Document:

EXHIBIT 10.6

 

POST CLOSING AGREEMENT  Hardinge Holdings
GmbH

 

THIS
POST-CLOSING AGREEMENT (“Agreement”) is made as of March 16, 2009, by and
between HARDINGE INC., a New York corporation having an address of One Hardinge
Drive, Elmira, New York 14902 (“Borrower”), HARDINGE TECHNOLOGY SYSTEMS, INC., a
New York corporation having an address of One Hardinge Drive, Elmira, New York 14902
(“Guarantor”), and MANUFACTURERS AND TRADERS TRUST COMPANY,
a New York banking corporation with banking offices at One M&T Plaza,
Buffalo, New York 14240, Attention: Office of General Counsel (“Lender”).

 

Pursuant to
the terms of a certain commitment letter dated March 13, 2009 (“Commitment
Letter”), Lender agreed to make a loan to Borrower in the amount of Ten Million
and 00/100 Dollars ($10,000,000.00) (the “Loan”).  The Loan will be evidenced by a note in the
total principal amount of $10,000,000.00 by Borrower to the order of Lender (the
“Note”).  The Note is secured by, among
other things, a Credit Agreement, a Guaranty, a Negative Pledge Agreement, and a
General Security Agreement, all of even date herewith (collectively with the
Note, the “Loan Documents”).

 

A.          Borrower
acknowledges that as part of the consideration for the Loan, Lender is to
receive a pledge of 2/3rds of the stock of Hardinge Holdings GmbH, a foreign
subsidiary of Borrower (the “Holding Co.”) (the “Pledge”).  It is the understanding of the parties hereto
that all of the stock in Borrower’s foreign subsidiaries is currently held by
Holding Co.

B.           Borrower and Guarantor acknowledge that
Lender and its counsel have requested certain due diligence items in
preparation for the Loan as set forth on Exhibit A hereto and that not all
of the items have been provided as of the closing date.

C.           Borrower acknowledges and agrees that Lender
will not make the Loan in the absence of this Agreement.

 

NOW,
THEREFORE, for and in consideration of Lender making the Loan to Borrower and
for other good and valuable consideration, the receipt, adequacy and
sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1.              The above recitals are true and correct
and are incorporated herein by reference.

 

2.             Borrower and Guarantor acknowledge and
agree to provide any and all items on Exhibit A that have not been
provided to Lender or Lender’s counsel prior to the closing date.  Such items shall be delivered within fifteen
(15) days of the date hereof.  In
addition, Borrower and Guarantor acknowledge and agree to provide any
additional information and documentation that Lender may reasonably request in
connection with the Loan and the subsequent Pledge.

 

3.              Pledge.  Borrower acknowledges that it owns 100% of
the stock of Holding Co.  which holds all
of the foreign stock of the foreign subsidiaries of Borrower.  Borrower acknowledges and agrees that in
consideration for the Loan, it agrees to execute within fifteen (15) days of
the date hereof, a Pledge Agreement pledging 2/3rds of its stock in Holding Co.
along with any and all other documents needed to 

 

 

effectuate the
Pledge.  Borrower further agrees that it
shall provide and cause Holding Co. to provide all of the documentation
pertaining to the formation, authority, stock holdings, etc. of Holding Co. as
is required by Lender, in its reasonable judgment.  Borrower further agrees that if Lender or
Lender’s counsel shall deem it necessary, Borrower shall cause Holding Co. to
execute any and all documents necessary to effectuate the Pledge.  Borrower agrees to obtain an opinion letter
from New York counsel in substantially the form attached hereto as Exhibit B
regarding the authority and enforcement of the Pledge by Borrower.  Borrower shall obtain legal counsel in the
foreign country or organization for Holding Co. to opine as to authority and
enforceability of a Pledge by Holding Co. relative to the foreign stock or
assets of Holding Co.

 

4.              It is understood and agreed to by the
parties hereto that the current stock certificates that Borrower is required to
deliver to Lender are being held by JPMorgan Chase Bank in connection with the
prior financing.  Borrower acknowledges
and agrees that if it is unable to provide the certificates prior to or at the
time of closing, it shall deliver those certificates immediately upon the
release thereof by JPMorgan Chase Bank and within fifteen (15) days of the date
hereof.

 

5.              Borrower shall pay any and all expenses
related to any post-closing items contained in this Agreement, including, but
not limited to, expenses incurred in complying with Paragraph 3 herein and any
Lender’s counsel fees for services rendered in connection with this Agreement
incurred after March 17, 2009.

 

6.              Event of Default.  Borrower’s and Guarantor’s failure to perform
their obligations by the dates stated herein shall be an Event of Default under
the Loan Documents.

 

IN WITNESS WHEREOF, the parties below have entered into this Agreement
as of the day and year first above written.

