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Exhibit 10.1 MENTOR CORPORATION
1991 STOCK
OPTION PLAN(as amended through September 17, 2007) I. Purposes of the Plan This Mentor
Corporation 1991 Stock Option Plan (the “Plan”) is intended
to enable Mentor Corporation (the “Corporation”) and its
subsidiaries to attract and retain key employees and non-employee directors
and, by giving such employees and non-employee directors an opportunity to
acquire a proprietary interest in the corporation, to provide such employees
and non-employee directors with a stronger incentive to exert their maximum
effort for the continued success and growth of the Corporation and its
subsidiaries. II. Administration of the
Plan The Plan shall be
administered by a committee or committees appointed by, and consisting of one
or more members of, the Board of Directors of the Corporation (the
“Board”). The Board may delegate the responsibility for
administration of the Plan with respect to designated classes of optionees to
different committees, subject to such limitations as the Board deems
appropriate. The composition of any committee responsible for administration of
the Plan with respect to optionees who are subject to trading restrictions of
Section 16(b) of the Securities Exchange Act of 1934 (the “1934
Act”) with respect to securities of the Corporation shall comply with
the applicable requirements of Rule 16b-3 of the Securities and Exchange
Commission. Members of a committee shall serve for such term as the Board may
determine and shall be subject to removal by the Board at any time. Any
committee appointed by the Board shall have full authority to administer the
Plan within the scope of its delegated responsibilities, including authority to
interpret and construe any relevant provision of the Plan and to adopt such
rules and regulations as it may deem necessary. Decisions of a committee made
within the discretion delegated to it by the Board shall be final and binding
on all persons who have an interest in the Plan. With respect to any matter,
the term “Committee” shall hereinafter refer to such committee as
shall have been delegated authority with respect to such matter. III. Eligibility for Awards Options may be granted
under the Plan to such key employees of the Corporation and its subsidiaries
(including officers, whether or not they are also members of the Board) as the
Committee shall from time to time select. In addition, members of the Board who
are not employees of the Corporation or one of its subsidiaries shall be
eligible to receive options in accordance with, and only in accordance with,
the automatic grant provisions of Section VI below. IV. Stock Subject to the
Plan a. Class.
The stock which is the subject of options granted under the Plan shall be the
Corporation’s authorized but unissued common stock (“Common
Stock”). In connection with the issuance of shares of Common Stock
under the Plan, the Corporation may repurchase shares in the open market or
otherwise.   1




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b. Aggregate
Amount 1. The total
number of shares of Common Stock issuable under the Plan shall not exceed
5,000,000* shares plus the number of shares that would have become available
for grant, under the Corporation’s Restated 1987 Stock Option Plan and
Incentive Stock Option Plan (the “Prior Plans”) by reason of
the lapse, expiration or cancellation of options thereunder prior to exercise
in full (provided such shares are not subject to a subsequent grant under one
of the Prior Plans), subject to adjustment under Section IV(c). 2. If any
outstanding option under the Plan expires or is terminated or cancelled for any
reason (including pursuant to Section IX of the Plan) before being
exercised for the full number of shares of Common Stock to which it applies,
then the Common Stock allocable to the unexercised portion of such option shall
not be charged against the limitation of Section IV(b)(1) and may again
become the subject of subsequent options granted under the Plan. 3. Adjustments.
