GOLDMAN SACHS
& CO. | 85 BROAD STREET | NEW YORK, NEW YORK 10004 | TEL:
212-902-1000
Opening
Transaction
|
To:
|
Mentor
Corporation
201 Mentor Drive
Santa Barbara, California 93111
|
|
From:
|
Goldman, Sachs
& Co.
|
|
Subject:
|
Collared
Accelerated Share Repurchase Transaction - VWAP Pricing
|
|
Ref.
No:
|
[Insert
Reference Number]
|
|
Date:
|
March 8,
2004
|
This master
confirmation ("Master Confirmation") dated as of March 8, 2004, is
intended to supplement the terms and provisions of certain
Transactions (each, a "Transaction") entered into from time to time
between Goldman, Sachs & Co. ("GS&Co.") and Mentor
Corporation ("Counterparty"). This Master Confirmation, taken
alone, is neither a commitment by either party to enter into any
Transaction nor evidence of a Transaction. The terms of any
particular Transaction shall be set forth in a Supplemental
Confirmation in the form of Annex A hereto and which references
this Master Confirmation, in which event the terms and provisions
of this Master Confirmation shall be deemed to be incorporated into
and made a part of each such Supplemental Confirmation. This
Master Confirmation and each Supplemental Confirmation together
shall constitute a "Confirmation" as referred to in the Agreement
specified below.
The definitions
and provisions contained in the 2002 ISDA Equity Derivatives
Definitions (the "Equity Definitions"), as published by the
International Swaps and Derivatives Association, Inc., are
incorporated into this Master Confirmation. This Master
Confirmation and each Supplemental Confirmation evidences a
complete binding agreement between the Counterparty and GS&Co.
as to the terms of each Transaction to which this Master
Confirmation and the related Supplemental Confirmation
relates.
GS&Co. and
Counterparty agree to use all reasonable efforts promptly to
negotiate, execute and deliver an agreement in the form of the 1992
ISDA Master Agreement (Multicurrency-Cross Border) (the "ISDA Form"
or the "Agreement"), with such modifications as GS&Co. and
Counterparty will in good faith agree. Upon the execution by
GS&Co. and Counterparty of the Agreement, this Master
Confirmation and each Supplemental Confirmation will supplement,
form a part of, and be subject to the Agreement. All
provisions contained in or incorporated by reference in the
Agreement upon its execution will govern this Master Confirmation
and each Supplemental Confirmation except as expressly modified
below. Until GS&Co. and Counterparty execute and deliver
the Agreement, this Master Confirmation and each Supplemental
Confirmation, together with all other documents referring to the
Agreement confirming Transactions entered into between GS&Co.
and Counterparty (notwithstanding anything to the contrary in a
Confirmation), shall supplement, form a part of, and be subject to
the ISDA Form as if GS&Co. and Counterparty had executed the
Agreement (but without any Schedule except for (i) the
election of Loss and Second Method, New York law (without regard to
the conflicts of law principles) as the governing law and US
Dollars ("USD") as the Termination Currency, (ii) the election
that subparagraph (ii) of Section 2(c) will not apply to
Transactions, (iii) the replacement of the word "third" in the
last line of Section 5(a)(i) with the word "first" and (iv)
the election that the "Cross Default" provisions of Section
5(a)(vi) shall apply to Counterparty, with a "Threshold Amount" of
USD 50 million).
All provisions
contained in the Agreement shall govern this Master Confirmation
and the related Supplemental Confirmation relating to a Transaction
except as expressly modified below or in the related Supplemental
Confirmation. With respect to any relevant Transaction, the
Agreement, this Master Confirmation and the related Supplemental
Confirmation shall represent the entire agreement and understanding
of the parties with respect to the subject matter and terms of such
Transaction and shall supersede all prior or contemporaneous
written or oral communications with respect thereto.