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  HARDINGE
  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ EDWARD J. GAIO

  
	
   

  	
   

  	
  Name: Edward
  J. Gaio

  
	
   

  	
   

  	
  Title:   Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
  GUARANTOR:

  
	
   

  	
   

  
	
   

  	
  HARDINGE
  TECHNOLOGY SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ RICHARD L. SIMONS

  
	
   

  	
   

  	
  Name: Richard
  L. Simons

  
	
   

  	
   

  	
  Title:  President

  

 

2

 

	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  MANUFACTURERS
  AND TRADERS TRUST COMPANY

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ SUSAN A. BURTIS

  
	
   

  	
   

  	
  Name: Susan
  A. Burtis

  
	
   

  	
   

  	
  Title:   Vice President

  

 

3

 

EXHIBIT A – LIST OF REQUIREMENTS

 

EXHIBIT A-1: REQUEST FOR INFORMATION SHEET

EXHIBIT A-2: CLOSING CHECKLIST

 

4

 

EXHIBIT A-1: REQUEST FOR INFORMATION SHEET

HARDINGE INC.

 

1.             The following
information as to the Borrower – Hardinge Inc.:

 

A.           Full and proper name of Borrower and State
of Formation

B.             Address of Borrower

C.             Federal Identification Number

D.            Copy of Certificate of Incorporation and
filing receipt, along with any amendments thereto

E.              Copy of By-laws, along with any
amendments thereto

F.              Long
Form Certificate of Good Standing, dated within (60) days of
closing

G.             Franchise tax search, dated within (60)
days of closing

H.            Name and title of person who will be
executing bank documents

I.                 Name and title of second person to
sign authorization  for person in (H) above
to sign documents

J.                The following searches against
Borrower:

·
Bankruptcy search

·
Judgment search

·
Lien search

·
UCC Search – in the State where entity was formed

K.            SEC filing

L.              Copies of all financing documents
including loan payoff

M.         Information as to whether publicly traded

N.            Security Agreement Questionnaire

 

2.             The following
information as to: all material direct and
indirect subsidiaries that are Guarantors or are pledging stock as collateral
for the loan

 

A.         Full and proper name

B.             Jurisdiction of Formation

C.             Address

D.            Identification Number

E.              Copy of Articles of Organization or applicable
organizational document and filing receipt, and any amendments thereto

F.              Copy of operational documents, and any
amendments thereto

G.             Long
Form Certificate of Good Standing (showing Proof of Publication
where required), dated within sixty (60) days of closing

H.            Name and title of person who will be
executing documents

I                    Name and title of second person to
sign authorization  for person in (H) above
to sign documents

J.                The following searches (as applicable):

·
Bankruptcy search

·
Judgment search

·
Lien search

·
Franchise Tax Search

L.              SEC filings or any similar filings in any
other jurisdictions, if applicable

M.         Information as to whether or not stock is
publicly traded

 

5

 

N.            For Guarantors:  List of all shareholders, the amount of
voting shares they own  and the
total amount of outstanding shares of voting stock

 

3.              The following
information as to the property or properties known as the Company’s headquarters located at One Hardridge Drive, Elmira, Chemung
County, New York:

 

A.                                                                             Information
regarding Owner and Proof of Ownership;

B.                                                                             Title
Search;

C.                                                                             Tax
Map Identification Number;

D.                                                                            Copy
of Negative Pledge Agreement from previous financing;

E.                                                                              Information
as to any tenants and copies of any leases.

 

4.              HAZARD AND
LIABILITY INSURANCE - requirements:

 

A.           Hazard Insurance:  Evidence of Commercial Property Insurance on
the Acord 28 Form 

·
Note:  Must be on the 2003 version of that
certificate or must state in the fine print at the top of the form:  “THIS IS EVIDENCE THAT INSURANCE AS
IDENTIFIED BELOW HAS BEEN ISSUED, IS IN FORCE, AND CONVEYS ALL RIGHTS AND
PRIVILEGES AFFORDED UNDER THE POLICY”

· If this
is not possible, we will need an Insurance Binder

B.             Liability Insurance:  Certificate of Insurance on ACORD 25-S Form

·
Note:  Must be on a version of that certificate that
states in the fine print at the top of the form:  “THIS IS EVIDENCE THAT INSURANCE AS
IDENTIFIED BELOW HAS BEEN ISSUED, IS IN FORCE, AND CONVEYS ALL RIGHTS AND
PRIVILEGES AFFORDED UNDER THE POLICY”

· If this
is not possible, we will need an Insurance Binder along with the Certificate of
Insurance

C.             Both Certificates must list Borrower as the
insured

D.            The amount of Hazard Insurance coverage must
be for at least the amount of the loan

E.              Both Certificates must list correct property
address(es)

F.              Both Certificates must contain a 30 day
cancellation notice

·  Note:  Must read as follows:  “SHOULD THE POLICY BE TERMINATED, THE COMPANY
WILL GIVE THE ADDITIONAL INTEREST INDENTIFIED BELOW THIRTY (30) DAYS WRITTEN
NOTICE, AND WILL SEND NOTIFICATION OF ANY CHANGES TO THE POLICY THAT WOULD
AFFECT THAT INTEREST, IN ACCORDANCE WITH THE POLICY PROVISIONS AS REQUIRED BY
LAW.”

