Committee, the Sponsor or the Trustee,
              as the case may be, such invalid or conflicting provisions of this
              paragraph shall be given no further force or effect. In such
              circumstances, the Trustee shall continue to follow instructions
              received from Participants, to the extent such instructions have
              not been invalidated by such order or opinion. To the extent the
              Trustee is required by such opinion or order to exercise any
              residual fiduciary responsibility with respect to such Offer, the
              Sponsor shall appoint an independent fiduciary who shall direct
              the Trustee as to whether or not Company Stock held by the Trustee
              shall be sold, exchanged or transferred pursuant to such Offer.

         All property received in exchange for such Company Stock so tendered
shall upon receipt be held by the Trustee in the Fund within the accounts of
those Participants who so tendered, the provisions of this Agreement shall
hereby be deemed amended to permit the holding of such property within said Fund
and the property shall thereafter be administered, invested, reinvested and
distributed in accordance with the applicable terms of the Plan and Trust.

         All dividends paid to the Trustee with respect to the Company Stock
Fund shall be held in the Trust by the Trustee as directed by the Committee.

         The Trustee, when directed by the Committee, shall borrow money from
any source, including the Company or any shareholder in the Company, in such
amounts and upon such terms as the Committee may determine, for the purpose of
purchasing or otherwise acquiring Company Stock. In connection with any such
borrowing, at the direction of the Committee, the Trustee may issue its
promissory note and may secure the repayment of such borrowed funds only with
the Company Stock acquired with the proceeds of the loan. Any such borrowing
from the Company, or from any other "disqualified person" within the meaning of
section 4975(e)(2) of the Code, or any other "party in interest" within the
meaning of section 3(14) of ERISA (or guaranteed by the Company or any other
disqualified person or party in interest), shall be subject to the following
provisions:

         (1)  The proceeds of any such loan shall be used only to acquire
              Company Stock, to pay any charges or fees incurred in connection
              with such acquisition, and/or to repay any such loan.

         (2)  The only Trust Funds assets which may be used as collateral for
              the loan shall be the Company Stock acquired with the proceeds of
              such loan (or used as collateral on a prior such loan repaid with
              the proceeds of such current loan), and the terms of such loan
              must provide that shares of such Company Stock pledged as
              collateral shall be released from their status as collateral in
              accordance with Sections 4.2(b) and 6.7(a)(1) (or superseding
              sections) of the Plan (pertaining to the release of Company Stock
              from the Exempt Loan Suspense Subfund) as

                                      -7-

<PAGE>   10

              amended from time to time and which are incorporated herein by
              this reference. Notwithstanding the foregoing, in addition to or
              in lieu of pledging the acquired Company Stock as collateral for
              the repayment of any loan, the Company may guarantee such
              repayment.

         (3)  In the event of a default in the repayment of any such loan, the
              value of pledged shares of Company Stock transferred to the lender
              in satisfaction of such loan shall not exceed the amount of such
              default. Other than such a transfer of the pledged Company Stock
              in such amount, the lender shall have no recourse against the
              Trust for nonpayment of the loan.

         (4)  In the event that there shall be more than one class of capital
              stock of the Company, the class or classes of Company Stock
              acquired by the Trustee with the proceeds of such a loan, and the
              relative proportions of such classes of stock held by the Trustee,
              shall comply with any applicable requirements established pursuant
              to regulations issued by the Secretary of the Treasury under
              section 4975 of the Code so as to assure that such loan and/or
              acquisition of Company Stock does not constitute a prohibited
              transaction within the meaning of the applicable provisions of the
              Code and ERISA, as such provisions may be amended from time to
              time.

         THIRD: PAYMENTS.