In the event any change is made to the Common Stock subject to the Plan or
subject to any outstanding option granted under the Plan (whether by reason of
merger, consolidation, reorganization, recapitalization, stock dividend, stock
split, combination of shares, exchange of shares, or other change in corporate
or capital structure of the Corporation), then, unless such change results in
the termination of all outstanding options, the Committee shall make
appropriate adjustments to the kind and maximum number of shares subject to the
Plan, the kind and maximum number of shares for which options are to be granted
to each individual under the Plan, the kind and maximum number of shares for
which options are to be granted to non-employee directors, and the kind and
number of shares and price per share of stock subject to outstanding options. 4. Individual
Limit. No individual will receive grants under this Plan for more than 600,000*
shares (subject to adjustment as provided in Section IV(c)). Grants that
are repriced and/or canceled and regranted will count against the limit
contained in this Section IV(d). V. Terms and Conditions of
Options Stock options granted
under the Plan may be either incentive stock options (“Incentive
Options”) qualifying under Section 422 of the Internal Revenue
Code of 1986, as amended (“Internal Revenue Code”), or
nonstatutory options, and shall be appropriately designated. The options shall
be evidenced by instruments in such form as the Committee may from time to time
approve. Such instruments shall conform to the following terms and conditions: a. Option
Price. The option price per share shall be the fair market value of a share
of Common Stock on the day the option is granted. b. Number of
Shares, Term and Exercise 1. Each option
granted under the Plan shall be exercisable on such date or dates, during such
period and for such number of shares as shall be determined by the Committee
and set forth in the instrument evidencing such option. No option granted under
the Plan, however, shall have an expiration date which is more than
10 years after the date of the option grant. Each option shall contain
such other terms, conditions and restrictions, which may vary from grant to
grant and may be modified by the Committee after the date of grant, as the
Committee shall determine. 2   2




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2. After any
option granted under the Plan becomes exercisable, it may be exercised by
notice to the Corporation at any time prior to the termination of such option.
Except as authorized by the Committee in accordance with Section VII, the
option price for the number of shares of Common Stock for which the option is
exercised shall become immediately due and payable upon exercise. 3. The option
price shall be payable in full in cash; provided, however, that the Committee
may, either at the time the option is granted or at the time it is exercised
and subject to such limitations as it may determine, authorize payment of all
or a portion of the option price in cash and/or one or a combination of the
following alternative forms: i. a promissory
note authorized pursuant to Section VII; or ii. full payment
in shares of Common Stock valued as of the exercise date; or iii. by
delivering a properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Corporation the amount of
sale or loan proceeds to pay the option price; or 4. Effective
September 17, 2007, in the event an optionee ceases to be an employee
of the Corporation of any of its subsidiaries due to death, his or her options
shall become fully vested and exercisable upon the optionee’s death. c. Termination
of Employment The Committee shall
determine and shall set forth in each option whether the option shall continue
to be exercisable, and the terms and conditions of such exercise, on and after
an optionee ceases to be employed by the Corporation or any of its subsidiaries. d. Incentive
Options. Options granted under the Plan which are intended to be Incentive
Options shall be subject to the following additional terms and conditions: 1. Dollar
Limitation. To the extent that the aggregate fair market value (determined
as of the respective date or dates of grant) of shares with respect to which
options that would otherwise be Incentive Options are exercisable for the first
time by any individual during any calendar year under the Plan (or any other
plan of the Corporation, a parent or subsidiary corporation or predecessor
thereof) exceeds the sum of $100,000 (or such greater amount as may be
permitted under the Internal Revenue Code), whether by reason of acceleration
or otherwise, such options shall not be treated as Incentive Options. In making
such determination, such options shall be taken into account in the order in
which they were granted. 3   3




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2. 10%
Shareholder. If any employee to whom an Incentive Option is to be granted
pursuant to the provisions of the Plan is on the date of grant the owner of
stock (determined with application of the ownership attribution rules of
Section 425(d) of the Internal Revenue Code) possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of his or her
employer corporation or of its parent or subsidiary corporation (10%
Shareholder), then the following special provisions shall be applicable to the