If, in relation
to any Transaction to which this Master Confirmation and related
Supplemental Confirmation relate, there is any inconsistency
between the Agreement, this Master Confirmation, any Supplemental
Confirmation and the Equity Definitions that are incorporated into
any Supplemental Confirmation, the following will prevail for
purposes of such Transaction in the order of precedence indicated:
(i) such Supplemental Confirmation; (ii) this Master Confirmation;
(iii) the Agreement; and (iv) the Equity Definitions.
1. Each
Transaction constitutes a Share Forward Transaction for the
purposes of the Equity Definitions. Set forth below are the
terms and conditions which, together with the terms and conditions
set forth in each Supplemental Confirmation (in respect of each
relevant Transaction), shall govern each such
Transaction.
General
Terms:
Trade
Date:
For each Transaction, as set forth in the Supplemental
Confirmation.
Seller:
Counterparty
Buyer:
GS&Co.
Shares:
Common shares of Counterparty (Ticker: MNT)
Number of
Shares:
For each Transaction, as set forth in the Supplemental
Confirmation.
Forward
Price:
For each Transaction, as set forth in the Supplemental
Confirmation.
Capped
Settlement
Amount:
For each Transaction, as set forth in the Supplemental
Confirmation.
Floor
Settlement
Amount:
For each Transaction, as set forth in the Supplemental
Confirmation.
Prepayment:
Not Applicable
Variable
Obligation:
Not Applicable
Exchange:
New York Stock Exchange
Related
Exchange(s):
All Exchanges
Market
Disruption
Event:
The definition of "Market Disruption Event" in Section 6.3(a) of
the Equity Definitions is hereby amended by inserting the words "at
any time on any Scheduled Trading Day during the Valuation Period
or" after the word "material," in the third line
thereof.
Valuation:
Valuation
Period:
Each Scheduled Trading Day during the period commencing on and
including the first succeeding Scheduled Trading Day following the
Trade Date, to and including the Valuation Date (but excluding any
day(s) on which the Valuation Period is suspended in accordance
with Section 5 herein and including any day(s) by which the
Valuation Period is extended pursuant to the provision
below).
Notwithstanding anything to the contrary in the Equity Definitions,
to the extent that any Scheduled Trading Day in the Valuation
Period is a Disrupted Day, the Valuation Date shall be postponed
and the Calculation Agent in its sole discretion shall extend the
Valuation Period and make adjustments to the weighting of each
Relevant Price for purposes of determining the Settlement Price,
with such adjustments based on, among other factors, the duration
of any Market Disruption Event and the volume, historical trading
patterns and price of the Shares. To the extent that there
are 9 consecutive Disrupted Days during the Valuation Period, then
notwithstanding the occurrence of a Disrupted Day, the Calculation
Agent shall have the option in its sole discretion to either
determine the Relevant Price using its good faith estimate of the
value for the Share on such 9 th consecutive day or
elect to further extend the Valuation Period as it deems
necessary.
Valuation
Date:
For each Transaction, as set forth in the Supplemental Confirmation
(as the same may be postponed in accordance with the provisions of
"Valuation Period" and Section 5 herein).
Settlement
Terms:
Settlement
Currency:
USD (all amounts shall be converted to the Settlement Currency in
good faith and in a commercially reasonable manner by the
Calculation Agent).
Settlement
Method
Election:
Applicable; provided that (a) Section 7.1 of the Equity
Definitions is hereby amended by deleting the word "Physical" in
the sixth line thereof and replacing it with the words "Net Share"
and deleting the word "Physical" in the last line thereof and
replacing it with word "Cash" and (b) in the event that GS&Co.
would deliver to the Counterparty an amount of Shares under Net
Share Settlement, Cash Settlement shall be applicable in lieu of
Net Share Settlement.
Electing
Party:
Counterparty
Settlement
Method Election
Date:
20 Scheduled Trading Days prior to the originally scheduled
Valuation Date.
