Document:

exv10w2

 

Exhibit 10.2

EMPLOYMENT AGREEMENT 

This Employment Agreement, effective as of February 5, 2007, is by and between MENTOR
Corporation (“COMPANY”), with its executive offices at 201 Mentor Drive, Santa Barbara, California
93111, and EDWARD S. NORTHUP (“EMPLOYEE”).

RECITALS

COMPANY is in the business of manufacturing, distributing and selling medical devices and
related products. EMPLOYEE has experience in this business and possesses valuable skills and
experience, which will be used in advancing COMPANY’s interests. EMPLOYEE is willing to be engaged
by COMPANY and COMPANY is willing to engage EMPLOYEE in an executive capacity responsible for ALL
OPERATING functions of COMPANY, upon the terms and conditions set forth in this Agreement.

AGREEMENT

EMPLOYEE and COMPANY, intending to be legally bound, agree as follows:

1. SERVICES

1.1 General Services.

1.1.1 COMPANY shall employ EMPLOYEE as CHIEF OPERATING OFFICER. EMPLOYEE shall have
such duties, authorities and responsibilities commensurate with the duties,
authorities and responsibilities of persons in similar capacities in similarly
sized companies and such other duties and responsibilities as the Board of
Directors of the COMPANY (the “Board”) shall designate that are consistent with the
EMPLOYEE’s position as CHIEF OPERATING OFFICER of the COMPANY. To the extent that
they do not materially reduce the scope of the responsibilities described above,
EMPLOYEE’s duties may change from time to time on reasonable notice, based on the
needs of COMPANY and EMPLOYEE’s skills as determined by COMPANY. These duties
shall hereinafter be referred to as “Services.” EMPLOYEE shall report directly to
the President/CEO of the COMPANY or, from time to time, to a designee of the
President/CEO, provided that (i) EMPLOYEE’s Services, as described above, remain
materially unchanged and (ii) the changed reporting structure is consistent with
reporting and organizational structures that exist from time to time in similarly
sized companies.

 

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1.1.2 In the event that EMPLOYEE shall from time to time serve COMPANY as a
director or shall serve in any other office during the term of this Agreement;
EMPLOYEE shall serve in such capacities without further compensation.

1.1.3. EMPLOYEE shall devote his entire working time, attention, and energies to
the business of COMPANY, and shall not, during the term of this Agreement, be
engaged in any other business activity whether or not such business activity is
pursued for gain, profit or other pecuniary advantage, without the prior written
consent of the Board of Directors of COMPANY. This shall not be construed as
preventing EMPLOYEE from investing his assets in a form or manner that does not
require any services on the part of EMPLOYEE in the operation or affairs of the
entities in which such investments are made, or from engaging in such civic,
charitable, religious, or political activities that do not interfere with the
performance of EMPLOYEE’s duties hereunder.

1.2 Best Abilities. EMPLOYEE shall serve COMPANY faithfully and to the best of
EMPLOYEE’s ability. EMPLOYEE shall use EMPLOYEE’s best abilities to perform the Services.
EMPLOYEE shall act at all times according to what EMPLOYEE reasonably believes is in the
best interests of COMPANY.

1.3 Corporate Authority. EMPLOYEE, as an executive officer, shall comply with all
laws and regulations applicable to EMPLOYEE as a result of this Agreement, including, but
not limited to, the Securities Act of 1933 and Securities Act of 1934. Prior to the
execution of this Agreement, EMPLOYEE has received and reviewed COMPANY’s Policies and
Procedures and COMPANY’s Employee Handbook. EMPLOYEE shall comply with COMPANY’s Policies
and Procedures, and practices now in effect or as later amended or adopted by COMPANY, as
required of similarly-situated executives of COMPANY.

2. TERM

This Agreement shall commence upon the execution of this Agreement (the “Effective Date”) and
shall have an initial term of three (3) years unless terminated as provided in Section 4 of this
Agreement. On the third anniversary of the Effective Date, this Agreement automatically will renew
for an additional three-year term, unless either party provides the other party with written notice
of non-renewal at least 120 days prior to the date of the automatic renewal. In the event that the
COMPANY provides written notice of non-renewal to the EMPLOYEE as provided in the preceding
sentence, then EMPLOYEE shall be entitled to the payments described in Section 4.2.5 below as of
the date of the expiration of this Agreement.

 

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3. COMPENSATION AND BENEFITS

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

3.1.1 Base Compensation. COMPANY agrees to pay EMPLOYEE an annualized
base salary of FOUR HUNDRED THOUSAND DOLLARS AND NO CENTS ($400,000.) less
applicable withholdings, payable in equal installments no less frequently than
semi-monthly.

	 	3.1.2	 	Cash Incentive Bonus. EMPLOYEE shall be eligible to
participate in the COMPANY’s Incentive Bonus Plans, as in effect from time to
time, for an annual or more frequent cash incentive bonus, subject to
applicable withholdings, of SEVENTY-FIVE (75) Percent of EMPLOYEE’s annual
base salary, for achievement of target-level performance, and a maximum bonus
of not less than NINETY-SEVEN AND ONE-HALF (97.5) Percent of EMPLOYEE’s base
salary for achievement of extraordinary performance thereunder, and subject to
approval by COMPANY’s [Compensation Committee of the Board/Chief Executive
Officer]. Any cash incentive bonus shall accrue and become payable to
EMPLOYEE only if EMPLOYEE is employed with COMPANY on the last day of the
fiscal year for which the cash incentive bonus is calculated.
	 
	 	3.1.3	 	Stock Options. Based upon satisfactory performance,
under the Plan, COMPANY expects that EMPLOYEE will qualify for grants of
options to acquire common stock of COMPANY subject to determination by the
Board of Directors, of an amount which is consistent with COMPANY’s Executive
Compensation Program. Any such grants shall also be subject to performance
considerations as well as the determination of the Board of Directors.

3.2 Business Expenses. COMPANY shall reimburse EMPLOYEE for business expenses
reasonably incurred in performing Services according to COMPANY’s Expense Reimbursement
Policy.

