UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
{x} Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
{} Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period December 31, 2000
Commission File Number 0-7955
Mentor Corporation
(Exact name of registrant as specified in its charter)
Minnesota 41-0950791
(State of Incorporation) (I.R.S. Employer Identification Number)
201 Mentor Drive, Santa Barbara, California 93111
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number: (805) 879-6000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
The number of shares outstanding for each of the Issuer's classes
of common stock as of February 12, 2001 was:
Common stock, $.10 par value 23,675,768 shares
Mentor Corporation
INDEX
Part I. Financial Information
Item 1. Financial Statements (unaudited)
Condensed Consolidated Statements of Financial
Position - December 31, 2000 and March 31, 2000
Consolidated Statements of Income - Three Months
Ended December 31, 2000 and 1999
Consolidated Statements of Income - Nine Months
Ended December 31, 2000 and 1999
Condensed Consolidated Statements of Cash Flows -
Nine Months Ended December 31, 2000 and 1999
Notes to Condensed Consolidated Financial Statements-
December 31, 2000
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
Item 3. Quantitative and Qualitative Disclosures About
Market Risk
Part II. Other Information
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security
Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
List of Exhibits
10 Employment agreements
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Mentor Corporation
Condensed Consolidated Statements of Financial Position
December 31, 2000 and March 31, 2000
(Unaudited)
December 31, March 31,
(dollars in thousands) 2000 2000
ASSETS
Current assets:
Cash and cash equivalents $ 51,526 $ 24,313
Marketable securities 20,607 52,563
Accounts receivable, net 38,079 45,310
Inventories 37,257 34,441
Deferred income taxes 7,552 5,739
Prepaid expenses and other 4,459 6,096
Total current assets 159,480 168,462
Property and equipment, net 35,421 36,522
Intangibles, net 13,588 4,008
Goodwill, net 4,537 4,394
Long-term marketable securities
and investments 6,379 12,848
Other assets 4,299 4,472
64,224 62,244
Total assets $ 223,704 $ 230,706
See Notes to Condensed Consolidated Financial Statements
Mentor Corporation
Condensed Consolidated Statements of Financial Position
December 31, 2000 and March 31, 2000
(Unaudited)
December 31, March 31,
(dollars in thousands) 2000 2000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 7,386 $ 10,342
Accrued compensation 6,380 8,972
Income taxes payable 1,574 3,868
Dividends payable 583 608
Sales returns 5,661 6,401
Warranty and related reserves 10,587 6,563
Accrued royalties 1,116 1,600
Other accrued liabilities 6,324 5,967
Total current liabilities 39,611 44,321
Deferred income taxes 1,831 2,743
Shareholders' equity:
Common stock, $.10 par value:
Authorized 50,000,000 shares
Issued and outstanding:
23,317,915 shares at
December 31, 2000
24,208,834 shares at
March 31, 2000 2,332 2,421
Capital in excess of par value 2,174 9,876
Foreign currency translation
adjustments (3,930) (2,694)
Net unrealized gains on securities 924 5,017
Retained earnings 180,762 169,022
182,262 183,642
Total liabilities and shareholders'
Equity $ 223,704 $ 230,706
See Notes to Condensed Consolidated Financial Statements
Mentor Corporation
Consolidated Statements of Income
Three Months Ended December 31, 2000 and 1999
(Unaudited)
(in thousands, except per share
data) 2000 1999
Net sales $ 60,978 $ 60,587
Costs and expenses:
Cost of sales 22,530 23,143
Selling, general and
administrative, exclusive of
restructuring charge 22,760 23,946
Research and development 4,609 3,902
Restructuring charge 1,350 -
51,249 50,991
Operating income 9,729 9,596
Interest expense (10) (3)
Interest income 1,044 1,017
Other income, net (213) 131
Income from continuing operations
before income taxes 10,550 10,741
Income taxes 3,372 3,468
Income from continuing operations 7,178 7,273
Income from discontinued
operations, net of taxes - 571
Net income $ 7,178 $ 7,844
Basic earnings per share:
Continuing operations $ .31 $ .30
Discontinued operations - .02
Basic earnings per share $ .31 $ .32
Diluted earnings per share:
Continuing operations $ .30 $ .29
Discontinued operations - .02
Diluted earnings per share $ .30 $ .31
See notes to consolidated financial statements
Mentor Corporation
Consolidated Statements of Income
Nine Months Ended December 31, 2000 and 1999
(Unaudited)
(in thousands, except per share
data) 2000 1999
Net sales $ 188,112 $ 178,733
Costs and expenses:
Cost of sales 70,738 66,574
Selling, general and
administrative, exclusive of
restructuring charge 73,086 72,371
Research and development 13,795 11,936
Restructuring charge 2,400 -
160,019 150,881
Operating income 28,093 27,852
Interest expense (96) (32)
Interest income 3,282 1,999
Other income, net 620 (31)
Income from continuing operations
before income taxes 31,899 29,788
Income taxes 10,365 9,527
Income from continuing operations 21,534 20,261
Income from discontinued
operations, net of taxes - 7,797
Net income $ 21,534 $ 28,058
Basic earnings per share:
Continuing operations $ .91 $ .83
Discontinued operations - .32
Basic earnings per share $ .91 $ 1.15
Diluted earnings per share:
Continuing operations $ .89 $ .81
Discontinued operations - .31
Diluted earnings per share $ .89 $ 1.12
See notes to consolidated financial statements
Mentor Corporation
Condensed Consolidated Statements of Cash Flows
Nine Months Ended December 31, 2000 and 1999
(Unaudited)
(in thousands) 2000 1999
Net cash provided by continuing
operating activities $ 29,150 $ 24,714
Net cash used in discontinued
operating activities - (6,925)
Net cash provided by operating
activities 29,150 17,789
Cash from Investing Activities:
Purchases of property, equipment,
and intangibles (6,634) (7,807)
Purchases and sales of marketable
securities, net 33,225 (50,738)
Other, net 172 (21)
Net cash provided by (used for)
continuing investing activities 26,763 (58,566)
Net cash provided by discontinued
investing activities - 59,392
Net cash provided by
investing activities 26,763 826
Cash from Financing Activities:
Proceeds from exercise of stock
Options 1,166 3,501
Dividends paid (1,797) (1,833)
Borrowings under line of credit
agreement 6,000 -
Repayments under line of credit
agreement (6,000) (4,000)
Repurchase of common stock (28,069) (10,227)
Net cash used for financing activities (28,700) (12,559)
Increase in cash and cash equivalents 27,213 6,056
Cash and cash equivalents at beginning
of period 24,313 19,533
Cash and cash equivalents at end of
period $ 51,526 $ 25,589
See notes to consolidated financial statements
Mentor Corporation
Notes to Condensed Consolidated Financial Statements
December 31, 2000
Note A - Summary of Significant Accounting Policies
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial information
and with instructions to Form 10-Q and Article 10 of Regulation S-
X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
Operating results for the three-month and nine-month periods
ended December 31, 2000 are not necessarily indicative of the
results that may be expected for the year ended March 31, 2001.
The balance sheet at March 31, 2000 has been derived from the
audited financial statements at that date but does not include
all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.
For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's Annual
Report on Form 10-K for the year ended March 31, 2000.
Note B - Inventories
Inventories at December 31, 2000 and March 31, 2000 consisted of:
(in thousands) Dec 31, March 31,
Raw materials $ 6,053 $ 5,880
Work in process 7,040 7,068
Finished goods 24,164 21,493
$ 37,257 $ 34,441
Note C - Long-Term Marketable Securities
The Company's long-term marketable securities and investments
include the Company's equity investments in its partners,
Intracel Corporation and North American Scientific, Inc. (NASI)
and shares of Paradigm Medical Industries, Inc. (Paradigm)
received in connection with the sale of assets of discontinued
operations. Intracel Corporation is developing a new potential
treatment for bladder cancer. The Intracel Corporation investment
is carried at $3 million adjusted cost as quoted market prices
are not available. Also included is a equity interest in NASI,
the Company's manufacturing partner under an exclusive agreement
for the distribution of brachytherapy seeds for the treatment of
prostate cancer, and an equity interest in Paradigm. These
investments are recorded at fair market value of $3,378,000,
(cost of $1,956,000) and $9,840,000 (cost of $2,122,000) based
upon quoted stock market prices at December 31, 2000 and March
31, 2000, respectively. The unrealized gain of $924,000 and
$5,017,000, net of taxes of $498,000 and $2,701,000, at December
31, and March 31, 2000, respectively, is reported as a separate
component of shareholders' equity. The Company sold a portion of
its NASI securities and realized a gain of $1,098,000 during the
first six months of fiscal 2001. The gain was reflected in other
income, net.
Note D - Comprehensive Income
The components of comprehensive income are listed below:
Three Months Ended Nine Months Ended
December 31, December 31,
(in thousands) 2000 1999 2000 1999
Net income $ 7,178 $ 7,844 $21,534 $28,058
Foreign currency
translation adjustment (12) (738) (1,236) (977)
Unrealized gains (losses)
on investment activities (2,493) 1,538 (4,093) 2,072
Comprehensive income $ 4,673 $ 8,644 $16,205 $29,153
Note E - Business Segment Information
The Company's operations are principally managed on a functional
basis and reported on a product or geographic basis. As a result
there are four reportable segments: Aesthetic and General
Surgery, Surgical Urology, Clinical and Consumer Healthcare
products, and International.
The Aesthetic and General Surgery products segment consists
primarily of breast implants, tissue expanders and the Company's
Contour Genesis Ultrasonic equipment product line along with
equipment and disposables for traditional liposuction. The
Surgical Urology segment includes penile implants, surgical
incontinence products and brachytherapy seeds for the treatment
of prostate cancer. The Clinical and Consumer Healthcare segment
includes catheters and other products for the management of
urinary incontinence and retention. The International segment
includes the operations of the Company's wholly owned
international sales offices, which cover most of the Company's
implantable product lines, and a small European manufacturing and
distribution facility. Segment revenues include domestic sales,
sales to independent foreign distributors and sales to the
Company's direct international sales offices.
Selected financial information for the Company's reportable
segments for the quarter ended December 31, 2000 and 1999
follows:
Three Months Ended Nine Months Ended
December 31, December 31,
(in thousands) 2000 1999 2000 1999
Revenues
Aesthetic and General
Surgery $ 32,568 $ 31,056 $ 99,217 $ 93,872
Surgical Urology 12,772 13,216 39,793 36,222
Clinical and Consumer
Healthcare 11,174 11,173 34,050 33,166
International 9,375 9,335 30,256 29,086
Total reportable
Segments 65,889 64,780 203,316 192,346
Elimination of inter-
Segment revenues (4,911) (4,193) (15,204) (13,613)
Total consolidated
Revenues $ 60,978 $ 60,587 $188,112 $178,733
Three Months Ended Nine Months Ended
December 31, December 31,
(in thousands) 2000 1999 2000 1999
Operating profit (loss)
From continuing
Operations
Aesthetic and General
Surgery $ 8,883 $ 7,264 $ 24,329 $ 24,737
Surgical Urology 1,377 2,427 4,869 4,990
Clinical and Consumer
Healthcare 1,884 2,215 5,654 6,042
International 1,064 1,420 4,316 4,868
Total reportable
Segments 13,208 13,326 39,168 40,637
Corporate operating (3,478) (3,730) (11,074) (12,785)
expenses
Interest expense (11) (3) (97) (32)
Interest income 1,044 1,017 3,282 1,999
Other income (loss) (213) 131 620 (31)
Income from continuing
operations before
taxes $ 10,550 $ 10,741 $ 31,899 $ 29,788
December 31, March 31,
(in thousands) 2000 2000
Identifiable assets
Aesthetic and General Surgery $ 62,382 $ 56,583
Surgical Urology 23,284 23,429
Clinical and Consumer Healthcare 21,857 26,714
International 25,753 24,627
Total reportable segments 133,276 131,353
Corporate and other 90,427 99,353
Consolidated assets $ 223,703 $ 230,706
Note F - Discontinued Operations
In May 1999, the Company announced that its Board of Directors
had decided to divest the ophthalmology business, which accounted
for approximately 16% of sales in fiscal 1999. Consistent with
the plan to dispose of its ophthalmic business segment, the net
assets and operations of the ophthalmic segment of the business,
comprised of the intraocular lens products and ophthalmic
equipment lines, have been classified as discontinued operations.
A summary of the results of operations for discontinued
operations for the three-month and nine-month periods ended
December 31, 1999 follows:
Three Months Nine Months
Ended Ended
December 31, December 31,
(in thousands) 1999 1999
Revenues $ 152 $ 14,114
Income (loss) before income $ (735) $ 367
taxes
Income tax (benefit) expense (235) 1,115
Net (loss) from discontinued
Operations (500) (748)
Gain from disposal, net of
taxes of $5,107 and $8,933 1,071 8,545
Income from discontinued
Operations, net of taxes $ 571 $ 7,797
During the quarter ended June 30, 1999, the Company completed the
sale of the assets of the intraocular lens business, for cash
consideration of $38.4 million. On October 4, 1999 the Company
completed the sale of the remaining assets of the Ophthalmic
equipment business for cash consideration of $21 million. The
Company recorded an after tax a gain of approximately $1.1
million from this transaction in the third quarter.
At December 31, 2000 and March 31, 2000, remaining assets and
liabilities related to discontinued operations were not
significant.
Note G - Earnings per Share
A reconciliation of weighted average shares outstanding, used to
calculate basic earnings per share, to weighted average shares
outstanding assuming dilution, used to calculate diluted earnings
per share, follows:
Three Months Ended Nine Months Ended
December 31, December 31,
2000 1999 2000 1999
Average outstanding shares:
Basic 23,319 24,357 23,632 24,419
Shares issuable through
Options 404 740 547 677
Average common shares
Outstanding: Diluted 23,723 25,097 24,179 25,096
Certain Employee stock option s have been excluded from the
computation of diluted earnings per share because their effective
would be anti-dilutive.
Note H - Interim Reporting
The Company's three quarterly interim reporting periods are each
approximately thirteen-week periods ending on the Friday nearest
the end of the third calendar month. The fiscal year end remains
March 31. To facilitate ease of presentation, each interim
period is shown as if it ended on the last day of the appropriate
calendar month. The actual dates for each quarter end are shown
below:
Fiscal 2001 Fiscal 2000
First Quarter June 30, 2000 July 2, 1999
Second Quarter September 29, 2000 October 1, 1999
Third Quarter December 29, 2000 December 31, 1999
Note I - Effects of Recent Accounting Pronouncements
In December 1999, the Securities and Exchange Commission issued
Staff Accounting Bulletin No. 101 "Revenue Recognition in
Financial Statements" or SAB 101. SAB 101 summarizes certain of
the SEC Staff's views in applying generally accepted accounting
principles to revenue recognition in financial statements. In
addition, the Financial Accounting Standards Board, (FASB)
Emerging Issue Task Force, (EITF) issued EITF 00-10: "Accounting
for Shipping and Handling Fees and Costs." The Company has
evaluated the combined effect that these pronouncements will have
on its revenue recognition policies. Net income will not be
effected; however, both Revenue and Cost of goods sold will be
increased by equal amounts. The changes will amount to less than
1% of revenue in any period presented. The Company will adopt
the provisions of these two pronouncements in the fourth quarter
ending March 31, 2001.
