**EMPLOYMENT AGREEMENT**

ThisEmployment Agreement, effective as of August 5, 2004, is by and between MENTORCorporation ("COMPANY"), with its executive offices at 201 Mentor Drive, SantaBarbara, California 93111, and Loren McFarland ("EMPLOYEE") of 6173 La GoletaRoad, Goleta, California 93117.

**RECITALS**

COMPANYis in the business of manufacturing and selling medical devices and relatedproducts. EMPLOYEE has experience in this business and possesses valuableskills and experience, which will be used in advancing COMPANY's interests.EMPLOYEE is willing to be engaged by COMPANY and COMPANY is willing to engageEMPLOYEE in an executive capacity responsible for ALL FINANCIAL******functionsof 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       GeneralServices.

1.1.1 Company shall employ EMPLOYEE as VICE PRESIDENT OF FINANCE/CHIEF FINANCIALOFFICER/TREASURER. EMPLOYEE shall perform the duties customarily performed byone 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 responsibilitiesdescribed above, EMPLOYEE's duties may change from time to time on reasonablenotice, based on the needs of COMPANY and EMPLOYEE's skills as determined byCOMPANY.  These duties shall hereinafter be referred to as "Services." EMPLOYEE shall report directly to the President/CEO of Mentor Corporation.  

1.1.2   In the event that EMPLOYEE shall from timeto time serve COMPANY as a director or shall serve in any other office duringthe term of this Agreement; EMPLOYEE shall serve in such capacities withoutfurther compensation. 

1.1.3. EMPLOYEE shall devote his entire working time, attention, and energies to thebusiness of COMPANY, and shall not, during the term of this Agreement, beengaged in any other business activity whether or not such business activity ispursued for gain, profit or other pecuniary advantage, without the prior writtenconsent of the Board of Directors of COMPANY.  This shall not be construed aspreventing EMPLOYEE from investing his assets in a form or manner that does notrequire any services on the part of EMPLOYEE in the operation or affairs of theentities in which such investments are made, or from engaging in such civic,charitable, religious, or political activities that do not interfere with theperformance of EMPLOYEE's duties hereunder.  

 

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1.2       BestAbilities.  EMPLOYEE shall serve COMPANY faithfully and to the best ofEMPLOYEE's ability.  EMPLOYEE shall use EMPLOYEE's best abilities to performthe Services.  Employee shall act at all times according to what EMPLOYEEreasonably believes is in the best interests of COMPANY.

1.3       CorporateAuthority.   EMPLOYEE, as an executive officer, shall comply with all lawsand regulations applicable to EMPLOYEE as a result of this Agreement,including, but not limited to, the Securities Act of 1933 and Securities Act of1934. Prior to the execution of this Agreement, EMPLOYEE has received andreviewed COMPANY's Policies and Procedures and COMPANY's Employee Handbook. EMPLOYEE shall comply with COMPANY's Policies and Procedures, and practices nowin effect or as later amended or adopted by COMPANY, as required of similarly-situatedexecutives of COMPANY.

2.         TERM

ThisAgreement shall commence upon the execution of this Agreement and shall continueuntil terminated as provided in Section 4 of this Agreement.  

3.         COMPENSATIONAND BENEFITS

3.1 Compensation.  EMPLOYEE's total compensation consists of base salary,bonus potential, stock options, and medical and other benefits generallyprovided to employees of COMPANY.  Any compensation paid to EMPLOYEE shall bepursuant to COMPANY's policies and practices for exempt employees and shall besubject to all applicable laws and requirements regarding the withholding offederal, state and/or local taxes.  Compensation provided in this Agreement isfull payment for Services and EMPLOYEE shall receive no additional compensationfor extraordinary services unless otherwise authorized.  EMPLOYEE's entirecompensation package will be reviewed annually by the Compensation Committee ofthe Board of Directors, a practice which is consistent with COMPANY's ExecutiveCompensation Program.

3.1.1 Base Compensation.  COMPANY agrees to pay EMPLOYEE an annualized basesalary of TWO HUNDRED FIFTY THOUSAND DOLLARS AND NO CENTS ($250,000.)**lessapplicable withholdings, payable in equal installments no less frequently thansemi-monthly.  