 

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

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

4. TERMINATION

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

	 	4.1.1	 	Death. This Agreement shall terminate upon
EMPLOYEE’s death, effective as of the date of EMPLOYEE’s death.
	 
	 	4.1.2	 	Disability. COMPANY may, at its option, either
suspend compensation payments or terminate this Agreement due to EMPLOYEE’s
Disability if EMPLOYEE is incapable, even with reasonable accommodation by
COMPANY, of performing the Services because of accident, injury, or physical
or mental illness for ONE HUNDRED EIGHTY (180) consecutive days, or is unable
or shall have 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 are consecutive. If COMPANY suspends compensation payments because of
EMPLOYEE’s Disability, COMPANY shall resume compensation payments when
EMPLOYEE resumes performance of the Services. If COMPANY elects to terminate
this Agreement due to EMPLOYEE’s Disability, it must first give EMPLOYEE TEN
(10) WORKING days advance written notice.
	 
	 	4.1.3	 	Discontinuance Of Business. If COMPANY discontinues
operating its business, this Agreement shall terminate as of the last day of
the month on which COMPANY ceases its entire operations with the same effect
as if that last date were originally established as termination date of this
Agreement.

 

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	 	4.1.4	 	For Cause. COMPANY may terminate this Agreement without
advance notice for Cause. For the purpose of this Agreement, “Cause” shall mean
any failure to comply in any material respect with this Agreement or any Agreement
incorporated herein; personal or professional misconduct by EMPLOYEE (including,
but not limited to, criminal activity or gross or willful neglect of duty); breach of
EMPLOYEE’s fiduciary duty to the COMPANY; conduct which threatens public health or
safety, or threatens to do immediate or substantial harm to COMPANY’s business or
reputation; or any other misconduct, deficiency, failure of performance, breach or
default, reasonably capable of being remedied or corrected by EMPLOYEE. To the
extent that a breach pursuant to this Section 4.1.4 is curable by EMPLOYEE without
harm to COMPANY and/or it’s reputation, COMPANY shall, instead of immediately
terminating EMPLOYEE pursuant to this Agreement, provide EMPLOYEE with notice of
such breach, specifying the actions required to cure such breach, and EMPLOYEE
shall have ten (10) days to cure such breach by performing the actions so
specified. If EMPLOYEE fails to cure such breach within the ten (10) day period
COMPANY may terminate this Agreement without further notice.
COMPANY’s exercise of its right to terminate under this section shall be without
prejudice to any other remedy to which COMPANY may be entitled at law, in equity,
or under this Agreement.

	 	4.1.5.	 	Resignation by EMPLOYEE for Good Reason. This Agreement and
employment relationship is terminable by either party, with or without cause,
including but not limited to resignation 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 without EMPLOYEE’s express written consent: (i) a significant
reduction of EMPLOYEE’s material duties, authorities or responsibilities as
provided in this Agreement; provided however, except in the Change of Control
context, EMPLOYEE’s reporting structure may be realigned at any time, as
described in Section 1.1.1, without triggering this definition of Good Reason;
(ii) a reduction in Base Compensation or Cash Incentive Bonus other than a
one-time reduction of not more than 10% that also is applied to substantially
all other senior executives at the COMPANY; (iii) a material reduction in
EMPLOYEE’s benefits as compared to the benefits in effect on the Effective
Date; (iv) EMPLOYEE must perform a significant portion of his duties at a
location other than COMPANY headquarters; or (v) COMPANY headquarters are
relocated more than 50 miles from the current location in Santa Barbara,
California.

	 	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 of
Control under the provisions of the Long-Term Incentive Plan as then defined
at the time of such Change of Control,
EMPLOYEE shall be entitled to severance compensation pursuant to Section
4.2.6 (i),(ii),(iii),(iv) and (v).

 

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4.2 EMPLOYEE’s Rights Upon Termination

	 	4.2.1	 	Death. Upon termination of this Agreement because
of death of EMPLOYEE pursuant to Section 4.1.1 above, COMPANY shall have no
further obligation to EMPLOYEE under the Agreement except to distribute to
EMPLOYEE’s estate or designated beneficiary any unpaid compensation and
reimbursable expenses, less applicable withholdings, owed to EMPLOYEE prior to
the date of EMPLOYEE’s death.
	 
	 	4.2.2	 	Disability. Upon termination of this Agreement
because of Disability of EMPLOYEE pursuant to Sections 4.1.2 above, COMPANY
shall have no further obligation to EMPLOYEE under the Agreement except to
distribute to EMPLOYEE’s estate or designated beneficiary any unpaid
compensation and reimbursable expenses, less applicable withholdings, owed to
EMPLOYEE prior to the date of EMPLOYEE’s termination due to Disability.
	 
	 	4.2.3	 	Discontinuance Of Business. Upon termination of
this Agreement because of discontinuation of COMPANY’s business pursuant to
Section 4.1.3, COMPANY shall have no further obligation to EMPLOYEE under the
Agreement except to distribute to EMPLOYEE any unpaid compensation and
reimbursable expenses, less applicable withholdings, owed to EMPLOYEE prior to
the date of termination of this Agreement.
	 
	 	4.2.4	 	Voluntary Termination without Good Reason; Termination
With Cause. Upon voluntary termination of EMPLOYEE’s employment by
EMPLOYEE without Good Reason or termination of EMPLOYEE’s employment for Cause
pursuant to Section 4.1.4, COMPANY shall have no further obligation to
EMPLOYEE under this Agreement except to distribute to EMPLOYEE:

i. Any compensation and reimbursable expenses owed to EMPLOYEE by COMPANY
through the termination date, less applicable withholdings; and

ii. Severance compensation as provided for in COMPANY’s Severance Policy,
if any, less applicable withholdings.

