This Agreement is entered into as of June 24, 2006 by and between Mentor Corporation (the “Company”) and A.Chris Fawzy (“Consultant”) (collectively referred to as the “Parties”).
1. Duties and Scope ofServices.
(a) Positions andDuties. As of theEffective Date as defined below, Consultant will serve as a Consultant to theCompany. Consultant will report to the Chief Executive Officer (the “CEO”) of the Company. As an independent contractor, Consultant willrender such business and professional services, in ways and at times asreasonably directed by the CEO, which are consistent with his role as aconsultant.
(b) Obligations. The Consultant will render services tothe Company as may be requested from time to time that may include, but not belimited to, assisting with the Company’s agreements and other existing orpotential arrangements such as acquisitions or licensing arrangements, SEC andother filings, and the management and oversight of the Company’s transitionservices agreement obligations relating to the recent divestiture to Coloplast,as such efforts and time requirements are described in Exhibit A, attachedhereto.
2. Term of Agreement. This Agreement will have a term ofapproximately sixteen (16) months commencing on June 24, 2006 (the “Effective Date”) and ending October 31, 2007 (the “Consulting Term”); provided however, the Agreement may berenewable thereafter by agreement of the Parties.
(a) Total CashCompensation. The Companywill pay Consultant the compensation set forth in Exhibit A for the performanceof services.
(b) Options andRestricted Stock. Duringthe Consulting Term, the Consultant’s existing stock options and restrictedstock grants will continue in accordance with the Consultant’s stock optionagreements and restricted stock agreements including, but not limited to, thecontinuation of vesting in accordance with the current vesting schedules(collectively, the “Award Agreements”). The Parties acknowledge that the Consultantis and at all time during the Consulting Term shall remain an Eligible Personunder the Awards Agreements as defined therein.
4. Employee Benefits. Consultant will be ineligible toparticipate in any of the Company employee benefit plans, policies, andarrangements that are applicable to employees of the Company; as such plans,policies, and arrangements may exist from time to time.
5. Expenses. The Company will reimburse Consultantfor all reasonable travel, entertainment, and other expenses incurred byConsultant in the furtherance of the performance of Consultant’s dutieshereunder, in accordance with the Company’s expense reimbursement policy as ineffect from time to time.
6. Termination ofConsulting.
(a) Consultant and the Companyacknowledge that this Agreement may be terminated by the Company only for GrossMisconduct which means (i) Consultant’swillful failure to perform his assigned duties and responsibilities reasonablyassigned to him that are not corrected within a fifteen (15) day correctionperiod, after there has been delivered to Consultant a written demand forperformance from the CEO which describes the basis for the belief of the CEO thatConsultant has not substantially performed his duties and provides Consultantwith fifteen (15) days to take corrective action; (ii) any act of personaldishonesty taken by Consultant in connection with his responsibilities as aconsultant of the Company with the intention or reasonable expectation thatsuch may result in substantial personal enrichment of Consultant; (iii)Consultant’s conviction of, or plea of nolo contendere to, a felony which theBoard reasonably believes has had or will have a material detrimental effect onthe Company’s reputation or business, or (iv) Consultant materially breachingConsultant’s Confidential Information Agreement (defined below), which breachis (if capable of cure) not cured within fifteen (15) days after the Companygives written notice to the Consultant of the breach.
(b) In the event that Companyappropriately terminates this Agreement pursuant to Paragraph 6(a) above, or inthe event that the Consultant terminates this Agreement for any reason, theConsultant shall be entitled only to (a) all Compensation accrued up to theeffective date of termination, (b) all vesting of options up to the effectivedate of termination, as provided under the terms of the applicable optionagreements applicable to the Consultant, (c) all vesting of restricted sharesup to the effective date of termination, as provided under the terms of theapplicable restricted stock agreements applicable to the Consultant and (d) allbusiness expenses required to reimbursed under the Company’s expensereimbursement policy to the Consultant with respect to business expenses incurredprior to termination.