 

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3.1.2    Cash Incentive Bonus.  EMPLOYEE shall be eligible for a cash incentivebonus of up to FIFTY (50)******Percent of EMPLOYEE's annual basesalary, subject to applicable withholdings and subject to approval by COMPANY'sCompensation Committee and Board of Directors.  Any cash incentive bonus shallaccrue and become payable to EMPLOYEE only if EMPLOYEE is employed with COMPANYon the last day of the fiscal year for which the cash incentive bonus iscalculated.

3.1.3    Stock Options. Based upon satisfactory performance, under the Plan,COMPANY expects that EMPLOYEE will qualify for grants of options to acquirecommon stock of COMPANY subject to determination by the Board of Directors, ofan amount which is consistent with COMPANY's Executive Compensation Program. Any such grants shall also be subject to performance considerations as well asthe determination of the Board of Directors.

3.2  Business Expenses.  COMPANY shall reimburse EMPLOYEE for businessexpenses reasonably incurred in performing Services according to COMPANY's ExpenseReimbursement Policy.

3.3  Additional Benefits.  COMPANY shall provide EMPLOYEE those additionalbenefits normally granted by COMPANY to its employees subject to eligibilityrequirements applicable to each benefit.  COMPANY has no obligation to provideany other benefits unless provided for in this Agreement. Currently COMPANYprovides major medical, dental, life, salary continuation, long term disabilitybenefits and eligibility to participate in COMPANY's 401(k) plan.

3.4  Vacation.  Employee shall accrue vacation equal to TWENTY (20) days peryear, at the rate of approximately 1.67 days per month.  The time or times forsuch vacation shall be selected by EMPLOYEE and approved by the President andChief Executive Officer of COMPANY.

4.  TERMINATION

4.1  Circumstances Of Termination.  This Agreement and the employmentrelationship between COMPANY and EMPLOYEE may be terminated as follows:

4.1.1    Death.  This Agreement shallterminate upon EMPLOYEE's death, effective as of the date of EMPLOYEE's death.

4.1.2    Disability.  COMPANY may, at its option, either suspendcompensation payments or terminate this Agreement due to EMPLOYEE's Disabilityif EMPLOYEE is incapable, even with reasonable accommodation by COMPANY, ofperforming the Services because of accident, injury, or physical or mentalillness for ONE HUNDRED EIGHTY (180) consecutive days, or is unable or shallhave failed to perform the Services for a total period of ONE HUNDRED EIGHTY (180)within a TWELVE (12) month period, regardless of whether such days areconsecutive.  If COMPANY suspends compensation payments because of EMPLOYEE'sDisability, COMPANY shall resume compensation payments when EMPLOYEE resumesperformance of the Services.  If COMPANY elects to terminate this Agreement dueto EMPLOYEE's Disability, it must first give EMPLOYEE TEN (10) WORKING daysadvance written notice. 

 

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4.1.3    Discontinuance Of Business.  IfCOMPANY discontinues operating its business, this Agreement shall terminate asof the last day of the month on which COMPANY ceases its entire operations withthe same effect as if that last date were originally established as terminationdate of this Agreement.

4.1.4 For Cause.  COMPANY may terminate this Agreement without advancenotice for Cause.  For the purpose of this Agreement,  "Cause" shall meanany failure to comply in any material respect with this Agreement or anyAgreement incorporated herein; personal or professional misconduct byEMPLOYEE (including, but not limited to, criminal activity or gross or willfulneglect of duty); breach of  EMPLOYEE's fiduciary duty to the COMPANY;conduct which threatens public health or safety, or threatens to doimmediate or substantial harm to COMPANY's business or reputation; orany other misconduct, deficiency, failure of performance, breach or default,reasonably capable of being remedied or corrected by            EMPLOYEE.  Tothe extent that a breach pursuant to this Section 4.1.4 is curable byEMPLOYEE without harm to COMPANY  and/or it's reputation, COMPANYshall, instead of immediately  terminating EMPLOYEE pursuant to thisAgreement, provide   EMPLOYEE with notice of such breach, specifying theactions required to cure such breach, and EMPLOYEE shall have ten(10)  days to cure such breach by performing the actions so specified.  If  EMPLOYEEfails to cure such breach within the ten (10) day period,   COMPANY mayterminate this Agreement without further notice.  COMPANY'sexercise of its right to terminate under this section  shall be withoutprejudice to any other remedy to which COMPANY may be entitled at law, inequity, or under this Agreement.