 

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	 	4.2.5	 	Termination Without Cause; Resignation for Good Reason;
Non-renewal of Agreement by COMPANY. Upon termination of
EMPLOYEE’s employment by COMPANY without Cause pursuant to Section 4.1.4,
or if EMPLOYEE terminates this Agreement at any time for Good Reason, or
if Company does not renew the term of the Agreement as provided in Section
2 above, then COMPANY shall have no further obligation to EMPLOYEE under
this Agreement except to distribute to EMPLOYEE:

	 	i.	 	Any compensation then due EMPLOYEE in
accordance with Section 3.1.1 , and reimbursable expenses owed by
COMPANY to EMPLOYEE through the termination date, less applicable
withholdings; and
	 
	 	ii.	 	Reimbursement of full COBRA premium for
TWENTY-FOUR (24) months following termination. Should EMPLOYEE
discontinue COBRA coverage or elect alternative coverage, a cash
payment will not be provided in lieu of payment of premium;
	 
	 	iii.	 	A pro-rated share of the Cash Incentive
Bonus that would be due to EMPLOYEE if EMPLOYEE had remained employed
with COMPANY through the last day of the fiscal year for which the
cash incentive bonus is calculated, less applicable withholdings
and/or any other applicable bonus or compensation program as approved
by the Board of Directors; and
	 
	 	iv.	 	Severance compensation totaling
TWENTY-FOUR- (24) months base pay, determined at EMPLOYEE’s
then-current rate of base pay; however, EMPLOYEE may elect to accept
a lesser amount of severance than stipulated if EMPLOYEE deems it
beneficial to him/her in light of various income and excise tax
considerations. In consideration for this severance compensation,
EMPLOYEE, on behalf of himself, his agents, heirs, executors,
administrators, and assigns, expressly releases and forever
discharges COMPANY and its successors and assigns, and all of its
respective agents, directors, officers, partners, employees,
representatives, insurers, attorneys, parent companies, subsidiaries,
affiliates, and joint ventures, and each of them, from any and all
claims based upon acts or events that occurred on or before the date
on which EMPLOYEE accepts the severance compensation, including any
claim arising under any state or federal statute or common law,
including, but not limited to, Title VII of the Civil Rights Act of
1964, 42 U.S.C. “ 2000e, et seq., the Americans with
Disabilities Act, 42 U.S.C. “ 12101, et seq., the Age Discrimination in Employment Act, 29 U.S.C. “ 623, et.
seq., the Worker Adjustment and Retraining Notification Act,
29 U.S.C. “ 2101, et. seq., and the California Fair
Employment and Housing Act, Cal. Gov’t Code “ 12940, et
seq. EMPLOYEE acknowledges that he is familiar with section
1542 of the California Civil Code, which reads as follows:

 

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A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR
AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY
HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR.

EMPLOYEE expressly acknowledges and agrees that he is releasing
all known and unknown claims, and that he is waiving all rights he
has or may have under Civil Code Section 1542 or under any other
statute or common law principle of similar effect. EMPLOYEE
acknowledges that the benefits he is receiving in exchange for
this Release are more than the benefits to which he otherwise
would have been entitled, and that such benefits constitute valid
and adequate consideration for this Release. EMPLOYEE further
acknowledges that he has read this Release, understands all of its
terms, and has consulted with counsel of his choosing before
signing this Agreement.

Severance compensation pursuant to this paragraph shall be in lieu
of any other severance benefit to which EMPLOYEE would otherwise
be entitled, under either any other provision to this Agreement or
any COMPANY policies in effect on the date of execution of this
Agreement. During the first six (6) months after termination,
EMPLOYEE’s severance compensation shall accrue, payable in one
lump sum payment, less applicable withholdings, on the seventh
month after termination, subject to the Internal Revenue Service
guidance providing that the imposition of tax under Internal
Revenue Code Section 409A does not apply to such payments.

 

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	 	4.2.6	 	Termination Due to Change Of Control.  If employment is
terminated within TWELVE (12) months AFTER any of the events delineated in
Section 4.1.6 of this Agreement (“Change of Control”),
COMPANY shall have no further obligation to EMPLOYEE under this Agreement
except to distribute to EMPLOYEE:

	 	i.	 	Any compensation then due EMPLOYEE in
accordance with Section 3.1.1 and reimbursable expenses owed by
COMPANY to EMPLOYEE through the termination date, less applicable
withholdings; and
	 
	 	ii.	 	A ONE HUNDRED PERCENT (100%) of the Cash
Incentive Bonus that would be due to EMPLOYEE if EMPLOYEE had
remained employed with COMPANY through the last day of the fiscal
year for which the cash incentive bonus is calculated, less
applicable withholdings and/or any other applicable bonus or
compensation program as approved by the Board of Directors; and
	 
	 	iii.	 	Any options awarded and pursuant to the Long-Term Incentive
Plan applicable to EMPLOYEE’s option award(s); and
	 
	 	iv.	 	Reimbursement of full COBRA premium for
TWENTY-FOUR (24) months following termination. Should EMPLOYEE
discontinue COBRA coverage or elect alternative coverage, a cash
payment will not be provided in lieu of payment of premium; and
	 
	 	v.	 	Severance compensation totaling TWENTY-FOUR
(24) months base pay, determined at EMPLOYEE’s then-current rate of
base pay; however, EMPLOYEE may elect to accept a lesser amount of
severance than stipulated if EMPLOYEE deems it beneficial to him/her
in light of various income and excise tax considerations. In
consideration for this severance compensation, EMPLOYEE, on behalf of
himself, his agents, heirs, executors, administrators, and assigns,
expressly releases and forever discharges COMPANY and its successors
and assigns, and all of its respective agents, directors, officers,
partners, employees, representatives, insurers, attorneys, parent
companies, subsidiaries, affiliates, and joint ventures, and each of
them, from any and all claims based upon acts or events that occurred
on or before the date on which EMPLOYEE accepts the severance
compensation, including any claim arising under any state or federal
statute or common law, including, but not  

 