G.             Bank to be listed on the Hazard Insurance as “Loss
Payee”

H.            Bank to be listed on the Liability Insurance
as “Additional Insured”

I.                 Bank name/address to be set forth as follows:

 

Manufacturers and Traders Trust Company

Its Successors and/or Assigns

M&T Center, One Fountain Plaza, 9th Floor

Buffalo, New York 14203-1495

 

5.              Attorney
Opinion Letter required – we will send you our required form after due
diligence items are received and loan documents are finalized

 

6

 

6.              The following
information regarding the Marketable Securities to be collateralized:

 

A.           Copies
of Certificates to be pledged as marketable securities

 

7.              Please note that more information and
documentation may be required once the details of the transaction are clarified
and this Request for Information is subject to change accordingly and is also
subject to review by our client.

 

7

 

EXHIBIT A-2: CLOSING CHECKLIST

CLOSING
CHECKLIST

 

	
  Borrower:

  	
   

  	
  Hardinge Inc.

  
	
  Type of Entity:

  	
   

  	
  New York corporation

  
	
  Address:

  	
   

  	
  One Hardinge Drive, Elmira, New York 14902

  
	
  Federal I.D. #:

  	
   

  	
  16-0470200

  
	
   

  	
   

  	
   

  
	
  Corporate Guarantor:

  	
   

  	
  Hardinge Technology
  Systems, Inc.

  
	
  Type of Entity:

  	
   

  	
  New York corporation

  
	
  Address:

  	
   

  	
  One Hardinge Drive, Elmira, New
  York 14902

  
	
  Federal I.D.#:

  	
   

  	
  16-1326427

  
	
   

  	
   

  	
   

  
	
  Lender:

  	
   

  	
  Manufacturers and Traders Trust Company (“Lender”)

  
	
   

  	
   

  	
   

  
	
  Property:

  	
   

  	
  One Hardinge Drive, Town of Horseheads/City of
  Elmira, Chemung County, NY

  
	
   

  	
   

  	
  Tax Map No. 69.09-4-62

  
	
   

  	
   

  	
   

  
	
  Borrower’s Attorney:

  	
   

  	
  Phillips Lytle LLP - Raymond H.
  Seitz, Esq. & David J. Murray (“Borrower”)

  
	
  Lender’s Attorney:

  	
   

  	
  Coughlin & Gerhart – Mark S. Gorgos
  (“C&G”)

  
	
  Loan Officer:

  	
   

  	
  Susan A. Burtis

  
	
   

  	
   

  	
   

  
	
  Amount/Type of Loan:

  	
   

  	
  $10,000,000.00 Term Loan

  
	
   

  	
   

  	
   

  
	
  Closing Date:

  	
   

  	
  March 16, 2009

  

 

	
   

  	
   

  	
  Document

  	
   

  	
  Responsible Party

  	
   

  	
  Req’d

  	
   

  	
  Rec’d

  	
   

  	
  Comments

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Original
  Executed Commitment Letter/CLB

  	
   

  	
  Lender

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  LIBOR Term
  Note - $10,000,000.00

  	
   

  	
  C&G

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Credit
  Agreement

  	
   

  	
  C&G

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Negative
  Pledge Agreement

  	
   

  	
  C&G

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  General
  Security Agreement

  	
   

  	
  C&G

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Stock Pledge
  Agreement(s) (pledging 2/3rds of foreign stock)

  	
   

  	
  C&G

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
  Post-Closing Item

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Trading
  Rider (if necessary)

  	
   

  	
  C&G

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
  Post-Closing Item

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  Irrevocable
  Stock Power (if necessary)

  	
   

  	
  C&G

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
  Post-Closing Item

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  Federal
  Reserve Form U-1 (if necessary)

  	
   

  	
  C&G

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
  Post-Closing Item

  

 

8

 

	
   

  	
   

  	
  Document

  	
   

  	
  Responsible Party

  	
   

  	
  Req’d

  	
   

  	
  Rec’d

  	
   

  	
  Comments

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
   

  	
  Post-Closing
  Agreement

  	
   

  	
  C&G

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
   

  	
  UCC-1 –
  General Security Agreement (NYS)

  	
   

  	
  C&G

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
   

  	
  UCC-3
  Termination (JPMorgan Chase)

  	
   

  	
  Borrower

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
   

  	
  Error and
  Omissions Compliance Affidavit

  	
   

  	
  C&G

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
   

  	
  TIN
  Certification

  	
   

  	
  C&G

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
   

  	
  Company
  General Certificate with Borrowing Resolution

  	
   

  	
  C&G

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
   

  	
  Corporate Guaranty – Hardinge Technology Systems, Inc.

  	
   

  	
  C&G

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
   

  	
  Company General Certificate – Hardinge Technology Systems, Inc.

  	
   

  	
  C&G

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.

  	
   

  	
  Resolution to Guaranty

  	
   

  	
  C&G

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19.

  	
   

  	
  Consent of Shareholders to Guaranty

  	
   

  	
  C&G

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  20.

  	
   

  	
  Disbursement
  Closing Statement

  	
   

  	
  C&G

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  21.

  	
   

  	
  JPMorgan
  Chase Credit Agreement

  	
   

  	
  Borrower

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  22.

  	
   

  	
  Payoff
  statement for JPMorgan Chase loan

  	
   

  	
  Borrower

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  23.