         Subject to the provisions of Article FOURTEENTH hereof, the Trustee
shall from time to time transfer cash or other property from the Trust Fund to
such persons, including an insurance company or companies or a paying agent
designated by the Committee, at such addresses, in such amounts, for such
purposes and in such manner as the Committee may direct, provided that such
transfer is administratively feasible, and the Trustee shall incur no liability
for any such payment made at the direction of the Committee. The Committee shall
be solely responsible to insure that any payment made at its direction conforms
with the provisions of the Plan, the provisions of this Agreement, and ERISA,
and the Trustee shall have no duty to determine the rights or benefits of any
person in the Trust Fund or under the Plan or to inquire into the right or power
of the Committee to direct any such payment.

         FOURTH: ADMINISTRATIVE POWERS.

         The Trustee is authorized to exercise from time to time the following
powers in respect of any property, real or personal, of the Trust Fund:

         (1)  power to sell at public or private sale for cash or upon credit or
              partly for cash and partly upon credit and upon such terms and
              conditions as it shall deem proper as and when directed to do so
              by the Committee (or by Participants pursuant to Article Second).
              No purchaser shall be bound to see to or be liable for the
              application of the proceeds of any such sale;

                                      -8-

<PAGE>   11

         (2)  power to exchange securities or property held by it for other
              securities or property, or partly for such securities or property
              and partly for cash, and to exercise conversion, subscription,
              option and similar rights with respect to securities held by it,
              and to make payments in connection therewith as and when directed
              to do so by the Committee (or by Participants pursuant to Article
              Second);

         (3)  power to vote in person or by proxy at corporate or other meetings
              and to participate in or consent to any voting trust,
              reorganization, dissolution, merger or other action affecting
              securities in its possession or the issuers thereof; except,
              notwithstanding any other provision of the Trust to the contrary,
              the Trustee's discretion and authority to vote the Company Stock
              Fund, shall be determined as provided herein.

         (4)  power to acquire, hold or dispose of property in unregistered
              form, or in its name without designation of fiduciary capacity, or
              in the name of its nominee or any custodian, and to the extent
              permitted by ERISA, to combine certificates representing
              investments with investments of the same issue held by the Trustee
              in other fiduciary capacities, and to deposit property in a
              depository or clearing corporation or with the federal reserve
              bank in its district as and when directed to do so by the
              Committee (or by Participants pursuant to Article Second);

         (5)  power to compromise and adjust all debts or claims due to or made
              against it, to participate in any plan of reorganization,
              consolidation, merger, combination, liquidation or other similar
              plan or any action thereunder, or any contract, lease, mortgage,
              purchase, sale or other action by any corporation or other entity
              upon the written direction of the Committee;

         (6)  power to deposit any such property with any protective,
              reorganization or similar committee; to delegate discretionary
              power to any such committee; and to pay part of the expenses and
              compensation of any such committee; and any assessments levied
              with respect to any property so deposited upon the written
              direction of the Committee unless the Trustee is so ordered to do
              so by a court or governmental agency of competent jurisdiction;

         (7)  power to exercise any conversion privilege or subscription right
              available in connection with any such property; to oppose or to
              consent to the reorganization, consolidation, merger or
              readjustment of the finances of any corporation, company or
              association, or to the sale, mortgage, pledge or lease of the
              property of any corporation, company or association any of the
              securities of which may at any time be held in the Trust Fund and
              to do any act with reference thereto, including the exercise of
              options, the making of agreements or subscriptions and the
              payments of expenses, assessments or subscriptions, which may be
              deemed necessary or advisable in connection therewith and to hold
              and retain any securities or other property which it may so
              acquire upon the written direction of the Committee;

                                      -9-

<PAGE>   12

         (8)  power to make distributions in cash or in specific property, real
              or personal, or an undivided interest therein, or partly in cash
              and partly in such property upon the written direction of the
              Committee (or by Participants but subject to the provisions of the
              Plan);

         (9)  power to engage legal counsel, including counsel to the Company or
              the Trustee in its individual capacity, and any other suitable
              agents, and to consult with such counsel or agents with respect to
              the construction of this Agreement, the administration of the
              Trust Fund, and the duties of the Trustee hereunder following
              written consent of the Committee;

