EXHIBIT 10.1

INDEMNIFICATION AGREEMENT

This INDEMNIFICATION AGREEMENT (this "Agreement"), is made and entered into this
____ day of _____________, 2006 (the "Effective Date"), by and between Mentor
Corporation, a Minnesota corporation (the "Company"), and [           
              ] (the "Indemnitee").

WHEREAS, the Company believes it is essential to retain and attract qualified
directors and officers;

WHEREAS, the Indemnitee is a director and/or officer of the Company;

WHEREAS, both the Company and the Indemnitee recognize the increased risk of
litigation and other claims being asserted against directors and officers of
public companies;

WHEREAS, the Company's Amended and Restated Bylaws (the "Bylaws") require the
Company to indemnify its directors and officers to the extent permitted by the
MBCA (as hereinafter defined);

WHEREAS, the Indemnitee has been serving and intends to continue serving as a
director and/or officer of the Company in part in reliance on the Bylaws; and

WHEREAS, in recognition of the Indemnitee's need for (i) substantial protection
against personal liability based on the Indemnitee's reliance on the Bylaws,
(ii) specific contractual assurance that the protection promised by the Bylaws
will be available to the Indemnitee, regardless of, among other things, any
amendment to or revocation of the Bylaws or any change in the composition of the
Company's Board of Directors (the "Board") or acquisition transaction relating
to the Company, and (iii) an inducement to continue to provide effective
services to the Company as a director and/or officer thereof, the Company wishes
to provide for the indemnification of the Indemnitee and to advance expenses to
the Indemnitee to the fullest extent permitted by law and as set forth in this
Agreement, and, to the extent insurance is maintained by the Company, to provide
for the continued coverage of the Indemnitee under the Company's directors' and
officers' liability insurance policies;

NOW, THEREFORE, in consideration of the premises contained herein and of the
Indemnitee continuing to serve the Company directly or, at its request, with
another enterprise, and intending to be legally bound hereby, the parties hereto
agree as follows:

1.            Certain Definitions.

(a)                 A "Change in Control" shall be deemed to have occurred if:

(i)                   any "person," as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder (the "Exchange Act"), other than: (a) a trustee or other
fiduciary holding securities under an employee benefit plan of the Company; (b)
a corporation owned, directly or indirectly, by the shareholders of the Company
in substantially the same proportions as their ownership of stock of the
Company; or (c) any current beneficial shareholder or group, as defined by Rule
13d-5 of the Exchange Act, including the heirs, assigns and successors thereof,
of beneficial ownership, within the meaning of Rule 13d-3 of the Exchange Act,
of securities possessing more than 50% of the total combined voting power of the
Company's outstanding securities; hereafter becomes the "beneficial owner," as
defined in Rule 13d-3 of the Exchange Act, directly or indirectly, of securities
of the Company representing 20% or more of the total combined voting power
represented by the Company's then outstanding Voting Securities;

(ii)                 during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board and any new director whose
election by the Board or nomination for election by the Company's shareholders
was approved by a vote of at least two-thirds of the directors then in office
who either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute a majority thereof; or

 

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(iii)                the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the Voting Securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities of the
surviving entity) at least 80% of the total voting power represented by the
Voting Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or the shareholders of the
Company approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company, in one transaction or a series of
transactions, of all or substantially all of the Company's assets.

(b)                 "Expense" shall mean attorneys' fees and all other costs,
expenses and obligations paid or incurred in connection with investigating,
defending, being a witness in or participating in (including on appeal), or
preparing for any of the foregoing, any Proceeding relating to any Indemnifiable
Event.

(c)                 "Indemnifiable Event" shall mean any event or occurrence
that takes place either prior to or after the execution of this Agreement,
related to the fact that the Indemnitee is or was a director or officer of the
Company, or is or was serving at the request of the Company as a director,
officer, employee, or agent of another corporation or of a partnership, joint
venture, trust or other enterprise, including service with respect to employee
benefit plans, or by reason of anything done or not done by the Indemnitee in
any such capacity.

(d)                 "MBCA" shall mean the Minnesota Business Corporation Act, as
the same exists or may hereafter be amended or interpreted; provided, however,
that in the case of any such amendment or interpretation, only to the extent
that such amendment or interpretation permits the Company to provide broader
indemnification rights than were permitted prior thereto.