Note J - Acquisition of Intangible assets
Certain technologies related to the manufacture of mammary
prostheses were developed under a 1983 agreement with a limited
partnership whereby the limited partners contributed money
towards the development of the technology in exchange for
payments based upon a percentage of future sales of the products
utilizing the technology.
During the first quarter ended June 30, 2000 the Company
exercised its option under the Agreement of Purchase and Sale
between Mentor Corporation and the Partnership, as amended, to
make a lump sum payment to the Limited Partners in lieu of all
future payments and rights. The Limited Partners could elect to
be paid in cash, the Company's common stock, or a combination of
cash and common stock. This transaction was completed in the
second quarter ended September 30, 2000. The limited partners
elected to be paid $1.0 million in cash and 434 thousand shares
of the Company's common stock, the transfer of which is
restricted under rule 144. The shares were valued at the fair
market value on the date of issuance, of approximately $9
million. Accordingly, the purchased partnership rights were
recorded as $10.1 million, cost, as an intangible asset and will
be amortized over their estimated economic life.
Note K - Restructuring charge
In September 2000, Mentor initiated a restructuring plan as part
of a strategic initiative to streamline operations and improve
the efficiency of the Company. Early in October, staff
reductions at the Corporate headquarters were announced and costs
were estimated to total $1.8 million. The plan was later
expanded to include employee reductions at the two manufacturing
plants. The total plan includes a reduction in workforce of
approximately 70 employees and changes in internal organization
structure. Employees effected by the restructuring were provided
with a severance package, outplacement counseling and extended
benefits totaling approximately $2.4 million. The Company
recorded $1.05 million of the restructuring charge in the quarter
ended September 30, 2000 and the remaining $1.35 million in the
quarter ending December 31, 2000. Approximately $2.2 million of
the total amount of $2.4 million was paid in the third quarter.
Note L - Events Subsequent to December 31, 2000
On January 22, 2001, the Company announced the acquisition of
South Bay Medical, a privately held Minneapolis based medical
device company. South Bay developed a computer workstation and
automated cartridge-based needle loading system used in
brachytherapy procedures for the treatment of prostate cancer.
The Company paid $2 million in cash and $4 million in restricted
common stock at closing. Additional cash and restricted common
stock will be paid based upon achievement of milestones and other
performance factors. The acquisition will be recorded as a
purchase in the fourth quarter ending March 31, 2001.
On February 9, 2001, the Company announced the acquisition of
Porges S.A., a subsidiary of Sanofi-Synthelabo. Porges is a
manufacturer of urological products with headquarters in Paris,
dedicated manufacturing facilities in Sarlat, France and eight
wholly owned sales subsidiaries covering most European markets
and Japan. Porges had sales last year of approximately $42
million. The acquisition was financed from the Company's
existing cash and by a $14-million draw down on the Company's
line of credit. The acquisition will be recorded as a purchase
in the fourth quarter.
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
Except for the historical information contained herein, the
matters discussed in this Management's Discussion contain certain
forward-looking statements that involve risk and uncertainty.
Such forward-looking statements are characterized by future or
conditional verbs and include statements regarding new and
existing products, technologies and opportunities, market and
industry segment growth and demand and acceptance of new and
existing products. Such statements are only predictions and our
actual results may differ materially from those anticipated in
these forward-looking statements. Factors that may cause such
differences include, but are not limited to, increased
competition, changes in product demand, changes in market
acceptance, new product development, obtaining FDA approval of
new and existing products, changes in government regulation,
supply of raw materials, changes in reimbursement practices,
adverse results of litigation and other risks identified in this
Form 10-Q or in other documents filed by the Company with the
Securities and Exchange Commission. Specific attention should be
directed to the sections entitled "Government Regulation",
"Product Liability", and "Factors that May Effect Future Results
of Operations" in the Company's Annual Report on Form 10-K for
the fiscal year ended March 31, 2000. The Company assumes no
obligation to update forward-looking statements as circumstances
change.
In May 1999, the Company announced that its Board of Directors
decided to divest the ophthalmology business, which accounted for
approximately 16% of sales in fiscal 1999. The Company completed
the sale of the assets of the intraocular lens portion of the
ophthalmology business in the quarter ended June 30, 1999. In
the quarter ended December 31, 1999, the Company completed the
sale of the remaining assets of the Ophthalmology business,
primarily the equipment product lines. Accordingly, the Company
accounts for the ophthalmic business as a "Discontinued
Operations" in accordance with Generally Accepted Accounting
Principles. Accordingly, results of operations of the ophthalmic
business are reported, on a net basis, as a single line on the
financials. All prior period amounts in this Form 10-Q have been
presented to exclude the operating results of the ophthalmic
business as discontinued operations.
RESULTS OF OPERATIONS
Sales
Sales for the three months ended December 31, 2000 were $61
million compared to $60.6 million for the same quarter of the
prior year. Sales were negatively effected by the continued
strength of the U.S. dollar versus other currencies and the
general slowdown in the economy. Sales growth in key product
lines was offset by weaknesses in other product lines.
Aesthetic surgery sales in the U.S. domestic market grew by 7%
over the prior year, but international sales declined by 4%. In
the domestic breast implant market, the strongest segment was
reconstruction, with sales growth of 9% over last year. The
cosmetic augmentation market grew by 2% and sales of body
contouring (liposuction) products declined by 3% for the quarter
resulting in overall sales of $36.6 million for aesthetic and
general surgery products, an increase of 5% over third quarter
last year.
Sales of surgical urology products totaled $12.8 million for the
quarter a decrease of 6% from the same quarter in the prior year.
Sales of our Suspend sling implant for incontinence decreased 12%
compared to a particularly strong quarter in the previous year,
and had sequential quarter growth of 9%. Brachytherapy product
sales decreased by 3%, and penile implant sales decreased by 4%
from a year ago.
The clinical and consumer healthcare product line, consisting of
urological catheters and other disposables, sales totaled $11.5
million, a decline of 3% compared to third quarter last year.
Domestic sales increased 4% over the prior year but were offset
by a sharp decline in international sales.
For the nine months ended December 31, 2000 sales increased 5%
from $179 million to $188 million. Surgical Urology product
revenue increased 8% primarily due to strong growth in
brachytherapy seeds and Suspend Sling. Aesthetic and General
surgery products increased 6% reflecting 7% growth in mammary
implant revenues and a 8% decrease in body contouring revenues.
Clinical and Consumer Healthcare sales for the nine-month year-to-
date period are consistent with last year, and sales for the
fiscal year are expected to show a slight gain.
Sales growth in the quarter ending March 31, 2000 was
particularly strong primarily due to the Company's direct-to-
consumer campaign in the Aesthetic segment. Sales growth for the
comparable quarter ending March 31, 2001 is expected to be
consistent with the growth reported in the third quarter.
Sales by Principal Product Line
For the Three Months Ended For the Nine Months Ended
December 31, December 31,
Percent Percent
2000 1999 Change 2000 1999 Change
Aesthetic &
General Surgery
Products $36,617 $34,955 4.8% $112,845 $106,183 6.3%
Surgical Urology
Products 12,844 13,733 (6.5%) 40,399 37,481 7.8%
Clinical &
Consumer
Healthcare
Products 11,517 11,899 (3.2%) 34,868 35,069 (0.6%)
$60,978 $60,587 0.6% $188,112 $178,733 5.2%
Cost of Sales
Cost of sales as a percent of net sales for the quarter and nine-
month period ended December 31, 2000 were 36.9% and 37.6%,
respectively compared to 38.2% and 37.2% for the same periods a
year ago. The change was primarily attributable to manufacturing
efficiencies, and a shift in the Company's product mix towards
higher margin Aesthetic Products combined with a decrease in
lower margin international sales during the quarter. This
reverses a recent trend towards lower margins attributable the
increased percentage of total sales represented by two products
(brachytherapy seeds and the Suspendr Sling) which are
distributed by the Company under alliance agreements. These
alliance products generate gross margins of approximately 50%,
which is lower than the margin generated by products that are
both manufactured and distributed by the Company. In addition,
gross margins were negatively impacted by the strength of the
dollar in our European markets during the recent quarter.
The Company's anticipates that future sales of these alliance
products will grow more rapidly than the higher margin products
manufactured by Mentor. Consequently, despite improved
manufacturing efficiencies, gross margins are not expected to
continue their recent trend of improvements due to the change in
product mix.
Selling, General and Administrative Expenses
Selling, general and administrative expenses, exclusive of the
restructuring charge, were 37.3% of sales in the quarter compared
to 39.5% in the comparable period in the previous year. For the
nine months ended December 31, 2000 selling, general and
administrative expenses decreased to 38.9% of sales from 40.5%.
The decrease reflects lower spending on the Company's direct-to-
consumer advertising campaign partially offset by increases in
product liability reserves and information technology costs. In
addition, cost savings from the Company's recent restructuring
contributed to the improvement in the third quarter and the nine
months ended December 31, 2000.
The Company announced a reduction in corporate staff at its
headquarters in Santa Barbara as part of a restructuring move to
streamline operations and improve efficiency. Employees affected
by the restructuring were provided with a severance package,
outplacement counseling and extended benefits to help with the
transition. This program resulted in a restructuring charge of
approximately $2.4 million of which $1.05 million was recorded in
the second quarter and $1.35 million in the third quarter.
Research and Development
Research and development expenses as a percent of net sales for
the quarter and nine-month period ended December 31, 2000 were
7.6% and 7.3%, respectively compared to 6.4% and 6.7% for the
same periods a year ago. The increases are attributable to
spending on the Company's ongoing clinical studies related to
silicon gel mammary implants. In May 2000, the Company received
FDA approval for saline-filled breast implants and in July
received similar regulatory clearance on our inflatable penile
implants. Although the Company has successfully completed these
PMAA submissions, the amount of spending on research and
development is not expected to decrease as the focus of research
and development efforts will shift towards new product
development. In addition, the Company is committed to a variety
of clinical and laboratory studies in connection with its
ultrasonic liposuction equipment, gel-filled mammary implants and
other products.
The Company has an investment in Intracel Corporation, its
partner for a potential bladder cancer treatment. The Intracel
agreement required the Company to pay $1 million per year for
three years to defray the costs of the clinical trials for the
product. The Company previously paid $2 million to Intracel for
the clinical trials under this agreement. In June 2000, the
agreement was modified to increase Mentor's commitment by $1
million. The Company began paying the remaining $2 million in
quarterly payments of $250 thousand on July 1, 2000.
Interest and Other Income and Expense
Interest expense was $10 thousand in the quarter compared to $3
thousand in the same quarter of the previous year. During the
quarter ended June 30, the Company borrowed under its line of
credit to fund its stock repurchase program. The borrowings were
repaid during the same quarter.
Interest income for the three months ended December 31, 2000
increased slightly above the $1.0 million reported for the
comparable period in the previous year. Slightly higher coupon
rates and an increased usage of fully taxable investments offset
somewhat lower levels of cash and marketable securities in the
current year as compared to the same period last year.
Other income and expense, primarily includes realized gains on
sales of marketable securities recorded as long-term marketable
securities available for sale, gains or losses on disposals of
assets, and foreign currency gains or losses related to the
Company's foreign operations. The Company did not have any sales
of marketable securities during the quarter ended December 31
2000 and recorded a gain on sales of marketable securities of
$1,098,000 for the nine months ended December 31, 2000.
Income Taxes
The effective rate of corporate income taxes for the year is
approximately 32.5%, as compared to 31.8% in the same period a
year ago. The increase in the effective rate is the net effect
of several offsetting items and relates primarily to non-
deductible expenses, foreign operations, and utilization of
research and development credits.
Income from Continuing Operations
Income from continuing operations decreased slightly from $7.3
million reported in the previous year to $7.2 million for the
third quarter of fiscal 2001. Income from continuing operations
for the nine-month period ended December 31, 2000 was $21.5
million compared to $20.3 million for the comparable period the
prior year and an increase of 6%. The operating income of fiscal
2001 includes the restructuring charge of $2.4 million described
above. Diluted earnings per share from continuing operations
were $0.30 for the quarter compared to $0.29 for the comparable
period last year, an increase of 3%. Although the increase in
diluted earnings per share from continuing operations is
consistent with the increase in sales, the restructuring charge
offset improvements in operating trends and other efficiencies as
well as the effect of fewer shares outstanding as a result of the
share buyback program.
Discontinued Operations
In May 1999, the Company announced that its Board of Directors
decided to divest the ophthalmology business, which accounted for
approximately 16% of sales in fiscal 1999. The Company completed
the sale of the assets of the intraocular lens portion of the
ophthalmology business in the quarter ended June 30, 1999.
Accordingly, the Company accounts for the ophthalmic business as
a "Discontinued Operations" in accordance with Generally Accepted
Accounting Principles.
For the quarter ended December 31, 1999 the Company had net
income from discontinued operations of $571 thousand, net of tax.
The results of discontinued operations for the quarter ended
December 31, 1999 included a $1.1 million gain, net of tax from
the sale of the Ophthalmic equipment business for cash
consideration of $21 million and a net loss from operations of
approximately $.5 million. During the quarter ended June 30,
1999, the Company completed the sale of the assets of the
intraocular lens business, recording a gain of $7.5 million, net
of tax. By March 31, 2000 the Company had completed its
divestiture of discontinued operations, accordingly there were no
significant remaining assets or liabilities related to the
Ophthalmic division. There were no discontinued operations
during the quarter ended December 31, 2000.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 2000, the Company's working capital was $120
million compared to $124 million at March 31, 2000. The
Company's working capital needs were provided from operations.
The Company generated $29 million of cash from continuing
operations during the nine months ended December 31, 2000,
compared to $25 million the previous year.
The Company anticipates investing approximately $6 million in
facilities and capital equipment in fiscal 2001. The majority of
the expenditures will be for facility upgrades at the Company's
facilities in the Netherlands and Texas, as well as for enhancing
the Company's information technology capabilities.
The Company has a line of credit for $25 million. In order to
temporarily fund stock repurchases in fiscal 2001, the Company
borrowed and repaid $6 million on its line of credit during the
quarter ended June 30, 2000.
The Company's Board of Directors has authorized an ongoing stock
repurchase program. The objectives of the program, among other
items, are to offset the issuance of stock options, provide
liquidity to the market and to reduce the overall number of
shares outstanding. Repurchases are subject to market conditions
and cash availability. In May 1999, the Board increased the
repurchase authorization by 4 million shares to 4.6 million
shares. The Company intends to continue the share repurchase
program in fiscal 2001, and repurchased 1,493 thousand shares for
$28.1 million during the first three quarters. As of September
30, 2000 authorization to repurchase 2.3 million shares was
remaining.
For the last several years, the Company has paid a quarterly cash
dividend of $.025 per share. On February 13, 2001 the Board of
Directors approved an increase in the quarterly cash dividend to
$.03 per share, and increase of 20%. At the indicated rate of
$.12 per year, the aggregate annual dividend would equal
approximately $2.8 million.
Certain technologies related to the manufacture of mammary
prostheses were developed under a 1983 agreement with a limited
partnership whereby the limited partners contributed money
towards the development of the technology in exchange for
payments based upon a percentage of future sales of the products
utilizing the technology. The Company paid approximately $2
million in such payments to the partnership for last year. The
Company was the general partner for this partnership. The
agreement included an option to purchase the technology and
thereby terminate the partnership.