         (10) power to commence or defend suits or legal proceedings and to
              represent the Trust Fund in all suits or legal proceedings; to
              settle, compromise or submit to arbitration any claims, debts or
              damages due or owing to or from the Trust Fund, provided that the
              Trustee shall notify the Committee of all such suits, legal
              proceedings and claims and, except in the case of a suit, legal
              proceeding or claim involving solely the Trustee's action or
              omissions to act, shall obtain the written consent of the Sponsor
              before settling, compromising or submitting to binding arbitration
              any claim, suit or legal proceeding of any nature whatsoever;

         (11) power to enter into any contract or policy with an insurance
              company or companies, for the purpose of insurance coverage or
              otherwise, provided that, except as provided in Article FIFTH, the
              Trustee shall be the sole owner of all such contracts or policies
              and all such contracts or policies shall be held as assets of the
              Trust Fund upon the written direction of the Committee;

         (12) power to make, execute and deliver, as Trustee, any and all deeds,
              leases, notes, bonds, guarantees, mortgages, conveyances,
              contracts, waivers, releases or other instruments in writing
              necessary or proper for the accomplishment of any of the foregoing
              powers;

         (13) power to transfer assets of the Trust Fund to a successor trustee
              as provided in Article TWELFTH; and

         (14) power to appoint custodians or subcustodians to hold any or all of
              the Trust Fund upon the written direction or consent of the
              Committee;

         (15) power to appoint ministerial agents to perform various functions
              of the Trustee upon the written direction or consent of the
              Committee; and

         (16) power to exercise, subject to the terms and restrictions set forth
              in Article Fourth and the provisions of the Plan, generally, any
              of the powers that an individual owner might exercise in
              connection with property either real, personal or mixed held by
              the Trust Fund, and to do all other acts that the Trustee may deem

                                      -10-

<PAGE>   13

              necessary or proper to carry out any of the powers set forth in
              this Article FOURTH or otherwise in the best interests of the
              Trust Fund.

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

         (1)  All Company Stock held in the Trust Fund shall be voted by the
              Trustee as the Committee directs in its absolute discretion,
              except as provided in this subparagraph (1).

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

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

              A list of the Participants eligible to vote unallocated Company
              Stock and the number of shares subject to their direction shall be
              delivered to the Trustee by the Committee.

         (2)  To the extent there remains any residual fiduciary responsibility
              with respect to the voting of Company Stock after application of
              subparagraph (1) above, the

                                      -11-

<PAGE>   14

              Trustee shall vote such Company Stock as directed by the Committee
              or as directed by an independent fiduciary if duly appointed by
              the Sponsor.

         (3)  All Participants entitled to direct such voting shall be notified
              by the Sponsor, pursuant to its normal communications with
              shareholders, of each occasion for the exercise of such voting
              rights within a reasonable time before such rights are to be
              exercised. Such notification shall include all information
              distributed to shareholders either by the Sponsor or any other
              party regarding the exercise of such rights. Such Participants
              shall be so entitled to direct the voting of fractional shares (or
              fractional interests in shares); provided, however, that the
              Trustee may, to the extent possible, vote the combined fractional
              shares (or fractional interests in shares) so as to reflect the
              aggregate direction of all Participants giving directions with
              respect to fractional shares (or fractional interests in shares).
              To the extent that a Participant shall fail to direct the Trustee
              as to the exercise of voting rights arising under Company Stock
              credited to his or her ESOP account, such Company Stock shall not
              be voted unless the Trustee is directed otherwise as provided in
              subparagraph (2) above. The Trustee shall maintain confidentiality
              with respect to the voting directions of all Participants.