(e)                 "Proceeding" shall mean any threatened, pending or completed
action, suit, investigation or proceeding, and any appeal thereof, whether
civil, criminal, administrative or investigative and/or any inquiry or
investigation, whether conducted by the Company or any other party, that the
Indemnitee in good faith believes might lead to the institution of any such
action.

(f)                  "Reviewing Party" shall mean any appropriate person or body
consisting of a member or members of the Company's Board or any other person or
body appointed by the Board (including the special independent counsel referred
to in Section 6) who is not a party to the particular Proceeding with respect to
which the Indemnitee is seeking indemnification or such other appropriate person
or body as specified in the MBCA.

(g)                 "Voting Securities" shall mean any securities of the Company
which vote generally in the election of directors.

2.            Indemnification.  In the event the Indemnitee was or is a party to
or is involved (as a party, witness, or otherwise) in any Proceeding by reason
of (or arising in part out of) an Indemnifiable Event, whether the basis of the
Proceeding is the Indemnitee's alleged action in an official capacity as a
director or officer or in any other capacity while serving as a director or
officer, the Company shall indemnify the Indemnitee to the fullest extent
permitted by the MBCA against any and all Expenses, liability, and loss
(including judgments, fines, ERISA excise taxes or penalties, and amounts paid
or to be paid in settlement, and any interest, assessments, or other charges
imposed thereon, and any federal, state, local, or foreign taxes imposed on any
director or officer as a result of the actual or deemed receipt of any payments
under this Agreement) (collectively, "Liabilities") reasonably incurred or
suffered by such person in connection with such Proceeding.  The Company shall
provide indemnification pursuant to this Section 2 as soon as practicable, but
in no event later than 30 days after it receives written demand from the
Indemnitee.  Notwithstanding anything in this Agreement to the contrary and
except as provided in Section 5 below, the Indemnitee shall not be entitled to
indemnification pursuant to this Agreement (i) in connection with any Proceeding
initiated by the Indemnitee against the Company or any director or officer of
the Company unless the Company has joined in or consented to the initiation of
such Proceeding, (ii) on account of any suit in which judgment is rendered
against the Indemnitee pursuant to Section 16(b) of the Exchange Act for an
accounting of profits made from the purchase or sale by the Indemnitee of
securities of the Company or (iii) if the MBCA or the Company's Articles of
Incorporation or Bylaws prohibit such indemnification. 

 

 

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3.            Advancement of Expenses.  The Company shall advance Expenses to
the Indemnitee within 30 business days of such request (an "Expense Advance") to
the fullest extent permitted by the MBCA and the Company's Articles of
Incorporation and Bylaws; provided, however, that if required by the MBCA or
other applicable corporate laws such Expenses shall be advanced only upon
delivery to the Company of an undertaking by or on behalf of the Indemnitee to
repay such amount if it is ultimately determined that the Indemnitee is not
entitled to be indemnified by the Company.  Expenses incurred by the Indemnitee
while not acting in his/her capacity as a director or officer, including service
with respect to employee benefit plans, may be advanced upon such terms and
conditions as the Board, in its sole discretion, deems appropriate.

4.            Review Procedure for Indemnification.  Notwithstanding the
foregoing, (i) the obligations of the Company under Sections 2 and 3 above shall
be subject to the condition that the Reviewing Party shall not have determined
(in a written opinion, in any case in which the special independent counsel
referred to in Section 6 hereof is involved) that the Indemnitee would not be
permitted to be indemnified under applicable law, and (ii) the obligation of the
Company to make an Expense Advance pursuant to Section 3 above shall be subject
to the condition that, if, when and to the extent that the Reviewing Party
determines that the Indemnitee would not be permitted to be so indemnified under
applicable law, the Company shall be entitled to be reimbursed by the Indemnitee
(who hereby agrees to reimburse the Company) for all such amounts theretofore
paid; provided, however, that if the Indemnitee has commenced legal proceedings
in a court of competent jurisdiction pursuant to Section 5 below to secure a
determination that the Indemnitee should be indemnified under applicable law,
any determination made by the Reviewing Party that the Indemnitee would not be
permitted to be indemnified under applicable law shall not be binding and the
Indemnitee shall not be required to reimburse the Company for any Expense
Advance until a final judicial determination is made with respect thereto (as to
which all rights of appeal therefrom have been exhausted or have lapsed).   The
Indemnitee's obligation to reimburse the Company for Expense Advances pursuant
to this Section 4 shall be unsecured and no interest shall be charged thereon. 
If there has not been a Change in Control, the Reviewing Party shall be selected
by the Board, and if there has been such a Change in Control, other than a
Change in Control which has been approved by a majority of the Company's Board
who were directors immediately prior to such Change in Control, the Reviewing
Party shall be the special independent counsel referred to in Section 6 hereof.