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	 	 	 	limited to, Title VII of
the Civil Rights Act of 1964, 42 U.S.C. '' 2000e, et
seq., the Americans with Disabilities Act, 42 U.S.C. ''
12101, et seq.,  the Age Discrimination in Employment Act, 29 U.S.C. '' 623,
et seq., the Worker Adjustment and Retraining
Notification Act, 29 U.S.C. '' 2101, et seq., and
the California Fair Employment and Housing Act, Cal. Gov’t Code ''
12940, et seq. EMPLOYEE acknowledges that he is
familiar with section 1542 of the California Civil Code, which
reads as follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

EMPLOYEE expressly acknowledges and agrees that he is releasing
all known and unknown claims, and that he is waiving all rights he
has or may have under Civil Code Section 1542 or under any other
statute or common law principle of similar effect. EMPLOYEE
acknowledges that the benefits he is receiving in exchange for
this Release are more than the benefits to which he otherwise
would have been entitled, and that such benefits constitute valid
and adequate consideration for this Release. EMPLOYEE further
acknowledges that he has read this Release, understands all of its
terms, and has consulted with counsel of his choosing before
signing this Agreement.

Severance compensation pursuant to this paragraph shall be in lieu
of any other severance benefit to which EMPLOYEE would otherwise
be entitled, either under any provision to this Agreement or any
COMPANY policies in effect on the date of execution of this
Agreement. During the first six (6) months after termination,
EMPLOYEE’s severance compensation shall accrue, payable in one
lump sum payment, less applicable withholdings, on the seventh
month after termination, subject to the Internal Revenue Service
guidance providing that the imposition of tax under Internal
Revenue Code Section 409A does not apply to such payments.

 

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5. REPRESENTATIONS AND WARRANTIES

5.1 Representations of EMPLOYEE. EMPLOYEE represents and warrants that
EMPLOYEE has all right, power, authority and capacity, and is free to enter into
this Agreement; that by doing so, EMPLOYEE will not violate or interfere with the rights of
any other person or entity; and that EMPLOYEE is not subject to any contract, understanding
or obligation that will or might prevent, interfere with or impair the performance of this
Agreement by EMPLOYEE. EMPLOYEE shall indemnify and hold COMPANY harmless with respect to
any losses, liabilities, demands, claims, fees, expenses, damages and costs (including
attorneys’ fees and court costs) resulting from or arising out of any claim or action based
upon EMPLOYEE’s entering into this Agreement.

5.2 Representations of COMPANY. COMPANY represents and warrants that it has all
right, power and authority, without the consent of any other person, to execute and
deliver, and perform its obligations under, this Agreement. All corporate and other
actions required to be taken by COMPANY to authorize the execution, delivery and
performance of this Agreement and the consummation of all transactions contemplated hereby
have been duly and properly taken. This Agreement is the lawful, valid and legally binding
obligation of COMPANY enforceable in accordance with its terms.

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

6. COVENANTS

6.1 Nondisclosure and Invention Assignment. EMPLOYEE acknowledges that, as a
result of performing the Services, EMPLOYEE shall have access to confidential and sensitive
information concerning COMPANY’s business including, but not limited to, their business
operations, sales and marketing data, and manufacturing processes. EMPLOYEE also
acknowledges that in the course of performing the Services, EMPLOYEE may develop new
product ideas or inventions as a result of COMPANY’s information. Accordingly, to preserve
COMPANY’s confidential information and to assure it the full benefit of that information,
EMPLOYEE shall, as a condition of employment with COMPANY, execute COMPANY’s standard form
of Employee Confidentiality Agreement attached hereto as Exhibit A, and execute updated
versions of the Employee Confidentiality Agreement as it may be modified from time to time
by COMPANY and as may be required of similarly-situated executives of COMPANY. The
Employee Confidentiality Agreement is incorporated herein by this reference. EMPLOYEE’s
obligations under the Employee Confidentiality Agreement continue beyond the termination of
this Agreement.

 

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6.2 Covenant Not to Compete. EMPLOYEE agrees that solely in the event of
the sale or acquisition of the COMPANY, and to the maximum extent permitted by applicable
law, EMPLOYEE shall abide by the following covenant not to compete. The sale or acquisition
of the COMPANY shall include the COMPANY’s sale of its goodwill, or its sale of all or substantially all of its operating assets, together with
the goodwill, or its sale or other disposition of its ownership interest in COMPANY or as
otherwise provided in California Business and Professions Code Section 16601. The covenant
not to compete shall exist only in the event that following the termination of this
Agreement (and only in the event of the sale or acquisition of the COMPANY), the COMPANY
elects, at its sole discretion, to invoke its restrictions. To exercise this covenant not
to compete, the COMPANY shall notify EMPLOYEE within ten (10) days of termination of this
Agreement of its intention to exercise this option and make an additional payment to
EMPLOYEE of TWELVE (12) months’ base monthly salary determined at EMPLOYEE’s last rate of
base monthly salary (and not including any bonus for which the EMPLOYEE may be eligible)
with COMPANY. Pursuant to this covenant not to compete, EMPLOYEE agrees that for a period
of one (1) year following the termination date of this Agreement, EMPLOYEE shall not
directly or indirectly for EMPLOYEE, or as a member of a partnership, or as an officer,
director, stockholder, employee, or representative of any other entity or individual,
engage, directly or indirectly, in any business activity which is the same or similar to
work engaged in by EMPLOYEE on behalf of COMPANY within the same geographic territory where
the COMPANY carries on or conducts business, and which is directly competitive with the
business conducted or to EMPLOYEE’s knowledge, contemplated by COMPANY at the time of
termination of this Agreement, (other than investments in professionally managed funds over
which the EMPLOYEE does not have control or discretion in investment decisions and
investments in publicly traded companies, so long as EMPLOYEE’S beneficial ownership does
not exceed 2% of the public companies outstanding voting stock). EMPLOYEE may accept
employment with an entity competing with COMPANY only if the business of that entity is
diversified and EMPLOYEE is employed solely with respect to a separately-managed and
separately-operated part of that entity’s business that does not compete with COMPANY.
Prior to accepting such employment, EMPLOYEE and the prospective employer entity shall
provide COMPANY with written assurances reasonably satisfactory to COMPANY that EMPLOYEE
will not render services directly or indirectly to any part of that entity’s business that
competes with the business of COMPANY.