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

         (5)  In the event a court of competent jurisdiction shall issue an
              opinion or order to the Plan, the Committee, the Sponsor or the
              Trustee, which shall, in the opinion of counsel to the Committee,
              the Sponsor or the Trustee, invalidate under ERISA, in all
              circumstances or in any particular circumstances, any provision or
              provisions of this paragraph regarding the manner in which Company
              Stock held in the Trust shall be voted or cause any such provision
              or provisions to conflict with ERISA, then, upon notice thereof to
              the Committee, the Sponsor or the Trustee, as the case may be,
              such invalid or conflicting provisions of this paragraph shall be
              given no further force or effect. In such circumstances the
              Trustee shall continue to follow instructions received from
              Participants, to the extent such instructions have not been
              invalidated by such order or opinion. To the extent the Trustee is
              required by such opinion or order to exercise any residual
              fiduciary responsibility with respect to voting, the Sponsor shall
              appoint an independent fiduciary who shall direct the Trustee as
              to the manner in which Company Stock held by the Trustee shall be
              voted.

         Notwithstanding the foregoing paragraphs, in the event that an
investment manager is appointed pursuant to Article SECOND hereof, such
investment manager shall exercise such of the powers enumerated in this Article
FOURTH and otherwise contained in this Agreement with respect to the portion of
the Trust Fund subject to its control as may be specified in the instrument
under which the investment manager was appointed.

                                      -12-

<PAGE>   15

         FIFTH: INSURANCE COMPANY CONTRACTS.

         The Trustee may, at the direction of the Committee, (i) enter into one
or more contracts with legal reserve life insurance companies, the rate of
return from which is fixed by the terms of such contracts, (ii) transfer to any
such insurance companies a portion of the Trust Fund in accordance with any such
contracts, and (iii) hold any such contracts as a part of the Trust Fund until
directed otherwise by the Committee. The Committee shall give such direction to
the Trustee by delivering to the Trustee a copy of the action of the Committee
which shall specifically refer to this Article FIFTH and direct the Trustee to
so act. The Committee may direct the Trustee to (i) request any information from
any such insurance companies necessary or appropriate to make an investment
decision, (ii) demand or accept withdrawals or other distributions under any
such contracts, (iii) exercise or not to exercise any rights, powers, privileges
and options under any such contracts and (iv) assign, amend, modify or terminate
any such contracts. The Trustee shall take no action with respect to any such
contracts except at the direction of the Committee. The Trustee shall incur no
liability for complying with any direction of the Committee, and in the absence
of any direction from the Committee, the Trustee shall incur no liability for
failing to take any action. Any insurance companies issuing any contracts as
hereinabove described may deal with the Trustee as the absolute owner of any
such contracts and need not inquire as to the authority of the Trustee to act
with regard to such contracts. Any such insurance company may accept and rely
upon any communication from the Trustee that is signed by an officer of the
Trustee. For purposes of this Agreement, any such insurance company shall be
considered to be an investment manager with regard to the assets of the Plan
subject to its control. In no event shall the underlying assets of such
insurance company in which such contracts are invested be considered assets of
the Plan or part of the Trust Fund.

         SIXTH: FIDUCIARY STANDARDS.

         The Trustee (or any investment manager appointed pursuant to Article
SECOND hereof) shall (i) discharge its duties hereunder with the care, skill,
prudence and diligence under the circumstances then prevailing that a prudent
person acting in a like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims; (ii) subject to
the investment funds specified in the Plan, if any, and to the extent required
by ERISA, diversify the investments of the Trust Fund so as to minimize the risk
of large losses unless under the circumstances it is clearly prudent not to do
so; and (iii) discharge its duties in accordance with the provisions of the Plan
and this Agreement insofar as such provisions are consistent with ERISA.

         The Trustee (or any investment manager appointed pursuant to Article
SECOND hereof) shall not engage in any transaction that it knows or should know
violates section 406 of ERISA. Notwithstanding the foregoing, the Trustee (or
any investment manager appointed pursuant to Article SECOND hereof) may, in
accordance with any appropriate exemption provided under ERISA or upon the
approval of the Secretary of the Department of Labor, enter into any transaction
otherwise prohibited under section 406 of ERISA.