  	
   

  	
  Updated
  Title Search and underlying documents – One Hardinge Drive, Elmira, New York

  ·
  Proof of Ownership

  ·
  Title Search

  ·
  Tax Map Identification Number

  ·
  Tenancies

  	
   

  	
  Borrower

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  24.

  	
   

  	
  Tax Receipts
  (One Hardinge Drive, Elmira, New York)

  	
   

  	
  Borrower

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  25.

  	
   

  	
  Corporate
  Documents – Borrower (formation and authority)

  	
   

  	
  Borrower

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  26.

  	
   

  	
  UCC Search –
  Borrower

  	
   

  	
  Borrower

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  27.

  	
   

  	
  Bankruptcy
  Search – Borrower

  	
   

  	
  Borrower

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  28.

  	
   

  	
  Judgment
  Search – Borrower

  	
   

  	
  Borrower

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  

 

9

 

	
   

  	
   

  	
  Document

  	
   

  	
  Responsible Party

  	
   

  	
  Req’d

  	
   

  	
  Rec’d

  	
   

  	
  Comments

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  29.

  	
   

  	
  Lien Search –
  Borrower

  	
   

  	
  Borrower

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  30.

  	
   

  	
  Franchise
  Tax Search – Borrower

  	
   

  	
  Borrower

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  31.

  	
   

  	
  SEC filing –
  Borrower

  	
   

  	
  Borrower

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  32.

  	
   

  	
  Security
  Agreement Questionnaire to be filled out and returned by Borrower

  	
   

  	
  C&G

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  33.

  	
   

  	
  Stock Detail
  – Borrower (including whether or not publicly traded and information of stock
  detail for foreign subsidiaries and Borrower’s holdings therein)

  	
   

  	
  Borrower

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  34.

  	
   

  	
  Copies of Certificates
  to be pledged as marketable securities

  	
   

  	
  Borrower

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  35.

  	
   

  	
  Corporate
  Documents – Hardinge Technology Systems, Inc. (formation and authority)

  	
   

  	
  Borrower

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  36.

  	
   

  	
  Corporate
  Documents – Hardinge Holdings Co., Gmbh (formation and authority)

  	
   

  	
  Borrower

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  37.

  	
   

  	
  Stock Detail
  – Hardinge Holdings Co., Gmbh (including whether or not publicly traded on
  any exchange and information of stock detail for foreign subsidiaries)

  	
   

  	
  Borrower

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
  Post-Closing Item

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  38.

  	
   

  	
  SEC filings
  or similar filings in jurisdiction of formation for Hardinge Holdings Co.,
  Gmbh

  	
   

  	
  Borrower

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
  Post-Closing Item

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  39.

  	
   

  	
  Certificates
  of Insurance

  ·
  Liability

  ·
  Property /Builders Risk

  	
   

  	
  Borrower

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  40.

  	
   

  	
  Opinion
  Letter as of closing (New York counsel)

  	
   

  	
  Borrower

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  41.

  	
   

  	
  Opinion
  Letter regarding Stock Pledge (New York counsel)

  	
   

  	
  Borrower

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
  Post-Closing Item

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  42.

  	
   

  	
  Opinion
  Letter regarding Stock Pledge (foreign counsel for Hardinge Holdings Co.
  Gmbh)

  	
   

  	
  Borrower

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
  Post-Closing Item

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  43.

  	
   

  	
  Wire
  Authorization Form

  	
   

  	
  Lender

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  

 

10

 

EXHIBIT B – FORM OF OPINION LETTER

 

11Exhibit 4.3

 

ADVANCED MEDICAL OPTICS, INC.

2002 INCENTIVE COMPENSATION PLAN

 

ARTICLE I.

GENERAL PROVISIONS

 

1.1                             Purposes of the Plan

 

Advanced
Medical Optics, Inc. (“AMO”) has adopted this 2002 Incentive Compensation
Plan (the “Plan”) to advance the interests of AMO and its stockholders by
affording its Directors, Employees and Consultants an opportunity to acquire or
increase a proprietary interest in AMO or to otherwise benefit from the success
of the Company through the grant to such Directors, Employees and Consultants
of Incentive Awards under the terms and conditions set forth herein. By thus
encouraging such Directors, Employees and Consultants to become owners of AMO’s
shares and by granting such Directors, Employees and Consultants other
incentive compensation that is measured by the increased market value of AMO’s
shares or another appropriate measure of the success and profitability of the
Company, the Company seeks to attract, retain and motivate those highly
competent individuals upon whose judgment, initiative, leadership and continued
efforts the success of the Company in large measure depends. Additionally,
options will be granted under the Plan in accordance with Section 3.8 to
individuals who held unvested options under the Allergan, Inc. 1989
Incentive Compensation Plan which were converted in connection with and as of
the Distribution (as defined below).

 

1.2                          Definitions

 

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

 

(a)          “Allergan” means Allergan, Inc., a Delaware
corporation.

