Exhibit 99.8
ADVANCED MEDICAL OPTICS,
INC.
2005 INCENTIVE COMPENSATION
PLAN
(March 2005, subject to
stockholder approval)
ARTICLE I.
GENERAL PROVISIONS
1.1 Purposes of the Plan
Advanced Medical Optics, Inc.
(“AMO”) has adopted this 2005 Incentive Compensation
Plan (the “Plan”) to advance the interests of AMO and
its stockholders by affording its Directors, Employees and
Consultants an opportunity to acquire or increase a proprietary
interest in AMO or to otherwise benefit from the success of the
Company through the grant to such Directors, Employees and
Consultants of Incentive Awards under the terms and conditions set
forth herein. By thus encouraging such Directors, Employees and
Consultants to become owners of AMO’s shares and by granting
such Directors, Employees and Consultants other incentive
compensation that is measured by the increased market value of
AMO’s shares or another appropriate measure of the success
and profitability of the Company, the Company seeks to attract,
retain and motivate those highly competent individuals upon whose
judgment, initiative, leadership and continued efforts the success
of the Company in large measure depends.
1.2 Definitions
As used herein the following terms
shall have the meanings set forth below:
(a) “AMO” means Advanced
Medical Optics, Inc., a Delaware corporation, or any successor
thereto.
(b) “Board” means the
Board of Directors of AMO.
(c) “Cause” means, with
respect to the discharge by the Company of any Participant, any
conduct that under Company policies as set forth from time to time
in the AMO Employee Handbook (or any successor thereto) would be
considered to constitute “serious misconduct” that
would justify immediate termination without benefit of a counseling
review or severance pay.
(d) “Change in Control”
means the following and shall be deemed to occur if any of the
following events occur:
(i) Any “person,” as
such term is used in Sections 13(d) and 14(d) of the Exchange Act
(a “Person”), is or becomes the “beneficial
owner,” as defined in Rule 13d-3 under the Exchange Act (a
“Beneficial Owner”), directly or indirectly, of
securities of AMO representing (i) 20% or more of the combined
voting power of AMO’s then outstanding voting securities,
which acquisition is not approved in advance of the acquisition or
within 30 days after the acquisition by a majority of the Incumbent
Board (as hereinafter defined) or (ii) 33% or more of the combined
voting power of AMO’s then outstanding voting securities,
without regard to whether such acquisition is approved by the
Incumbent Board;
(ii) Individuals who, as of June 29,
2002, constituted the Board (the “Incumbent Board”),
cease for any reason to constitute at least a majority of the
Board, provided that any person becoming a Director subsequent to
June 29, 2002, whose election, or nomination for election by
AMO’s stockholders, is approved by a vote of at least a
majority of the Directors then comprising the Incumbent Board
(other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the
Directors of AMO, as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) shall, for the
purposes of this Plan, be considered as though such person were a
member of the Incumbent Board of AMO;
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(iii) The consummation of a merger,
consolidation or reorganization involving AMO, other than one which
satisfies both of the following conditions:
(A) a merger, consolidation or
reorganization which would result in the voting securities of AMO
outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of another entity) at least 55% of the combined voting
power of the voting securities of AMO or such other entity
resulting from the merger, consolidation or reorganization (the
“Surviving Corporation”) outstanding immediately after
such merger, consolidation or reorganization and being held in
substantially the same proportion as the ownership in AMO’s
voting securities immediately before such merger, consolidation or
reorganization, and
(B) a merger, consolidation or
reorganization in which no Person is or becomes the Beneficial
Owner, directly or indirectly, of securities of AMO representing
20% or more of the combined voting power of AMO’s then
outstanding voting securities; or
(iv) Complete liquidation of AMO or
a sale of all or substantially all of AMO’s
assets.
Additionally, notwithstanding the
preceding provisions of this Paragraph (e), a Change in Control
shall not be deemed to have occurred if the Person described in the
preceding provisions of this Paragraph (e) is (1) an underwriter or
underwriting syndicate that has acquired any of AMO’s then
outstanding voting securities solely in connection with a public
offering of AMO’s securities, (2) AMO or any subsidiary of
AMO or (3) an employee stock ownership plan or other employee
benefit plan maintained by the AMO or any of its subsidiaries that
is qualified under the provisions of the Code. In addition,
notwithstanding the preceding provisions of this Paragraph (e), a
Change in Control shall not be deemed to have occurred if the
Person described in the preceding provisions of this Paragraph (e)
becomes a Beneficial Owner of more than the permitted amount of
outstanding securities as a result of the acquisition of voting
securities by AMO which, by reducing the number of voting
securities outstanding, increases the proportional number of shares
beneficially owned by such Person, provided , that if a
Change in Control would occur but for the operation of this
sentence and such Person becomes the Beneficial Owner of any
additional voting securities (other than through the exercise of
options granted under any stock option plan of AMO or through a
stock dividend or stock split), then a Change in Control shall
occur.