                                      -13-

<PAGE>   16

         The Trustee shall not be responsible for the administration of the
Plan, for determining the funding policy of the Plan, or the adequacy of the
Trust Fund to meet and discharge liabilities under the Plan.

         The Trustee shall not be responsible for any failure of the Committee
or the Company to discharge any of their respective responsibilities with
respect to the Plan nor be required to enforce payment of any contributions to
the Trust Fund.

         SEVENTH: PROHIBITION OF DIVERSION.

         (1)  At no time prior to the satisfaction of all liabilities with
              respect to Participants in the Plan and their beneficiaries shall
              any part of the corpus or income of the Trust Fund be used for, or
              diverted to, purposes other than for the exclusive benefit of such
              Participants and their beneficiaries. Except as provided in
              subparagraphs (2), (3) and (4) below, and Article THIRTEENTH, or
              as otherwise permitted under the provisions of the Plan, the
              assets of the Trust Fund shall never inure to the benefit of the
              Company and shall be held for the exclusive purpose of providing
              benefits to Participants in the Plan and their beneficiaries and
              defraying the reasonable expenses of administering the Plan.

         (2)  In the case of a contribution that is made by the Company by a
              mistake of fact, subparagraph (1) above shall not prohibit the
              return to the Company of such contribution at the direction of the
              Committee within one year after the payment of the contribution.

         (3)  If a contribution by the Company is expressly conditioned on
              qualification of the Plan under section 401 of the Code, and if
              the Plan does not so qualify, then subparagraph (1) above shall
              not prohibit the return to the Company of such contribution at the
              direction of the Committee within one year after the date of
              denial of qualification of the Plan, to the extent permitted by
              ERISA and the Code.

         (4)  If a contribution by the Company is expressly conditioned upon the
              deductibility of the contribution under section 404 of the Code,
              then to the extent such deduction is disallowed, subparagraph (1)
              above shall not prohibit the return to the Company of such
              contribution at the direction of the Committee, to the extent
              disallowed, within one year after the date of such disallowance.

         EIGHTH: HOLD HARMLESS.

         To the maximum extent permitted by ERISA and other applicable law, the
Trustee shall not be liable for and the Company shall indemnify the Trustee
against, and agrees to hold the Trustee harmless from, all liabilities and
claims (including reasonable attorney's fees and expenses in defending against
such liabilities and claims) against the Trustee, arising from the Trustee's
performance of its duties in conformance with the terms of the Plan and this

                                      -14-

<PAGE>   17

Agreement, including any liability and claim arising with regard to the
provisions of Article SECOND, unless such liability or claim results from
negligent, reckless, or willful acts of commission or omission by the Trustee or
results from the Trustee's violation of ERISA or other applicable laws. To the
maximum extent permitted by ERISA and other applicable law, the Trustee shall
not be liable for acting (or for taking no action) in accordance with any
written direction of the Committee or an investment manager designated under
Article SECOND, or, where an investment manager has been designated, failing to
act in the absence of any such direction, including, without limitation, any
claim or liability that may be asserted against the Trustee on account of
failure to receive securities purchased, or failure to deliver securities sold
pursuant to orders issued by an investment manager, and the Company shall
indemnify the Trustee against and agrees to hold the Trustee harmless from, all
such liabilities and claims (including attorney's fees and expenses in defending
against such liabilities and claims). The foregoing indemnifications shall also
apply to liabilities and claims against the Trustee arising from any breach of
fiduciary responsibility by a fiduciary other than the Trustee, unless the
Trustee (i) participates knowingly in or knowingly undertakes to conceal such
breach, (ii) has enabled such fiduciary to commit such breach by its failure to
exercise its fiduciary duties under ERISA or (iii) has actual knowledge of such
breach and fails to take reasonable remedial action to remedy such breach.

         NINTH: ACCOUNTS.