The Company exercised its option to make a lump sum payment to
the Limited Partners in lieu of all future payments and rights
according to the Agreement of Purchase and Sale between Mentor
Corporation and the Partnership, as amended. The Limited
Partners could elect to be paid in cash, Company's stock, or a
combination. This transaction was completed in the second
quarter ended September 30, 2000. The limited partners elected
to be paid $1.0 million in cash and 434 thousand shares of the
Company's common stock. The stock, transfer of which is
restricted by rule 144, was valued at the fair market value on
the date of issuance, of approximately $9 million. The decrease
in payments to the partners will be offset by the increased
amortization of the new intangible asset and the additional
common shares outstanding, thus having a neutral effect on
earnings per share.
On January 22, 2001, subsequent to the end of the quarter, the
Company announced the acquisition of South Bay Medical, a
privately held Minneapolis based medical device company. South
Bay developed a computer workstation and automated
cartridge-based needle loading system used in brachytherapy
procedures for the treatment of prostate cancer. The Company
paid $2 million in cash and $4 million in restricted common stock
at closing. Additional cash and restricted common stock will be
paid based upon achievement of milestones and other performance
factors.
On February 9, 2001, subsequent to the end of the quarter, the
Company announced the acquisition of Porges S.A., a subsidiary of
Sanofi-Synthelabo. Porges is a manufacturer of urological
products with headquarters in Paris, dedicated manufacturing
facilities in Sarlat, France and eight wholly owned sales
subsidiaries covering most European markets and Japan. Porges
had sales last year of approximately $42 million. The
acquisition was financed from the Company's existing cash and by
a $14-million draw down on the Company's line of credit.
The Company's principal source of liquidity at December 31, 2000
consisted of $72 million in cash and marketable securities plus
$25 million available under its line of credit. Subsequent to
the end of the quarter, the Company borrowed approximately $14
million of the line to partially finance the purchase of Porges
S.A. mentioned above. The Company believes that funds generated
from operations, its cash and marketable securities and funds
available under its line of credit will be adequate to meet its
working capital and capital expenditure requirements through
fiscal 2001.
Item 3. Quantitative and Qualitative Disclosures about Market
Risk
There has been no material changes in the Company's exposure to
market risk as reported in Item 7A in the annual report on Form
10-K for the fiscal year ended March 31, 2000.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In regards to the litigation reported in Item 3 of the
annual report on Form 10-K for the fiscal year ended March 31,
2000, there have been no material changes.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
No event constituting a material default has occurred
respecting any senior security of the Registrant.
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's 2000 Annual Meeting of Shareholders held on
September 19, 2000, the proposal Number 2 to approve the
Company's 2000 Long-term Incentive Plan was discussed and
adjourned to October 19 at 10:00 a.m. in Santa Barbara to allow
the board to collect and consider input from shareholders
concerning the proposed Long-term Incentive Plan. At the
reconvened meeting there were 13,153,458 (including 2,161,942
proxies given to management) votes for the proposal and
8,315,840 against. Prior to the reconvened meeting, the Company
determined after considering input from the shareholders, that
the number of shares authorized under the plan would be reduced
from 7,500,000 to 3,000,000 shares and that the plan terms would
not allow option repricing. In light of the changes made to the
plan, the Board intends to submit the amended plan for
shareholder vote at the next Annual shareholder's meeting.
Item 5. Other Information
(a) See Note L - Events Subsequent to December 31, 2000.
(b) The Securities and Exchange Commission informed the
Company that it is investigating, under a formal order of
investigation, the events relating to the March 23, 2000 USA
Today article entitled "Breast Implant manufacturer under
investigation by the FDA," which was authored by Rita Rubin, and
the March 23, 2000 press release issued by Mentor responding to
that article, and possibly other matters. The Company is
cooperating fully with the SEC's investigation. An investigation
does not indicate that the SEC or its staff has concluded that
violations of law have occurred.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits (listed by number corresponding to the Exhibit
Table of Item 601 in Regulation S-K)
10 (a) Employment Agreement, dated October 16, 2000
between Mentor Corporation and Eugene G. Glover.
10 (b) Employment Agreement, dated November 28, 2000
between Mentor Corporation and Ramona Schwab.
10 (c) Employment Agreement, dated November 28, 2000
between Mentor Corporation and Bobby K. Purkait.
(b) Reports on Form 8-K
(1) On October 13, 2000 the Company filed a
current report on Form 8-K under Item 5 concerning
the Press release dated September 28, 2000 "Mentor
Chairman Resumes CEO Position."
(2) On October 16, 2000 the Company file a current
report on Form 8-K under item 5 concerning the
press release dated October 10, 2000 "Mentor
Announces reduction in Corporate Staff."
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
MENTOR CORPORATION
(Registrant)
DATE: February 13, 2001 BY: /s/CHRISTOPHER CONWAY
Christopher J. Conway
President and
Chief Executive Officer
DATE: February 13, 2001 BY: /s/ADEL MICHAEL
Adel Michael
Senior Vice President
Chief Financial Officer
EXHIBIT 10(a)
EMPLOYMENT AGREEMENT
This Employment Agreement, dated October 16, 2000, is by and
between MENTOR Corporation ("COMPANY"), with its executive
offices at 201 Mentor Drive, Santa Barbara, California 93111, and
Eugene Glover ("EMPLOYEE") of 1564 Ramona Lane, Santa Barbara,
California 93108.
RECITALS
COMPANY is in the business of manufacturing and selling
medical devices and related products. EMPLOYEE has experience in
this business and possesses valuable skills and experience, which
will be used in advancing COMPANY's interests. EMPLOYEE is
willing to be engaged by COMPANY and COMPANY is willing to engage
EMPLOYEE in an executive capacity responsible for the Advanced
Development operations of COMPANY, upon the terms and conditions
set forth in this Agreement. Effective with the date of this
Agreement, GLOVER becomes an employee of the Company and
therefore his status changes from outside Director to that of
inside Director. Consequently, EMPLOYEE is not eligible for
benefits granted to outside Directors from this date forward and
for so long as EMPLOYEE remains an active employee of Company.
However, all benefits granted previously under previous status of
outside Director shall not be rescinded.
AGREEMENT
EMPLOYEE and COMPANY, intending to be legally bound, agree as
follows:
1. SERVICES
1.1 General Services.
1.1.1 Company shall employ EMPLOYEE as Senior Vice
President, Advanced Development. EMPLOYEE shall perform
the duties customarily performed by one holding such
position in a similar business as that engaged in by
COMPANY. To the extent that they do not reduce the
scope of the responsibilities described above,
EMPLOYEE's duties may change from time to time on
reasonable notice, based on the needs of COMPANY and
EMPLOYEE's skills as determined by COMPANY. These
duties shall hereinafter be referred to as "Services."
EMPLOYEE shall report directly to the Chairman of the
Board, President and Chief Executive Officer of Mentor
Corporation.
1.1.2 As Senior Vice President, Advanced Development of
COMPANY, EMPLOYEE shall also be an officer of
COMPANY and shall serve in such capacity without
further compensation. In the event that EMPLOYEE
shall from time to time serve COMPANY as a
director or shall serve in any other office during
the term of this Agreement; EMPLOYEE shall serve
in such capacities without further compensation.
If EMPLOYEE is, for any reason, removed as an
officer or director of the COMPANY by the Board of
Directors of COMPANY, such removal shall be
without prejudice to EMPLOYEE's contractual rights
under this Agreement.
1.1.3. EMPLOYEE shall devote his entire working time,
attention, and energies to the business of COMPANY, and
shall not, during the term of this Agreement, be
engaged in any other business activity whether or not
such business activity is pursued for gain, profit or
other pecuniary advantage, without the prior written
consent of the Board of Directors of COMPANY. This
shall not be construed as preventing EMPLOYEE from
investing his assets in a form or manner that does not
require any services on the part of EMPLOYEE in the
operation or affairs of the entities in which such
investments are made, or from engaging in such civic,
charitable, religious, or political activities that do
not interfere with the performance of EMPLOYEE's duties
hereunder.
1.2 Best Abilities. EMPLOYEE shall serve COMPANY
faithfully and to the best of EMPLOYEE's ability. EMPLOYEE
shall use EMPLOYEE's best abilities to perform the Services.
Employee shall act at all times according to what EMPLOYEE
reasonably believes is in the best interests of COMPANY.
1.3 Corporate Authority. Employee, as an executive
officer, shall comply with all laws and regulations
applicable to EMPLOYEE as a result of this Agreement
including, but not limited to, the Securities Act of 1933
and Securities Act of 1934. Prior to the execution of this
Agreement, EMPLOYEE has received and reviewed COMPANY's
Policies and Procedures and COMPANY's Employee Handbook.
EMPLOYEE shall comply with COMPANY's Policies and
Procedures, and practices now in effect or as later amended
or adopted by COMPANY, as required of similarly-situated
executives of COMPANY.
2. TERM
This Agreement shall commence upon the execution of this
Agreement and shall continue until terminated as provided in
Section 4 of this Agreement.
3. COMPENSATION AND BENEFITS
3.1 Compensation. EMPLOYEE's total compensation consists
of base salary, bonus potential, stock options, and medical
and other benefits generally provided to employees of
COMPANY. Any compensation paid to EMPLOYEE shall be
pursuant to COMPANY's policies and practices for exempt
employees and shall be subject to all applicable laws and
requirements regarding the withholding of federal, state
and/or local taxes. Compensation provided in this Agreement
is full payment for Services and EMPLOYEE shall receive no
additional compensation for extraordinary services unless
otherwise authorized. EMPLOYEE's entire compensation
package will be reviewed annually by the Compensation
Committee of the Board of Directors, a practice which is
consistent with COMPANY's Executive Compensation Program.
3.1.1 Base Compensation. COMPANY agrees to pay
EMPLOYEE an annualized base salary of Two Hundred Fifty
Thousand Dollars and No Cents ($250,000.00), less
applicable withholdings, payable in equal installments
no less frequently than semi-monthly.
3.1.2 Cash Incentive Bonus. EMPLOYEE shall be eligible for a
cash incentive bonus of up to Forty Percent of your annual base
salary, subject to applicable withholdings and subject to
approval by COMPANY's Compensation Committee and Board of
Directors. Any cash incentive bonus shall accrue and become
payable to EMPLOYEE only if EMPLOYEE is employed with COMPANY on
the last day of the fiscal year for which the cash incentive
bonus is calculated.
3.1.3 Stock Options. EMPLOYEE shall be granted an option for
50,000 shares of COMPANY's common stock subject to a four (4)
year vesting schedule one (1) year after grant at the rate of
twenty-five percent (25%) per year. Options are exercisable for
a period of ten (10) years after vesting and shall be exercised
in accordance with the Mentor Corporation 1991 Stock Option Plan
("Plan"), as amended from time to time. EMPLOYEE shall execute
the Option Agreement and otherwise comply with the terms of the
Plan with regard to the options being granted by this Agreement.
This provision is subject to applicable state and federal
securities laws. Based upon satisfactory performance, under the
Plan, COMPANY expects that EMPLOYEE will qualify for additional
grants of options to acquire common stock of COMPANY subject to
determination by the Board of Directors, of an amount which is
consistent with COMPANY's Executive Compensation Program.
Subsequent grants, if any, shall also be subject to performance
considerations as well as the determination of the Board of
Directors.
3.2 Business Expenses. COMPANY shall reimburse EMPLOYEE
for business expenses reasonably incurred in performing
Services according to COMPANY's Expense Reimbursement
Policy.
3.3 Additional Benefits. COMPANY shall provide EMPLOYEE
those additional benefits normally granted by COMPANY to its
employees subject to eligibility requirements applicable to
each benefit. COMPANY has no obligation to provide any
other benefits unless provided for in this Agreement.
Currently COMPANY provides major medical, dental, life,
salary continuation, long term disability benefits and
eligibility to participate in COMPANY's 401(k) plan.
3.4 Vacation. Employee shall accrue vacation equal to
twenty (20) days per year, at the rate of approximately 1.67
days per month. The time or times for such vacation shall
be selected by EMPLOYEE and approved by the Chairman of the
Board, President and Chief Executive Officer of COMPANY.
4. TERMINATION
4.1 Circumstances Of Termination. This Agreement and the
employment relationship between COMPANY and EMPLOYEE may be
terminated as follows:
4.1.1 Death. This Agreement shall terminate upon
EMPLOYEE's death, effective as of the date of
EMPLOYEE's death.
4.1.2 Disability. COMPANY may, at its option, either suspend
compensation payments or terminate this Agreement due to
EMPLOYEE's Disability if EMPLOYEE is incapable, even with
reasonable accommodation by COMPANY, of performing the Services
because of accident, injury, or physical or mental illness for
sixty (60) consecutive days, or is unable or shall have failed to
perform the Services for a total period of ninety (90) within a
twelve (12) month period, regardless of whether such days are
consecutive. If COMPANY suspends compensation payments because
of EMPLOYEE's Disability, COMPANY shall resume compensation
payments when EMPLOYEE resumes performance of the Services. If
COMPANY elects to terminate this Agreement due to EMPLOYEE's
Disability, it must first give EMPLOYEE three (3) days advance
written notice.
4.1.3 Discontinuance Of Business. If COMPANY
discontinues operating its business, this
Agreement shall terminate as of the last day of
the month on which COMPANY ceases its entire
operations with the same effect as if that last
date were originally established as termination
date of this Agreement.
4.1.4 For Cause. COMPANY may terminate this Agreement
without advance notice for Cause. For the purpose of
this Agreement, "Cause" shall mean any failure to
comply in any material respect with this Agreement or
any Agreement incorporated herein; personal or
professional misconduct by EMPLOYEE (including, but not
limited to, criminal activity or gross or willful
neglect of duty); breach of EMPLOYEE's fiduciary duty
to the COMPANY; conduct which threatens public health
or safety, or threatens to do immediate or substantial
harm to COMPANY's business or reputation; or any other
misconduct, deficiency, failure of performance, breach
or default, reasonably capable of being remedied or
corrected by EMPLOYEE. To the extent that a breach
pursuant to this Section 4.1.4 is curable by EMPLOYEE
without harm to COMPANY and/or it's reputation, COMPANY
shall, instead of immediately terminating EMPLOYEE
pursuant to this Agreement, provide EMPLOYEE with
notice of such breach, specifying the actions required
to cure such breach, and EMPLOYEE shall have ten (10)
days to cure such breach by performing the actions so
specified. If EMPLOYEE fails to cure such breach
within the ten (10) day period, COMPANY may terminate
this Agreement without further notice. COMPANY's
exercise of its right to terminate under this section
shall be without prejudice to any other remedy to which
COMPANY may be entitled at law, in equity, or under
this Agreement.
4.1.5. For Convenience Of Party. This Agreement and
employment relationship is terminable by either party, for
convenience, with or without cause, at any time upon thirty (30)
days' advance written notice to the other party.
4.1.6. Change of Control. If employment is terminated within
twelve (12) months upon any of the following events EMPLOYEE
shall be entitled to severance compensation pursuant to Section
4.2.6 (I) and (ii) and (iii):
(i) the sale, lease or other disposition of all or substantially
all of Company's assets to a single purchaser or group of
related purchasers;
(ii) the sale, lease or other disposition, in one
transaction or a series of related
transactions of the majority of COMPANY's
outstanding capital stock; or,
(iii) the merger or consolidation of COMPANY
into or with another corporation in which the
stockholders of COMPANY shall own less than
fifty (50%) percent of the voting securities
of the surviving corporation (all of which
events shall be referred to as a Change in
Control).