(e) “Code” means the
Internal Revenue Code of 1986, as amended. Where the context so
requires, a reference to a particular Code section shall also refer
to any successor provision of the Code to such section.
(f) “Committee” means
the committee appointed by the Board to administer the Plan. The
Committee shall be composed entirely of members who meet the
requirements of Section 1.4(a) hereof.
(g) “Common Stock” means
the common stock of AMO, $0.01 par value.
(h) “Company” means AMO
and any Subsidiary, as determined from time to time.
(i) “Consultant” means
any consultant or adviser if:
(i) The consultant or adviser
renders bona fide services to the Company;
(ii) The services rendered by the
consultant or adviser are not in connection with the offer or sale
of securities in a capital-raising transaction and do not directly
or indirectly promote or maintain a market for the Company’s
securities; and
(iii) The consultant or adviser is a
natural person who has contracted directly with the Company to
render such services.
(j) “Director” shall
mean a member of the Board.
(k) “Dividend
Equivalent” means an amount payable in cash, Common Stock or
a combination thereof to a holder of a Stock Option, Stock
Appreciation Right or other Incentive Award denominated in shares
of Common Stock that is equivalent to the amount of dividends paid
to stockholders with respect to a number of shares of Common Stock
equal to the number of shares upon which such Incentive Award is
based.
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(l) “Effective Time”
means the Effective Time as defined by the Merger
Agreement.
(m) “Employee” means any
individual classified by the Company as a regular, full-time or
part-time employee of the Company, and with respect to individuals
employed by AMO or any of its U.S. Subsidiaries, whose income is
subject to withholding of income tax and/or for whom Social
Security contributions are made by the Company, except that such
term shall not include any individual who (a) performs services for
the Company and who is classified or paid as an independent
contractor (regardless of his or her classification for federal tax
or other legal purposes) by the Company or (b) performs services
for the Company pursuant to an agreement between the Company and
any other person including a leasing organization.
(n) “Exchange Act” means
the Securities Exchange Act of 1934, as amended. Where the context
so requires, a reference to a particular section of the Exchange
Act shall also refer to any successor provision to such
section.
(o) “Fair Market Value”
means: (a) the closing price of a share of Common Stock on the
principal exchange on which shares of Common Stock are then
trading, if any (or as reported on any composite index which
includes such principal exchange), on the trading day next
preceding such date on which a trade occurred, or (b) if Common
Stock is not traded on an exchange but is quoted on Nasdaq or a
successor quotation system, the mean between the closing
representative bid and asked prices for the Common Stock on the
trading day next preceding such date as reported by Nasdaq or such
successor quotation system, or (c) if Common Stock is not publicly
traded on an exchange and not quoted on Nasdaq or a successor
quotation system, the Fair Market Value of a share of Common Stock
as established by the Committee acting in good faith.
(p) “Incentive Award”
means any Stock Option, Dividend Equivalent, Restricted Stock,
Restricted Stock Unit, Stock Appreciation Right, Stock Payment,
Performance Award or other award granted or sold under the
Plan.
(q) “Incentive Stock
Option” means an incentive stock option, as defined under
Section 422 of the Code and the regulations thereunder.
(r) “Independent
Director” shall mean a member of the Board who is not an
Employee (or otherwise an employee of the Company).
(s) “Merger Agreement”
means the Agreement and Plan of Merger, dated November 9, 2004,
among AMO, Vault Merger Corporation, and VISX, Incorporated (the
“Merger Agreement”).
(t) “Nonqualified Stock
Option” means a Stock Option other than an Incentive Stock
Option.