         The Trustee or its agent shall keep records of all transactions
relating to the Trust Fund, which shall be made available at all reasonable
times to the Committee, persons designated by the Board of Directors of the
Sponsor or as may be required by law. The Trustee or its agent shall render an
accounting to the Company and the Committee at least annually which shall be in
a form sufficient to produce financial statements and to conduct an audit as
required by ERISA and the Code. The Committee may approve such accounting on
behalf of itself and the Company by an instrument in writing delivered to the
Trustee. If the Committee does not file with the Trustee objections to any such
accounting within sixty (60) days after its receipt, the Committee shall be
deemed to have approved such accounting on behalf of itself and the Company. In
such case, or upon the written approval of the Committee of any such accounting,
the Trustee shall, to the extent permitted by law, be discharged from all
liability to the Committee and the Company for its acts or failures to act
described in such accounting. Except to the extent otherwise provided in ERISA,
no person, other than the Company or the Committee, may require an accounting or
bring any action against the Trustee with respect to the Trust Fund. The Trustee
shall render to the Committee, at least quarterly, a statement of the Trust Fund
assets and their values and, whenever a contribution is made to the Trust Fund
other than in cash, a statement of the value of such property on the date it is
received by the Trustee.

         Nothing contained in this Agreement or in the Plan shall deprive the
Trustee of the right to have judicial settlement of its accounts. In any
proceeding for a judicial settlement of the Trustee's accounts, or for
instructions with regard to the Trust, the only necessary parties thereto in
addition to the Trustee shall be the Committee. If the Trustee so elects, it may
join as a party or parties any other person or persons.

                                      -15-

<PAGE>   18

         TENTH: COMMITTEE.

         The Sponsor shall certify to the Trustee the name of the entity,
person, or persons from time to time constituting the Committee. All directions
to the Trustee by the Committee shall be in writing, and the Trustee shall be
entitled to rely without further inquiry upon all such written directions
received from the Committee. The Committee shall in its sole discretion have the
right to appoint such agents as it may deem necessary to carry out its duties
pursuant to the provisions of the Plan and this Trust. If necessary or
appropriate the Committee shall notify the Trustee in writing as to the identity
and authority of any such agent, which notice shall be effective upon receipt by
the Trustee and shall remain effective until notice of the termination of any
such agent's authority is given to the Trustee.

         ELEVENTH: COMPENSATION AND EXPENSES.

         The Trustee shall be entitled to receive such reasonable compensation
for its services as may be agreed upon from time to time by the Sponsor and the
Trustee. Unless paid by the Company, such compensation, attorneys' fees that
were incurred with the Committee's approval in the administration of the Trust
Fund, all taxes levied or assessed against the Trust Fund, and such other
expenses as are incurred in the administration of the Trust Fund shall be paid
from the Trust Fund.

         TWELFTH: RESIGNATION OF TRUSTEE.

         The Trustee may resign at any time by giving thirty (30) days written
notice to the Sponsor. An authorized officer of the Sponsor may remove the
Trustee at any time by giving thirty (30) days written notice to the Trustee
unless the Trustee shall accept as adequate a shorter notice. In the case of the
resignation or removal of the Trustee, an authorized officer of the Sponsor
shall appoint a successor trustee who shall have the same powers and duties as
those conferred upon the Trustee. Upon the resignation or removal of the Trustee
and the appointment of the successor trustee, the Trustee shall account for the
administration of the Trust Fund up to the date of its resignation or removal in
the manner provided in Article NINTH hereof and, upon the approval or deemed
approval of such accounting, the Trustee shall transfer to the successor trustee
all of the assets then constituting the Trust Fund and the Trustee shall to the
maximum extent permitted by ERISA be forever released and discharged from all
liability and accountability with respect to the propriety of its acts and
transactions; provided, however, that the Trustee may, in its sole discretion,
transfer such assets prior to the completion of such accounting if the Sponsor
agrees thereto in writing, such writing to include such limitations on the
Trustee's liability therefor as the Trustee may deem appropriate. The term
"Trustee" as used in this Agreement shall be deemed to apply to any successor
trustee acting hereunder.