5.            Enforcement of Indemnification Rights.  If the Reviewing Party
determines that the Indemnitee substantively would not be permitted to be
indemnified in whole or in part under applicable law, or if the Indemnitee has
not otherwise been paid in full pursuant to Sections 2 and 3 above within 30
days after a written demand has been received by the Company, the Indemnitee
shall have the right to commence litigation in any court in the State of
[California] having subject matter jurisdiction thereof and in which venue is
proper to recover the unpaid amount of the demand (an "Enforcement Proceeding")
and, if successful in whole or in part, the Indemnitee shall be entitled to be
paid any and all Expenses in connection with such Enforcement Proceeding.  The
Company hereby consents to service of process for such Enforcement Proceeding
and to appear in any such Enforcement Proceeding.  Any determination by the
Reviewing Party otherwise shall be conclusive and binding on the Company and the
Indemnitee.

6.            Change in Control.  The Company agrees that if there is a Change
in Control of the Company, other than a Change in Control which has been
approved by a majority of the Company's Board who were directors immediately
prior to such Change in Control, then with respect to all matters thereafter
arising concerning the rights of the Indemnitee to indemnity payments and
Expense Advances under this Agreement or any other agreement or under applicable
law or the Company's Articles of Incorporation or Bylaws now or hereafter in
effect relating to indemnification for Indemnifiable Events, the Company shall
seek legal advice only from special independent counsel selected by the
Indemnitee and approved by the Company, which approval shall not be unreasonably
withheld.  Such special independent counsel shall not have otherwise performed
services for the Company or the Indemnitee, other than in connection with such
matters, within the last five years.  Such independent counsel shall not include
any person who, under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing either the Company
or the Indemnitee in an action to determine the Indemnitee's rights under this
Agreement.  Such counsel, among other things, shall render its written opinion
to the Company and the Indemnitee as to whether and to what extent the
Indemnitee would be permitted to be indemnified under applicable law.  The
Company agrees to pay the reasonable fees of the special independent counsel
referred to above and to indemnify fully such counsel against any and all
expenses (including attorneys' fees), claims, liabilities and damages arising
out of or relating to this Agreement or the engagement of special independent
counsel pursuant to this Agreement.

7.            Partial Indemnity.  If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the Expenses and Liabilities, but not, however, for all of the total
amount thereof, the Company shall nevertheless indemnify the Indemnitee for the
portion thereof to which the Indemnitee is entitled.  Moreover, notwithstanding
any other provision of this Agreement, to the extent that the Indemnitee has
been successful on the merits or otherwise in defense of any or all Proceedings
relating in whole or in part to an Indemnifiable Event or in defense of any
issue or matter therein, including dismissal without prejudice, the Indemnitee
shall be indemnified against all Expenses incurred in connection therewith.  In
connection with any determination by the Reviewing Party or otherwise as to
whether the Indemnitee is entitled to be indemnified hereunder, the burden of
proof shall be on the Company to establish that the Indemnitee is not so
entitled.

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8.            Non-exclusivity.  The rights of the Indemnitee hereunder shall be
in addition to any other rights the Indemnitee may have under any statute,
provision of the Company's Articles of Incorporation or Bylaws, vote of
shareholders or disinterested directors or otherwise, both as to action in an
official capacity and as to action in another capacity while holding such
office.  To the extent that a change in the MBCA permits greater indemnification
by agreement than would be afforded currently under the Company's Articles of
Incorporation and Bylaws and this Agreement, it is the intent of the parties
hereto that the Indemnitee shall enjoy by this Agreement the greater benefits so
afforded by such change. 

9.            Liability Insurance.  To the extent the Company maintains an
insurance policy or policies providing directors' and officers' liability
insurance, the Indemnitee shall be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the coverage
available for any director or officer of the Company.