Default
Settlement
Method:
Cash Settlement
Cash Settlement
Procedures:
Notwithstanding anything to the contrary in Section 8.4(a) of the
Equity Definitions:
(a) if the
Forward Cash Settlement Amount is a positive number then Seller
shall pay to Buyer the lesser of (i) the Capped Settlement
Amount plus the Dividend Amount and (ii) the Forward Cash
Settlement Amount (such amount, the "Net Cash Amount");
and
(b) if the
Forward Cash Settlement Amount is a negative number then Buyer
shall pay to Seller the lesser of (i) the Floor Settlement
Amount plus the Dividend Amount and (ii) the absolute value of
the Forward Cash Settlement Amount.
Forward Cash
Settlement
Amount: An
amount in the Settlement Currency equal to the sum of (a) the
Number of Shares multiplied by an amount equal to (i) the
Settlement Price minus (ii) the Forward Price plus (b) the
Dividend Amount.
Settlement
Price:
The arithmetic mean of the Relevant Prices of the Shares for each
Exchange Business Day in the Valuation Period.
Relevant
Price:
The New York 10b-18 Volume Weighted Average Price per share of the
Shares for the regular trading session (including any extensions
thereof) of the Exchange on the related Exchange Business Day
(without regard to pre-open or after hours trading outside of such
regular trading session) as published by Bloomberg at 4:15 p.m.
New York time on such date.
Cash Settlement
Payment
Date:
3 Currency Business Days after the Valuation Date.
Counterparty's
Contact Details
for Purpose of
Giving
Notice:
To be provided by Counterparty
GS&Co.'s
Contact Details for
Purpose of
Giving
Notice:
Telephone No.: (212) 902-8996
Facsimile No.: (212) 902-0112
Attention: Equity Operations: Options and
Derivatives
With a copy to:
Jim Ziperski
Equity Capital Markets
One New York Plaza
New York, NY 10004
Telephone No.: (212) 902-8557
Facsimile No.: (212) 346-2126
Net Share
Settlement:
Net Share
Settlement
Procedures:
Net Share Settlement shall be made in accordance with the
procedures attached hereto as Annex B.
Net Share
Settlement
Price:
(a) in respect of any Share for which the Exchange is an auction or
"open outcry" exchange that has a price as of the Valuation Time at
which any trade can be submitted for execution, the Net Share
Settlement Price shall be the price per Share as of the Valuation
Time on the Net Share Valuation Date as reported in the official
real-time price dissemination mechanism for such Exchange and (b)
in respect of any Share for which the Exchange is a dealer exchange
or dealer quotation system, the Net Share Settlement Price shall be
the mid-point of the highest bid and lowest ask prices quoted as of
the Valuation Time on the Net Share Valuation Date (or the last
such prices quoted immediately before the Valuation Time) without
regard to quotations that "lock" or "cross" the dealer exchange or
dealer quotation system. In all cases the Net Share Settlement
Price shall be reduced by the per Share amount of the underwriting
discount and/or commissions agreed to pursuant to the equity
underwriting agreement contemplated by the Net Share Settlement
Procedures.
Valuation
Time:
As provided in Section 6.1 of the Equity Definitions; provided that
Section 6.1 of the Equity Definitions is hereby amended by
inserting the words "Net Share Valuation Date," before the
words "Valuation Date" in the first and third lines
thereof.
Net Share
Valuation
Date:
The Exchange Business Day immediately following the Valuation
Date.
Net Share
Settlement
Date:
The third Exchange Business Day immediately following the Valuation
Date.
Reserved
Shares:
Initially, 1,000,000 Shares. The Reserved Shares may be
increased or decreased in a Supplemental Confirmation.
Dividends:
Dividend
Period:
First Period
Dividend
Amount:
The sum of, for each gross cash dividend declared by the Issuer
during the Dividend Period, the related Record Amount multiplied by
the Assumed Shares on the relevant record date.