4.2 EMPLOYEE's Rights Upon Termination
4.2.1 Death. Upon termination of this Agreement
because of death of EMPLOYEE pursuant to Section
4.1.1 above, COMPANY shall have no further
obligation to EMPLOYEE under the Agreement except
to distribute to EMPLOYEE's estate or designated
beneficiary any unpaid compensation and
reimbursable expenses, less applicable
withholdings, owed to EMPLOYEE prior to the date
of EMPLOYEE's death.
4.2.2 Disability. Upon termination of this
Agreement because of Disability of EMPLOYEE
pursuant to Sections 4.1.2 above, COMPANY shall
have no further obligation to EMPLOYEE under the
Agreement except to distribute to EMPLOYEE's
estate or designated beneficiary any unpaid
compensation and reimbursable expenses, less
applicable withholdings, owed to EMPLOYEE prior to
the date of EMPLOYEE's termination due to
Disability.
4.2.3 Discontinuance Of Business. Upon termination of this
Agreement because of discontinuation of COMPANY's business
pursuant to Section 4.1.3, COMPANY shall have no further
obligation to EMPLOYEE under the Agreement except to distribute
to EMPLOYEE any unpaid compensation and reimbursable expenses,
less applicable withholdings, owed to EMPLOYEE prior to the date
of termination of this Agreement.
4.2.4 Termination With Cause. Upon termination of
EMPLOYEE's employment for Cause pursuant to
Section 4.1.4, COMPANY shall have no further
obligation to EMPLOYEE under this Agreement except
to distribute to EMPLOYEE:
i. Any compensation and reimbursable expenses
owed to EMPLOYEE by COMPANY through the
termination date, less applicable withholdings;
and
ii. Severance compensation as provided for in
COMPANY's Severance Policy, if any, less
applicable withholdings.
4.2.5 Termination Without Cause. Upon termination
of EMPLOYEE's employment by COMPANY without cause
pursuant to Section 4.1.5, COMPANY shall have no
further obligation to EMPLOYEE under this
Agreement except to distribute to EMPLOYEE:
i. Any compensation and reimbursable expenses owed by COMPANY
to EMPLOYEE through the termination date, less applicable
withholdings;
ii. Severance compensation totaling three- (3) month's base pay,
plus one (1) month base pay for each full year of service,
determined at EMPLOYEE's then-current rate of base pay. In
consideration for this severance compensation, EMPLOYEE, on
behalf of himself, his agents, heirs, executors,
administrators, and assigns, expressly releases and forever
discharges COMPANY and its successors and assigns, and all
of its respective agents, directors, officers, partners,
employees, representatives, insurers, attorneys, parent
companies, subsidiaries, affiliates, and joint ventures,
and each of them, from any and all claims based upon acts
or events that occurred on or before the date on which
EMPLOYEE accepts the severance compensation, including any
claim arising under any state or federal statute or
common law, including, but not limited to, Title VII of
the Civil Rights Act of 1964, 42 U.S.C. " 2000e, et seq.,
the Americans with Disabilities Act, 42 U.S.C. " 12101,
et seq., the Age Discrimination in Employment Act,
29 U.S.C. " 623, et. seq., the Worker Adjustment and
Retraining Notification Act, 29 U.S.C. " 2101, et. seq.,
and the California Fair Employment and Housing Act, Cal.
Gov't Code " 12940, et seq. EMPLOYEE acknowledges that
he is familiar with section 1542 of the California Civil
Code, which reads as follows:
A GENERAL RELEASE DOES NOT EXTEND TO
CLAIMS WHICH THE CREDITOR DOES NOT KNOW
OR SUSPECT TO EXIST IN HIS FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
EMPLOYEE expressly acknowledges and agrees
that he is releasing all known and unknown
claims, and that he is waiving all rights he
has or may have under Civil Code Section 1542
or under any other statute or common law
principle of similar effect. EMPLOYEE
acknowledges that the benefits he is
receiving in exchange for this Release are
more than the benefits to which he otherwise
would have been entitled, and that such
benefits constitute valid and adequate
consideration for this Release. EMPLOYEE
further acknowledges that he has read this
Release, understands all of its terms, and
has consulted with counsel of his choosing
before signing this Agreement.
Severance compensation pursuant to this
paragraph shall be in lieu of any other
severance benefit to which EMPLOYEE would
otherwise be entitled under COMPANY's
policies in effect on the date of execution
of this Agreement. Severance compensation
shall be paid upon termination of EMPLOYEE's
employment and in one lump sum payment at the
date of termination, less applicable
withholdings.
4.2.6 Termination Due to Change Of Control. If employment
is terminated within twelve (12) months upon any of the events
delineated in Section 4.1.6 of this Agreement ("Change of
Control"), COMPANY shall have no further obligation to EMPLOYEE
under this Agreement except to distribute to EMPLOYEE:
i. Any compensation and reimbursable expenses owed by
COMPANY to EMPLOYEE through the termination date,
less applicable withholdings;
ii. A pro-rated share of the cash incentive bonus
that would be due to EMPLOYEE if EMPLOYEE had
remained employed with COMPANY through the last
day of the fiscal year for which the cash
incentive bonus is calculated, less applicable
withholdings; and
iii. Severance compensation totaling twelve (12)
months base pay, plus one (1) month base pay for
each full year of service, determined at
EMPLOYEE's then-current rate of base pay. In
consideration for this severance compensation,
EMPLOYEE, on behalf of himself, his agents, heirs,
executors, administrators, and assigns, expressly
releases and forever discharges COMPANY and its
successors and assigns, and all of its respective
agents, directors, officers, partners, employees,
representatives, insurers, attorneys, parent
companies, subsidiaries, affiliates, and joint
ventures, and each of them, from any and all
claims based upon acts or events that occurred on
or before the date on which EMPLOYEE accepts the
severance compensation, including any claim
arising under any state or federal statute or
common law, including, but not limited to, Title
VII of the Civil Rights Act of 1964, 42 U.S.C. ''
2000e, et seq., the Americans with Disabilities
Act, 42 U.S.C. '' 12101, et seq., the Age
Discrimination in Employment Act, 29 U.S.C. ''
623, et seq., the Worker Adjustment and
Retraining Notification Act, 29 U.S.C. '' 2101, et
seq., and the California Fair Employment and
Housing Act, Cal. Gov't Code '' 12940, et seq.
EMPLOYEE acknowledges that he is familiar with
section 1542 of the California Civil Code, which
reads as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT
TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM
MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT
WITH THE DEBTOR.
EMPLOYEE expressly acknowledges and agrees that he
is releasing all known and unknown claims, and
that he is waiving all rights he has or may have
under Civil Code Section 1542 or under any other
statute or common law principle of similar effect.
EMPLOYEE acknowledges that the benefits he is
receiving in exchange for this Release are more
than the benefits to which he otherwise would have
been entitled, and that such benefits constitute
valid and adequate consideration for this Release.
EMPLOYEE further acknowledges that he has read
this Release, understands all of its terms, and
has consulted with counsel of his choosing before
signing this Agreement.
Severance compensation pursuant to this paragraph
shall be in lieu of any other severance benefit to
which EMPLOYEE would otherwise be entitled under
COMPANY's policies in effect on the date of
execution of this Agreement. Severance
compensation shall be paid upon termination of
EMPLOYEE's employment and in one lump sum payment
at the date of termination, less applicable
withholdings.
5. REPRESENTATIONS AND WARRANTIES
5.1 Representations of EMPLOYEE. EMPLOYEE represents and
warrants that EMPLOYEE has all right, power, authority and
capacity, and is free to enter into this Agreement; that by
doing so, EMPLOYEE will not violate or interfere with the
rights of any other person or entity; and that EMPLOYEE is
not subject to any contract, understanding or obligation
that will or might prevent, interfere with or impair the
performance of this Agreement by EMPLOYEE. EMPLOYEE shall
indemnify and hold COMPANY harmless with respect to any
losses, liabilities, demands, claims, fees, expenses,
damages and costs (including attorneys' fees and court
costs) resulting from or arising out of any claim or action
based upon EMPLOYEE's entering into this Agreement.
5.2 Representations of COMPANY. COMPANY represents and
warrants that it has all right, power and authority, without
the consent of any other person, to execute and deliver, and
perform its obligations under, this Agreement. All
corporate and other actions required to be taken by COMPANY
to authorize the execution, delivery and performance of this
Agreement and the consummation of all transactions
contemplated hereby have been duly and properly taken. This
Agreement is the lawful, valid and legally binding
obligation of COMPANY enforceable in accordance with its
terms.
5.3 Materiality of Representations. The representations,
warranties and covenants set forth in this Agreement shall
be deemed to be material and to have been relied upon by the
parties hereto.
6. COVENANTS
6.1 Nondisclosure and Invention Assignment. EMPLOYEE
acknowledges that, as a result of performing the Services,
EMPLOYEE shall have access to confidential and sensitive
information concerning COMPANY's business including, but not
limited to, their business operations, sales and marketing
data, and manufacturing processes. EMPLOYEE also
acknowledges that in the course of performing the Services,
EMPLOYEE may develop new product ideas or inventions as a
result of COMPANY's information. Accordingly, to preserve
COMPANY's confidential information and to assure it the full
benefit of that information, EMPLOYEE shall, as a condition
of employment with COMPANY, execute COMPANY's standard form
of Employee Confidentiality Agreement attached hereto as
Exhibit A, and execute updated versions of the Employee
Confidentiality Agreement as it may be modified from time to
time by COMPANY and as may be required of similarly-situated
executives of COMPANY. The Employee Confidentiality
Agreement is incorporated herein by this reference.
EMPLOYEE's obligations under the Employee Confidentiality
Agreement continue beyond the termination of this Agreement.
6.2 Covenant Not to Compete. In addition to the provisions
of the Employee Confidentiality Agreement, EMPLOYEE shall
abide by the following covenant not to compete if COMPANY,
at its option upon the termination of this Agreement
(regardless of the reason for the termination), exercises
this Covenant Not to Compete. COMPANY shall notify EMPLOYEE
within ten (10) days of termination of this Agreement of its
intention to exercise this option and make an additional
payment to EMPLOYEE of six (6) months' base pay determined
at EMPLOYEE's last rate of pay with COMPANY. EMPLOYEE
agrees that for a period of one (1) year following the
termination of this Agreement, he shall not directly or
indirectly for EMPLOYEE, or as a member of a partnership, or
as an officer, director, stockholder, employee, or
representative of any other entity or individual, engage,
directly or indirectly, in any business activity which is
the same or similar to work engaged in by EMPLOYEE on behalf
of COMPANY within the same geographic territory as
EMPLOYEE's work for COMPANY and which is directly
competitive with the business conducted or to EMPLOYEE's
knowledge, contemplated by COMPANY at the time of
termination of this Agreement, as defined in the Employee
Confidentiality Agreement incorporated into this Agreement
by reference. EMPLOYEE may accept employment with an entity
competing with COMPANY only if the business of that entity
is diversified and EMPLOYEE is employed solely with respect
to a separately-managed and separately-operated part of that
entity's business that does not compete with COMPANY. Prior
to accepting such employment, EMPLOYEE and the prospective
employer entity shall provide COMPANY with written
assurances reasonably satisfactory to COMPANY that EMPLOYEE
will not render services directly or indirectly to any part
of that entity's business that competes with the business of
COMPANY.
6.3 Covenant to Deliver Records. All memoranda, notes,
records and other documents made or compiled by EMPLOYEE, or
made available to EMPLOYEE during the term of this Agreement
concerning the business of COMPANY, shall be and remain
COMPANY's property and shall be delivered to COMPANY upon
the termination of this Agreement or at any other time on
request.
6.4 Covenant Not To Recruit. EMPLOYEE shall not, during
the term of this Agreement and for a period of one (1) year
following termination of this Agreement, directly or
indirectly, either on EMPLOYEE's own behalf, or on behalf of
any other individual or entity, solicit, interfere with,
induce (or attempt to induce) or endeavor to entice away any
employee associated with COMPANY to become affiliated with
him or any other individual or entity.
7. CERTAIN RIGHTS OF COMPANY
7.1 Announcement. COMPANY shall have the right to make
public announcements concerning the execution of this
Agreement and certain terms thereof.
7.2 Use of Name, Likeness and Biography. COMPANY shall
have the right (but not the obligation) to use, publish and
broadcast, and to authorize others to do so, the name,
approved likeness and approved biographical material of
EMPLOYEE to advertise, publicize and promote the business of
COMPANY and its affiliates, but not for the purposes of
direct endorsement without EMPLOYEE's consent. An "approved
likeness" and "approved biographical material" shall be,
respectively, any photograph or other depiction of EMPLOYEE,
or any biographical information or life story concerning the
professional career of EMPLOYEE.
7.3 Right to Insure. COMPANY shall have the right to
secure in its own name, or otherwise, and at its own
expense, life, health, accident or other insurance covering
EMPLOYEE, and EMPLOYEE shall have no right, title or
interest in and to such insurance. EMPLOYEE shall assist
COMPANY in procuring such insurance by submitting to
examinations and by signing such applications and other
instruments as may be required by the insurance carriers to
which application is made for any such insurance.
8. ASSIGNMENT
Neither party may assign or otherwise dispose of its rights
or obligations under this Agreement without the prior written
consent of the other party except as provided in this Section.
COMPANY may assign and transfer this Agreement, or its interest
in this Agreement, to any affiliate of COMPANY or to any entity
that is a party to a merger, reorganization, or consolidation
with COMPANY, or to a subsidiary of COMPANY, or to any entity
that acquires substantially all of the assets of COMPANY or of
any division with respect to which EMPLOYEE is providing services
(providing such assignee assumes COMPANY's obligations under this
Agreement). EMPLOYEE shall, if requested by COMPANY, perform
EMPLOYEE's duties and Services, as specified in this Agreement,
for the benefit of any subsidiary or other affiliate of COMPANY.
Upon assignment, acquisition, merger, consolidation or
reorganization, the term "COMPANY" as used herein shall be deemed
to refer to such assignee or successor entity. EMPLOYEE shall
not have the right to assign EMPLOYEE's interest in this
Agreement, any rights under this Agreement, or any duties imposed
under this Agreement, nor shall EMPLOYEE or his spouse, heirs,
beneficiaries, executors or administrators have the right to
pledge, hypothecate or otherwise encumber EMPLOYEE's right to
receive compensation hereunder without the express written
consent of COMPANY.
9. RESOLUTION OF DISPUTES
In the event of any dispute arising out of or in connection
with this Agreement or in any way relating to the employment of
EMPLOYEE which leads to the filing of a lawsuit, the parties
agree that venue and jurisdiction shall be in Santa Barbara
County, California. The prevailing party in any such litigation
shall be entitled to an award of costs and reasonable attorneys'
fees to be paid by the losing party.
10. GENERAL PROVISIONS
10.1 Notices. Notice under this Agreement shall be
sufficient only if personally delivered by a major
commercial paid delivery courier service or mailed by
certified or registered mail (return receipt requested and
postage pre-paid) to the other party at its address set
forth in the signature block below or to such other address
as may be designated by either party in writing. If not
received sooner, notices by mail shall be deemed received
five (5) days after deposit in the United States mail.
10.2 Agreement Controls. Unless otherwise provided for in
this Agreement, the COMPANY's policies, procedures and
practices shall govern the relationship between EMPLOYEE and
COMPANY. If, however, any of COMPANY's policies, procedures
and/or practices conflict with this Agreement (together with
any amendments hereto), this Agreement (and any amendments
hereto) shall control.