         THIRTEENTH: AMENDMENT

         An authorized officer of the Sponsor may amend all or any part of this
Agreement at any time provided, however, that any amendment shall not be
effective until the instrument of amendment has been agreed to and executed by
the Trustee. Any such amendment or

                                      -16-

<PAGE>   19

modification of this Agreement may be retroactive if necessary or appropriate to
qualify or maintain the Trust Fund as a part of a plan and trust exempt from
federal income taxation under sections 401(a) and 501(a) of the Code, the
provisions of ERISA, or any other applicable provisions of federal or state law,
as now in effect or hereafter amended or adopted, and any regulations issued
thereunder, including, without limitation, any regulations issued by the United
States Treasury Department, or the United States Department of Labor.

         Notwithstanding anything contained in this Article THIRTEENTH to the
contrary, no amendment shall divert any part of the Trust Fund to, and no part
of the Trust Fund shall be used for, any purpose other than for the exclusive
purpose of providing benefits to Participants and their beneficiaries; provided,
however, that nothing in this Article THIRTEENTH shall be deemed to limit or
otherwise prevent the payment from the Trust Fund of expenses, other charges as
provided in Article ELEVENTH, or as otherwise permitted by the Plan.

         FOURTEENTH: TERMINATION.

         This Agreement and the Trust Fund hereby created may be terminated at
any time by the Board of Directors of the Sponsor by written notice delivered to
the Trustee. Upon receipt of such notice of termination, the Trustee shall,
after payment of all expenses incurred in the administration of the Trust Fund
and such compensation as the Trustee may be entitled to, and upon approval of
the appropriate governmental or quasi-governmental authorities (if such approval
shall be required under applicable law or desired by the Committee), then
distribute the Trust Fund in cash or in kind to such persons or entities,
including the Company, at such time and in such amounts as the Committee shall
direct, which direction shall be in conformity with the provisions of the Plan
and ERISA.

         FIFTEENTH: PLAN-TO-PLAN TRANSFERS; ROLLOVERS.

         The Trustee or its agent may transfer all of the property representing
a Participant's vested interest in the Plan to the trustees of any trust
qualified under section 401(a) of the Code or to an individual retirement
account. The Trustee or its agent may make such a transfer only at the direction
of the Committee.

         The Trustee may accept as part of the Trust Fund such property as is
acceptable to the Trustee that represents a Participant's retirement benefits
transferred from a trust qualified under section 401(a) of the Code or
transferred from the Participant or an individual retirement account as a
permissible rollover under section 402(c) or 408(d)(3) of the Code. The Trustee
may accept such a transfer only at the direction of the Committee. A Participant
shall at all times be fully vested in any property so transferred as a rollover
to the Trust Fund. Such property shall be distributed to the Participant or his
beneficiary at the direction of the Committee within the time required for
distribution of his or her retirement benefits under the applicable provisions
of the Plan.

                                      -17-

<PAGE>   20

         SIXTEENTH: ADOPTING EMPLOYERS.

         An affiliated entity of the Sponsor that has adopted the Plan in
accordance with its terms shall become a party to this Agreement by delivering
to the Sponsor and the Trustee a certified copy of a resolution of its board of
directors or governing body to the effect that it agrees to adopt the Plan, to
become a party to this Agreement, and to be bound by all the terms and
conditions of the Plan and this Agreement. The Sponsor shall have the sole
authority to enforce this Agreement on behalf of any such affiliated entity and
the Trustee shall in no event be required to deal with any such affiliated
entity except by dealing with the Sponsor as its agent. Irrespective of the
number of affiliated entities which may become parties to this Agreement, the
Trustee shall in all respects invest and administer the Trust Fund as a single
fund for investment and accounting purposes without allocation of any part of
the Trust Fund as between the Sponsor and any such affiliated entity.