 

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

 

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

 

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

 

(e)          “Change in Control” means the following and
shall be deemed to occur if any of the following events occur after the
Distribution Date:

 

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

 

(ii)                    Individuals who, as of the date of the
Distribution, constitute the Board (the “Incumbent Board”), cease for any
reason to constitute at least a majority of the Board, provided that any person
becoming a Director subsequent to the date of the Distribution whose election,
or nomination for election by AMO’s stockholders, is approved by a vote of at
least a majority of the Directors then comprising the

 

A-1

 

Incumbent
Board (other than an election or nomination of an individual whose initial
assumption of office is in connection with an actual or threatened election
contest relating to the election of the Directors of AMO, as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act)
shall, for the purposes of this Plan, be considered as though such person were
a member of the Incumbent Board of AMO;

 

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

 

(A)                a merger, consolidation or reorganization
which would result in the voting securities of AMO outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of another entity) at least 55% of the
combined voting power of the voting securities of AMO or such other entity
resulting from the merger, consolidation or reorganization (the “Surviving
Corporation”) outstanding immediately after such merger, consolidation or
reorganization and being held in substantially the same proportion as the
ownership in AMO’s voting securities immediately before such merger,
consolidation or reorganization, and

 

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

 

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

 

Additionally,
notwithstanding the preceding provisions of this Paragraph (e), a Change in
Control shall not be deemed to have occurred if the Person described in the
preceding provisions of this Paragraph (e) is (1) an underwriter or
underwriting syndicate that has acquired any of AMO’s then outstanding voting
securities solely in connection with a public offering of AMO’s securities, (2) AMO
or any subsidiary of AMO or (3) an employee stock ownership plan or other
employee benefit plan maintained by the AMO or any of its subsidiaries that is
qualified under the provisions of the Code. In addition, notwithstanding the
preceding provisions of this Paragraph (e), a Change in Control shall not be
deemed to have occurred if the Person described in the preceding provisions of
this Paragraph (e) becomes a Beneficial Owner of more than the permitted
amount of outstanding securities as a result of the acquisition of voting
securities by AMO which, by reducing the number of voting securities
outstanding, increases the proportional number of shares beneficially owned by
such Person, provided, that if a Change in Control would occur but for the
operation of this sentence and such Person becomes the Beneficial Owner of any
additional voting securities (other than through the exercise of options
granted under any stock option plan of AMO or through a stock dividend or stock
split), then a Change in Control shall occur. Notwithstanding the preceding
provisions of this Paragraph (e), the Distribution shall not be deemed to
constitute a Change in Control.

 

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

 

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

 

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

 

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

 

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

 

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

 

A-2

 

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

 

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

 

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

 

(l)             “Distribution” means Allergan’s pro rata
distribution to the holders of its common stock, $0.01 par value, of all the
shares of Common Stock owned by Allergan.

 

(m)       “Distribution Date” means the date that the
Distribution is effective.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(v)         “Normal Retirement” means any termination of
an Employee’s employment (other than for Cause or death or Total Disability)
after such Employee has attained age 55 and has been employed by the Company
for a minimum of five (5) years. For purposes of determining the number of
years a Transferring Employee has been employed by the Company, service with
Allergan and its subsidiaries prior to the Distribution will be counted.

 

A-3

 

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

 

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

 

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

 

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

 

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

 

(bb)  “Plan” means the Advanced Medical Optics, Inc.
2002 Incentive Compensation Plan as set forth herein, as amended from time to time.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(jj)          “Total Disability” means the inability of a
person, by reason of mental or physical illness or accident, to perform any and
every duty of the occupation for the Company for which such person was
employed, engaged, appointed or elected when such disability commenced, which
disability is expected to continue for a period of at least 12 months. Any
determination as to the date and extent of any disability shall be made by the
Committee upon the basis of such information as the Committee deems necessary
or desirable

 

A-4

 

including,
without limitation, a determination by the insurance provider with respect to a
Participant under the Company’s Insured Long Term Disability Program or a
disability award letter with respect to a Participant from the Social Security
Administration.

 

(kk)    “Transferring Employee” means an individual
who transferred employment to the Company before or as of the Distribution Date
in accordance with the terms of the Employee Matters Agreement effective as of
the Distribution Date, between Allergan and AMO.

 

1.3                               Shares of Common Stock
Subject to the Plan

 

(a)          Subject to the provisions of Section 1.3(c) and
Section 9.1 of the Plan, the maximum number of shares of Common Stock that
may be issued pursuant to Incentive Awards under the Plan shall be 8,700,000
shares.

 

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

 

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

 

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

 

1.4                                 Administration of the Plan

 

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

 

(b)         The Committee has and may exercise such
powers and authority of the Board as may be necessary or appropriate for the
Committee to carry out its functions as described in the Plan Subject to the
provisions of the Plan, the Committee has authority in its discretion to select
the eligible Employees and Consultants to whom, and the time or times at which,
Incentive Awards shall be granted or sold, the nature of each Incentive Award,
the number of shares of Common Stock or the number of rights that make up each
Incentive Award, the period for the exercise of each Incentive Award, the
Performance Criteria (which need not be identical) utilized to measure the
value of Performance Awards and such other terms and conditions applicable to
each individual Incentive Award as the Committee shall determine. The Committee
may grant at any time new Incentive Awards to an Employee or Consultant who has
previously received Incentive Awards or other grants (including other stock
options) whether such prior Incentive Awards or such other grants are still
outstanding, have previously been exercised in whole or in part, or are
cancelled in connection with the issuance of new Incentive Awards. The
Committee may grant Incentive Awards singly or in combination or in tandem with
other Incentive Awards