option granted to such individual: i. The option
price per share of the Common Stock subject to such Incentive Option shall not
be less than one hundred ten percent (110%) of the fair market value of one
share of Common Stock on the date of grant; and ii. The option
shall not have a term in excess of five (5) years from the date of grant. 3. Parent;
Subsidiary. For purposes of this Section VI(d) “parent and
subsidiary corporation” and “parent or subsidiary
corporation” shall have the meaning attributed to those terms under
Section 422A(b) of the Internal Revenue Code. e. Withholding 1. The
Corporation’s obligation to deliver stock certificates upon the exercise
of any option shall be subject to the optionee’s satisfaction of all
applicable federal, state and local income and employment tax withholding
requirements. 2. In the event
that an optionee is required to pay to the Corporation an amount with respect
to income and employment tax withholding obligations in connection with
exercise of an option, the Committee may, in its discretion and subject to such
limitations and rules as it may adopt, permit the optionee to satisfy the
obligation, in whole or in part, by delivering shares of Common Stock already
held by the optionee or by making an irrevocable election that a portion of the
total value of the shares of Common Stock subject to the option be paid in the
form of cash in lieu of the issuance of Common Stock and that such cash payment
be applied to the satisfaction of the withholding obligations. f. Repurchase
Rights. The Committee may in its discretion determine that it shall be a
term and condition of one or more options exercised under the Plan that the
Corporation (or its assigns) shall have the right, exercisable upon the
optionee’s termination of employment with the Corporation and its
subsidiaries, to repurchase any or all of the shares of Common Stock previously
acquired by the optionee upon the exercise of such option. Any such repurchase
right shall be exercisable by the Corporation (or its assigns) upon such terms
and conditions (including the establishment of the appropriate vesting schedule
and other provisions for the expiration of such right in one or more
installments) as the Committee may specify in the instrument evidencing such
right. The Committee shall also have full power and authority to provide for
the automatic termination of the Corporation’s repurchase rights, in
whole or in part, and thereby accelerate the vesting of any or all of the
purchased shares, upon the occurrence of any Change in Control specified in
Article X. 4   4




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g. Modification of Options. The Committee shall have
full power and authority to modify or waive any or all of the terms, conditions
or restrictions applicable to any outstanding option, to the extent not
inconsistent with the Plan; provided, however, that no such modification or
waiver shall (1) without the consent of the option holder, adversely
affect the holder’s rights thereunder or (2) affect any outstanding
option granted pursuant to Section VI, except to the extent necessary to
conform to any amendment to Section VI. VI. Automatic Option Grants to
Directors a. Automatic
Option Grants. Non-employee members of the Board shall automatically be
granted nonstatutory stock options (“Automatic Option
Grants”) to purchase the number of shares of Common Stock set forth
below (subject to adjustment under Section IV(c) hereof) on the dates and
terms set forth below: 1. Each person
who is newly elected or appointed as a non-employee member of the Board of
Directors after the date of adoption of this Plan shall receive on the date of
such election or appointment an Automatic Option Grant to purchase 20,000
shares* . 2. On the date of
each of the Corporation’s Annual Meetings occurring after the date of
adoption of this Plan each person who is then an incumbent, continuing
non-employee director, or who is then newly elected or appointed as a
nonemployee director, shall receive an Automatic Option Grant for 6,000*
shares, provided that the maximum number of shares for which such a director
may receive such options pursuant to Section VI(a)(1) and VI(a)(2) shall
be 60,000* less the number of shares for which such director received options
under any prior option plan of the Corporation. 3. In addition to
any grants under Section VI(a)(1) and Section VI(a)(2) immediately
above, each individual who is a non-employee member of the Board on
May 17, 1994 shall receive an Automatic Option Grant to purchase 30,000*
shares. The automatic grant date of these options will be May 17, 1994. 4. In addition to
any grants under Section VI(a)(1), Section VI(a)(2) and
Section VI(a)(3) immediately above, each individual who is a non-employee
member of the Board of Directors of Mentor Corporation on May 15, 1997
shall receive a one-time grant of options to purchase 30,000 shares of Common
Stock. b. Terms and
Conditions. The terms and conditions applicable to each Automatic Option
Grant shall be as follows: 1. The option
price per share will be equal to one hundred percent (100%) of the fair market
value of one share of the Common Stock on the automatic grant date. 2. The options
will have terms of ten years measured from the automatic grant date. 5   5




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3. The options