4.1.5.   For Convenience Of Party;Resignation by EMPLOYEE for Good Reason.  This Agreement and employment relationship is terminable by eitherparty, for convenience, with or without cause, including but not limited toresignation by EMPLOYEE for Good Reason, at any time upon THIRTY (30) days'advance written notice to the other party. For purposes of this Agreement,"Good Reason" shall mean the occurrence of any of the following withoutEMPLOYEE's express written consent: (i) a significant reduction of EMPLOYEE'smaterial duties, position,  or responsibilities as provided in this Agreement,or the removal of EMPLOYEE from the position, duties, and responsibilitiescontemplated by this Agreement; (ii) a reduction in Base Compensation or CashIncentive Bonus**other than a one-time reduction of not more than 10%that also is applied to substantially all other senior executives at theCOMPANY; (iii) a material reduction in EMPLOYEE's benefits as compared to thebenefits in effect on the Effective Date; (iv) EMPLOYEE must perform asignificant portion of his duties at a location other than at COMPANYheadquarters; or (v) COMPANY headquarters are relocated more than 50 miles fromthe current location in Santa Barbara, California.

 

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**4.1.6.   **Change of Control.  If employment is terminated within TWELVE (12)months after the occurrence of any of the events described as a Change ofControl under the provisions of the Long-Term Incentive Plan as then defined atthe time of such Change of Control,  EMPLOYEEshall be entitled to severancecompensation pursuant to Section 4.2.6 (i) and (ii),  and (iii).****

4.2       EMPLOYEE'sRights Upon Termination

4.2.1    Death.  Upon termination of thisAgreement because of death of EMPLOYEE pursuant to Section 4.1.1 above, COMPANYshall have no further obligation to EMPLOYEE under the Agreement except todistribute to EMPLOYEE's estate or designated beneficiary any unpaidcompensation and reimbursable expenses, less applicable withholdings, owed toEMPLOYEE prior to the date of EMPLOYEE's death.

4.2.2    Disability.   Upon termination ofthis Agreement because of Disability of EMPLOYEE pursuant to Sections 4.1.2above, COMPANY shall have no further obligation to EMPLOYEE under the Agreementexcept to distribute to EMPLOYEE's estate or designated beneficiary any unpaidcompensation and reimbursable expenses, less applicable withholdings, owed toEMPLOYEE prior to the date of EMPLOYEE's termination due to Disability.

4.2.3    Discontinuance Of Business.  Upon termination of this Agreement because ofdiscontinuation of COMPANY's business pursuant to Section 4.1.3, COMPANY shallhave no further obligation to EMPLOYEE under the Agreement except to distributeto EMPLOYEE any unpaid compensation and reimbursable expenses, less applicablewithholdings, owed to EMPLOYEE prior to the date of termination of thisAgreement. 

 

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4.2.4    Termination With Cause.  Upontermination of EMPLOYEE's employment for Cause pursuant to Section 4.1.4,COMPANY  shall have no further obligation to EMPLOYEE under this Agreementexcept to distribute to EMPLOYEE:

i. Any compensation and reimbursable expenses owed to EMPLOYEE by COMPANY throughthe 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; Resignationfor Good Reason.  Upon termination of EMPLOYEE's employment by COMPANYwithout cause pursuant to Section 4.1.5, or if EMPLOYEE terminates thisAgreement at any time for Good Reason, COMPANY shall have no further obligationto EMPLOYEE under this Agreement except to distribute to EMPLOYEE:

i.          Any compensation then due EMPLOYEEin accordance with Section 3.1.1 , and reimbursable expenses owed by COMPANY toEMPLOYEE through the termination date, less applicable withholdings; and

ii.         Payment of full COBRA premiumfor TWELVE (12) months following termination.  Should EMPLOYEE discontinueCOBRA coverage or elect alternative coverage, a cash payment will not beprovided in lieu of payment of premium; and 