 

A-5

 

as
it determines in its discretion. The purchase price or initial value and any
and all other terms and conditions of the Incentive Awards may be established
by the Committee without regard to existing Incentive Awards or other grants.
Further, the Committee may, with the consent of the holder of an Incentive
Award, amend in a manner consistent with the Plan the terms of such Incentive
Award. In its absolute discretion, the Board may at any time and from time to
time exercise any and all rights and duties of the Committee under the Plan
except with respect to matters which under Rule 16b-3 or Section 162(m) of
the Code, or any regulations or rules issued thereunder, are required to
be determined in the sole discretion of the Committee. Notwithstanding the
foregoing, the full Board, acting by a majority of its members in office, shall
conduct the general administration of the Plan with respect to Incentive Awards
granted to Independent Directors, in which case any reference in the Plan to
the “Committee” shall be deemed a reference to the Board.

 

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

 

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

 

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

 

1.5                                 Award Instrument

 

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

 

ARTICLE II.

DIVIDEND EQUIVALENTS

 

2.1                                   Dividend Equivalents

 

Any
holder of an Incentive Award may, in the discretion of the Committee, be
granted, at no additional cost, Dividend Equivalents based on the dividends
declared on the Common Stock on record dates during the period between the date
an Incentive Award is granted and the date such Incentive Award is exercised
(or expires, or is

 

A-6

 

terminated
or cancelled) or such other period as is determined by the Committee and
specified in the instrument that evidences the grant of the Incentive Award.
Such Dividend Equivalents shall be converted to additional shares or cash by
such formula as may be determined by the Committee.

 

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

 

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

 

ARTICLE III.

OPTION GRANTS TO EMPLOYEES AND CONSULTANTS

 

3.1                             Eligibility

 

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

 

3.2                              Option Price

 

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

 

3.3                                Option Period

 

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

 

3.4                                Exercise of Options

 

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

 

3.5                               Limitation on Exercise of
Incentive Stock Options

 

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

 

A-7

 

3.6                                      Termination of Employment

 

(a)          Except as otherwise provided in a written
employment agreement or instrument between the Company and the Employee
evidencing the grant of the Option, in the event of the termination of an
Employee’s employment with the Company for Cause, all of the Employee’s
unexercised Options shall expire as of the date of such termination.

 

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

 

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

 

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

 

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

 

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

 

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

 

A-8

 

3.7                               Limitations on Exercise of
Options Granted to Consultants

 

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

 

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

 

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

 

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

 

3.8                               Grant of Options in
Substitution for Allergan, Inc. Options

 

In accordance with the provisions of Section
8.4 of that certain Employee Matters Agreement effective as of the Distribution
Date, between Allergan and AMO (the ”Employee Matters Agreement”) and
notwithstanding anything to the contrary in this Plan, in the event that
immediately prior to the Distribution Date a Transferring Employee (or other
person described in Section 1.25 of the Employee Matters Agreement) shall hold an
outstanding option granted under the Allergan, Inc. 1989 Incentive Compensation
Plan (the “Allergan Option”) that is, or a portion of which is, unvested, there
shall be granted to such Employee (or other person) pursuant to this Plan, in
substitution for such unvested Allergan Option, or unvested portion thereof, an
Option to purchase Common Stock (a “Substitute Option”) effective as of the
Distribution Date. Each Substitute Option shall be adjusted to preserve the
intrinsic value of the Allergan Option, and the ratio of the per share exercise
price to the per share fair market value of the Allergan Option, in a manner
that complies with the requirements of the Securities Exchange Commission and
the Financial Accounting Standards Board and as set forth in Section 8.4 of the
Employee Matters Agreement.

 

3.9                               No Reload Rights

 

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

 

ARTICLE IV.

DIRECTOR OPTIONS

 

4.1          Grant of Options to Independent
Directors other than the Chairman of the Board

 

(a)          Each person who is appointed to the Board and
is an Independent Director as of July 29, 2002 automatically shall be granted
(x) an Option to purchase 20,000 shares of Common Stock (subject to adjustment
as provided in Section 9.1) on such date, and (y) an Option to purchase 9,500
shares of Common Stock (subject to adjustment as provided in Section 9.1) on
the date of each annual meeting of stockholders occurring on or after May 20,
2004 during the term of the Plan provided such person is an Independent
Director as of such date.

 

(b)         Commencing on or after May 20, 2004 and
during the term of the Plan, each person who is initially elected or appointed
to the Board and who is an Independent Director at the time of such initial
election or appointment automatically shall be granted (x) an Option to
purchase 20,000 shares of Common Stock (subject to adjustment as provided in
Section 9.1) on the date of such initial election or appointment, and (y) an
Option to purchase 9,500 shares of Common Stock (subject to adjustment as
provided in Section 9.1) on the date of each annual meeting of stockholders
after such initial election or appointment provided such person is an
Independent Director as of such date.