         An affiliated entity that has adopted the Plan shall cease to be a
party to this Agreement upon the Sponsor delivering to the Trustee a certified
copy of a resolution of such affiliated entity's board of directors or governing
body terminating its participation in the Plan. In such event, or in the event
of the merger, consolidation, sale of property or stock, separation,
reorganization or liquidation of the Sponsor or of any such affiliated entity,
or in the event of the establishment, modification or continuance of any other
retirement plan that separately or in conjunction with this Plan qualifies under
section 401(a) of the Code, the Trustee shall continue to hold the portion of
the Trust Fund that is attributable to the participation in the Plan of the
employees and their beneficiaries affected by such termination or by such
transaction, and this Agreement shall continue in force with respect to such
portion, until otherwise directed by the Committee, in accordance with the
provisions of the Plan and ERISA.

         SEVENTEENTH: ALIENATION.

         No interest in the Trust Fund shall be assignable or subject to
anticipation, sale, transfer, mortgage, pledge, charge, garnishment, attachment,
bankruptcy or encumbrance or levy of any kind, and the Trustee shall not
recognize any attempt to assign, sell, transfer, mortgage, pledge, charge,
garnish, attach or otherwise encumber the same except to the extent that such
attempt is made pursuant to a court order determined by the Committee to be a
qualified domestic relations order, as defined in section 414 of the Code and
section 206 of ERISA, or as otherwise required by law.

         EIGHTEENTH: BOND.

         The Trustee shall not be required to give any bond or any other
security for the faithful performance of its duties under this Agreement except
as required by law.

         NINETEENTH: SUCCESSORS.

         This Agreement shall be binding upon the respective successors and
assigns of the Company and the Trustee. Any corporation that shall, by merger,
consolidation, purchase or

                                      -18-

<PAGE>   21

otherwise, succeed to substantially all the trust business of the Trustee shall,
upon such succession, and without any appointment or other action by any person,
be and become successor Trustee hereunder.

         TWENTIETH: SEVERABILITY.

         If any provision of this Agreement is held to be invalid, such
invalidity shall not affect the remaining provisions of the Agreement and they
shall be construed and enforced as if such invalid provisions had never been
inserted therein.

         TWENTY-FIRST: COMMUNICATIONS.

         Communications to the Company or the Committee shall be addressed to
the Sponsor, or to the Committee in care of the Sponsor, as the case may be, Mr.
Kevin Wilcox, Director, Corporate Employee Benefits, Allergan, Inc., 2525 Dupont
Drive, Irvine, CA 92612-1599 (or his/her successor); provided, however, that
upon the Sponsor's written request such communications shall be sent to such
other address as the Sponsor may specify.

         Communications to the Trustee shall be addressed to: UMB Bank, N.A.,
Employee Benefit Division, 1010 Grand Avenue, P.O. Box 419692, Kansas City, MO
64141-6692; provided, however, that upon the Trustee's written request, such
communications shall be sent to such other address as the Trustee may specify.
No communication shall be binding on the Trustee until it is received by the
Trustee.

         TWENTY-SECOND: GOVERNING LAW.

         This Agreement shall be construed in accordance with ERISA and, to the
extent not preempted by ERISA, the laws of the State of Missouri.

                                      -19-

<PAGE>   22

         IN WITNESS WHEREOF, the Sponsor and the Trustee have executed this
instrument as of July 1, 2000.

                                             ALLERGAN, INC.

                                             By: /s/ Francis R. Tunney, Jr.
                                                 -------------------------------
                                             Title: Corporate Vice President--
                                             Administration, General Counsel and
                                             Secretary

ATTEST:

Title:
       ---------------------------
(Corporate Seal)

                                             UMB BANK, N.A.

                                             By: /s/ William A. Hann
                                                 -------------------------------
                                             Title: Senior Vice President

                                      -20-

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