(u) “Normal Retirement”
means any termination of an Employee’s employment (other than
for Cause or death or Total Disability) after such Employee has
attained age 55 and has been employed by the Company for a minimum
of five (5) years. For purposes of determining the number of years
a Transferring Employee has been employed by the Company, service
with Allergan, Inc. and its subsidiaries prior to June 29, 2002,
and service with VISX, Incorporated and its subsidiaries prior to
the Effective Time, will be counted. Service with Pfizer and its
affiliates prior to June 26, 2004 for Transferring Employees
associated with acquisition of the Pfizer surgical ophthalmic
business shall also be counted. The Committee may grant service
credit associated with Transferring Employees in future
acquisitions at its discretion.
(v) “Option” or
“Stock Option” means a right to purchase Common Stock
and refers to both Incentive Stock Options and Nonqualified Stock
Options.
(w) “Participant” means
an individual who has received an Incentive Award pursuant to the
Plan.
(x) “Payment Event”
means the event or events giving rise to the right to payment of a
Performance Award.
(y) “Performance Award”
means an award, payable in cash, Common Stock, Restricted Stock,
Restricted Stock Units or a combination thereof, the terms and
conditions of which may be determined by the Committee at the time
the Performance Award is granted.
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(z) “Performance
Criteria” shall mean the following business criteria with
respect to the Company, any Subsidiary or any division or operating
unit thereof: (a) net income, (b) pre-tax income, (c) operating
income, (d) cash flow, (e) earnings per share, (f) return on
equity, (g) return on invested capital or assets, (h) cost
reductions or savings, (i) funds from operations, (j) appreciation
in the fair market value of Common Stock, (k) earnings before any
one or more of the following items: interest, taxes, depreciation
or amortization; each as determined in accordance with generally
accepted accounting principles, and (l) total shareholder return
(TSR).
(aa) “Plan” means the
Advanced Medical Optics, Inc. 2005 Incentive Compensation Plan as
set forth herein, as amended from time to time.
(bb) “Purchase Price”
means the purchase price (if any) to be paid by a Participant for
Restricted Stock or Restricted Stock Units as determined by the
Committee (which price shall be at least equal to the minimum price
required under applicable laws and regulations for the issuance of
Common Stock which is nontransferable and subject to a substantial
risk of forfeiture until specific conditions are met).
(cc) “Restricted Stock”
means Common Stock which is the subject of an Incentive Award under
this Plan and which is nontransferable and subject to a substantial
risk of forfeiture until specific conditions are met as set forth
in this Plan and in any instrument evidencing the grant of such
Incentive Award.
(dd) “Restricted Stock
Unit” means a right granted pursuant to Section VI of the
Plan to receive a share of Common Stock at a future date set by the
Committee or over a vesting period established by the
Committee.
(ee) “Rule 16b-3” means
Rule 16b-3 promulgated under the Exchange Act, as such Rule may be
amended from time to time.
(ff) “Securities Act”
means the Securities Act of 1933, as amended.
(gg) “Stock Appreciation
Right” or “Right” means a right granted pursuant
to Section VII of the Plan to receive a number of shares of Common
Stock or, in the discretion of the Committee, an amount of cash or
a combination of shares of Common Stock and cash, based on the
increase in the Fair Market Value of the shares of Common Stock
subject to the right during such period as is specified by the
Committee.
(hh) “Stock Payment”
means a payment in shares of Common Stock to replace all or any
portion of the compensation (other than base salary) that would
otherwise become payable to any Employee.
(ii) “Subsidiary” means
any corporation in an unbroken chain of corporations beginning with
AMO if each of the corporations other than the last corporation in
the unbroken chain then owns stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.
(jj) “Total Disability”
means the inability of a person, by reason of mental or physical
illness or accident, to perform any and every duty of the
occupation for the Company for which such person was employed,
engaged, appointed or elected when such disability commenced, which
disability is expected to continue for a period of at least 12
months. Any determination as to the date and extent of any
disability shall be made by the Committee upon the basis of such
information as the Committee deems necessary or desirable
including, without limitation, a determination by the insurance
provider with respect to a Participant under the Company’s
Insured Long Term Disability Program or a disability award letter
with respect to a Participant from the Social Security
Administration.
(kk) “Transferring
Employee” means (w) an individual who transferred employment
to the Company before or as of June 29, 2002, in accordance with
the terms of the Employee Matters Agreement effective as of June
29, 2002, between Allergan, Inc. and AMO, (x) an individual
employed by VISX, Incorporated or its Subsidiaries as of the
Effective Time, (y) an individual who transferred employment to the
Company as of June 26, 2004, in accordance with the Stock and Asset
Purchase Agreement between Pfizer Inc. and the Company, dated April
21, 2004, and (z) individuals designated by the Committee as
Transferring Employees associated with future
transactions.