will be exercisable in the following increments: twenty-five percent (25%)
after one year and the remainder in equal annual installments over the next
three years, provided that options with an automatic grant date of May 17,
1994 will be exercisable in the following increments: thirty-three and
one-third percent (33-1/3%) after one year and the remainder in equal annual
installments over the next two years. Notwithstanding the foregoing,
(i) the exercisability of all such options shall accelerate upon the
occurrence of a Change in Control in accordance with Section X(a) and
shall terminate, to the extent unexercised, if the Corporation’s Common
Stock ceases to exist or be publicly traded as a result of the Change in
Control, unless the options are expressly assumed or replaced by substitute
options by the entity that survives the Change in Control, and (ii) no
option granted under this Section VI may be exercised prior to approval of
the Plan by the Corporation’s shareholders, which approval was obtained
in September of 1991 for all such grants except the May 17, 1994 grants. 4. Upon exercise
of the option, the option price for the purchased shares will become payable
immediately in cash or in shares of Common Stock that the optionee has held for
at least six months. 5. In the event
the optionee ceases to serve as a director, the option may be exercised, to the
extent then exercisable and within the term thereof, for a period of ninety
(90) days after the date of cessation (twelve (12) months in the case of
cessation by reason of disability or death). In the case of death, the option
may be exercised within such period by the estate or heirs of the optionee. 6. Effective
September 17, 2007, in the event the optionee ceases to serve as a
director due to the optionee’s death, the option shall become fully
vested and exercisable upon the optionee’s death. VII. Loans, Loan Guarantees and
Installment Payments In order to assist an
employee (including an employee who is an officer or member of the Board) in
the acquisition of shares of Common Stock pursuant to an option granted under
the Plan (other than pursuant to Section VI), the Committee may authorize,
at either the time of the grant of an option or the time of the acquisition of
Common Stock thereunder, (i) the extension of a loan to the employee by
the Corporation, (ii) the payment by the employee of the purchase price,
if any, of the Common Stock in installments, or (iii) the guarantee by the
Corporation of a loan obtained by the employee from a third party. The terms of
any loans, guarantees or installment payments, including the interest: rate and
terms of repayment, will be subject to the discretion of the Committee. Loans,
installment payments and guarantees may be granted without security, the
maximum credit available being the purchase price, if any, of the Common Stock
acquired plus the maximum federal and state income and employment tax liability
which may be incurred in connection with the acquisition. VIII. Assignability No option granted
under the Plan shall be assignable or transferable by the optionee other than
by will or by the laws of descent and distribution, and during the lifetime of
the optionee options granted under the Plan may be exercised only by the
optionee. 6   6




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IX. Cancellation and New Grant
of Options The Committee shall
have the authority to effect, at any time and from time to time, with the
consent of the affected option holders, the cancellation of any or all
outstanding options under the Plan or the Prior Plans (other than options
granted under Section VI) and to grant in substitution therefor new
options under the Plan covering the same or different numbers of shares of
Common Stock but having an option price per share not less than the fair market
value on the new grant date (or, in the case of an Incentive Option to be
granted to a 10% Shareholder, one hundred ten percent (110%) of such fair
market value). If one or more of the cancelled options is an Incentive Option
granted before 1987 under one of the Prior Plans, then such option shall,
solely for purposes of the “sequential exercise” rule applicable to
other outstanding Incentive options granted before 1987 under the Prior Plans
or any other plan of the Corporation or parent or subsidiary, be considered to
be outstanding until the expiration date initially specified for the option
term of such option. X. Recapitalization, Merger,
Consolidation, Sale of Assets or Liquidation a. Acceleration of Exercisability. Anything else to
the contrary in this Plan notwithstanding, in the event of a “Change in
Control” of the Corporation, as defined herein, all options held by a
person under this Plan that shall not have expired, shall become immediately
exercisable in full. The acceleration of the exercisability of options shall be
effective immediately prior to (but subject to the actual occurrence of) the
applicable Change in Control, and each optionee shall be entitled to exercise
his or her accelerated options in advance prior to the Change in Control,
provided that such Change in Control actually occurs and that such optionee has
not voluntarily terminated his or her position with the Corporation prior to
the occurrence of such Change in Control. b. Optional