 

A-9

 

4.2          Grant
of Options to Chairman of the Board of Directors

 

(a)       Any
person who is appointed to the Board as Chairman of the Board (“Chairman”) and
who is Chairman and an Independent Director as of July 29, 2002
automatically shall be granted (x) an Option to purchase 40,000 shares of
Common Stock (subject to adjustment as provided in Section 9.1) on such
date, and (y) an Option to purchase 13,000 shares of Common Stock (subject
to adjustment as provided in Section 9.1) on the date of each annual
meeting of stockholders occurring after July 29, 2002 during the term of
the Plan provided such person is Chairman and an Independent Director as of
such date.

 

(b)      Commencing
on or after July 30, 2002 and during the term of the Plan, any person,
other than a person described in Section 4.2(a), who is elected or
appointed to the Board as Chairman and who is an Independent Director at the
time of such election or appointment automatically shall be granted (x) an
Option to purchase 40,000 shares of Common Stock (subject to adjustment as
provided in Section 9.1) on the date of such initial election or
appointment, and (y) an Option to purchase 13,000 shares of Common Stock
(subject to adjustment as provided in Section 9.1) on the date of each
annual meeting of stockholders after such initial election or appointment
provided such person is Chairman and an Independent Director as of such date.

 

(c)       The
awards granted to the Chairman under this Section 4.2 shall be in lieu of
any awards the Chairman may have otherwise been entitled to under Section 4.1(a) or
(b), as applicable, on or after the Chairman’s election or appointment as
Chairman; provided, however, that if the Chairman shall cease to be Chairman,
but shall continue as an Independent Director, such individual shall be
entitled to receive the annual grants set forth in clause (y) of Section 4.1(a) or
(b), as applicable, on the date of each annual meeting of stockholders
thereafter provided such person is an Independent Director as of such date.

 

4.3          Discretionary
Grants

 

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

 

4.4          Terms
of Options Granted to Independent Directors

 

Unless otherwise prescribed by the Board in the instrument
evidencing the grant of the Option, the price per share of the shares subject
to each Option granted to an Independent Director shall equal 100% of the Fair
Market Value of a share of Common Stock on the date the Option is granted.
Unless otherwise prescribed by the Board in the instrument evidencing the grant
of the Option, each Option granted to an Independent Director shall become
fully exercisable on the day immediately preceding the date of the first annual
meeting of stockholders subsequent to the date the Option was granted, provided
such person is an Independent Director as of such date. Subject to Section 4.5,
the term of each Option granted to an Independent Director shall be 10 years
from the date the Option is granted. No portion of an Option which is
unexercisable at termination of directorship shall thereafter become
exercisable. Payment of the exercise price with respect to an Option granted to
an Independent Director shall be made in accordance with Section 3.4.
Notwithstanding the foregoing, in the event of a Change in Control, Options
granted to Independent Directors shall, as of the date of such Change in
Control, immediately become fully vested and exercisable. The limitations under
Section 3.9 shall apply to Options granted to Independent Directors.

 

4.5          Limitations
on Exercise of Options Granted to Independent Directors

 

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

 

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

 

A-10

 

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

 

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

 

ARTICLE V.

PERFORMANCE AWARDS

 

5.1          Grant
of Performance Awards

 

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

 

5.2          Payment
of Award; Limitation

 

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

 

5.3          Expiration
of Performance Award

 

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

 

ARTICLE VI.

RESTRICTED STOCK

 

6.1          Award
of Restricted Stock

 

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

 

6.2          Requirements
of Restricted Stock

 

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

 

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

 

A-11

 

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

 

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

 

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

 

6.3          Lapse
of Restrictions

 

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

 

6.4          Rights
of Participant

 

Subject to the provisions of Section 6.2 or
restrictions imposed pursuant to Section 6.2, the Participant will have
all rights of a stockholder with respect to the Restricted Stock granted or
sold to such Participant under the Plan, including the right to vote the shares
and receive all dividends and other distributions paid or made with respect
thereto; provided, however, that in the discretion of the Committee, any
extraordinary distributions with respect to the Common Stock shall be subject
to the restrictions set forth in Section 6.2.

 

6.5          Termination
of Employment, Consultancy or Directorship

 

Upon a Participant’s termination of employment or, if
applicable, termination of consultancy or directorship, for death or Total
Disability, all of the restrictions imposed on the Participant’s Restricted
Stock shall lapse as of the Participant’s last date of employment or, if
applicable, consultancy or directorship. In all other cases (other than a Job
Elimination), unless the Committee in its discretion determines otherwise, upon
a Participant’s termination of employment or, if applicable, termination of
consultancy or directorship, for any reason, all of the Participant’s
Restricted Stock remaining subject to restrictions imposed pursuant to this
Plan on the date of such termination of employment or, if applicable,
termination of consultancy or directorship, shall be repurchased by the Company
at the Purchase Price (if any).