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1.3 Shares of Common Stock Subject to the
Plan
(a) Subject to the provisions of
Section 1.3(c) and Section 9.1 of the Plan, the maximum number of
shares of Common Stock that may be issued pursuant to Incentive
Awards under the Plan shall be 5,000,000 shares. In no event will
more than 5,000,000 shares of Common Stock be available for
issuance pursuant to the exercise of Incentive Stock
Options.
(b) The Common Stock to be issued
under this Plan will be made available, at the discretion of the
Board or the Committee, either from authorized but unissued shares
of Common Stock or from previously issued shares of Common Stock
reacquired by the Company, including shares purchased on the open
market.
(c) Shares of Common Stock subject
to unexercised portions of any Incentive Award granted under this
Plan that expires or is terminated, cancelled, or substituted or
exchanged for an award for a different kind of shares or other
securities, and shares of Common Stock issued pursuant to an
Incentive Award under this Plan that are reacquired by the Company
pursuant to the terms of the Incentive Award under which such
shares were issued, will again become available for the grant of
further Incentive Awards under this Plan. Additionally, shares of
Common Stock which are delivered by an Employee (either actually or
by attestation) or withheld by the Company upon the exercise of any
Incentive Award under the Plan, in payment of the exercise price
thereof or tax withholding thereon, may again be optioned, granted
or awarded hereunder.
(d) The maximum number of shares of
Common Stock with respect to which Incentive Awards may be granted
to any individual in any given calendar year is 500,000 shares.
With respect to Performance Awards made in cash, the maximum dollar
amount which may be awarded in the aggregate to any individual in
any calendar year is $500,000.
1.4 Administration of the Plan
(a) The Plan will be administered by
the Committee, which will consist of two or more Independent
Directors appointed by the Board, each of whom is both a
“non-employee director” as defined by Rule 16b-3 and an
“outside director” for purposes of Section 162(m) of
the Code. Appointment of Committee members shall be effective upon
acceptance of appointment. Committee members may resign at any time
by delivering written notice to the Board. Vacancies in the
Committee may be filled by the Board.
(b) The Committee has and may
exercise such powers and authority of the Board as may be necessary
or appropriate for the Committee to carry out its functions as
described in the Plan Subject to the provisions of the Plan, the
Committee has authority in its discretion to select the eligible
Employees and Consultants to whom, and the time or times at which,
Incentive Awards shall be granted or sold, the nature of each
Incentive Award, the number of shares of Common Stock or the number
of rights that make up each Incentive Award, the period for the
exercise of each Incentive Award, the Performance Criteria (which
need not be identical) utilized to measure the value of Performance
Awards and such other terms and conditions applicable to each
individual Incentive Award as the Committee shall determine. The
Committee may grant at any time new Incentive Awards to an Employee
or Consultant who has previously received Incentive Awards or other
grants (including other stock options) whether such prior Incentive
Awards or such other grants are still outstanding, have previously
been exercised in whole or in part, or are cancelled in connection
with the issuance of new Incentive Awards. The Committee may grant
Incentive Awards singly or in combination or in tandem with other
Incentive Awards as it determines in its discretion. The purchase
price or initial value and any and all other terms and conditions
of the Incentive Awards may be established by the Committee without
regard to existing Incentive Awards or other grants. Further, the
Committee may, with the consent of the holder of an Incentive
Award, amend in a manner consistent with the Plan the terms of such
Incentive Award. In its absolute discretion, the Board may at any
time and from time to time exercise any and all rights and duties
of the Committee under the Plan except with respect to matters
which under Rule 16b-3 or Section 162(m) of the Code, or any
regulations or rules issued thereunder, are required to be
determined in the sole discretion of the Committee. Notwithstanding
the foregoing, the full Board, acting by a majority of its members
in office, shall conduct the general administration of the Plan
with
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respect to Incentive Awards granted to
Independent Directors, in which case any reference in the Plan to
the “Committee” shall be deemed a reference to the
Board.