iii.        Severance compensationtotaling TWELVE- (12) months base pay, plus ONE (1) month base pay for eachfull year of service, determined at EMPLOYEE's then-current rate of base pay.  Inconsideration for this severance compensation, EMPLOYEE, on behalf of himself,his agents, heirs, executors, administrators, and assigns, expressly releasesand forever discharges COMPANY and its successors and assigns, and all of itsrespective agents, directors, officers, partners, employees, representatives,insurers, attorneys, parent companies, subsidiaries, affiliates, and jointventures, and each of them, from any and all claims based upon acts or eventsthat occurred on or before the date on which EMPLOYEE accepts the severancecompensation, including any claim arising under any state or federal statute orcommon law, including, but not limited to, Title VII of the Civil Rights Act of1964, 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, 29U.S.C. " 623, et. seq., the Worker Adjustment and RetrainingNotification Act, 29 U.S.C. " 2101, et. seq., and the California FairEmployment and Housing Act, Cal. Gov't Code " 12940, et seq. EMPLOYEEacknowledges that he is familiar with section 1542 of the California CivilCode, which reads as follows:

 

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AGENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW ORSUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IFKNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

EMPLOYEEexpressly acknowledges and agrees that he is releasing all known and unknownclaims, and that he is waiving all rights he has or may have under Civil CodeSection 1542 or under any other statute or common law principle of similareffect.  EMPLOYEE acknowledges that the benefits he is receiving in exchangefor this Release are more than the benefits to which he otherwise would havebeen entitled, and that such benefits constitute valid and adequateconsideration for this Release.  EMPLOYEE further acknowledges that he has readthis Release, understands all of its terms, and has consulted with counsel ofhis choosing before signing this Agreement.  

Severancecompensation pursuant to this paragraph shall be in lieu of any other severancebenefit to which EMPLOYEE would otherwise be entitled, under either any otherprovision to this Agreement or any COMPANY policies in effect on the date ofexecution of this Agreement.  Severance compensation shall be paid upontermination of EMPLOYEE's employment and in one lump sum payment at the date oftermination, less applicable withholdings.

4.2.6    Termination Due to ChangeOf Control.   If employment is terminatedwithin TWELVE (12) months AFTER any of the events delineated in Section 4.1.6of this Agreement ("Change of Control"), COMPANYshall have no further obligation to EMPLOYEE under this Agreement except todistribute to EMPLOYEE:

 

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i.          Any compensation then due EMPLOYEEin accordance with Section 3.1.1  and reimbursable expenses owed by COMPANY toEMPLOYEE through the termination date, less applicable withholdings; and

ii.          A pro-rated share of the CashIncentive Bonus that would be due to EMPLOYEE if EMPLOYEE had remained employedwith COMPANY through the last day of the fiscal year for which the cashincentive bonus is calculated, less applicable withholdings and/or any otherapplicable bonus or compensation program as approved by the Board of Directors;and

iii.         Any options awarded andpursuant to the Long-Term Incentive Plan applicable to EMPLOYEE's optionaward(s); and

iv.         Payment of full COBRA premiumfor TWELVE (12) months following termination. Should EMPLOYEE discontinue COBRAcoverage or elect alternative coverage, a cash payment will not be provided inlieu of payment of premium; and

**v.         **Severance compensationtotaling TWELVE (12) months base pay, plus ONE (1) month base pay for each fullyear of service, determined at EMPLOYEE's then-current rate of base pay.  In considerationfor this severance compensation, EMPLOYEE, on behalf of himself, his agents,heirs, executors, administrators, and assigns, expressly releases and foreverdischarges COMPANY and its successors and assigns, and all of its respectiveagents, directors, officers, partners, employees, representatives, insurers,attorneys, parent companies, subsidiaries, affiliates, and joint ventures, andeach of them, from any and all claims based upon acts or events that occurredon 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, 42U.S.C. '' 2000e, etseq., the Americans with Disabilities Act, 42U.S.C. '' 12101, etseq., the Age Discrimination in EmploymentAct, 29 U.S.C. ''  623, etseq., the Worker Adjustment andRetraining Notification Act, 29 U.S.C. '' 2101, etseq., andthe California Fair Employment and Housing Act, Cal. Gov't Code '' 12940, etseq.  EMPLOYEE acknowledges that he is familiar with section 1542 of theCalifornia Civil Code, which reads as follows:

 

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AGENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOTKNOW 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 WITHTHE DEBTOR.