Assumed
Shares:
For any Exchange Business Day in the Dividend Period, an amount
equal to (a) the Number of Shares minus (b) the Number of Shares
divided by the total number of Exchange Business Days in the
Dividend Period (the "Daily Amount") multiplied by the number of
Exchange Business Days in the Dividend Period preceding and
including such Exchange Business Day. The Daily Amount will
be deemed to be zero for each day on which the Valuation Period is
suspended in accordance with Section 5 herein. In the event
that the Valuation Period is extended pursuant to the provisions of
"Valuation Period" or Section 5 herein, the Calculation Agent may
make corresponding adjustments to the amount of Assumed Shares for
the related Transaction.
Reinvestment of
Dividends:
Not Applicable
Share
Adjustments:
Method of
Adjustment:
Calculation Agent Adjustment
Extraordinary
Events:
Consequences of
Merger Events:
(a)
Share-for-Share:
Modified Calculation Agent Adjustment
(b)
Share-for-Other:
Cancellation and Payment on that portion of the Other Consideration
that consists of cash; Modified Calculation Agent Adjustment on the
remainder of the Other Consideration.
(c)
Share-for-Combined:
Component Adjustment
Determining
Party:
GS&Co.
Tender
Offer:
Applicable
Consequences of
Tender Offers:
(a)
Share-for-Share:
Modified Calculation Agent Adjustment
(b)
Share-for-Other:
Cancellation and Payment on that portion of the Other Consideration
that consists of cash; Modified Calculation Agent Adjustment on the
remainder of the Other Consideration.
(c)
Share-for-Combined:
Component Adjustment
Determining
Party:
GS&Co.
Nationalization, Insolvency or
Delisting:
Negotiated Close-out; provided that in addition to the provisions
of Section 12.6(a)(iii) of the Equity Definitions, it shall also
constitute a Delisting if the Exchange is located in the United
States and the Shares are not immediately re-listed, re-traded or
re-quoted on any of the New York Stock Exchange, the American Stock
Exchange or The NASDAQ National Market (or their respective
successors).
Additional
Disruption Events:
(a)
Change in
Law:
Applicable
(b)
Failure to
Deliver:
Not Applicable
(c)
Insolvency
Filing:
Applicable
(d)
Loss of Stock
Borrow:
Applicable; furthermore Sections 12.9(a)(vii) and 12.9(b)(iv) of
the Equity Definitions are amended by deleting the words "at a rate
equal to or less than the Maximum Stock Loan Rate" and replacing
them with "at a rate of return equal to or greater than
zero".
Hedging
Party:
GS&Co.
Determining
Party:
GS&Co.
Non-Reliance:
Applicable
Agreements and
Acknowledgements
Regarding
Hedging
Activities:
Applicable
Additional
Acknowledgements:
Applicable
Net Share
Settlement following Extraordinary
Event:
Counterparty shall have the right, in its sole discretion, to make
any payment required to be made by it pursuant to
Sections 12.7 or 12.9 of the Equity Definitions (except with
respect to any portion of the consideration for the Shares
consisting of cash in the event of a Merger Event or Tender Offer)
following the occurrence of an Extraordinary Event by electing to
Net Share Settle the Transactions under this Master Confirmation in
accordance with the terms, and subject to the conditions, for Net
Share Settlement herein by giving written notice to GS&Co. of
such election on the day that the notice fixing the date that the
Transactions are terminated or cancelled, as the case may be, (the
"Cancellation Date") pursuant to the applicable provisions of
Section 12 of the Equity Definitions is effective. If
Counterparty elects Net Share Settlement: (a) the Net Share
Valuation Date shall be the date specified in the notice fixing the
date that the Transactions are terminated or cancelled, as the case
may be; provided that the Net Share Valuation Date shall be either
the Exchange Business Day that such notice is effective or
the first Exchange Business Day immediately following the Exchange
Business Day that such notice is effective, (b) the Net Share
Settlement Date shall be deemed to be the Exchange Business Day
immediately following the Cancellation Date and (c) all references
to the Net Cash Amount in Annex B hereto shall be deemed to be
references to the Cancellation Amount.