7. Release of Claims. Upon termination of this Agreement,Consultant agrees that the foregoingconsideration represents settlement in full of all outstanding obligations owedto Consultant by the Company and its officers, directors, managers, supervisors, agents and employees. Inconsideration for the mutual covenants contained in this Agreement,including but not limited to the compensation provided hereunder, Consultantand the Company, on behalf of themselves, and their respective heirs, family members,executors, officers, directors, employees, investors, shareholders,administrators, affiliates, divisions, subsidiaries, predecessor and successorcorporations, and assigns, hereby fully and forever release each other andtheir respective heirs, family members, executors, officers, directors,employees, investors, shareholders, administrators, affiliates, divisions,subsidiaries, predecessor and successor corporations and assigns, from, andagree not to sue concerning, any claim, duty, obligation or cause of actionrelating to any matters of any kind, whether presently known or unknown,suspected or unsuspected, that Consultant or Company may possess arising fromany omissions, acts or facts that have occurred up until and including the dateof such termination including, without limitation:
(a) any and all claims relating to orarising from Consultant’s employment relationship with the Company and the termination of that relationship;
(b) any and all claimsrelating to, or arising from, Consultant’s right to purchase, or actualpurchase of shares of stock of the Company, including, without limitation, anyclaims for fraud, misrepresentation, breach of fiduciary duty, breach of dutyunder applicable state corporate law, and securities fraud under any state or federallaw;
(c) any and all claimsunder the law of any jurisdiction including, but not limited to, wrongfuldischarge of employment, constructivedischarge from employment, termination in violation of public policy,discrimination, harassment, retaliation, breach of contract, both express andimplied, breach of a covenant of good faith and fair dealing, both express andimplied; promissory estoppel, negligent or intentional infliction of emotionaldistress, negligent or intentional misrepresentation, negligent or intentionalinterference with contract or prospective economic advantage, unfair businesspractices, defamation, libel, slander, negligence, personal injury, assault,battery, invasion of privacy, false imprisonment, and conversion;
(d) any and all claims forviolation of any federal, state or municipal statute, including, but notlimited to, Title VII of the Civil Rights Act of 1964, theCivil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, theAmericans with Disabilities Act of 1990, the Fair Labor Standards Act, theEmployee Retirement Income Security Act of 1974, The Worker Adjustment andRetraining Notification Act, the Older Workers Benefit Protection Act; theCalifornia Fair Employment and Housing Act, and the California Labor Code,including, but not limited to Labor Code sections 1400-1408;
(e) any and all claims forviolation of the federal, or any state, constitution;
(f) any and all claimsarising out of any other laws and regulations relating to employment oremployment discrimination;
(g) any claim for anyloss, cost, damage, or expense arising out of any dispute over thenon-withholding or other tax treatment of any of the proceeds received byConsultant as a result of this Agreement; and
(h) any and all claims for attorneys’ fees and costs.
TheCompany and Consultant agree that the release set forth in this section shallbe and remain in effect in all respects as a complete general release as to thematters released. This release does not extend to any obligations incurredunder this Agreement.
The Parties acknowledge and agree that anyjudicial or arbitral determination of a material breach of any provision ofthis Agreement will entitle the non-breaching party to any legal or equitableremedies available to such non-breaching party, including but not limited tothe right to immediately to recover and/or cease the severance benefitsprovided under this Agreement.
8. Civil Code Section 1542. The Parties represent that they are not aware ofany claim by either of them other than the claims that are released by thisAgreement. Consultant and the Company acknowledge that they have been advisedby legal counsel and are familiar with the provisions of California Civil CodeSection 1542, which provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THECREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OFEXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLYAFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.
Consultantand the Company, being aware of said code section, agree to expressly waive anyrights they may have thereunder, as well as under any other statute or commonlaw principles of similar effect.
9. Indemnification. Theindemnification provisions of the Separation and Release of Claims Agreementdated June 24, 2006 between Consultant and the Company (the”Indemnification Provisions”) shall remain in full force and effect and shallnot be amended or modified by this Agreement.
10. Nondisclosure of Confidential Information.
(a) “Confidential Information”includes all information, data, concepts, ideas, methods, processes,techniques, formulae, know-how, trade secrets, and improvements relating to theresearch, development, manufacturing, or marketing activities of Mentor thatare confidential and proprietary to Mentor, or any subsidiary of MentorCorporation, together with all analyses, compilations, studies, and otherdocuments prepared by the Consultant that contain or otherwise reflect anyConfidential Information. During the term of this Agreement, Mentor maydisclose Confidential Information to the Consultant so that the Consultant canrender Services. The Consultant agrees that Confidential Information isconfidential and proprietary to Mentor and shall remain the property of Mentor.
(b) The Consultant will:
(i) holdall Confidential Information in strict confidence and with the same degree ofcare to prevent disclosure to others that he takes to preserve and safeguardhis own proprietary and confidential information, but not less than a reasonabledegree of care, and not disclose or otherwise disseminate ConfidentialInformation to others, except as may be required by law;
(ii) notuse Confidential Information commercially or for any purpose other than inrendering Services;
(iii) limitthe dissemination of and access to Confidential Information to those who have aneed for access to such Confidential Information for the rendering of Servicesand who are under an obligation of confidence consistent with this Agreement;
(iv) notdisclose to others that Confidential Information is known to or used by Mentor orthose associated with Mentor; and
(v) return to Mentor, within thirty (30) calendar days of its request orupon termination of this Agreement, all Confidential Information and any otherrecords containing Confidential Information.