Actions. In the event the Committee determines in good faith that a Change
in Control may be imminent, the Committee may, but shall not be obligated to: 1. If the Change
in Control is a merger or consolidation or a statutory share exchange, make
provision for the protection of the outstanding options granted under this Plan
by the substitution, in lieu of such options, of options to purchase such
numbers of shares of appropriate voting common stock of the corporation
surviving any merger or consolidation or, if appropriate, of the parent
corporation of the Corporation or such surviving corporation (the
“Survivor’s Stock”) as the Committee deems equitable,
or, alternatively, by the delivery of such numbers of shares of the
Survivor’s Stock as have a fair market value as of the date of the Change
in Control equal to the product of (i) the amount by which the Change in
Control Proceeds per Share (as defined in Section X(c)(3)) exceeds the
option exercise price per share times (ii) the numbers of Common shares
covered by the respective options; or 2. At least ten
(10) days prior to any Change in Control described in
Section X(c)(1)(iii), declare, and provide written notice to each optionee
of the declaration, that each outstanding option, whether or not then
exercisable, shall be cancelled at the time of the Change in Control (unless it
shall have been exercised prior to the occurrence of the Change in Control) in
exchange for payment to each optionee, within ten days after the Change in
Control, of cash equal to the amount (if any), for each Share covered by the
cancelled option, by which the Change in Control Proceeds per Share (as defined
in Section X(c)(3)) exceeds the exercise price per Share covered by such
option. 7   7




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No such action by the
Committee shall in any way affect the acceleration of the exercisability of
options pursuant to Section X(a), and each optionee shall have the right,
during the period preceding the Change in Control, to exercise his or her
option as; to all or any part of the shares covered thereby in accordance with
said Section X(a). In the event of a declaration pursuant to this
Section X(b), each outstanding option granted pursuant to this Plan that
shall not have been exercised prior to the Change in Control shall be cancelled
at the time of the Change in Control, and this Plan shall terminate at the time
of such cancellation, subject to the obligations of the Corporation provided in
this Section X(b). Any action taken by
the Committee under this Section X(b) in contemplation of an expected
Change in Control shall be null and void in the event such Change in Control
does not actually occur. c. Definitions 1. Change in
Control. A “Change in Control,” for purposes of this Plan,
shall have occurred if: i. a majority of
the directors of the Corporation shall be persons other than persons:
(A) for whose election proxies shall have been solicited by the Board of
Directors of the Corporation, or (B) who are then serving as directors
appointed by the Board of Directors to fill vacancies on the Board of Directors
caused by death or resignation (but not by removal) or to fill newly-created
directorships; ii. twenty
percent (20%) or more of the outstanding voting power of the Corporation shall
have been acquired or beneficially owned (as defined in Rule 13d-3 under
the 1934 Act or any successor rule thereto) by any person (other than the
Corporation, a subsidiary of the Corporation or, as to any optionee, that
optionee) or Group (as defined in Section X(c)(2), which Group does not,
as to any optionee, include such optionee; or iii. there shall
have occurred: (A) a merger or
consolidation of the Corporation with or into another corporation (other than
(1) a merger or consolidation with a subsidiary of the Corporation or
(2) a merger or consolidation in which (aa) the holders of voting
stock of the Corporation immediately prior to the merger as a class continue to
hold immediately after the merger at least sixty percent (60%) of all
outstanding voting power of the surviving or resulting corporation or its
parent and (bb) all holders of each outstanding class or series of voting
stock of the Corporation immediately prior to the merger or consolidation have
the right to receive substantially the same cash, securities or other property
in exchange for their voting stock of the Corporation as all other holders of
such class or series); (B) a statutory
exchange of shares of one or more classes or series of outstanding voting stock
of the Corporation for cash, securities or other property; 8   8




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(C) the sale or
other disposition of all or substantially all of the assets of the Corporation
(in one transaction or a series of transactions); or (D) the
liquidation or dissolution of the Corporation; unless, as to any optionee, more than
twenty-five percent (25%) of the voting stock (or the voting equity interest)
of the surviving corporation or the corporation or other entity acquiring all
or substantially all of the assets of the Corporation (in the case of a merger,
consolidation or disposition of assets) or of the Corporation or its resulting
parent corporation (in the case of a statutory share exchange) is beneficially
owned by such optionee or a Group that includes such optionee. 2. Group.
