July 14, 2004

Peter Shepard1246 North Ontare RoadSanta Barbara, CA 93105

Dear Peter:

The purpose of this letter is to confirm the transfer ofyour assignment as Senior Vice President for Business Development from a fullto a part-time (10%), position. The terms and conditions of the transfer are asfollows:

| **TITLE:**                       | Senior Vice President, BusinessDevelopment                                                                                                                                                                                                                                                                                                                                                                                      |
|----------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                             |                                                                                                                                                                                                                                                                                                                                                                                                                            |
| **SUPERVISOR:**                  | Josh Levine, President/CEO                                                                                                                                                                                                                                                                                                                                                                                                      |
|                             |                                                                                                                                                                                                                                                                                                                                                                                                                            |
| **EFFECTIVE DATES:  ** | August 1, 2004*.*                                                                                                                                                                                                                                                                                                                                                                                                               |
|                             | * *                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **BASE SALARY:**       | 10% of base pay  *NOTE: This is the rateof base pay that willbe used to calculate all other compensation-related benefits,including any applicable bonus and/or  severance  pay-outs.*                                                                                                                                                                                                                           |
|                             | *_____________                    ___________________Employee                                         Company* |
|                             | * *                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **BONUS:  **           | Any bonus payout will be prorated (10%).                                                                                                                                                                                                                                                                                                                                                                                        |
|                             |                                                                                                                                                                                                                                                                                                                                                                                                                            |
| **STOCK OPTIONS:**               | Continued participation in theCompany stock option program,including vesting of awarded options per defined schedule.                                                                                                                                                                                                                                                                                                           |
|                             |                                                                                                                                                                                                                                                                                                                                                                                                                            |
| **BENEFITS: **              | All standard health and welfare benefitswill remain in full effect, including monthly car allowance, and full monthlypremiums will be paid by Company.                                                                                                                                                                                                                                                                          |
|                             |                                                                                                                                                                                                                                                                                                                                                                                                                            |
| **TRAVEL:**                 | Travelrequired by business needs will be reimbursed in accordance with Company policyand guidelines.                                                                                                                                                                                                                                                                                                                            |

 

Mentor Corporation is committed to a standard of excellencein the products and services that it provides to its customers.  Our employeeshave participated in our efforts to meet this commitment and to achieve astandard of excellence.  Because the company and its employees are judged ontheir performance and results, it is important that both retain the ability todetermine their own relationships with one another.  Accordingly, either theemployee or Mentor can terminate the employment relationship at will, with orwithout cause, and with or without advance notice, at any time.  No one otherthan the President/CEO of Mentor Corporation has the authority to enter intoany agreement for employment for any specified period of time, or to make anyagreement contrary to the foregoing.  Any agreement contrary to the foregoingmust be in writing and signed by the President/CEO of Mentor Corporation andthe employee.

----

 

Any salary figures provided to an employee in annual ormonthly terms are stated for the sake of convenience or to facilitatecomparisons and are not intended and do not create an employment contract.

When you have signed this letter, it, along with your EmployeeConfidentiality Agreement and the Employment Agreement dated November 28, 2000,will together constitute the entire agreement between you and Mentor concerningyour employment.  

If the above meets with your approval, please sign theoriginal of the two letters enclosed indicating your acceptance of this agreement. Please return the original to Corporate Human Resources by **July 16, 2004.**The copy enclosed is for your files.

Signed By:

/s/JOSH LEVINE                                                                               7/14/04Josh Levine                                                                                       DatePresident/CEO

Accepted By:

/s/PETER SHEPARD                                                                      7/15/04Peter Shepard                                                                                   DateSenior Vice President

 

 

Cc:      HumanResources