EMPLOYEEexpressly acknowledges and agrees that he is   releasing all known and unknownclaims, and that he is waiving all rights he has or may have underCivil Code Section 1542 or under any other statute or common law principleof similar effect.  EMPLOYEE acknowledges that the benefits he isreceiving in exchange for this Release are more than the benefits towhich he otherwise would have been entitled, and that such benefitsconstitute valid and  adequate consideration for this Release.  EMPLOYEE furtheracknowledges that he has read this Release,  understands all of its terms,and has consulted with counsel of his choosing before signing thisAgreement.

Severancecompensation pursuant to this paragraph shall be  in lieu of any otherseverance benefit to which EMPLOYEE would otherwise be entitled, either underany provision to this Agreement or  any COMPANY policies in effect on the  dateof execution of this Agreement.  Severance compensation shall bepaid upon termination of  EMPLOYEE's employment and in one lump sumpayment   at the date of termination, less applicable withholdings.

5.         REPRESENTATIONSAND WARRANTIES

5.1 Representations of EMPLOYEE.  EMPLOYEE represents and warrants thatEMPLOYEE has all right, power, authority and capacity, and is free to enterinto this Agreement; that by doing so, EMPLOYEE will not violate or interferewith the rights of any other person or entity; and that EMPLOYEE is not subjectto 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 (includingattorneys' fees and court costs) resulting from or arising out of any claim oraction based upon EMPLOYEE's entering into this Agreement.

 

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5.2 Representations of COMPANY.  COMPANY represents and warrants that it hasall right, power and authority, without the consent of any other person, toexecute and deliver, and perform its obligations under, this Agreement.  Allcorporate and other actions required to be taken by COMPANY to authorize theexecution, delivery and performance of this Agreement and the consummation ofall transactions contemplated hereby have been duly and properly taken.  ThisAgreement is the lawful, valid and legally binding obligation of COMPANYenforceable in accordance with its terms.

5.3 Materiality of Representations.  The representations, warranties andcovenants set forth in this Agreement shall be deemed to be material and tohave been relied upon by the parties hereto.

6.         COVENANTS

6.1 Nondisclosure and Invention Assignment.  EMPLOYEE acknowledges that, asa result of performing the Services, EMPLOYEE shall have access to confidentialand sensitive information concerning COMPANY's business including, but notlimited to, their business operations, sales and marketing data, andmanufacturing processes.  EMPLOYEE also acknowledges that in the course ofperforming the Services, EMPLOYEE may develop new product ideas or inventionsas a result of COMPANY's information.  Accordingly, to preserve COMPANY'sconfidential information and to assure it the full benefit of that information,EMPLOYEE shall, as a condition of employment with COMPANY, execute COMPANY'sstandard form of Employee Confidentiality Agreement attached hereto as ExhibitA, and execute updated versions of the Employee Confidentiality Agreement as itmay be modified from time to time by COMPANY and as may be required ofsimilarly-situated executives of COMPANY.  The Employee ConfidentialityAgreement is incorporated herein by this reference.  EMPLOYEE's obligationsunder the Employee Confidentiality Agreement continue beyond the termination ofthis Agreement.

6.2 Covenant Not to Compete.  In addition to the provisions of the EmployeeConfidentiality Agreement, EMPLOYEE shall abide by the following covenant notto compete if COMPANY, at its option upon the termination of this Agreement(regardless of the reason for the termination), exercises this Covenant Not toCompete.  COMPANY shall notify EMPLOYEE within ten (10) days of termination ofthis Agreement of its intention to exercise this option and make an additionalpayment to EMPLOYEE of six (6) months' base pay determined at EMPLOYEE's lastrate of pay with COMPANY.  EMPLOYEE agrees that for a period of one (1) yearfollowing the termination of this Agreement, he shall not directly orindirectly for EMPLOYEE, or as a member of a partnership, or as an officer,director, stockholder, employee, or representative of any other entity orindividual, engage, directly or indirectly, in any business activity which isthe same or similar to work engaged in by EMPLOYEE on behalf of COMPANY withinthe same geographic territory as EMPLOYEE's work for COMPANY and which isdirectly competitive with the business conducted or to EMPLOYEE's knowledge,contemplated by COMPANY at the time of termination of this Agreement, asdefined in the Employee Confidentiality Agreement incorporated into thisAgreement by reference.  EMPLOYEE may accept employment with an entitycompeting with COMPANY only if the business of that entity is diversified andEMPLOYEE is employed solely with respect to a separately-managed andseparately-operated part of that entity's business that does not compete withCOMPANY.  Prior to accepting such employment, EMPLOYEE and the prospectiveemployer entity shall provide COMPANY with written assurances reasonablysatisfactory to COMPANY that EMPLOYEE will not render services directly orindirectly to any part of that entity's business that competes with thebusiness of COMPANY.