EMPLOYEE acknowledges that (i) EMPLOYEE is familiar with the foregoing covenant not to
compete; (ii) EMPLOYEE is an officer and key member of the management of COMPANY; (iii)
EMPLOYEE is a shareholder of the COMPANY; (iv) the goodwill associated with the existing
business, customers and assets of COMPANY prior to any sale or acquisition of the COMPANY
is an integral component of the value of COMPANY; and (v) EMPLOYEE’s agreement as set forth
herein is necessary and reasonable with respect to its length of time, scope and geographic
coverage, in order to protect the goodwill related to the COMPANY in connection with its
sale or acquisition.

 

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6.3 Covenant to Deliver Records. All memoranda, notes, records and other
documents made or compiled by EMPLOYEE, or made available to EMPLOYEE during the term of
this Agreement concerning the business of COMPANY, shall be and remain COMPANY’s property
and shall be delivered to COMPANY upon the termination of this Agreement or at any other
time on request.

6.4 Covenant Not To Recruit. EMPLOYEE shall not, during the term of this
Agreement and for a period of one (1) year following termination of this Agreement,
directly or indirectly, either on EMPLOYEE’s own behalf, or on behalf of any other
individual or entity, solicit, interfere with, induce (or attempt to induce) or endeavor to
entice away any employee associated with COMPANY to become affiliated with him or any other
individual or entity.

7. CERTAIN RIGHTS OF COMPANY

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

7.2 Use of Name, Likeness and Biography. COMPANY shall have the right (but not
the obligation) to use, publish and broadcast, and to authorize others to do so, the name,
approved likeness and approved biographical material of EMPLOYEE to advertise, publicize
and promote the business of COMPANY and its affiliates, but not for the purposes of direct
endorsement without EMPLOYEE’s consent. An “approved likeness” and “approved biographical
material” shall be, respectively, any photograph or other depiction of EMPLOYEE, or any
biographical information or life story concerning the professional career of EMPLOYEE.

7.3 Right to Insure. COMPANY shall have the right to secure in its own name, or
otherwise, and at its own expense, life, health, accident or other insurance covering
EMPLOYEE, and EMPLOYEE shall have no right, title or interest in and to such insurance.
EMPLOYEE shall assist COMPANY in procuring such insurance by submitting to examinations and
by signing such applications and other instruments as may be required by the insurance
carriers to which application is made for any such insurance.

 

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8. ASSIGNMENT

Neither party may assign or otherwise dispose of its rights or obligations under this
Agreement without the prior written consent of the other party except as provided in this Section.
COMPANY may assign and transfer this Agreement, or its interest in this Agreement, to any affiliate
of COMPANY or to any entity that is a party to a merger, reorganization, or consolidation with
COMPANY, or to a subsidiary of COMPANY, or to any entity that acquires substantially all of the
assets of COMPANY or of any division with respect to which EMPLOYEE is providing services (providing such assignee assumes COMPANY’s
obligations under this Agreement). EMPLOYEE shall, if requested by COMPANY, perform EMPLOYEE’s
duties and Services, as specified in this Agreement, for the benefit of any subsidiary or other
affiliate of COMPANY. Upon assignment, acquisition, merger, consolidation or reorganization, the
term “COMPANY” as used herein shall be deemed to refer to such assignee or successor entity.
EMPLOYEE shall not have the right to assign EMPLOYEE’s interest in this Agreement, any rights under
this Agreement, or any duties imposed under this Agreement, nor shall EMPLOYEE or his spouse,
heirs, beneficiaries, executors or administrators have the right to pledge, hypothecate or
otherwise encumber EMPLOYEE’s right to receive compensation hereunder without the express written
consent of COMPANY.

9. RESOLUTION OF DISPUTES

In the event of any dispute arising out of or in connection with this Agreement or in any way
relating to the employment of EMPLOYEE which leads to the filing of a lawsuit, the parties agree
that venue and jurisdiction shall be in Santa Barbara County, California. The prevailing party in
any such litigation shall be entitled to an award of costs and reasonable attorneys’ fees to be
paid by the losing party.

10. GENERAL PROVISIONS

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

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

10.3 Amendment and Waiver. Any provision of this Agreement may be amended or
modified and the observance of any provision may be waived (either retroactively or
prospectively) only by written consent of the parties. Either party’s failure to enforce
any provision of this Agreement shall not be construed as a waiver of that party’s right to
enforce such provision.

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

 

14

 

10.5 Force Majeure. Either party shall be temporarily excused from performing
under this Agreement if any force majeure or other occurrence beyond the reasonable control
of either party makes such performance impossible, except a Disability as defined in this
Agreement, provided that the party subject to the force majeure provides notice of such
force majeure at the first reasonable opportunity. Under such circumstances, performance
under this Agreement which related to the delay shall be suspended for the duration of the
delay provided the delayed party shall resume performance of its obligations with due
diligence once the delaying event subsides. In case of any such suspension, the parties
shall use their best efforts to overcome the cause and effect of such suspension.

10.6 Remedies. EMPLOYEE acknowledges that because of the nature of COMPANY’s
business, and the fact that the services to be performed by EMPLOYEE pursuant to this
Agreement are of a special, unique, unusual, extraordinary, and intellectual character
which give them a peculiar value, a breach of this Agreement shall cause substantial injury
to COMPANY for which money damages cannot reasonably be ascertained and for which money
damages would be inadequate. EMPLOYEE therefore agrees that COMPANY shall have the right
to obtain injunctive relief, including the right to have the provisions of this Agreement
specifically enforced by any court having equity jurisdiction, in addition to any other
remedies that COMPANY may have.

