EXHIBIT 10.7
EMPLOYMENT
AGREEMENT
This Employment Agreement,
effective as of August 25, 2005, is by and between MENTOR
Corporation ("COMPANY"), with its executive offices at 201 Mentor
Drive, Santa Barbara, California 93111, and CLARKE SCHERFF
("EMPLOYEE") of 5540 PINEGLEN ROAD, LA CRESENTA, CA
91214
RECITALS
COMPANY is in the business of
manufacturing 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 QUALITY AND COMPLIANCE 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 VICE PRESIDENT, QUALITY AND COMPLIANCE.
EMPLOYEE shall perform the duties customarily performed by one
holding such position in a similar business as that engaged in by
COMPANY. To the extent that they do not reduce the scope of
the 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 Mentor
Corporation.
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, except that EMPLOYEE may serve as a
non-management director on the board of directors of a maximum of
two other public companies. 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 and shall
continue until terminated as provided in Section 4 of this
Agreement.
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 ONE HUNDRED EIGHTY-NINE THOUSAND DOLLARS
AND NO CENTS ($189,000.) less applicable withholdings, payable in
equal installments no less frequently than
semi-monthly.
3.1.2
Cash Incentive Bonus. EMPLOYEE shall be eligible for
a cash incentive bonus of up to SIXTY (60) Percent of EMPLOYEE's
annual base salary, subject to applicable withholdings and subject
to approval by COMPANY's Compensation Committee and Board of
Directors. 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/Equity Grants. Based upon satisfactory
performance, under the COMPANY'S then current stock equity or other
long-term incentive plans, COMPANY expects that EMPLOYEE will
qualify for grants of options or other equity awards to acquire or
receive 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.
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.
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
For Convenience Of Party; Resignation by EMPLOYEE for Good
Reason. This Agreement and employment relationship is
terminable by either party, for convenience, 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, position, or responsibilities as
provided in this Agreement, or the removal of EMPLOYEE from the
position, duties, and responsibilities contemplated by this
Agreement; (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 as defined under the provisions of
the applicable equity or other long-term incentive plan in effect
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).
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
that COMPANY shall (i) 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, and (ii) administer the benefits
available to EMPLOYEE's estate or designated beneficiary upon death
of EMPLOYEE under the COMPANY's applicable benefit and incentive
plans.
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 that COMPANY shall (i) distribute to EMPLOYEE, or
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, and (ii) administer the benefits
available to EMPLOYEE, or EMPLOYEE's estate or designated
beneficiary, upon disability of EMPLOYEE under the COMPANY's
applicable benefit and incentive plans.
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
Termination With Cause. Upon 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.
4.2.5
Termination Without Cause; Resignation for Good Reason.
Upon termination of EMPLOYEE's employment by COMPANY without
cause pursuant to Section 4.1.5, or if EMPLOYEE terminates this
Agreement at any time for Good Reason, 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 Sections 3.1.1
and 3.1.2, and reimbursable expenses owed by COMPANY to EMPLOYEE
through the termination date, less applicable withholdings;
and
ii. Payment of
full COBRA premium for TWENTY-FOUR (24) months following
termination. Should EMPLOYEE discontinue COBRA coverage or
elect alternative co