 

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6.3 Covenant to Deliver Records.  All memoranda, notes, records and otherdocuments made or compiled by EMPLOYEE, or made available to EMPLOYEE duringthe term of this Agreement concerning the business of COMPANY, shall be andremain COMPANY's property and shall be delivered to COMPANY upon thetermination of this Agreement or at any other time on request.  

6.4 Covenant Not To Recruit.  EMPLOYEE shall not, during the term of thisAgreement 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 anyother individual or entity, solicit, interfere with, induce (or attempt toinduce) or endeavor to entice away any employee associated with COMPANY tobecome affiliated with him or any other individual or entity.  

7.         CERTAIN RIGHTSOF COMPANY

7.1 Announcement.  COMPANY shall have the right to make public announcementsconcerning the execution of this Agreement and certain terms thereof.  

7.2 Use of Name, Likeness and Biography.  COMPANY shall have the right (butnot the obligation) to use, publish and broadcast, and to authorize others todo so, the name, approved likeness and approved biographical material ofEMPLOYEE to advertise, publicize and promote the business of COMPANY and itsaffiliates, but not for the purposes of direct endorsement without EMPLOYEE'sconsent.  An "approved likeness" and "approved biographicalmaterial" shall be, respectively, any photograph or other depiction ofEMPLOYEE, or any biographical information or life story concerning theprofessional career of EMPLOYEE.  

 

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7.3 Right to Insure.  COMPANY shall have the right to secure in its ownname, or otherwise, and at its own expense, life, health, accident or otherinsurance covering EMPLOYEE, and EMPLOYEE shall have no right, title orinterest in and to such insurance.  EMPLOYEE shall assist COMPANY in procuringsuch insurance by submitting to examinations and by signing such applicationsand other instruments as may be required by the insurance carriers to whichapplication is made for any such insurance.

8.         ASSIGNMENT

Neitherparty may assign or otherwise dispose of its rights or obligations under thisAgreement without the prior written consent of the other party except asprovided in this Section.  COMPANY may assign and transfer this Agreement, orits interest in this Agreement, to any affiliate of COMPANY or to any entitythat is a party to a merger, reorganization, or consolidation with COMPANY, orto a subsidiary of COMPANY, or to any entity that acquires substantially all ofthe assets of COMPANY or of any division with respect to which EMPLOYEE isproviding services (providing such assignee assumes COMPANY's obligations underthis Agreement).  EMPLOYEE shall, if requested by COMPANY, perform EMPLOYEE'sduties and Services, as specified in this Agreement, for the benefit of anysubsidiary or other affiliate of COMPANY.  Upon assignment, acquisition,merger, consolidation or reorganization, the term "COMPANY" as used hereinshall be deemed to refer to such assignee or successor entity.  EMPLOYEE shallnot have the right to assign EMPLOYEE's interest in this Agreement, any rightsunder this Agreement, or any duties imposed under this Agreement, nor shallEMPLOYEE or his spouse, heirs, beneficiaries, executors or administrators havethe right to pledge, hypothecate or otherwise encumber EMPLOYEE's right toreceive compensation hereunder without the express written consent ofCOMPANY.   

9.         RESOLUTION OFDISPUTES

Inthe event of any dispute arising out of or in connection with this Agreement orin any way relating to the employment of EMPLOYEE which leads to the filing ofa lawsuit, the parties agree that venue and jurisdiction shall be in SantaBarbara County, California.  The prevailing party in any such litigation shallbe entitled to an award of costs and reasonable attorneys' fees to be paid bythe losing party.

10.       GENERALPROVISIONS

10.1 Notices.  Notice under this Agreement shall be sufficient only ifpersonally delivered by a major commercial paid delivery courier service ormailed by certified or registered mail (return receipt requested and postagepre-paid) to the other party at its address set forth in the signature blockbelow or to such other address as may be designated by either party inwriting.  If not received sooner, notices by mail shall be deemed received five(5) days after deposit in the United States mail. 