 

6.6          Termination
of Employment Due to Job Elimination

 

Upon an Employee’s termination of employment due to Job
Elimination, the terminating Employee shall have the restrictions lapse on each
grant of Restricted Stock in an amount equal to the number of shares of
Restricted Stock granted multiplied by a fraction, the numerator of which is
the number of full calendar months from the date of grant until the Employee’s
last day of employment and the denominator of which is the number of months
during which the restriction would have been in effect pursuant to each
original grant.

 

A-12

 

ARTICLE VII.

STOCK APPRECIATION RIGHTS

 

7.1          Granting
of Stock Appreciation Rights

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7.2          Termination
of Employment or Consultancy

 

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

 

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ARTICLE VIII.

STOCK PAYMENTS

 

8.1          Stock
Payments

 

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

 

ARTICLE IX.

OTHER PROVISIONS

 

9.1          Adjustment
Provisions

 

(a)   Subject
to Section 9.1(b) below, (i) if the outstanding shares of Common
Stock of the Company are increased, decreased or exchanged for a different
number or kind of shares or other securities, or if additional shares or new or
different shares or other securities are distributed in respect of such shares
of Common Stock (or any stock or securities received with respect to such
Common Stock), through merger, consolidation, sale or exchange of all or
substantially all of the properties of the Company, reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split, spin-off or other distribution with respect to such shares of Common
Stock (or any stock or securities received with respect to such Common Stock),
or (ii) if the value of the outstanding shares of Common Stock of the
Company is reduced by reason of an extraordinary cash dividend, an appropriate
and proportionate adjustment shall be made in (x) the maximum number and
kind of shares provided in Section 1.3 (including the maximum amounts
referred to in Section 1.3(d)), (y) the number and kind of shares or
other securities subject to then outstanding Incentive Awards, and (z) the
price for each share or other unit of any other securities subject to then
outstanding Incentive Awards. No fractional interests will be issued under the
Plan resulting from any such adjustments.

 

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

 

9.2          Continuation
of Employment

 

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

 

A-14

 

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

 

9.3          Compliance
with Government Regulations

 

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

 

9.4          Additional
Conditions

 

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

 

9.5          Privileges
of Stock Ownership

 

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

 

9.6          Amendment
and Termination of Plan, Amendment of Incentive Awards

 

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

 

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

 

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

 

A-15

 

9.7          Not
Transferable

 

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

 

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

 

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

 

9.8          Other
Compensation Plans

 

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

 

9.9          Plan
Binding on Successors

 

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

 

A-16

 

9.10        Singular,
Plural; Gender

 

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

 

9.11        Headings,
Etc., No Part of Plan

 

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

9.12        Participation
By Foreign Employees

 

Notwithstanding Section 9.6 of the Plan, the
Committee may, in order to fulfill the purposes of the Plan: (i) modify
grants of Incentive Awards to Participants who are foreign nationals or
employed outside of the United States to recognize differences in applicable
law, tax policy or local custom and/or (ii) amend the Plan from time to
time by adopting or modifying appendices to the Plan, which appendices shall
contain such terms and conditions with respect to the operation of the Plan in
one or more foreign jurisdictions as are necessary to bring the Plan into
compliance with applicable law, tax policy or local custom. Nothing contained
in this Section 9.12 shall be deemed to grant the Committee the authority
to: (i) increase the maximum number of shares that may be sold or issued
under the Plan, (ii) alter the class of Employees eligible to participate
in the Plan, (iii) reduce the minimum exercise price with respect to Options
as set forth in Sections 3.2 and 4.4, or (iv) increase the annual award
limits set forth in Section 1.3(d).

 

9.13        Withholding

 

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

 

9.14        Miscellaneous

 

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

 

(b)   No
shares of Common Stock shall be issued or delivered upon exercise of an Option
unless and until there shall have been compliance with all applicable
requirements of the Securities Act, all applicable listing requirements of any
market or securities exchange on which shares of Common Stock are then listed
and any other requirement of law or of any regulatory body having jurisdiction
over such issuance and delivery. The inability of the Company to obtain any
required permits, authorizations or approvals necessary for the lawful

 

A-17

 

issuance and sale of any shares of Common Stock hereunder
on terms deemed reasonable by the Committee shall relieve the Company, the
Board and the Committee of any liability in respect of the nonissuance or sale
of such shares of Common Stock as to which such requisite permits,
authorizations or approvals shall not have been obtained.

 

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

 

ARTICLE X.

EFFECTIVE DATE

 

10.1        Effective
Date and Duration of Plan

 

The Plan became effective on June 19, 2002. The Plan
shall terminate at such time as the Board, in its discretion, shall determine.
No Incentive Award may be granted under the Plan after the date of such
termination, but such termination shall not affect any Incentive Award
theretofore granted; provided, however, that in no event may any Incentive
Stock Option be granted under the Plan after June 18, 2012. The Amendments
approved by the Board on February 5, 2004 remain subject to and contingent
upon stockholder approval.

 

* * *

 

I hereby certify that the foregoing amended and restated
Plan was duly adopted by the Board of Directors of Advanced Medical Optics, Inc.
on February 5, 2004.

 

	
  Executed on this 12th day of February, 2004.

  	
   

  
	
   

  	
  /s/ AIMEE S. WEISNER

  
	
   

  	
  Secretary

  

 

* * *

 

A-18

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