(c) Excepted from these obligations ofconfidentiality and nondisclosure is information that:
(i) wasor becomes public knowledge through no fault of the Consultant;
(ii) was known to the Consultant prior to the date of disclosure, asevidenced by his written records or other proof; or
(iii) isdisclosed to the Consultant by an independent third party who had the lawfulright to disclose it.
(d) The Consultant’s obligations ofconfidentiality and nondisclosure shall survive termination of this Agreement.
(e) If the Consultant is requested todisclose any Confidential Information, he shall immediately notify Mentor of suchrequest so that Mentor can seek appropriate protection for its ConfidentialInformation. The Consultant shall inform the requesting party of theconfidential and proprietary nature of the requested materials, and Mentor shallhave the right to participate in the Consultant’s response to any such request. The Consultant shall cooperate fully with Mentor’s efforts to narrow the scope of any request forConfidential Information, to obtain a protective order limiting use ordisclosure of any Confidential Information sought, or in any other lawful wayto obtain continued protection for Mentor’s Confidential Information. If disclosure isrequired by law, disclosure shall be limited to the specific ConfidentialInformation that is legally required to be disclosed and to the persons orentities to whom disclosure is required.
(f) All memoranda, notes, records,papers, design specifications, and other documents and all copies thereofrelating to Mentor’s business activities and all objects relatedthereto, including but not limited to documents and information generated bythe Consultant as a result of performing the Services, are and shall remain theproperty of Mentor. The Consultant will take any action necessary toperfect Mentor’s ownership interest in such documents andinformation. Upon termination of this Agreement, the Consultant shallreturn to Mentor all documents, objects, and information provided to theConsultant by Mentor or generated by the Consultant as a result ofperforming the Services.
11. Notices. All notices, requests, demands, andother communications called for hereunder will be in writing and will be deemedgiven (a) on the date of delivery if delivered personally, (b) on the date ofdelivery to Consultant’s Company email address with email return receiptnotification, (c) one day after being sent overnight by a well establishedcommercial overnight service, or (d) four days after being mailed by registeredor certified mail, return receipt requested, prepaid and addressed to theparties or their successors at the following addresses, or at such otheraddresses as the parties may later designate in writing:
If to the Company:
Attn: Vice President of Human Resources
201 Mentor Drive
Santa Barbara, CA 93111
If to Consultant:
at the last residential address known bythe Company.
12. Arbitration. TheParties agree that any and all disputes arising out of, or relating to, theterms of this Agreement, their interpretation, and any of the matters hereinreleased, will be subject to binding arbitration in Santa BarbaraCounty before the American ArbitrationAssociation under its National Rules for the Resolution of EmploymentDisputes. The Parties agree that the prevailing party in any arbitration willbe awarded its reasonable attorneys’ fees and costs.
The Partieshereby agree to waive their right to have any dispute between them resolved in acourt of law by a judge or jury. Notwithstanding the foregoing, the Partiesagree that the prevailing party in any arbitration matter contemplatedhereunder will be entitled to injunctive relief in any court of competentjurisdiction to enforce the arbitration award, and nothing in this section willprevent either party from seeking such injunctive relief (or any otherprovisional remedy) from any court having jurisdiction over the Parties and thesubject matter of their dispute relating to the Parties’ obligations under thisAgreement and the agreements incorporated herein by reference.
13. Costs. The Parties will each bear their own costs, expertfees, attorneys’ fees and other fees incurred in connection with thisAgreement.
14. No Representations. Each party represents that it has had theopportunity to consult with an attorney, and has carefully read and understandsthe scope and effect of the provisions of this Agreement. Neither party hasrelied upon any representations or statements made by the other party heretowhich are not specifically set forth in this Agreement.
15. Severability. In the event that any provision hereof becomes oris declared by a court of competent jurisdiction to be illegal, unenforceableor void, then (a) the provision will be amended automatically to the minimumextent necessary to cure the illegality or invalidity and permit enforcementand (b) the remainder of this Agreement will continue in full force and effectso long as the remaining provisions remain intelligible and continue to reflectthe original intent of the Parties.
16. Entire Agreement. ThisAgreement and its attachments, together with the Award Agreements, representthe entire agreement and understanding between the Company and Consultantconcerning the Consulting subject matter of this Agreement and Consultant’srelationship with the Company, and supersedes and replaces any and all prioragreements and understandings between the Parties concerning the Consulting subjectmatter of this Agreement and Consultant’s relationship with the Company.