10.3 Amendment and Waiver. Any provision of this Agreement
may be amended or modified and the observance of any
provision may be waived (either retroactively or
prospectively) only by written consent of the parties.
Either party's failure to enforce any provision of this
Agreement shall not be construed as a waiver of that party's
right to enforce such provision.
10.4 Governing Law. This Agreement and the performance
hereunder shall be interpreted under the substantive laws of
the State of California.
10.5 Force Majeure. Either party shall be temporarily
excused from performing under this Agreement if any force
majeure or other occurrence beyond the reasonable control of
either party makes such performance impossible, except a
Disability as defined in this Agreement, provided that the
party subject to the force majeure provides notice of such
force majeure at the first reasonable opportunity. Under
such circumstances, performance under this Agreement which
related to the delay shall be suspended for the duration of
the delay provided the delayed party shall resume
performance of its obligations with due diligence once the
delaying event subsides. In case of any such suspension,
the parties shall use their best efforts to overcome the
cause and effect of such suspension.
10.6 Remedies. EMPLOYEE acknowledges that because of the
nature of COMPANY's business, and the fact that the services
to be performed by EMPLOYEE pursuant to this Agreement are
of a special, unique, unusual, extraordinary, and
intellectual character which give them a peculiar value, a
breach of this Agreement shall cause substantial injury to
COMPANY for which money damages cannot reasonably be
ascertained and for which money damages would be inadequate.
EMPLOYEE therefore agrees that COMPANY shall have the right
to obtain injunctive relief, including the right to have the
provisions of this Agreement specifically enforced by any
court having equity jurisdiction, in addition to any other
remedies that COMPANY may have.
10.7 Severability. If any term, provision, covenant,
paragraph, or condition of this Agreement is held to be
invalid, illegal, or unenforceable by any court of competent
jurisdiction, that provision shall be limited or eliminated
to the minimum extent necessary so this Agreement shall
otherwise remain enforceable in full force and effect.
10.8 Construction. Headings and captions are only for
convenience and shall not affect the construction or
interpretation of this Agreement. Whenever the context
requires, words, used in the singular shall be construed to
include the plural and vice versa, and pronouns of any
gender shall be deemed to include the masculine, feminine,
or neuter gender.
10.9 Counterpart Copies. This Agreement may be signed in
counterpart copies, each of which shall represent an
original document, and all of which shall constitute a
single document.
10.10 No Adverse Construction. The rule that a contract is
to be construed against the party drafting the contract is
hereby waived, and shall have no applicability in construing
this Agreement or the terms hereof.
10.11 Entire Agreement. With respect to its subject matter,
namely, the employment by COMPANY of EMPLOYEE, this
Agreement (including the documents expressly incorporated
therein, such as the Employee Confidentiality Agreement),
contains the entire understanding between the parties, and
supersedes any prior agreements, understandings, and
communications between the parties, whether oral, written,
implied or otherwise, including, but not limited to, the
original offer of employment letter.
10.12 Assistance of Counsel. EMPLOYEE expressly
acknowledges that he was given the right to be represented
by counsel of his own choosing in connection with the terms
of this Agreement.
The parties execute this Agreement as of the date stated above:
EUGENE GLOVER MENTOR CORPORATION
/s/EUGENE GLOVER /s/CHRISTOPHER J. CONWAY
Eugene Glover Christopher J. Conway
President and CEO
NOTICE ADDRESS: NOTICE ADDRESS:
1564 Ramona Lane 201 Mentor Drive
Santa Barbara, CA 93108 Santa Barbara, CA 93111
EXHIBIT 10(b)
EMPLOYMENT AGREEMENT
This Employment Agreement, dated November 28, 2000, is by
and between MENTOR Corporation ("COMPANY"), with its executive
offices at 201 Mentor Drive, Santa Barbara, California 93111, and
Ramona Schwab ("EMPLOYEE") of 4050 Via Laguna, Santa Barbara,
California 93110.
RECITALS
COMPANY is in the business of manufacturing and selling
medical devices and related products. EMPLOYEE has experience in
this business and possesses valuable skills and experience, which
will be used in advancing COMPANY's interests. EMPLOYEE is
willing to be engaged by COMPANY and COMPANY is willing to engage
EMPLOYEE in an executive capacity responsible for the Human
Resources operations of COMPANY, upon the terms and conditions
set forth in this Agreement.
AGREEMENT
EMPLOYEE and COMPANY, intending to be legally bound, agree as
follows:
1. SERVICES
1.1 General Services.
1.1.1 Company shall employ EMPLOYEE as Vice President,
Human Resources. EMPLOYEE shall perform the duties
customarily performed by one holding such position in a
similar business as that engaged in by COMPANY. To the
extent that they do not reduce the scope of the
responsibilities described above, EMPLOYEE's duties may
change from time to time on reasonable notice, based on
the needs of COMPANY and EMPLOYEE's skills as
determined by COMPANY. These duties shall hereinafter
be referred to as "Services." EMPLOYEE shall report
directly to the Chairman of the Board, President and
Chief Executive Officer of Mentor Corporation.
1.1.2 As Vice President, Human Resources of COMPANY,
EMPLOYEE shall also be an officer of COMPANY and
shall serve in such capacity without further
compensation. In the event that EMPLOYEE shall
from time to time serve COMPANY as a director or
shall serve in any other office during the term of
this Agreement; EMPLOYEE shall serve in such
capacities without further compensation. If
EMPLOYEE is, for any reason, removed as an officer
or director of the COMPANY by the Board of
Directors of COMPANY, such removal shall be
without prejudice to EMPLOYEE's contractual rights
under this Agreement.
1.1.3. EMPLOYEE shall devote his entire working time,
attention, and energies to the business of COMPANY, and
shall not, during the term of this Agreement, be
engaged in any other business activity whether or not
such business activity is pursued for gain, profit or
other pecuniary advantage, without the prior written
consent of the Board of Directors of COMPANY. This
shall not be construed as preventing EMPLOYEE from
investing his assets in a form or manner that does not
require any services on the part of EMPLOYEE in the
operation or affairs of the entities in which such
investments are made, or from engaging in such civic,
charitable, religious, or political activities that do
not interfere with the performance of EMPLOYEE's duties
hereunder.
1.2 Best Abilities. EMPLOYEE shall serve COMPANY
faithfully and to the best of EMPLOYEE's ability. EMPLOYEE
shall use EMPLOYEE's best abilities to perform the Services.
Employee shall act at all times according to what EMPLOYEE
reasonably believes is in the best interests of COMPANY.
1.3 Corporate Authority. Employee, as an executive
officer, shall comply with all laws and regulations
applicable to EMPLOYEE as a result of this Agreement
including, but not limited to, the Securities Act of 1933
and Securities Act of 1934. Prior to the execution of this
Agreement, EMPLOYEE has received and reviewed COMPANY's
Policies and Procedures and COMPANY's Employee Handbook.
EMPLOYEE shall comply with COMPANY's Policies and
Procedures, and practices now in effect or as later amended
or adopted by COMPANY, as required of similarly-situated
executives of COMPANY.
2. TERM
This Agreement shall commence upon the execution of this
Agreement and shall continue until terminated as provided in
Section 4 of this Agreement.
3. COMPENSATION AND BENEFITS
3.1 Compensation. EMPLOYEE's total compensation consists
of base salary, bonus potential, stock options, and medical
and other benefits generally provided to employees of
COMPANY. Any compensation paid to EMPLOYEE shall be
pursuant to COMPANY's policies and practices for exempt
employees and shall be subject to all applicable laws and
requirements regarding the withholding of federal, state
and/or local taxes. Compensation provided in this Agreement
is full payment for Services and EMPLOYEE shall receive no
additional compensation for extraordinary services unless
otherwise authorized. EMPLOYEE's entire compensation
package will be reviewed annually by the Compensation
Committee of the Board of Directors, a practice which is
consistent with COMPANY's Executive Compensation Program.
3.1.1 Base Compensation. COMPANY agrees to pay
EMPLOYEE an annualized base salary of One Hundred
Eighty Thousand Dollars and No Cents ($180,000.00),
less applicable withholdings, payable in equal
installments no less frequently than semi-monthly.
3.1.4 Cash Incentive Bonus. EMPLOYEE shall be eligible for a
cash incentive bonus of up to Forty Percent of your annual base
salary, subject to applicable withholdings and subject to
approval by COMPANY's Compensation Committee and Board of
Directors. Any cash incentive bonus shall accrue and become
payable to EMPLOYEE only if EMPLOYEE is employed with COMPANY on
the last day of the fiscal year for which the cash incentive
bonus is calculated.
3.1.5 Stock Options. EMPLOYEE shall be granted an option for
20,000 shares of COMPANY's common stock subject to a four (4)
year vesting schedule one (1) year after grant at the rate of
twenty-five percent (25%) per year. Options are exercisable for
a period of ten (10) years after vesting and shall be exercised
in accordance with the Mentor Corporation 1991 Stock Option Plan
("Plan"), as amended from time to time. EMPLOYEE shall execute
the Option Agreement and otherwise comply with the terms of the
Plan with regard to the options being granted by this Agreement.
This provision is subject to applicable state and federal
securities laws. Based upon satisfactory performance, under the
Plan, COMPANY expects that EMPLOYEE will qualify for additional
grants of options to acquire common stock of COMPANY subject to
determination by the Board of Directors, of an amount which is
consistent with COMPANY's Executive Compensation Program.
Subsequent grants, if any, shall also be subject to performance
considerations as well as the determination of the Board of
Directors.
3.2 Business Expenses. COMPANY shall reimburse EMPLOYEE
for business expenses reasonably incurred in performing
Services according to COMPANY's Expense Reimbursement
Policy.
3.3 Additional Benefits. COMPANY shall provide EMPLOYEE
those additional benefits normally granted by COMPANY to its
employees subject to eligibility requirements applicable to
each benefit. COMPANY has no obligation to provide any
other benefits unless provided for in this Agreement.
Currently COMPANY provides major medical, dental, life,
salary continuation, long term disability benefits and
eligibility to participate in COMPANY's 401(k) plan.
3.4 Vacation. Employee shall accrue vacation equal to
fifteen (15) days per year during the first five years of
service, at the rate of 1.25 days per month. Thereafter,
vacation will accrue at twenty (20) days per year, at the
rate of approximately 1.67 days per month. The time or
times for such vacation shall be selected by EMPLOYEE and
approved by the Chairman of the Board, President and Chief
Executive Officer of COMPANY.
4. TERMINATION
4.1 Circumstances Of Termination. This Agreement and the
employment relationship between COMPANY and EMPLOYEE may be
terminated as follows:
4.1.1 Death. This Agreement shall terminate upon
EMPLOYEE's death, effective as of the date of
EMPLOYEE's death.
4.1.3 Disability. COMPANY may, at its option, either suspend
compensation payments or terminate this Agreement due to
EMPLOYEE's Disability if EMPLOYEE is incapable, even with
reasonable accommodation by COMPANY, of performing the Services
because of accident, injury, or physical or mental illness for
sixty (60) consecutive days, or is unable or shall have failed to
perform the Services for a total period of ninety (90) within a
twelve (12) month period, regardless of whether such days are
consecutive. If COMPANY suspends compensation payments because
of EMPLOYEE's Disability, COMPANY shall resume compensation
payments when EMPLOYEE resumes performance of the Services. If
COMPANY elects to terminate this Agreement due to EMPLOYEE's
Disability, it must first give EMPLOYEE three (3) days advance
written notice.
4.1.3 Discontinuance Of Business. If COMPANY
discontinues operating its business, this
Agreement shall terminate as of the last day of
the month on which COMPANY ceases its entire
operations with the same effect as if that last
date were originally established as termination
date of this Agreement.
4.1.4 For Cause. COMPANY may terminate this Agreement
without advance notice for Cause. For the purpose of
this Agreement, "Cause" shall mean any failure to
comply in any material respect with this Agreement or
any Agreement incorporated herein; personal or
professional misconduct by EMPLOYEE (including, but not
limited to, criminal activity or gross or willful
neglect of duty); breach of EMPLOYEE's fiduciary duty
to the COMPANY; conduct which threatens public health
or safety, or threatens to do immediate or substantial
harm to COMPANY's business or reputation; or any other
misconduct, deficiency, failure of performance, breach
or default, reasonably capable of being remedied or
corrected by EMPLOYEE. To the extent that a breach
pursuant to this Section 4.1.4 is curable by EMPLOYEE
without harm to COMPANY and/or it's reputation, COMPANY
shall, instead of immediately terminating EMPLOYEE
pursuant to this Agreement, provide EMPLOYEE with
notice of such breach, specifying the actions required
to cure such breach, and EMPLOYEE shall have ten (10)
days to cure such breach by performing the actions so
specified. If EMPLOYEE fails to cure such breach
within the ten (10) day period, COMPANY may terminate
this Agreement without further notice. COMPANY's
exercise of its right to terminate under this section
shall be without prejudice to any other remedy to which
COMPANY may be entitled at law, in equity, or under
this Agreement.
4.1.7. For Convenience Of Party. This Agreement and
employment relationship is terminable by either party, for
convenience, with or without cause, at any time upon thirty (30)
days' advance written notice to the other party.
4.1.8. Change of Control. If employment is terminated within
twelve (12) months upon any of the following events EMPLOYEE
shall be entitled to severance compensation pursuant to Section
4.2.6 (i) and (ii) and (iii):
(i) the sale, lease or other disposition of all
or substantially all of Company's assets to a
single purchaser or group of related
purchasers;
(ii) the sale, lease or other disposition, in one
transaction or a series of related
transactions of the majority of COMPANY's
outstanding capital stock; or,
(iii) the merger or consolidation of COMPANY
into or with another corporation in which the
stockholders of COMPANY shall own less than
fifty (50%) percent of the voting securities
of the surviving corporation (all of which
events shall be referred to as a Change in
Control).
4.2 EMPLOYEE's Rights Upon Termination
4.2.1 Death. Upon termination of this Agreement
because of death of EMPLOYEE pursuant to Section
4.1.1 above, COMPANY shall have no further
obligation to EMPLOYEE under the Agreement except
to distribute to EMPLOYEE's estate or designated
beneficiary any unpaid compensation and
reimbursable expenses, less applicable
withholdings, owed to EMPLOYEE prior to the date
of EMPLOYEE's death.
4.2.2 Disability. Upon termination of this
Agreement because of Disability of EMPLOYEE
pursuant to Sections 4.1.2 above, COMPANY shall
have no further obligation to EMPLOYEE under the
Agreement except to distribute to EMPLOYEE's
estate or designated beneficiary any unpaid
compensation and reimbursable expenses, less
applicable withholdings, owed to EMPLOYEE prior to
the date of EMPLOYEE's termination due to
Disability.
4.2.4 Discontinuance Of Business. Upon termination of this
Agreement because of discontinuation of COMPANY's business
pursuant to Section 4.1.3, COMPANY shall have no further
obligation to EMPLOYEE under the Agreement except to distribute
to EMPLOYEE any unpaid compensation and reimbursable expenses,
less applicable withholdings, owed to EMPLOYEE prior to the date
of termination of this Agreement.