(c) Subject to the express
provisions of the Plan, the Committee has the authority to
interpret the Plan, to determine the terms and conditions of
Incentive Awards and to make all other determinations necessary or
advisable for the administration of the Plan. The Committee has
authority to prescribe, amend and rescind rules and regulations
relating to the Plan. All interpretations, determinations and
actions by the Committee shall be final, conclusive and binding
upon all parties. Any action of the Committee with respect to the
administration of the Plan shall be taken pursuant to a majority
vote or by the unanimous written consent of its members.
(d) Members of the Committee shall
receive such compensation, if any, for their services as members as
may be determined by the Board. All expenses and liabilities which
members of the Committee incur in connection with the
administration of the Plan shall be borne by the Company. The
Committee may, with the approval of the Board, employ attorneys,
consultants, accountants, appraisers, brokers or other persons. The
Committee, the Company and the Company’s officers and
Directors shall be entitled to rely upon the advice, opinions or
valuations of any such persons. No member of the Board or the
Committee nor any designee thereof will be liable for any action or
determination made in good faith by the Board or the Committee with
respect to the Plan or any transaction arising under the
Plan.
(e) The Committee may, but need not,
delegate from time to time some or all of its authority to grant
Incentive Awards under the Plan to a committee consisting of one or
more members of the Committee or of one or more officers of AMO;
provided, however, that the Committee may not delegate to
any such committee, the Committee’s authority to grant
Incentive Awards to officers. Any delegation hereunder shall be
subject to the restrictions and limits that the Committee specifies
at the time of such delegation of authority and may be rescinded at
any time by the Committee. At all times, any committee appointed
under this Section 1.4(e) shall serve in such capacity at the
pleasure of the Committee.
1.5 Award Instrument
At the time of the grant of each
Incentive Award pursuant to this Plan, the Committee shall deliver,
or cause to be delivered, to the Participant to whom the Incentive
Award is granted an instrument evidencing the grant of the
Incentive Award and setting forth such terms and conditions
applicable to the Incentive Award as the Committee may in its
discretion determine consistent with the Plan. For all purposes of
this Plan, electronic communications may be considered written
instruments.
ARTICLE II.
DIVIDEND
EQUIVALENTS
2.1 Dividend Equivalents
Any holder of an Incentive Award
may, in the discretion of the Committee, be granted, at no
additional cost, Dividend Equivalents based on the dividends
declared on the Common Stock on record dates during the period
between the date an Incentive Award is granted and the date such
Incentive Award is exercised (or expires, or is terminated or
cancelled) or such other period as is determined by the Committee
and specified in the instrument that evidences the grant of the
Incentive Award. Such Dividend Equivalents shall be converted to
additional shares or cash by such formula as may be determined by
the Committee.
Dividend Equivalents shall be
computed as of each dividend record date in such manner as may be
determined by the Committee and shall be payable to Participants at
such time or time as the Committee in its discretion may
determine.
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Dividend Equivalents granted with
respect to Options intended to be qualified performance-based
compensation for purposes of Section 162(m) of the Code shall be
payable, with respect to pre-exercise periods, regardless of
whether such Option is subsequently exercised.
ARTICLE III.
OPTION GRANTS TO EMPLOYEES AND
CONSULTANTS
3.1 Eligibility
Any Employee or Consultant selected
by the Committee shall be eligible to be granted an Option;
provided , however , that only Employees shall be
eligible to receive “incentive stock options” within
the meaning of Code Section 422 and the regulations promulgated
thereunder.
3.2 Option Price
The purchase price of Common Stock
under each Option (the “Option Exercise Price”) will be
determined by the Committee at the date such Option is granted. The
Option Exercise Price may not be less than the Fair Market Value on
the date of grant of the Common Stock subject to the
Option.
3.3 Option Period
Options may be exercised as
determined by the Committee, but: (a) in the absence of specific
action by the Committee, or (b) in the case of an Incentive Stock
Option, in no event after ten years from the date of grant of such
Option (or with respect to an Incentive Stock Option, such other
period as is necessary to enable such Option to be treated as an
“incentive stock option” within the meaning of Code
Section 422 and the regulations promulgated thereunder).
3.4 Exercise of Options
At the time of the exercise of an
Option, the purchase price shall be paid in full in cash or other
equivalent consideration acceptable to the Committee, in its sole
discretion, consistent with the Plan’s purpose and applicable
law and as set forth in the instrument evidencing the grant of the
Option; provided , however, that the Company shall not lend
money to any Participant to finance an option e