10.7 Severability. If any term, provision, covenant, paragraph, or condition of
this Agreement is held to be invalid, illegal, or unenforceable by any court of competent
jurisdiction, that provision shall be limited or eliminated to the minimum extent necessary
so this Agreement shall otherwise remain enforceable in full force and effect.

10.8 Construction. Headings and captions are only for convenience and shall not
affect the construction or interpretation of this Agreement. Whenever the context
requires, words, used in the singular shall be construed to include the plural and vice
versa, and pronouns of any gender shall be deemed to include the masculine, feminine, or
neuter gender.

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

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

10.11 Entire Agreement. With respect to its subject matter, namely, the
employment by COMPANY of EMPLOYEE, this Agreement (including the documents expressly
incorporated therein, such as the Employee Confidentiality Agreement and
the offer of employment letter dated December, 14, 2006), contains the entire understanding
between the parties, and supersedes any prior agreements, understandings, and
communications between the parties, whether oral, written, implied or otherwise.

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

 

15

 

The parties execute this Agreement as of the date stated below:

	 	 	 	 	 
	EMPLOYEE/DATE	 	MENTOR CORPORATION/DATE
	 
	 	 	 	 
	 

	 	By	 	 
	 

	 	 	 	 
	EDWARD S. NORTHUP/Date	 	Joshua Levine/Date
	 	 	President/CEO
	 	 	Mentor Corporation
	 
	 	 	 	 
	NOTICE ADDRESS:	 	NOTICE ADDRESS:
	 	 	201 Mentor Drive
	 	 	Santa Barbara, California 93111

 

16EMCORE: Exhibit 10-1

     

    
      

      

    

    EXHIBIT
      10.1

    SEVERANCE
      AGREEMENT AND RELEASE

    

    This
      Severance Agreement and Release (“Severance Agreement”) is executed this
      8th
      day of
February,
      2007, by
      and between Thomas G. Werthan (“Employee”) who resides at 169 Ticonderoga Blvd,
      Freehold, New Jersey and Emcore Corporation (“Emcore” or the “Company”).
      Employee and Emcore shall sometimes be referred to herein as the “Parties” and
      shall sometimes be referred to individually as “Party.”

    

    1. Employee’s
      employment is terminated effective February 19, 2007. 

    

    2. (a) As
      soon
      as administratively practicable following August 20, 2007, Emcore shall pay
      to
      Employee 82 weeks of his salary in a lump-sum payment (“Severance”). The total
      Severance, which will be paid to Employee, is equal to $387,040, less applicable
      tax withholdings and deductions.

    

    (b) In
      accordance with the Company’s health plans, Employee will be eligible to
      exercise his rights to continued health insurance coverage for Employee, and,
      where applicable, Employee’s spouse and eligible dependents, at Employee’s
      expense (subject to the foregoing), upon termination of the Employee’s
      employment pursuant to the Consolidated Omnibus Budget Reconciliation Act of
      1985 (“COBRA”), as amended. To the extent Employee elects COBRA continuation
      coverage, the Company shall continue to pay the employer’s portion of the COBRA
      premiums for the period of time that Employee is eligible for COBRA continuation
      coverage, up to a maximum of 82 weeks, equal to the amount that the Company
      would have otherwise paid for health insurance coverage if Employee were an
      active employee during such time. Up until the Severance payment is made, the
      Company will also pay Employee’s portion of the COBRA premiums, the total of
      which shall then be deducted from the Severance payment. After the Severance
      payment is made, Employee shall be responsible for paying Employee’s portion of
      COBRA premiums. Nothing herein shall be construed as extending or delaying
      the
      start date of the COBRA coverage period for Employee.

    

    All
      voluntary payroll deductions, including but not limited to 401(k), ESPP and
      term
      life, will cease effective the date of termination. 

     

    (c) If
      Employee is rehired by Emcore, Emcore shall no longer be obligated to make
      any
      severance payment under Paragraph 2(a) above that would otherwise be due and
      owing after the effective date of employee's rehiring. Employee acknowledges
      and
      agrees that the cessation of severance payments under this provision shall
      not
      affect the validity or enforceability of Paragraph 5 of this
      Agreement.

    

    (d) Pursuant
      to the terms of that certain Promissory Note dated December 1, 1995, Emcore
      shall forgive all principal and interest due and owing on the 1995 loan to
      Employee in the amount of $82,000. Employee agrees that he shall be responsible
      for the timely payment of all personal taxes related to the loan forgiveness.
      

    

    3. Employee
      agrees and acknowledges that the payments and benefits provided for in Paragraph
      2 exceed any benefits to which he or she would otherwise be entitled under
      any
      policy, plan, and/or procedure of Emcore or any agreement with Emcore. Employee
      agrees and acknowledges that the payment of Severance (or any other payments
      hereunder) shall not be construed as a guarantee of any particular tax treatment
      for such payment. Except for the Severance and benefits set forth in Paragraph
      2, Employee acknowledges that Employee
      has received all wages, bonuses, salaries, fees, vacation pay, benefits or
      any
      other form of compensation to which Employee was entitled.

    

    4. Employee
      shall have twenty-one (21) days from the date of his receipt of this Agreement
      to consider the terms and conditions of the Agreement. Employee may accept
      this
      Agreement by signing and returning it to Ms. Monica Van Berkel, Vice President,
      Human Resources, Emcore Corporation, or her successor to 2015 W. Chestnut
      Street, Alhambra, CA 91803, no later than 5:00 p.m. on the twenty-first (21st)
      day after Employee’s receipt of this Agreement (“Agreement and Release Return
      Date”). Thereafter, Employee will have seven (7) days to revoke this Agreement
      by stating his desire to do so in writing to Ms. Van Berkel or her successor
      at
      the address listed above, and delivering it to Ms. Van Berkel or her successor
      no later than 5:00 p.m. on the seventh (7th) day following the date Employee
      signs this Agreement. The effective date of this Agreement shall be the (8th)
      day following Employee’s signing of this Agreement (the “Release Effective
      Date”), provided the Employee does not revoke the Agreement during the
      revocation period described above. In the event Employee does not accept this
      Agreement as set forth above, or in the event Employee revokes this Agreement
      during the revocation period, this Agreement, including but not limited to
      the
      obligation of Emcore and its subsidiaries and affiliates to provide the payments
      and benefits referred to in Paragraph 2 above, shall automatically be deemed
      null and void. 