4.2.4 Termination With Cause. Upon termination of
EMPLOYEE's employment for Cause pursuant to
Section 4.1.4, COMPANY shall have no further
obligation to EMPLOYEE under this Agreement except
to distribute to EMPLOYEE:
i. Any compensation and reimbursable expenses
owed to EMPLOYEE by COMPANY through the
termination date, less applicable withholdings;
and
ii. Severance compensation as provided for in
COMPANY's Severance Policy, if any, less
applicable withholdings.
4.2.5 Termination Without Cause. Upon termination
of EMPLOYEE's employment by COMPANY without cause
pursuant to Section 4.1.5, COMPANY shall have no
further obligation to EMPLOYEE under this
Agreement except to distribute to EMPLOYEE:
iii. Any compensation and reimbursable expenses owed by COMPANY
to EMPLOYEE through the termination date, less applicable
withholdings;
iv. Severance compensation totaling three- (3) month's base pay,
plus one (1) month base pay for each full year of service,
determined at EMPLOYEE's then-current rate of base pay. In
consideration for this severance compensation, EMPLOYEE, on
behalf of himself, his agents, heirs, executors,
administrators,
and assigns, expressly releases and forever discharges
COMPANY and its successors and assigns, and all of its
respective agents, directors, officers, partners, employees,
representatives, insurers, attorneys, parent companies,
subsidiaries, affiliates, and joint ventures, and each of
them, from any and all claims based upon acts or events that
occurred on or before the date on which EMPLOYEE accepts the
severance compensation, including any claim arising under
any state or federal statute or common law, including, but
not limited to, Title VII of the Civil Rights Act
of 1964, 42 U.S.C. " 2000e, et seq., the Americans with
Disabilities Act, 42 U.S.C. " 12101, et seq., the Age
Discrimination in Employment Act, 29 U.S.C. " 623, et. seq.,
the Worker Adjustment and Retraining Notification Act, 29
U.S.C. "2101, et. seq., and the California Fair Employment
and Housing Act, Cal. Gov't Code " 12940, et seq. EMPLOYEE
acknowledges that he is familiar with section 1542 of the
California Civil Code, which reads as follows:
A GENERAL RELEASE DOES NOT EXTEND TO
CLAIMS WHICH THE CREDITOR DOES NOT KNOW
OR SUSPECT TO EXIST IN HIS FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
EMPLOYEE expressly acknowledges and agrees
that he is releasing all known and unknown
claims, and that he is waiving all rights he
has or may have under Civil Code Section 1542
or under any other statute or common law
principle of similar effect. EMPLOYEE
acknowledges that the benefits he is
receiving in exchange for this Release are
more than the benefits to which he otherwise
would have been entitled, and that such
benefits constitute valid and adequate
consideration for this Release. EMPLOYEE
further acknowledges that he has read this
Release, understands all of its terms, and
has consulted with counsel of his choosing
before signing this Agreement.
Severance compensation pursuant to this
paragraph shall be in lieu of any other
severance benefit to which EMPLOYEE would
otherwise be entitled under COMPANY's
policies in effect on the date of execution
of this Agreement. Severance compensation
shall be paid upon termination of EMPLOYEE's
employment and in one lump sum payment at the
date of termination, less applicable
withholdings.
4.2.7 Termination Due to Change Of Control. If employment
is terminated within twelve (12) months upon any of the events
delineated in Section 4.1.6 of this Agreement ("Change of
Control"), COMPANY shall have no further obligation to EMPLOYEE
under this Agreement except to distribute to EMPLOYEE:
i. Any compensation and reimbursable expenses owed by
COMPANY to EMPLOYEE through the termination date,
less applicable withholdings;
ii. A pro-rated share of the cash incentive bonus
that would be due to EMPLOYEE if EMPLOYEE had
remained employed with COMPANY through the last
day of the fiscal year for which the cash
incentive bonus is calculated, less applicable
withholdings; and
iii. Severance compensation totaling twelve (12)
months base pay, plus one (1) month base pay for
each full year of service, determined at
EMPLOYEE's then-current rate of base pay. In
consideration for this severance compensation,
EMPLOYEE, on behalf of himself, his agents, heirs,
executors, administrators, and assigns, expressly
releases and forever discharges COMPANY and its
successors and assigns, and all of its respective
agents, directors, officers, partners, employees,
representatives, insurers, attorneys, parent
companies, subsidiaries, affiliates, and joint
ventures, and each of them, from any and all
claims based upon acts or events that occurred on
or before the date on which EMPLOYEE accepts the
severance compensation, including any claim
arising under any state or federal statute or
common law, including, but not limited to, Title
VII of the Civil Rights Act of 1964, 42 U.S.C. ''
2000e, et seq., the Americans with Disabilities
Act, 42 U.S.C. '' 12101, et seq., the Age
Discrimination in Employment Act, 29 U.S.C. ''
623, et seq., the Worker Adjustment and
Retraining Notification Act, 29 U.S.C. '' 2101, et
seq., and the California Fair Employment and
Housing Act, Cal. Gov't Code '' 12940, et seq.
EMPLOYEE acknowledges that he is familiar with
section 1542 of the California Civil Code, which
reads as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT
TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM
MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT
WITH THE DEBTOR.
EMPLOYEE expressly acknowledges and agrees that he
is releasing all known and unknown claims, and
that he is waiving all rights he has or may have
under Civil Code Section 1542 or under any other
statute or common law principle of similar effect.
EMPLOYEE acknowledges that the benefits he is
receiving in exchange for this Release are more
than the benefits to which he otherwise would have
been entitled, and that such benefits constitute
valid and adequate consideration for this Release.
EMPLOYEE further acknowledges that he has read
this Release, understands all of its terms, and
has consulted with counsel of his choosing before
signing this Agreement.
Severance compensation pursuant to this paragraph
shall be in lieu of any other severance benefit to
which EMPLOYEE would otherwise be entitled under
COMPANY's policies in effect on the date of
execution of this Agreement. Severance
compensation shall be paid upon termination of
EMPLOYEE's employment and in one lump sum payment
at the date of termination, less applicable
withholdings.
5. REPRESENTATIONS AND WARRANTIES
5.1 Representations of EMPLOYEE. EMPLOYEE represents and
warrants that EMPLOYEE has all right, power, authority and
capacity, and is free to enter into this Agreement; that by
doing so, EMPLOYEE will not violate or interfere with the
rights of any other person or entity; and that EMPLOYEE is
not subject to any contract, understanding or obligation
that will or might prevent, interfere with or impair the
performance of this Agreement by EMPLOYEE. EMPLOYEE shall
indemnify and hold COMPANY harmless with respect to any
losses, liabilities, demands, claims, fees, expenses,
damages and costs (including attorneys' fees and court
costs) resulting from or arising out of any claim or action
based upon EMPLOYEE's entering into this Agreement.
5.2 Representations of COMPANY. COMPANY represents and
warrants that it has all right, power and authority, without
the consent of any other person, to execute and deliver, and
perform its obligations under, this Agreement. All
corporate and other actions required to be taken by COMPANY
to authorize the execution, delivery and performance of this
Agreement and the consummation of all transactions
contemplated hereby have been duly and properly taken. This
Agreement is the lawful, valid and legally binding
obligation of COMPANY enforceable in accordance with its
terms.
5.3 Materiality of Representations. The representations,
warranties and covenants set forth in this Agreement shall
be deemed to be material and to have been relied upon by the
parties hereto.
6. COVENANTS
6.1 Nondisclosure and Invention Assignment. EMPLOYEE
acknowledges that, as a result of performing the Services,
EMPLOYEE shall have access to confidential and sensitive
information concerning COMPANY's business including, but not
limited to, their business operations, sales and marketing
data, and manufacturing processes. EMPLOYEE also
acknowledges that in the course of performing the Services,
EMPLOYEE may develop new product ideas or inventions as a
result of COMPANY's information. Accordingly, to preserve
COMPANY's confidential information and to assure it the full
benefit of that information, EMPLOYEE shall, as a condition
of employment with COMPANY, execute COMPANY's standard form
of Employee Confidentiality Agreement attached hereto as
Exhibit A, and execute updated versions of the Employee
Confidentiality Agreement as it may be modified from time to
time by COMPANY and as may be required of similarly-situated
executives of COMPANY. The Employee Confidentiality
Agreement is incorporated herein by this reference.
EMPLOYEE's obligations under the Employee Confidentiality
Agreement continue beyond the termination of this Agreement.
6.2 Covenant Not to Compete. In addition to the provisions
of the Employee Confidentiality Agreement, EMPLOYEE shall
abide by the following covenant not to compete if COMPANY,
at its option upon the termination of this Agreement
(regardless of the reason for the termination), exercises
this Covenant Not to Compete. COMPANY shall notify EMPLOYEE
within ten (10) days of termination of this Agreement of its
intention to exercise this option and make an additional
payment to EMPLOYEE of six (6) months' base pay determined
at EMPLOYEE's last rate of pay with COMPANY. EMPLOYEE
agrees that for a period of one (1) year following the
termination of this Agreement, he shall not directly or
indirectly for EMPLOYEE, or as a member of a partnership, or
as an officer, director, stockholder, employee, or
representative of any other entity or individual, engage,
directly or indirectly, in any business activity which is
the same or similar to work engaged in by EMPLOYEE on behalf
of COMPANY within the same geographic territory as
EMPLOYEE's work for COMPANY and which is directly
competitive with the business conducted or to EMPLOYEE's
knowledge, contemplated by COMPANY at the time of
termination of this Agreement, as defined in the Employee
Confidentiality Agreement incorporated into this Agreement
by reference. EMPLOYEE may accept employment with an entity
competing with COMPANY only if the business of that entity
is diversified and EMPLOYEE is employed solely with respect
to a separately-managed and separately-operated part of that
entity's business that does not compete with COMPANY. Prior
to accepting such employment, EMPLOYEE and the prospective
employer entity shall provide COMPANY with written
assurances reasonably satisfactory to COMPANY that EMPLOYEE
will not render services directly or indirectly to any part
of that entity's business that competes with the business of
COMPANY.
6.3 Covenant to Deliver Records. All memoranda, notes,
records and other documents made or compiled by EMPLOYEE, or
made available to EMPLOYEE during the term of this Agreement
concerning the business of COMPANY, shall be and remain
COMPANY's property and shall be delivered to COMPANY upon
the termination of this Agreement or at any other time on
request.
6.4 Covenant Not To Recruit. EMPLOYEE shall not, during
the term of this Agreement and for a period of one (1) year
following termination of this Agreement, directly or
indirectly, either on EMPLOYEE's own behalf, or on behalf of
any other individual or entity, solicit, interfere with,
induce (or attempt to induce) or endeavor to entice away any
employee associated with COMPANY to become affiliated with
him or any other individual or entity.
7. CERTAIN RIGHTS OF COMPANY
7.1 Announcement. COMPANY shall have the right to make
public announcements concerning the execution of this
Agreement and certain terms thereof.
7.2 Use of Name, Likeness and Biography. COMPANY shall
have the right (but not the obligation) to use, publish and
broadcast, and to authorize others to do so, the name,
approved likeness and approved biographical material of
EMPLOYEE to advertise, publicize and promote the business of
COMPANY and its affiliates, but not for the purposes of
direct endorsement without EMPLOYEE's consent. An "approved
likeness" and "approved biographical material" shall be,
respectively, any photograph or other depiction of EMPLOYEE,
or any biographical information or life story concerning the
professional career of EMPLOYEE.
7.3 Right to Insure. COMPANY shall have the right to
secure in its own name, or otherwise, and at its own
expense, life, health, accident or other insurance covering
EMPLOYEE, and EMPLOYEE shall have no right, title or
interest in and to such insurance. EMPLOYEE shall assist
COMPANY in procuring such insurance by submitting to
examinations and by signing such applications and other
instruments as may be required by the insurance carriers to
which application is made for any such insurance.
8. ASSIGNMENT
Neither party may assign or otherwise dispose of its rights
or obligations under this Agreement without the prior written
consent of the other party except as provided in this Section.
COMPANY may assign and transfer this Agreement, or its interest
in this Agreement, to any affiliate of COMPANY or to any entity
that is a party to a merger, reorganization, or consolidation
with COMPANY, or to a subsidiary of COMPANY, or to any entity
that acquires substantially all of the assets of COMPANY or of
any division with respect to which EMPLOYEE is providing services
(providing such assignee assumes COMPANY's obligations under this
Agreement). EMPLOYEE shall, if requested by COMPANY, perform
EMPLOYEE's duties and Services, as specified in this Agreement,
for the benefit of any subsidiary or other affiliate of COMPANY.
Upon assignment, acquisition, merger, consolidation or
reorganization, the term "COMPANY" as used herein shall be deemed
to refer to such assignee or successor entity. EMPLOYEE shall
not have the right to assign EMPLOYEE's interest in this
Agreement, any rights under this Agreement, or any duties imposed
under this Agreement, nor shall EMPLOYEE or his spouse, heirs,
beneficiaries, executors or administrators have the right to
pledge, hypothecate or otherwise encumber EMPLOYEE's right to
receive compensation hereunder without the express written
consent of COMPANY.
9. RESOLUTION OF DISPUTES
In the event of any dispute arising out of or in connection
with this Agreement or in any way relating to the employment of
EMPLOYEE which leads to the filing of a lawsuit, the parties
agree that venue and jurisdiction shall be in Santa Barbara
County, California. The prevailing party in any such litigation
shall be entitled to an award of costs and reasonable attorneys'
fees to be paid by the losing party.
10. GENERAL PROVISIONS
10.1 Notices. Notice under this Agreement shall be
sufficient only if personally delivered by a major
commercial paid delivery courier service or mailed by
certified or registered mail (return receipt requested and
postage pre-paid) to the other party at its address set
forth in the signature block below or to such other address
as may be designated by either party in writing. If not
received sooner, notices by mail shall be deemed received
five (5) days after deposit in the United States mail.
10.2 Agreement Controls. Unless otherwise provided for in
this Agreement, the COMPANY's policies, procedures and
practices shall govern the relationship between EMPLOYEE and
COMPANY. If, however, any of COMPANY's policies, procedures
and/or practices conflict with this Agreement (together with
any amendments hereto), this Agreement (and any amendments
hereto) shall control.
10.3 Amendment and Waiver. Any provision of this Agreement
may be amended or modified and the observance of any
provision may be waived (either retroactively or
prospectively) only by written consent of the parties.
Either party's failure to enforce any provision of this
Agreement shall not be construed as a waiver of that party's
right to enforce such provision.
10.4 Governing Law. This Agreement and the performance
hereunder shall be interpreted under the substantive laws of
the State of California.
10.5 Force Majeure. Either party shall be temporarily
excused from performing under this Agreement if any force
majeure or other occurrence beyond the reasonable control of
either party makes such performance impossible, except a
Disability as defined in this Agreement, provided that the
party subject to the force majeure provides notice of such
force majeure at the first reasonable opportunity. Under
such circumstances, performance under this Agreement which
related to the delay shall be suspended for the duration of
the delay provided the delayed party shall resume
performance of its obligations with due diligence once the
delaying event subsides. In case of any such suspension,
the parties shall use their best efforts to overcome the
cause and effect of such suspension.
10.6 Remedies. EMPLOYEE acknowledges that because of the
nature of COMPANY's business, and the fact that the services
to be performed by EMPLOYEE pursuant to this Agreement are
of a special, unique, unusual, extraordinary, and
intellectual character which give them a peculiar value, a
breach of this Agreement shall cause substantial injury to
COMPANY for which money damages cannot reasonably be
ascertained and for which money damages would be inadequate.