 

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10.2 Agreement Controls.  Unless otherwise provided for in this Agreement,the COMPANY's policies, procedures and practices shall govern the relationshipbetween EMPLOYEE and COMPANY.  If, however, any of COMPANY's policies,procedures and/or practices conflict with this Agreement (together with anyamendments hereto), this Agreement (and any amendments hereto) shall control.

10.3 Amendment and Waiver.  Any provision of this Agreement may be amended ormodified and the observance of any provision may be waived (eitherretroactively or prospectively) only by written consent of the parties.  Eitherparty's failure to enforce any provision of this Agreement shall not beconstrued as a waiver of that party's right to enforce such provision.

10.4 Governing Law.  This Agreement and the performance hereunder shall beinterpreted under the substantive laws of the State of California.

10.5 Force Majeure.  Either party shall be temporarily excused fromperforming under this Agreement if any force majeure or other occurrence beyondthe reasonable control of either party makes such performance impossible,except a Disability as defined in this Agreement, provided that the partysubject to the force majeure provides notice of such force majeure at the firstreasonable opportunity.  Under such circumstances, performance under thisAgreement which related to the delay shall be suspended for the duration of thedelay provided the delayed party shall resume performance of its obligationswith due diligence once the delaying event subsides.  In case of any suchsuspension, the parties shall use their best efforts to overcome the cause andeffect of such suspension.

10.6 Remedies.  EMPLOYEE acknowledges that because of the nature of COMPANY'sbusiness, and the fact that the services to be performed by EMPLOYEE pursuantto this Agreement are of a special, unique, unusual, extraordinary, andintellectual character which give them a peculiar value, a breach of thisAgreement shall cause substantial injury to COMPANY for which money damagescannot reasonably be ascertained and for which money damages would beinadequate.  EMPLOYEE therefore agrees that COMPANY shall have the right toobtain injunctive relief, including the right to have the provisions of thisAgreement specifically enforced by any court having equity jurisdiction, inaddition to any other remedies that COMPANY may have.

10.7 Severability.  If any term, provision, covenant, paragraph, or conditionof this Agreement is held to be invalid, illegal, or unenforceable by any courtof competent jurisdiction, that provision shall be limited or eliminated to theminimum extent necessary so this Agreement shall otherwise remain enforceablein full force and effect.

10.8 Construction.  Headings and captions are only for convenience and shallnot affect the construction or interpretation of this Agreement.  Whenever thecontext requires, words, used in the singular shall be construed to include theplural and vice versa, and pronouns of any gender shall be deemed to includethe masculine, feminine, or neuter gender.

 

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10.9 Counterpart Copies.  This Agreement may be signed in counterpart copies,each of which shall represent an original document, and all of which shallconstitute a single document.

10.10No Adverse Construction.  The rule that a contract is to be construedagainst the party drafting the contract is hereby waived, and shall have noapplicability in construing this Agreement or the terms hereof.  

10.11Entire Agreement.  With respect to its subject matter, namely, theemployment by COMPANY of EMPLOYEE, this Agreement (including the documentsexpressly incorporated therein, such as the Employee ConfidentialityAgreement), contains the entire understanding between the parties, andsupersedes any prior agreements, understandings, and communications between theparties, whether oral, written, implied or otherwise, including, but notlimited to, the original offer of employment letter.

10.12Assistance of Counsel.  EMPLOYEE expressly acknowledges that he wasgiven the right to be represented by counsel of his own choosing in connectionwith the terms of this Agreement.

The parties execute this Agreement as of the datestated below:

| EMPLOYEE**/**DATE              | MENTORCORPORATION/DATE         |
|--------------------------------|--------------------------------|
| /s/ Loren McFarland            | By /s/ Joshua Levine           |
| Loren McFarland/Date           | JoshuaLevine/Date              |
|                           | President/CEO                  |
|                           | MentorCorporation              |
|                           |                           |
|                           |                           |
| NOTICE ADDRESS                 | NOTICEADDRESS:                 |
| 6173 La Goleta                 | 201Mentor Drive                |
| Goleta, California 93117  | SantaBarbara, California 93111 |

 

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