    

    5. (a) In
      consideration of the payments and benefits referred to in Paragraph 2, Employee
      for himself and on behalf of his heirs, executors, and assigns (hereinafter
      collectively referred to as the “Releasors”), forever releases and discharges
      Emcore and any and all of its parent corporations, subsidiaries, divisions,
      affiliated entities, predecessors, successors and assigns, and any and all
      of
      its or their employee benefit and/or pension plans or funds, and any of its
      or
      their past or present officers, directors, stockholders, agents, trustees,
      administrators, employees or assigns (whether acting as agents for such entities
      or in their individual capacities) (hereinafter collectively referred to as
      “Releasees”), from any and all claims, demands, causes of action, fees and
      liabilities of any kind whatsoever (based upon any legal or equitable theory,
      whether contractual, common-law, statutory, decisional, federal, state, local
      or
      otherwise), whether known or unknown, which Releasors ever had, now have or
      may
      have against Releasees by reason of any actual or alleged act, omission,
      transaction, practice, conduct, occurrence, or other matter from the beginning
      of the world up to and including the Release Effective Date relating to or
      arising from Employee’s employment with the Company or the termination thereof;
      provided, however, that Releasors do not release Emcore from any defense,
      indemnification or reimbursement obligation that Emcore has or may have to
      Employee by law, under Emcore’s By-Laws or under any insurance policy in effect
      in connection with Employee’s (i) performance of his duties as a director, chief
      financial officer or executive officer of Emcore, (ii) conduct in connection
      with the granting and accounting for stock options or investigation and analysis
      of past stock option grant practices, or (iii) any post-employment consulting
      arrangements that Employee may provide to Emcore in connection with the
      Consulting Agreement (defined below).

    

    (b)
       Without
      limiting the generality of the foregoing subparagraph (a), this Agreement is
      intended to and shall release the Releasees from any and all claims arising
      out
      of Employee’s employment with the Company and/or the termination of Employee’s
      employment, including but not limited to any claim(s) under or arising out
      of
      (i) the Age Discrimination in Employment Act, as amended, or the Older Workers
      Benefit Protection Act; (ii) Title VII of the Civil Rights Act of 1964, as
      amended; (iii) the Americans with Disabilities Act, as amended; (iv) the
      Employee Retirement Income Security Act of 1974, as amended (“ERISA”) (excluding
      claims for accrued, vested benefits under any employee benefit plan of Emcore
      in
      accordance with the terms of such plan and applicable law); (v)  the New
      Mexico Human Rights Act; (vi) the California Fair Employment and Housing Act;
      (vii) the California Equal Pay Law; (viii) the California Sexual Orientation
      Bias Law; (ix) the California Labor and Government Codes; (x) the California
      Unruh Act; (xi) the New Jersey Law Against Discrimination, the New Jersey Equal
      Pay Act, the New Jersey Family Leave Act; (xii) the Illinois Human Rights Act;
      (xiii) the Virginia Human Rights Act; (xiv) the Pennsylvania Human Relations
      Act; (xv) alleged discrimination or retaliation in employment (whether based
      on
      federal, state or local law, statutory or decisional); (xvi) the terms and
      conditions of Employee’s employment with Emcore, the termination of such
      employment, and/or any of the events relating directly or indirectly to or
      surrounding that termination; and (xvii) any law (statutory or decisional)
      providing for attorneys’ fees, costs, disbursements and/or the
      like.

    

    (c) As
      a
      further consideration and inducement for this Agreement, to the extent permitted
      by law, Employee hereby waives and releases any and all rights under Section
      1542 of the California Civil Code or any analogous state, local, or federal
      law,
      statute, rule, order or regulation that Employee has or may have with respect
      to
      the Releasees. California Civil Code Section 1542 reads as follows:

    

    A
      GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW
      OR
      SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
      KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
      DEBTOR.

    

    Employee
      hereby expressly agrees that this Agreement shall extend and apply to all
      unknown, unsuspected and unanticipated injuries and damages, as well as any
      that
      are now disclosed, arising prior to Employee’s execution of this Agreement.
This
      release does not extend to those rights, which as a matter of law cannot be
      waived, including but not limited to unwaivable rights Employee may have under
      the California Labor Code. Nothing in this Agreement shall limit Employee’s
      right to file a charge or complain with any state or federal agency or to
      participate or cooperate in such a manner. In the event that any claim or suit
      is brought on behalf of Employee, Employee waives any and all rights to receive
      monetary damages or injunctive relief in his favor.

    

    6. (a) Employee
      agrees that he has not and will not engage in any conduct that is injurious
      to
      Emcore’s or Releasee’s reputation or interest, including but not limited to, (i)
      divulging, communicating, or in any way making use of any confidential or
      proprietary information acquired in the performance of his duties at Emcore,
      except as required by law, or (ii) publicly disparaging (or inducing or
      encouraging others to publicly disparage) Emcore or Releasees.

    

    (b) Employee
      agrees to return to Emcore any and all originals and copies of documents,
      materials, records or other items in his possession or control belonging to
      Emcore or containing proprietary information relating to Emcore. Employee agrees
      to remove all Emcore proprietary information from his laptop. Employee shall
      be
      permitted to retain his laptop computer and cell phone. Emcore shall continue
      to
      pay Employee’s cell phone charges until March 31, 2007.

    

    (c) Employee
      acknowledges that the terms of the Confidentiality and Invention Assignment
      Agreement between Employee and Emcore signed by the Employee during his
      employment, remains in full force and effect, and Employee agrees and
      acknowledges that he is bound by its terms. Without limiting the generality
      of
      the foregoing, Emcore agrees that Employee’s acceptance of new employment with
      Energy Photovoltaics, Inc. does not violate his non-compete obligation or any
      non-compete obligation or any non-solicitation obligation of any third-party.
      