10.          Settlement of Claims.  The Company shall not be liable to indemnify
the Indemnitee under this Agreement (a) for any amounts paid in settlement of
any action or claim effected without the Company's written consent, which
consent shall not be unreasonably withheld; or (b) for any judicial award if the
Company was not given a reasonable and timely opportunity, at its expense, to
participate in the defense of such action.

11.          No Presumption.  For purposes of this Agreement, to the fullest
extent permitted by law, the termination of any Proceeding, action, suit or
claim, by judgment, order, settlement (whether with or without court approval)
or conviction, or upon a plea of nolo contendere, or its equivalent, shall not
create a presumption that the Indemnitee did not meet any particular standard of
conduct or have any particular belief or that a court has determined that
indemnification is not permitted by applicable law.

12.          Period of Limitations.  No legal action shall be brought and no
cause of action shall be asserted by or on behalf of the Company or any
affiliate of the Company against the Indemnitee, the Indemnitee's spouse, heirs,
executors or personal or legal representatives after the expiration of two years
from the date of accrual of such cause of action, or such longer period as may
be required by state law under the circumstances, and any claim or cause of
action of the Company or its affiliate shall be extinguished and deemed released
unless asserted by the timely filing of a legal action within such period;
provided, however, that if any shorter period of limitations is otherwise
applicable to any such cause of action, such shorter period shall govern.

13.          Amendment of this Agreement.  No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto.  No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar), nor shall such waiver constitute a continuing waiver. 
Except as specifically provided herein, no failure to exercise or any delay in
exercising any right or remedy hereunder shall constitute a waiver thereof.

14.          Subrogation.  In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of the Indemnitee, who shall execute all papers required and shall
do everything that may be necessary to secure such rights, including the
execution of such documents necessary to enable the Company effectively to bring
suit to enforce such rights.

15.          No Duplication of Payments.  The Company shall not be liable under
this Agreement to make any payment in connection with any claim made against
Indemnitee to the extent the Indemnitee has otherwise actually received payment
(under any insurance policy, Bylaw, vote, agreement or otherwise) of the amounts
otherwise indemnifiable hereunder.

16.          Binding Effect.  This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the parties hereto and their respective
successors, assigns, including any direct or indirect successor by purchase,
merger, consolidation or otherwise to all or substantially all of the business
and/or assets of the Company, spouses, heirs, and personal and legal
representatives.  The Company shall require and cause any successor (whether
direct or indirect by purchase, merger, consolidation or otherwise) to all,
substantially all, or a substantial part, of the business and/or assets of the
Company, by written agreement in form and substance satisfactory to the
Indemnitee, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform if
no such succession had taken place.  This Agreement shall continue in effect
regardless of whether the Indemnitee continues to serve as a director or officer
of the Company or of any other enterprise at the Company's request.

 

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17.          Severability.  The provisions of this Agreement shall be severable
in the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) is held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law. 
Furthermore, to the fullest extent possible, the provisions of this Agreement
(including, without limitation, each portion of this Agreement containing any
provision held to be invalid, void or otherwise unenforceable, that is not
itself invalid, void or unenforceable) shall be construed so as to give effect
to the intent manifested by the provision held invalid, illegal or
unenforceable.

18.          Governing Law.  This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Minnesota applicable to
contracts made and to be performed in such State without giving effect to the
principles of conflicts of laws.

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

20.          Notices.  All notices, demands, and other communications required
or permitted hereunder shall be made in writing and shall be deemed to have been
duly given if delivered by hand, against receipt, or mailed, postage prepaid,
certified or registered mail, return receipt requested, and addressed to the
Company at:

Mentor Corporation
201 Mentor Drive
Santa Barbara, California  93111
Attn:  General Counsel

and to the Indemnitee at:

                                                     
                                                     
                                                     
                                                     

Notice of change of address shall be effective only when done in accordance with
this Section.  All notices complying with this Section shall be deemed to have
been received on the date of delivery or on the third business day after
mailing.

 

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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Agreement as of the day first set forth above.

THE COMPANY:

 

MENTOR CORPORATION

By:___________________________________________

Name:_________________________________________

Title:__________________________________________

 

INDEMNITEE:

______________________________________________
                                                                                                                             
Signature
 

Print Name:_____________________________________

 

[SIGNATURE PAGE TO INDEMNIFICATION AGREEMENT]

 

 

 

 

 

 

 

 

 

 

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