EMPLOYEE therefore agrees that COMPANY shall have the right
to obtain injunctive relief, including the right to have the
provisions of this Agreement specifically enforced by any
court having equity jurisdiction, in addition to any other
remedies that COMPANY may have.
10.7 Severability. If any term, provision, covenant,
paragraph, or condition of this Agreement is held to be
invalid, illegal, or unenforceable by any court of competent
jurisdiction, that provision shall be limited or eliminated
to the minimum extent necessary so this Agreement shall
otherwise remain enforceable in full force and effect.
10.8 Construction. Headings and captions are only for
convenience and shall not affect the construction or
interpretation of this Agreement. Whenever the context
requires, words, used in the singular shall be construed to
include the plural and vice versa, and pronouns of any
gender shall be deemed to include the masculine, feminine,
or neuter gender.
10.9 Counterpart Copies. This Agreement may be signed in
counterpart copies, each of which shall represent an
original document, and all of which shall constitute a
single document.
10.10 No Adverse Construction. The rule that a contract is
to be construed against the party drafting the contract is
hereby waived, and shall have no applicability in construing
this Agreement or the terms hereof.
10.11 Entire Agreement. With respect to its subject matter,
namely, the employment by COMPANY of EMPLOYEE, this
Agreement (including the documents expressly incorporated
therein, such as the Employee Confidentiality Agreement),
contains the entire understanding between the parties, and
supersedes any prior agreements, understandings, and
communications between the parties, whether oral, written,
implied or otherwise, including, but not limited to, the
original offer of employment letter.
10.12 Assistance of Counsel. EMPLOYEE expressly
acknowledges that he was given the right to be represented
by counsel of his own choosing in connection with the terms
of this Agreement.
The parties execute this Agreement as of the date stated above:
RAMONA E. SCHWAB MENTOR CORPORATION
/s/RAMONA E. SCHWAB /s/CHRISTOPHER J. CONWAY
Ramona E. Schwab Christopher J. Conway
President and CEO
NOTICE ADDRESS: NOTICE ADDRESS:
4050 Via Laguna 201 Mentor Drive
Santa Barbara, CA 93110 Santa Barbara, CA 93111
EXHIBIT 10(c)
EMPLOYMENT AGREEMENT
This Employment Agreement, dated November 28, 2000, is by
and between MENTOR Corporation ("COMPANY"), with its executive
offices at 201 Mentor Drive, Santa Barbara, California 93111, and
Bobby Purkait ("EMPLOYEE") of 2995 East Valley Road, Santa
Barbara, California 93108.
RECITALS
COMPANY is in the business of manufacturing and selling
medical devices and related products. EMPLOYEE has experience in
this business and possesses valuable skills and experience, which
will be used in advancing COMPANY's interests. EMPLOYEE is
willing to be engaged by COMPANY and COMPANY is willing to engage
EMPLOYEE in an executive capacity responsible for the Science &
Technology operations of COMPANY, upon the terms and conditions
set forth in this Agreement.
AGREEMENT
EMPLOYEE and COMPANY, intending to be legally bound, agree as
follows:
1. SERVICES
1.1 General Services.
1.1.1 Company shall employ EMPLOYEE as Senior Vice
President, Science & Technology. EMPLOYEE shall perform
the duties customarily performed by one holding such
position in a similar business as that engaged in by
COMPANY. To the extent that they do not reduce the
scope of the responsibilities described above,
EMPLOYEE's duties may change from time to time on
reasonable notice, based on the needs of COMPANY and
EMPLOYEE's skills as determined by COMPANY. These
duties shall hereinafter be referred to as "Services."
EMPLOYEE shall report directly to the Chairman of the
Board, President and Chief Executive Officer of Mentor
Corporation.
1.1.2 As Senior Vice President, Science & Technology of
COMPANY, EMPLOYEE shall also be an officer of
COMPANY and shall serve in such capacity without
further compensation. In the event that EMPLOYEE
shall from time to time serve COMPANY as a
director or shall serve in any other office during
the term of this Agreement; EMPLOYEE shall serve
in such capacities without further compensation.
If EMPLOYEE is, for any reason, removed as an
officer or director of the COMPANY by the Board of
Directors of COMPANY, such removal shall be
without prejudice to EMPLOYEE's contractual rights
under this Agreement.
1.1.3. EMPLOYEE shall devote his entire working time,
attention, and energies to the business of COMPANY, and
shall not, during the term of this Agreement, be
engaged in any other business activity whether or not
such business activity is pursued for gain, profit or
other pecuniary advantage, without the prior written
consent of the Board of Directors of COMPANY. This
shall not be construed as preventing EMPLOYEE from
investing his assets in a form or manner that does not
require any services on the part of EMPLOYEE in the
operation or affairs of the entities in which such
investments are made, or from engaging in such civic,
charitable, religious, or political activities that do
not interfere with the performance of EMPLOYEE's duties
hereunder.
1.2 Best Abilities. EMPLOYEE shall serve COMPANY
faithfully and to the best of EMPLOYEE's ability. EMPLOYEE
shall use EMPLOYEE's best abilities to perform the Services.
Employee shall act at all times according to what EMPLOYEE
reasonably believes is in the best interests of COMPANY.
1.3 Corporate Authority. Employee, as an executive
officer, shall comply with all laws and regulations
applicable to EMPLOYEE as a result of this Agreement
including, but not limited to, the Securities Act of 1933
and Securities Act of 1934. Prior to the execution of this
Agreement, EMPLOYEE has received and reviewed COMPANY's
Policies and Procedures and COMPANY's Employee Handbook.
EMPLOYEE shall comply with COMPANY's Policies and
Procedures, and practices now in effect or as later amended
or adopted by COMPANY, as required of similarly-situated
executives of COMPANY.
2. TERM
This Agreement shall commence upon the execution of this
Agreement and shall continue until terminated as provided in
Section 4 of this Agreement.
3. COMPENSATION AND BENEFITS
3.1 Compensation. EMPLOYEE's total compensation consists
of base salary, bonus potential, stock options, and medical
and other benefits generally provided to employees of
COMPANY. Any compensation paid to EMPLOYEE shall be
pursuant to COMPANY's policies and practices for exempt
employees and shall be subject to all applicable laws and
requirements regarding the withholding of federal, state
and/or local taxes. Compensation provided in this Agreement
is full payment for Services and EMPLOYEE shall receive no
additional compensation for extraordinary services unless
otherwise authorized. EMPLOYEE's entire compensation
package will be reviewed annually by the Compensation
Committee of the Board of Directors, a practice which is
consistent with COMPANY's Executive Compensation Program.
3.1.1 Base Compensation. COMPANY agrees to pay
EMPLOYEE an annualized base salary of Two Hundred Fifty
Thousand Dollars and No Cents ($250,000.00), less
applicable withholdings, payable in equal installments
no less frequently than semi-monthly.
3.1.6 Cash Incentive Bonus. EMPLOYEE shall be eligible for a
cash incentive bonus of up to Forty Percent of your annual base
salary, subject to applicable withholdings and subject to
approval by COMPANY's Compensation Committee and Board of
Directors. Any cash incentive bonus shall accrue and become
payable to EMPLOYEE only if EMPLOYEE is employed with COMPANY on
the last day of the fiscal year for which the cash incentive
bonus is calculated.
3.1.7 Stock Options. Based upon satisfactory performance,
under the Plan, COMPANY expects that EMPLOYEE will qualify for
additional grants of options to acquire common stock of COMPANY
subject to determination by the Board of Directors, of an amount
which is consistent with COMPANY's Executive Compensation
Program. Subsequent grants, if any, shall also be subject to
performance considerations as well as the determination of the
Board of Directors.
3.2 Business Expenses. COMPANY shall reimburse EMPLOYEE
for business expenses reasonably incurred in performing
Services according to COMPANY's Expense Reimbursement
Policy.
3.3 Additional Benefits. COMPANY shall provide EMPLOYEE
those additional benefits normally granted by COMPANY to its
employees subject to eligibility requirements applicable to
each benefit. COMPANY has no obligation to provide any
other benefits unless provided for in this Agreement.
Currently COMPANY provides major medical, dental, life,
salary continuation, long term disability benefits and
eligibility to participate in COMPANY's 401(k) plan.
3.4 Vacation. Employee shall accrue vacation equal to
twenty (20) days per year, at the rate of approximately 1.67
days per month. The time or times for such vacation shall
be selected by EMPLOYEE and approved by the Chairman of the
Board, President and Chief Executive Officer of COMPANY.
4. TERMINATION
4.1 Circumstances Of Termination. This Agreement and the
employment relationship between COMPANY and EMPLOYEE may be
terminated as follows:
4.1.1 Death. This Agreement shall terminate upon
EMPLOYEE's death, effective as of the date of
EMPLOYEE's death.
4.1.4 Disability. COMPANY may, at its option, either suspend
compensation payments or terminate this Agreement due to
EMPLOYEE's Disability if EMPLOYEE is incapable, even with
reasonable accommodation by COMPANY, of performing the Services
because of accident, injury, or physical or mental illness for
sixty (60) consecutive days, or is unable or shall have failed to
perform the Services for a total period of ninety (90) within a
twelve (12) month period, regardless of whether such days are
consecutive. If COMPANY suspends compensation payments because
of EMPLOYEE's Disability, COMPANY shall resume compensation
payments when EMPLOYEE resumes performance of the Services. If
COMPANY elects to terminate this Agreement due to EMPLOYEE's
Disability, it must first give EMPLOYEE three (3) days advance
written notice.
4.1.3 Discontinuance Of Business. If COMPANY
discontinues operating its business, this
Agreement shall terminate as of the last day of
the month on which COMPANY ceases its entire
operations with the same effect as if that last
date were originally established as termination
date of this Agreement.
4.1.4 For Cause. COMPANY may terminate this Agreement
without advance notice for Cause. For the purpose of
this Agreement, "Cause" shall mean any failure to
comply in any material respect with this Agreement or
any Agreement incorporated herein; personal or
professional misconduct by EMPLOYEE (including, but not
limited to, criminal activity or gross or willful
neglect of duty); breach of EMPLOYEE's fiduciary duty
to the COMPANY; conduct which threatens public health
or safety, or threatens to do immediate or substantial
harm to COMPANY's business or reputation; or any other
misconduct, deficiency, failure of performance, breach
or default, reasonably capable of being remedied or
corrected by EMPLOYEE. To the extent that a breach
pursuant to this Section 4.1.4 is curable by EMPLOYEE
without harm to COMPANY and/or it's reputation, COMPANY
shall, instead of immediately terminating EMPLOYEE
pursuant to this Agreement, provide EMPLOYEE with
notice of such breach, specifying the actions required
to cure such breach, and EMPLOYEE shall have ten (10)
days to cure such breach by performing the actions so
specified. If EMPLOYEE fails to cure such breach
within the ten (10) day period, COMPANY may terminate
this Agreement without further notice. COMPANY's
exercise of its right to terminate under this section
shall be without prejudice to any other remedy to which
COMPANY may be entitled at law, in equity, or under
this Agreement.
4.1.9. For Convenience Of Party. This Agreement and
employment relationship is terminable by either party, for
convenience, with or without cause, at any time upon thirty (30)
days' advance written notice to the other party.
4.1.10. Change of Control. If employment is terminated within
twelve (12) months upon any of the following events EMPLOYEE
shall be entitled to severance compensation pursuant to Section
4.2.6 (I) and (ii) and (iii):
(ii) the sale, lease or other disposition of all or substantially
all of
Company's assets to a single purchaser or group of related
purchasers;
(ii) the sale, lease or other disposition, in one
transaction or a series of related
transactions of the majority of COMPANY's
outstanding capital stock; or,
(iii) the merger or consolidation of COMPANY
into or with another corporation in which the
stockholders of COMPANY shall own less than
fifty (50%) percent of the voting securities
of the surviving corporation (all of which
events shall be referred to as a Change in
Control).
4.2 EMPLOYEE's Rights Upon Termination
4.2.1 Death. Upon termination of this Agreement
because of death of EMPLOYEE pursuant to Section
4.1.1 above, COMPANY shall have no further
obligation to EMPLOYEE under the Agreement except
to distribute to EMPLOYEE's estate or designated
beneficiary any unpaid compensation and
reimbursable expenses, less applicable
withholdings, owed to EMPLOYEE prior to the date
of EMPLOYEE's death.
4.2.2 Disability. Upon termination of this
Agreement because of Disability of EMPLOYEE
pursuant to Sections 4.1.2 above, COMPANY shall
have no further obligation to EMPLOYEE under the
Agreement except to distribute to EMPLOYEE's
estate or designated beneficiary any unpaid
compensation and reimbursable expenses, less
applicable withholdings, owed to EMPLOYEE prior to
the date of EMPLOYEE's termination due to
Disability.
4.2.5 Discontinuance Of Business. Upon termination of this
Agreement because of discontinuation of COMPANY's business
pursuant to Section 4.1.3, COMPANY shall have no further
obligation to EMPLOYEE under the Agreement except to distribute
to EMPLOYEE any unpaid compensation and reimbursable expenses,
less applicable withholdings, owed to EMPLOYEE prior to the date
of termination of this Agreement.
4.2.4 Termination With Cause. Upon termination of
EMPLOYEE's employment for Cause pursuant to
Section 4.1.4, COMPANY shall have no further
obligation to EMPLOYEE under this Agreement except
to distribute to EMPLOYEE:
i. Any compensation and reimbursable expenses
owed to EMPLOYEE by COMPANY through the
termination date, less applicable withholdings;
and
ii. Severance compensation as provided for in
COMPANY's Severance Policy, if any, less
applicable withholdings.
4.2.5 Termination Without Cause. Upon termination
of EMPLOYEE's employment by COMPANY without cause
pursuant to Section 4.1.5, COMPANY shall have no
further obligation to EMPLOYEE under this
Agreement except to distribute to EMPLOYEE:
v. Any compensation and reimbursable expenses owed by COMPANY
to EMPLOYEE through the termination date, less applicable
withholdings;
vi. Severance compensation totaling three- (3) month's base pay,
plus one (1) month base pay for each full year of service,
determined at EMPLOYEE's then-current rate of base pay. In
consideration for this severance compensation, EMPLOYEE, on
behalf of himself, his agents, heirs, executors,
administrators, and assigns, expressly releases and forever
discharges COMPANY and its successors and assigns, and all
of its respective agents, directors, officers, partners,
employees, representatives, insurers, attorneys, parent
companies, subsidiaries, affiliates, and joint ventures, and
each of them, from any and all claims based upon acts or
events that occurred on or before the date on which EMPLOYEE
accepts the severance compensation, including any claim
arising under any state or federal statute or common law,
including, but not limited to, Title VII of the Civil Rights
Act of 1964, 42 U.S.C. " 2000e, et seq., the Americans with
Disabilities Act, 42 U.S.C. " 12101, et seq., the Age
Discrimination in Employment Act, 29 U.S.C. " 623, et.
seq., the Worker Adjustment and Retraining Notification Act,
29 U.S.C. "2101, et. seq., and the California Fair
Employment and Housing Act, Cal. Gov't Code " 12940, et seq.