    

    7. (a) Employee
      will reasonably cooperate with Emcore and/or its subsidiaries and affiliates
      and
      its/their counsel in connection with any investigation, administrative
      proceeding or litigation relating to any matter in which Employee was involved
      or of which Employee has knowledge. Emcore will continue to indemnify, defend
      and reimburse Employee in accordance with the terms of Emcore’s By-Laws and
      insurance policies and will also compensate Employee for his reasonable travel
      and lodging expenses for any time that Employee is required to devote to such
      investigation, administrative proceeding or litigation. In addition, Employee
      agrees to perform consulting services for Emcore pursuant to that certain
      Consulting Services Agreement dated February 8, 2007 (the “Consulting
      Agreement”). Following the completion of Employee’s consulting services under
      the Consulting Agreement, Emcore shall compensate Employee at the rate of
      $350/hour for any time that Employee is required to devote to such
      investigation, administrative proceeding or litigation. All payments required
      by
      this Paragraph 7(a) shall be paid within 30 days of the date that Employee
      performs the relevant service.

    

    (b) Employee
      agrees that, in the event he is subpoenaed by any person or entity (including,
      but not limited to, any government agency) to give testimony (in a deposition,
      court proceeding or otherwise) which in any way relates to Employee’s employment
      with Releasees, he will give prompt notice of such request to Monica Van Berkel,
      Vice President, Human Resources, Emcore Corporation, or her successor, and
      will
      make no disclosure until Emcore has had a reasonable opportunity to contest
      the
      right of the requesting person or entity to such disclosure, unless Employee
      is
      legally compelled to make such disclosure and, in the opinion of Employee’s
      counsel, Employee would be prejudiced by not making such disclosure prior to
      Emcore exercising its rights to contest.

    

    8. The
      making of this Agreement is not intended, and shall not be construed, as an
      admission that Releasees have violated any federal, state or local law
      (statutory or decisional), ordinance or regulation, breached any contract,
      or
      committed any wrong whatsoever against Employee.

    

    9. The
      parties agree that this Agreement may not be used as evidence in a subsequent
      proceeding except in a proceeding to enforce the terms of this
      Agreement.

    

    10. Employee
      acknowledges that: (a) he has carefully read this Agreement in its entirety;
      (b)
      he has had an opportunity to consider fully the terms of this Agreement;
      (c) he has been advised by Emcore in writing to consult with an attorney of
      his choosing in connection with this Agreement; (d) he fully understands the
      significance of all of the terms and conditions of this Agreement and he has
      discussed it with his independent legal counsel, or has had a reasonable
      opportunity to do so; (e) he has had answered to his satisfaction any questions
      he has asked with regard to the meaning and significance of any of the
      provisions of this Agreement; and (f) he is signing this Agreement voluntarily
      and of his own free will and assents to all the terms and condition contained
      herein.

     

    

    11. This
      Agreement is binding upon, and shall inure to the benefit of, the parties and
      their respective heirs, executors, administrators, successors and
      assigns.

    

    12. If
      any
      provision of this Agreement shall be held by a court of competent jurisdiction
      to be illegal, void, or unenforceable, such provision shall be of no force
      and
      effect. However, the illegality or unenforceability of such provision shall
      have
      no effect upon, and shall not impair the enforceability of, any other provision
      of this Agreement; provided, however, that, upon any finding by a court of
      competent jurisdiction that the release and covenants provided for by Paragraph
      5 of this Agreement is illegal, void, or unenforceable, Employee agrees to
      execute a release, waiver and/or covenant that is legal and enforceable. Emcore
      may seek appropriate relief in a court of competent jurisdiction, including,
      but
      not limited to, permanent or temporary injunctive relief against Employee,
      without the requirement of posting a bond or other security, for any material
      breach by Employee of Paragraph 6 and/or 7 of this Agreement.

    

    13. This
      Agreement shall be governed by, and construed and enforced in accordance with,
      the laws of the State of New Jersey, without regard to the conflict of laws
      provisions thereof.

    

    14. This
      Agreement (including the Exhibits attached hereto) and the Consulting Agreement
      constitute the complete understanding between the parties and supersede any
      and
      all agreements, understandings, and discussions, whether written or oral,
      between the parties. No other promises or agreements shall be binding unless
      in
      writing and signed after the Release Effective Date by the parties to be bound
      thereby.

    

    15. The
      Parties acknowledge that Section 409A of the Internal Revenue Code of 1986,
      as
      amended (“Section 409A”) imposes an additional tax (the “409A Tax”) on deferred
      compensation (as defined under Section 409A) that does not meet certain
      requirements, and that as of the date this Agreement is executed, final
      regulations implementing Section 409A have not been implemented. The Parties
      agree that it is not intended that the 409A Tax apply to any payment or the
      provision of any benefit hereunder, and accordingly, the provisions of this
      Paragraph 15 shall apply to any payment or benefit to which the 409A Tax would
      apply, regardless of whether such payment or benefit is explicitly made subject
      to this Paragraph 15. If any of the Parties reasonably determine that any
      payment or benefit permitted or required under this Agreement would result
      in
      409A Tax, and if such 409A Tax could be avoided by delaying the payment or
      postponing the provision of the benefit, the Parties agree to work in good
      faith
      to delay or postpone such payment or provision of the benefit until such time
      as
      it may be made or provided without the 409A Tax being imposed. If delay or
      postponement of a payment or the provision of a benefit would not avoid the
      imposition of the 409A Tax, then the Parties shall promptly agree in good faith
      on appropriate provisions to avoid such risk without materially changing the
      economic value of this Agreement to any Party.

    

    

    ________________    Date:
      February 8, 2007

    Thomas
      G.
      Werthan       

    

    

    By: _________________    Date:
      February 8, 2007

    Monica
      Van Berkel

    Vice
      President, Human Resources

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