Net Share
Settlement Upon
Early
Termination:
Counterparty shall have the right, in its sole discretion, to make
any payment required to be made by it (the "Early Termination
Amount") pursuant to Sections 6(d) and 6(e) of the Agreement
following the occurrence of an Early Termination Date in respect of
the Agreement by electing to Net Share Settle all the Transactions
under this Master Confirmation in accordance with the terms, and
subject to the conditions, for Net Share Settlement herein by
giving written notice to GS&Co. of such election on the day
that the notice fixing an Early Termination Date is
effective. If Counterparty elects Net Share
Settlement: (a) the Net Share Valuation Date shall be the date
specified in the notice fixing an Early Termination Date; provided
that the Net Share Valuation Date shall be either the Exchange
Business Day that such notice is effective or the first Exchange
Business Day immediately following the Exchange Business Day that
such notice is effective, (b) the Net Share Settlement Date shall
be deemed to be the Exchange Business Day immediately following the
Early Termination Date and (c) all references to Net Cash Amount in
Annex B hereto shall be deemed references to the Early Termination
Amount.
Transfer:
Notwithstanding anything to the contrary in the Agreement,
GS&Co. may assign, transfer and set over all rights, title and
interest, powers, privileges and remedies of GS&Co. under any
Transaction, in whole or in part, to an affiliate of GS&Co.
that is guaranteed by The Goldman Sachs Group, Inc. without the
consent of Counterparty.
GS&Co.
Payment
Instructions:
Chase Manhattan Bank New York
For A/C Goldman, Sachs & Co.
A/C # 930-1-011483
ABA: 021-000021
Counterparty
Payment
Instructions:
To be provided by Counterparty
2.
Calculation Agent : GS&Co.
3.
Representations, Warranties and Covenants of GS&Co. and
Counterparty .
(a)
Each party represents and warrants that it (i) is an "eligible
contract participant", as defined in the U.S. Commodity Exchange
Act, as amended and (ii) is entering into each Transaction
hereunder as principal (and not as agent or in any other capacity,
fiduciary or otherwise)and not for the benefit of any third
party.
(b)
Each party acknowledges that the offer and sale of each Transaction
to it is intended to be exempt from registration under the
Securities Act of 1933, as amended (the "Securities Act"), by
virtue of Section 4(2) thereof and the provisions of Regulation D
promulgated thereunder ("Regulation D"). Accordingly, each
party represents and warrants to the other that (i) it has the
financial ability to bear the economic risk of its investment in
each Transaction and is able to bear a total loss of its
investment, (ii) it is an "accredited investor" as that term
is defined under Regulation D, (iii) it will purchase each
Transaction for investment and not with a view to the distribution
or resale thereof, and (iv) the disposition of each Transaction is
restricted under this Master Confirmation and each Supplemental
Confirmation, the Securities Act and state securities
laws.
4.
Additional Representations, Warranties and Covenants of
Counterparty .
As of (i) the
date hereof and (ii) the period of time from the time at which
Counterparty places an order with GS&Co. for a Transaction (the
"Time of the Order") until the time that each party has fully
performed all of its obligations under the related Transaction,
Counterparty represents, warrants and covenants to GS&Co.