EMPLOYEE acknowledges that he is familiar with section 1542
of the California Civil Code, which reads as follows:
A GENERAL RELEASE DOES NOT EXTEND TO
CLAIMS WHICH THE CREDITOR DOES NOT KNOW
OR SUSPECT TO EXIST IN HIS FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
EMPLOYEE expressly acknowledges and agrees
that he is releasing all known and unknown
claims, and that he is waiving all rights he
has or may have under Civil Code Section 1542
or under any other statute or common law
principle of similar effect. EMPLOYEE
acknowledges that the benefits he is
receiving in exchange for this Release are
more than the benefits to which he otherwise
would have been entitled, and that such
benefits constitute valid and adequate
consideration for this Release. EMPLOYEE
further acknowledges that he has read this
Release, understands all of its terms, and
has consulted with counsel of his choosing
before signing this Agreement.
Severance compensation pursuant to this
paragraph shall be in lieu of any other
severance benefit to which EMPLOYEE would
otherwise be entitled under COMPANY's
policies in effect on the date of execution
of this Agreement. Severance compensation
shall be paid upon termination of EMPLOYEE's
employment and in one lump sum payment at the
date of termination, less applicable
withholdings.
4.2.8 Termination Due to Change Of Control. If employment
is terminated within twelve (12) months upon any of the events
delineated in Section 4.1.6 of this Agreement ("Change of
Control"), COMPANY shall have no further obligation to EMPLOYEE
under this Agreement except to distribute to EMPLOYEE:
ii. Any compensation and reimbursable expenses owed by COMPANY
to EMPLOYEE through the termination date, less applicable
withholdings;
ii. A pro-rated share of the cash incentive bonus
that would be due to EMPLOYEE if EMPLOYEE had
remained employed with COMPANY through the
last day of the fiscal year for which the
cash incentive bonus is calculated, less
applicable withholdings; and
iii. Severance compensation totaling twelve (12)
months base pay, plus one (1) month base pay for
each full year of service, determined at
EMPLOYEE's then-current rate of base pay. In
consideration for this severance compensation,
EMPLOYEE, on behalf of himself, his agents, heirs,
executors, administrators, and assigns, expressly
releases and forever discharges COMPANY and its
successors and assigns, and all of its respective
agents, directors, officers, partners, employees,
representatives, insurers, attorneys, parent
companies, subsidiaries, affiliates, and joint
ventures, and each of them, from any and all
claims based upon acts or events that occurred on
or before the date on which EMPLOYEE accepts the
severance compensation, including any claim
arising under any state or federal statute or
common law, including, but not limited to, Title
VII of the Civil Rights Act of 1964, 42 U.S.C. ''
2000e, et seq., the Americans with Disabilities
Act, 42 U.S.C. '' 12101, et seq., the Age
Discrimination in Employment Act, 29 U.S.C. ''
623, et seq., the Worker Adjustment and
Retraining Notification Act, 29 U.S.C. '' 2101, et
seq., and the California Fair Employment and
Housing Act, Cal. Gov't Code '' 12940, et seq.
EMPLOYEE acknowledges that he is familiar with
section 1542 of the California Civil Code, which
reads as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT
TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM
MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT
WITH THE DEBTOR.
EMPLOYEE expressly acknowledges and agrees that he
is releasing all known and unknown claims, and
that he is waiving all rights he has or may have
under Civil Code Section 1542 or under any other
statute or common law principle of similar effect.
EMPLOYEE acknowledges that the benefits he is
receiving in exchange for this Release are more
than the benefits to which he otherwise would have
been entitled, and that such benefits constitute
valid and adequate consideration for this Release.
EMPLOYEE further acknowledges that he has read
this Release, understands all of its terms, and
has consulted with counsel of his choosing before
signing this Agreement.
Severance compensation pursuant to this paragraph
shall be in lieu of any other severance benefit to
which EMPLOYEE would otherwise be entitled under
COMPANY's policies in effect on the date of
execution of this Agreement. Severance
compensation shall be paid upon termination of
EMPLOYEE's employment and in one lump sum payment
at the date of termination, less applicable
withholdings.
5. REPRESENTATIONS AND WARRANTIES
5.1 Representations of EMPLOYEE. EMPLOYEE represents and
warrants that EMPLOYEE has all right, power, authority and
capacity, and is free to enter into this Agreement; that by
doing so, EMPLOYEE will not violate or interfere with the
rights of any other person or entity; and that EMPLOYEE is
not subject to any contract, understanding or obligation
that will or might prevent, interfere with or impair the
performance of this Agreement by EMPLOYEE. EMPLOYEE shall
indemnify and hold COMPANY harmless with respect to any
losses, liabilities, demands, claims, fees, expenses,
damages and costs (including attorneys' fees and court
costs) resulting from or arising out of any claim or action
based upon EMPLOYEE's entering into this Agreement.
5.2 Representations of COMPANY. COMPANY represents and
warrants that it has all right, power and authority, without
the consent of any other person, to execute and deliver, and
perform its obligations under, this Agreement. All
corporate and other actions required to be taken by COMPANY
to authorize the execution, delivery and performance of this
Agreement and the consummation of all transactions
contemplated hereby have been duly and properly taken. This
Agreement is the lawful, valid and legally binding
obligation of COMPANY enforceable in accordance with its
terms.
5.3 Materiality of Representations. The representations,
warranties and covenants set forth in this Agreement shall
be deemed to be material and to have been relied upon by the
parties hereto.
6. COVENANTS
6.1 Nondisclosure and Invention Assignment. EMPLOYEE
acknowledges that, as a result of performing the Services,
EMPLOYEE shall have access to confidential and sensitive
information concerning COMPANY's business including, but not
limited to, their business operations, sales and marketing
data, and manufacturing processes. EMPLOYEE also
acknowledges that in the course of performing the Services,
EMPLOYEE may develop new product ideas or inventions as a
result of COMPANY's information. Accordingly, to preserve
COMPANY's confidential information and to assure it the full
benefit of that information, EMPLOYEE shall, as a condition
of employment with COMPANY, execute COMPANY's standard form
of Employee Confidentiality Agreement attached hereto as
Exhibit A, and execute updated versions of the Employee
Confidentiality Agreement as it may be modified from time to
time by COMPANY and as may be required of similarly-situated
executives of COMPANY. The Employee Confidentiality
Agreement is incorporated herein by this reference.
EMPLOYEE's obligations under the Employee Confidentiality
Agreement continue beyond the termination of this Agreement.
6.2 Covenant Not to Compete. In addition to the provisions
of the Employee Confidentiality Agreement, EMPLOYEE shall
abide by the following covenant not to compete if COMPANY,
at its option upon the termination of this Agreement
(regardless of the reason for the termination), exercises
this Covenant Not to Compete. COMPANY shall notify EMPLOYEE
within ten (10) days of termination of this Agreement of its
intention to exercise this option and make an additional
payment to EMPLOYEE of six (6) months' base pay determined
at EMPLOYEE's last rate of pay with COMPANY. EMPLOYEE
agrees that for a period of one (1) year following the
termination of this Agreement, he shall not directly or
indirectly for EMPLOYEE, or as a member of a partnership, or
as an officer, director, stockholder, employee, or
representative of any other entity or individual, engage,
directly or indirectly, in any business activity which is
the same or similar to work engaged in by EMPLOYEE on behalf
of COMPANY within the same geographic territory as
EMPLOYEE's work for COMPANY and which is directly
competitive with the business conducted or to EMPLOYEE's
knowledge, contemplated by COMPANY at the time of
termination of this Agreement, as defined in the Employee
Confidentiality Agreement incorporated into this Agreement
by reference. EMPLOYEE may accept employment with an entity
competing with COMPANY only if the business of that entity
is diversified and EMPLOYEE is employed solely with respect
to a separately-managed and separately-operated part of that
entity's business that does not compete with COMPANY. Prior
to accepting such employment, EMPLOYEE and the prospective
employer entity shall provide COMPANY with written
assurances reasonably satisfactory to COMPANY that EMPLOYEE
will not render services directly or indirectly to any part
of that entity's business that competes with the business of
COMPANY.
6.3 Covenant to Deliver Records. All memoranda, notes,
records and other documents made or compiled by EMPLOYEE, or
made available to EMPLOYEE during the term of this Agreement
concerning the business of COMPANY, shall be and remain
COMPANY's property and shall be delivered to COMPANY upon
the termination of this Agreement or at any other time on
request.
6.4 Covenant Not To Recruit. EMPLOYEE shall not, during
the term of this Agreement and for a period of one (1) year
following termination of this Agreement, directly or
indirectly, either on EMPLOYEE's own behalf, or on behalf of
any other individual or entity, solicit, interfere with,
induce (or attempt to induce) or endeavor to entice away any
employee associated with COMPANY to become affiliated with
him or any other individual or entity.
7. CERTAIN RIGHTS OF COMPANY
7.1 Announcement. COMPANY shall have the right to make
public announcements concerning the execution of this
Agreement and certain terms thereof.
7.2 Use of Name, Likeness and Biography. COMPANY shall
have the right (but not the obligation) to use, publish and
broadcast, and to authorize others to do so, the name,
approved likeness and approved biographical material of
EMPLOYEE to advertise, publicize and promote the business of
COMPANY and its affiliates, but not for the purposes of
direct endorsement without EMPLOYEE's consent. An "approved
likeness" and "approved biographical material" shall be,
respectively, any photograph or other depiction of EMPLOYEE,
or any biographical information or life story concerning the
professional career of EMPLOYEE.
7.3 Right to Insure. COMPANY shall have the right to
secure in its own name, or otherwise, and at its own
expense, life, health, accident or other insurance covering
EMPLOYEE, and EMPLOYEE shall have no right, title or
interest in and to such insurance. EMPLOYEE shall assist
COMPANY in procuring such insurance by submitting to
examinations and by signing such applications and other
instruments as may be required by the insurance carriers to
which application is made for any such insurance.
8. ASSIGNMENT
Neither party may assign or otherwise dispose of its rights
or obligations under this Agreement without the prior written
consent of the other party except as provided in this Section.
COMPANY may assign and transfer this Agreement, or its interest
in this Agreement, to any affiliate of COMPANY or to any entity
that is a party to a merger, reorganization, or consolidation
with COMPANY, or to a subsidiary of COMPANY, or to any entity
that acquires substantially all of the assets of COMPANY or of
any division with respect to which EMPLOYEE is providing services
(providing such assignee assumes COMPANY's obligations under this
Agreement). EMPLOYEE shall, if requested by COMPANY, perform
EMPLOYEE's duties and Services, as specified in this Agreement,
for the benefit of any subsidiary or other affiliate of COMPANY.
Upon assignment, acquisition, merger, consolidation or
reorganization, the term "COMPANY" as used herein shall be deemed
to refer to such assignee or successor entity. EMPLOYEE shall
not have the right to assign EMPLOYEE's interest in this
Agreement, any rights under this Agreement, or any duties imposed
under this Agreement, nor shall EMPLOYEE or his spouse, heirs,
beneficiaries, executors or administrators have the right to
pledge, hypothecate or otherwise encumber EMPLOYEE's right to
receive compensation hereunder without the express written
consent of COMPANY.
9. RESOLUTION OF DISPUTES
In the event of any dispute arising out of or in connection
with this Agreement or in any way relating to the employment of
EMPLOYEE which leads to the filing of a lawsuit, the parties
agree that venue and jurisdiction shall be in Santa Barbara
County, California. The prevailing party in any such litigation
shall be entitled to an award of costs and reasonable attorneys'
fees to be paid by the losing party.
10. GENERAL PROVISIONS
10.1 Notices. Notice under this Agreement shall be
sufficient only if personally delivered by a major
commercial paid delivery courier service or mailed by
certified or registered mail (return receipt requested and
postage pre-paid) to the other party at its address set
forth in the signature block below or to such other address
as may be designated by either party in writing. If not
received sooner, notices by mail shall be deemed received
five (5) days after deposit in the United States mail.
10.2 Agreement Controls. Unless otherwise provided for in
this Agreement, the COMPANY's policies, procedures and
practices shall govern the relationship between EMPLOYEE and
COMPANY. If, however, any of COMPANY's policies, procedures
and/or practices conflict with this Agreement (together with
any amendments hereto), this Agreement (and any amendments
hereto) shall control.
10.3 Amendment and Waiver. Any provision of this Agreement
may be amended or modified and the observance of any
provision may be waived (either retroactively or
prospectively) only by written consent of the parties.
Either party's failure to enforce any provision of this
Agreement shall not be construed as a waiver of that party's
right to enforce such provision.
10.4 Governing Law. This Agreement and the performance
hereunder shall be interpreted under the substantive laws of
the State of California.
10.5 Force Majeure. Either party shall be temporarily
excused from performing under this Agreement if any force
majeure or other occurrence beyond the reasonable control of
either party makes such performance impossible, except a
Disability as defined in this Agreement, provided that the
party subject to the force majeure provides notice of such
force majeure at the first reasonable opportunity. Under
such circumstances, performance under this Agreement which
related to the delay shall be suspended for the duration of
the delay provided the delayed party shall resume
performance of its obligations with due diligence once the
delaying event subsides. In case of any such suspension,
the parties shall use their best efforts to overcome the
cause and effect of such suspension.
10.6 Remedies. EMPLOYEE acknowledges that because of the
nature of COMPANY's business, and the fact that the services
to be performed by EMPLOYEE pursuant to this Agreement are
of a special, unique, unusual, extraordinary, and
intellectual character which give them a peculiar value, a
breach of this Agreement shall cause substantial injury to
COMPANY for which money damages cannot reasonably be
ascertained and for which money damages would be inadequate.
EMPLOYEE therefore agrees that COMPANY shall have the right
to obtain injunctive relief, including the right to have the
provisions of this Agreement specifically enforced by any
court having equity jurisdiction, in addition to any other
remedies that COMPANY may have.
10.7 Severability. If any term, provision, covenant,
paragraph, or condition of this Agreement is held to be
invalid, illegal, or unenforceable by any court of competent
jurisdiction, that provision shall be limited or eliminated
to the minimum extent necessary so this Agreement shall
otherwise remain enforceable in full force and effect.
10.8 Construction. Headings and captions are only for
convenience and shall not affect the construction or
interpretation of this Agreement. Whenever the context
requires, words, used in the singular shall be construed to
include the plural and vice versa, and pronouns of any
gender shall be deemed to include the masculine, feminine,
or neuter gender.
10.9 Counterpart Copies. This Agreement may be signed in
counterpart copies, each of which shall represent an
original document, and all of which shall constitute a
single document.
10.10 No Adverse Construction. The rule that a contract is
to be construed against the party drafting the contract is
hereby waived, and shall have no applicability in construing
this Agreement or the terms hereof.
10.11 Entire Agreement. With respect to its subject matter,
namely, the employment by COMPANY of EMPLOYEE, this
Agreement (including the documents expressly incorporated
therein, such as the Employee Confidentiality Agreement),
contains the entire understanding between the parties, and
supersedes any prior agreements, understandings, and
communications between the parties, whether oral, written,
implied or otherwise, including, but not limited to, the
original offer of employment letter.
10.12 Assistance of Counsel. EMPLOYEE expressly
acknowledges that he was given the right to be represented
by counsel of his own choosing in connection with the terms
of this Agreement.
The parties execute this Agreement as of the date stated above:
BOBBY PURKAIT MENTOR CORPORATION
/s/BOBBY PURKAIT /s/CHRISTOPHER J. CONWAY
Bobby Purkait Christopher J. Conway
President and CEO
NOTICE ADDRESS: NOTICE ADDRESS:
2995 E. Valley Road 201 Mentor Drive
Santa Barbara, CA 93108 Santa Barbara, CA 93111