17. No Waiver. The failure of any party to insist upon theperformance of any of the terms and conditions in this Agreement, or thefailure to prosecute any breach of any of the terms and conditions of thisAgreement, will not be construed thereafter as a waiver of any such terms orconditions. This entire Agreement will remain in full force and effect as ifno such forbearance or failure of performance had occurred.
18. No Oral Modification. Any modification or amendment of this Agreement, oradditional obligation assumed by either party in connection with thisAgreement, will be effective only if placed in writing and signed by bothParties or by authorized representatives of each party.
19. Headings. All captions and Section headings usedin this Agreement are for convenient reference only and do not form a part ofthis Agreement.
20. Governing Law. ThisAgreement will be deemed to have been executed and delivered within the Stateof California, and it will be construed, interpreted, governed, and enforced inaccordance with the laws of the State of California, without regard to conflictof law principles.
21. Counterparts. This Agreement may be executed in counterparts, andeach counterpart will have the same force and effect as an original and will constitutean effective, binding agreement on the part of each of the undersigned.
22. Voluntary Executionof Agreement. This Agreement is executed voluntarily and without anyduress or undue influence on the part or behalf of the Parties hereto, with thefull intent of releasing all claims. The Parties acknowledge that:
(a) They have read this Agreement;
(b) They have been represented in thepreparation, negotiation, and execution of this Agreement by legal counsel oftheir own choice or that they have voluntarily declined to seek such counsel;
(c) They understand the terms andconsequences of this Agreement and of the releases it contains; and
(d) They are fully aware of the legaland binding effect of this Agreement.
IN WITNESS WHEREOF, each of the partieshas executed this Agreement, in the case of the Company by a duly authorizedofficer, as of the day and year written below.
/s/Joshua H. Levine
June 24, 2006
/s/A. Chris Fawzy
June 24, 2006
SIGNATUREPAGE TO C. FAWZY CONSULTING AGREEMENT
1. Contact. Consultant’sprincipal Company contact:
Title: President and Chief ExecutiveOfficer
The Consultant will render services to the Company as may berequested from time to time by the Chief Executive Officer of the Company,including, but not be limited to, assisting with the Company’s agreements andother existing or potential arrangements such as acquisitions or licensingarrangements, SEC and other filings, and the management and oversight of theCompany’s transition services agreement obligations relating to the recentdivestiture to Coloplast dealing with the numerous services that the Company isobligated to undertake to facilitate a smooth transition of the divestiture. The Company’s obligations under the transitionservices agreement for which Consultant will provide services includeaccounting, regulatory, clinical, information technology, customer support, anduse of facilities services. It is anticipated thatthe transition services agreement will continue for a period of twelve months.
(a) Throughthe end of 2006, the Consultant will provide up to thirty-six (36) hours ofservices per month and the Company will pay for such services a rate of $9,000per month. If any additional time is requested by the Company and agreed to byConsultant above and beyond the thirty-six (36) hours per month, such serviceswill be paid at a rate of $250 per hour.
(b) Beginningin January of 2007 through October of 2007, and thereafter if agreed upon bythe Parties, the Consultant will provide up to eight (8) hours of services permonth and the Company will pay for such services a rate of $2,400 per month. If any additional time is requested by the Company and agreed to by Consultantabove and beyond the eight (8) hours per month, such services will be paid at arate of $300 per hour.
(c) Consultant will be entitled to receive Milestone Bonus paymentstotaling $120,000 based upon the completion of phases of various projectsrelating to the transition services agreement with Coloplast, which isanticipated to continue for a period of up to 12 months from the date of theclose of the Coloplast divestiture (i.e., through June, 2007). As suchmilestones are met, such milestone bonus will be paid in two installments: (i)the first payment of $40,000 less applicable withholdings, is payable in a lumpsum within fifteen (15) days of December 2, 2006;and (ii) the second payment of $80,000 less applicable withholdings, is payablein a lump sum within fifteen (15) days of June 2, 2007.
(d) Mentorwill reimburse the Consultant for any actual and reasonable out-of-pocketexpenses for authorized travel, including hotels, meals, transportation costs,and all other reasonable expenses incurred by the Consultant to provideServices. Any travel, whether domestic or international, must be approved by Mentor inwriting prior to such travel.
(e) Consultant willsubmit all receipts or other written documentation for any expenses incurred ina form prescribed by the Company and such reimbursement will be approved by thecontact person listed above or other designated agent of the Company.
(f) In addition, for any additional time paid at thehourly rates as described above, Consultant will submit a statement of servicesin a form prescribed by the Company every month and the contact person listedabove or other designated agent of the Company will approve such statement. Payment for the statement of services will be within fifteen (15) days ofreceipt.