that:
(a)
the purchase or writing of each Transaction will not violate
Rule 13e-1 or Rule 13e-4 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act");
(b)
it is not entering into any Transaction on the basis of, or is
aware of, any material non-public information with respect to the
Shares or in anticipation of, in connection with, or to facilitate,
a distribution of its securities, a self tender offer or a
third-party tender offer;
(c)
it is not entering into any Transaction to create, and will not
engage in any other securities or derivative transaction to create,
a false or misleading appearance of active trading or market
activity in the Shares (or any security convertible into or
exchangeable for the Shares), or which would otherwise violate the
Exchange Act;
(d)
Counterparty is in compliance with its reporting obligations under
the Exchange Act and its most recent Annual Report on Form 10-K,
together with all reports subsequently filed by it pursuant to the
Exchange Act, taken together and as amended and supplemented to the
date of this representation, do not , as of their respective filing
dates, contain any untrue statement of a material fact or omit any
material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances in which
they were made, not misleading;
(e)
each Transaction is being entered into pursuant to a publicly
disclosed Share buy-back program and its Board of Directors has
approved the use of derivatives to effect the Share buy-back
program;
(f)
notwithstanding the generality of Section 13.1 of the Equity
Definitions, GS&Co. is not making any representations or
warranties with respect to the treatment of any Transaction under
FASB Statements 149 or 150, EITF 00-19 (or any successor issue
statements) or under FASB's Liabilities & Equity
Project;
(g)
it will not take any action or refrain from taking any action that
would limit or in any way adversely affect GS&Co.'s rights
under the Agreement;
(h)
it has not, and during any Valuation Period (as extended pursuant
to the provisions of Section 5 and "Valuation Period" herein)
will not, enter into agreements similar to the Transactions
described herein where the valuation period in such other
transaction will overlap at any time (including as a result of
extensions in such valuation period as provided in the relevant
agreements) with any Valuation Period (as extended pursuant to the
provisions of Section 5 and "Valuation Period" herein) under this
Master Confirmation. In the event that the valuation period
in any other similar transaction overlaps with any Valuation Period
under this Master Confirmation as a result of any extension made
pursuant to the provisions of Section 5 and "Valuation Period"
herein, Counterparty shall promptly amend such transaction to avoid
any such overlap;
(i)
during the Valuation Period (as extended or suspended pursuant to
the provisions of Section 5 and "Valuation Period" herein) the
Shares or securities that are convertible into, or exchangeable or
exercisable for Shares are not subject to a "restricted period" as
such term is defined in Regulation M promulgated under the Exchange
Act ("Regulation M");
(j)
upon entering into each Transaction the Counterparty covenants that
it will immediately hold in treasury the Number of Shares purchased
by it in connection with the relevant Transaction from an entity
affiliated with GS&Co.; and
(k)
it shall report each Transaction as required under Regulation S-K
and/or Regulation S-B under the Exchange Act, as
applicable.
5.
Suspension of Valuation Period .
(a)
If Counterparty concludes that it will be engaged in a distribution
of the Shares for purposes of Regulation M, Counterparty agrees
that it will, on one Scheduled Trading Day's written notice, direct
GS&Co. not to purchase Shares in connection with hedging any
Transaction during the "restricted period" (as defined in
Regulation M). If on any Scheduled Trading Day Counterparty
delivers written notice (and confirms by telephone) by 8:30 a.m.
New York Time (the "Notification Time") then such notice shall be
effective to suspend the Valuation Period as of such Notification
Time. In the event that Counterparty delivers notice and/or
confirms by telephone after the Notification Time, then the
Valuation Period shall be suspended effective as of 8:30 a.m. New
York Time on the following Scheduled Trading Day or as otherwise
required by law or agreed between Counterparty and GS&Co.
The Valuation Period shall be suspended and the Valuation Date
extended for each Scheduled Trading Day in such restricted
period.
(b)
In the event that GS&Co. concludes, in its sole discretion,
that it is appropriate with respect to any legal, regulatory or
self-regulatory requirements or related policies and procedures
(whether or not such requirements, policies or procedures are
imposed by law or have been voluntarily adopted by GS&Co.), for
it to refrain from purchasing Shares on any Scheduled Trading Day
during the Valuation Period, GS&Co. may by written notice to
Counterparty elect to suspend the Valuation Period for such number
of Scheduled Trading Days as is specified in the notice. The notice
shall not specify, and GS&Co. shall not otherwise communicate
to Counterparty, the reason for GS&Co.'s election to suspend
the Valuation Period. The Valuation Period shall be suspended and
the Valuation Date extended for each Scheduled Trading Day
occurring during any such suspension.
(c)
On one occasion and upon written notice to GS&Co. prior to 8:30
a.m. New York time on any Scheduled Trading Day during the
Valuation Period, Counterparty may elect to sus