A “Group,” for purposes of this Plan, shall mean any two or more
persons acting as a partnership, limited partnership, syndicate, or other group
acting in concert for the purpose of acquiring, holding or disposing of voting
stock of the Corporation. 3. Change in
Control Proceeds. “Change in Control Proceeds” per Share shall
mean the cash plus the fair market value ‘ as determined in good faith by
the Committee, of the noncash consideration to be received per Share by the
shareholders of the Corporation upon the occurrence of a Change in Control. XI. Valuation of Common
Stock For all valuation
purposes under the Plan, the fair market value of a share of Common Stock on
any relevant date shall be determined in accordance with the following
provisions: a. Over-the-Counter. If the Common Stock is not at the
time listed or admitted to trading on any stock exchange but is traded in the
over-the-counter market, the fair market value shall be the mean between the
highest bid price and lowest asked price (or, if such information is available,
the closing selling price) of one share of Common Stock on the date in question
in the over-the-counter market, as such prices are reported by the National
Association of securities Dealers through its NASDAQ system or any successor
system. If there are no reported bid and asked prices (or closing selling
price) on the date in question, then the mean between the highest bid price and
lowest asked price (or, if available, the closing selling price) on the last
preceding date for which such quotations exist shall be determinative of fair
market value. b. Stock
Exchange. If the Common Stock is at the time listed or admitted to trading
on any stock exchange, then the fair market value shall be the closing selling
price of one share of Common Stock on the date in question on the stock
exchange determined by the Committee to be the primary market for the Common
Stock, as such price is officially quoted on such exchange. If there is no
reported sale of Common Stock on such exchange on the date in question, then
the fair market value shall be the closing selling price on the exchange on the
last preceding date for which such quotation exists. c. Neither
Over-the-Counter nor Stock Exchange. If the Common Stock is at the time
neither listed nor admitted to trading on any stock exchange nor traded in the
over-the-counter market, then the fair market value shall be determined by the
Committee after taking into account such factors as the Committee shall deem
appropriate. 9   9




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If, however, the
Committee determines that, as a result of circumstances existing on any date,
the use of the above rules is not a reasonable method of determining fair
market value on that date, the Committee may use such other method as, in its
judgment, is reasonable. XII. Effective Date and Term of
Plan a. Effective
Date. The Plan shall become effective on the date it is adopted by the
Board, but no shares of Common Stock shall be issued under the Plan and no
options granted under the Plan shall be exercisable before the Plan is approved
by the holders of at least a majority of the Corporation’s voting stock
represented and voting at a duly-held meeting at which a quorum is present. If
such shareholder approval is not obtained, then any options previously granted
under the Plan shall terminate and no further options shall be granted. Subject
to such limitation, the Committee may grant options under the Plan at any time
after the adoption of the Plan by the Board and before the date fixed herein
for termination of the Plan. b. Term.
No option may be granted under the Plan after the earlier of (i) the tenth
anniversary of the date of its adoption by the Board or (ii) the date on
which all shares available for issuance under the Plan have been issued or
cancelled pursuant to the exercise or surrender of options granted hereunder. XIII. Amendment or Discontinuance by
Board Action The Board may amend,
suspend or discontinue the Plan in whole or in part at any time; provided,
however, that (1) except to the extent necessary to qualify as Incentive
options any or all options granted under the Plan which are intended to so
qualify, such action shall not adversely affect rights and obligations with
respect to options at the time outstanding under the Plan; (2) the
provisions of the Plan concerning the eligibility of outside directors for
awards and the amount, price and timing of their awards may not be amended more
than once every six months, other than to comport with changes in the Internal
Revenue Code or rules thereunder; and (3) the Board shall not, without the
approval of the Corporation’s shareholders (i) increase the number
of shares of Common Stock which may be issued under the Plan (unless necessary
to effect the adjustments required under Section IV(c)), (ii) modify
the eligibility requirements for awards under the Plan or (iii) make any
other change with respect to which the Board determines that shareholder
approval is required by applicable law or regulatory standards. XIV. No Employment Obligation Nothing contained in
the Plan (or in any option granted under the Plan) shall confer upon any
employee any right to continue in the employ of the Corporation or any
affiliate or constitute any contract or agreement of employment or interfere in
any way with the right of the Corporation or an affiliate to reduce such
employee’s compensation from the rate in existence at. the time of the
granting of an option or to terminate such employee’s employment at any
time, with or without cause; but nothing contained herein or in any option
shall affect any contractual rights of an employee pursuant to a written
employment agreement. 10   10




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XV. Use of Proceeds The cash proceeds
received by the Corporation from the issuance of shares pursuant to options
under the Plan shall be used for general corporate purposes. XVI. Regulatory Approvals The implementation of
the Plan, the granting of any option under the Plan, and the issuance of Common
Stock upon the exercise of any such option or lapse of restrictions on any
Common Stock issued under the Plan shall be subject to the Corporation’s
procurement of all approvals and permits required by regulatory authorities
having jurisdiction over the Plan, the options granted under the Plan or the
Common Stock issued pursuant to such an option. XVII. Governing Law To the extent not
otherwise governed by federal law, the Plan and its implementation shall be
governed by and construed in accordance with the laws of the State of
California. 11   11