Exhibit 10.1

 

AMENDED AND RESTATED

CHANGE OF CONTROL AGREEMENT

 

This Amended and Restated Change of Control Agreement (the “Agreement”) is made
and entered into effective as of December 15, 2005, by and between Patty Gray
(the “Employee”) and Conceptus, Inc., a Delaware corporation (the “Company”).

 

RECITALS

 

A.            It is expected that another company or other entity may from time
to time consider the possibility of acquiring the Company or that a change of
control may otherwise occur, with or without the approval of the Company’s Board
of Directors (the “Board”). The Board recognizes that such consideration can be
a distraction to the Employee, an executive officer or director-level employee
of the Company, and can cause the Employee to consider alternative employment
opportunities. The Board has determined that it is in the best interests of the
Company and its stockholders to assure that the Company will have the continued
dedication and objectivity of the Employee, notwithstanding the possibility,
threat or occurrence of a Change of Control (as defined below) of the Company.

 

B.            The Board believes that it is in the best interests of the Company
and its stockholders to provide the Employee with an incentive to continue his
or her employment with the Company.

 

C.            The Board believes that it is imperative to provide the Employee
with certain benefits upon a Change of Control and, under certain circumstances,
upon termination of the Employee’s employment in connection with a Change of
Control, which benefits are intended to provide the Employee with financial
security and provide sufficient income and encouragement to the Employee to
remain with the Company notwithstanding the possibility of a Change of Control.

 

D.            To accomplish the foregoing objectives, the Board of Directors has
directed the Company, upon execution of this Agreement by the Employee, to agree
to the terms provided in this Agreement.

 

E.             Certain capitalized terms used in the Agreement are defined in
Section 4 below.

 

AGREEMENT

 

In consideration of the mutual covenants contained in this Agreement, and in
consideration of the continuing employment of Employee by the Company, the
parties agree as follows:

 

1.             AT-WILL EMPLOYMENT. The Company and the Employee acknowledge that
the Employee’s employment is and shall continue to be at-will, as defined under
applicable law. If the Employee’s employment terminates for any reason,
including (without limitation) any termination prior to a Change of Control, the
Employee shall not be entitled to any payments or

 

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benefits, other than as required under applicable law or as provided by this
Agreement, or as may otherwise be available in accordance with the terms of the
Company’s then existing employee plans and written policies in effect at the
time of termination. The terms of this Agreement shall terminate upon the
earliest of (i) the date on which Employee ceases to be employed as an executive
officer or director-level employee of the Company; (ii) the date that all
obligations of the parties hereunder have been satisfied, or (iii) two (2) years
after a Change of Control. A termination of the terms of this Agreement pursuant
to the preceding sentence shall be effective for all purposes, except that such
termination shall not affect the payment or provision of compensation or
benefits on account of a termination of employment occurring prior to the
termination of the terms of this Agreement.

 

2.             STOCK OPTIONS.

 

(a)           HOSTILE TAKEOVER. Subject to Sections 5 and 6 below, in the event
of a Hostile Takeover and regardless of whether the Employee’s employment with
the Company is terminated in connection with the Hostile Takeover, each stock
option granted for the Company’s securities (collectively the “Options”) and
each share of restricted stock of the Company held by the Employee shall become
fully vested and/or immediately exercisable, as applicable, immediately prior to
the consummation of the transaction and with respect to the Options shall be
exercisable to the extent so vested in accordance with the provisions of the
Company’s stock option agreement and stock option plan pursuant to which such
Options were granted.

 

(b)           CHANGE OF CONTROL. Subject to Sections 5 and 6 below, in the event
of a Change of Control and regardless of whether the Employee’s employment with
the Company is terminated in connection with the Change of Control, each Option
and share of restricted Company Stock held by the Employee shall become vested
and/or immediately exercisable immediately prior to the consummation of the
transaction as to fifty percent (50%) of the Option and restricted shares that
have not otherwise vested as of such date. The Option and restricted shares that
remain unvested as of the effective date of the transaction shall thereafter
vest at the same rate (that is, the same number of shares shall vest during each
vesting period) that was in effect prior to the Change of Control, and shall
accordingly vest over a period that is one-half of the total vesting period that
would otherwise be then remaining under the terms of the option or restricted
stock agreement pursuant to which each such Option or restricted stock was
granted, subject to any acceleration based on the subsequent attainment of
performance targets.

 

3.             CHANGE OF CONTROL.

 

(a)           TERMINATION FOLLOWING A CHANGE OF CONTROL. Subject to Sections 5
and 6 below, if the Employee’s employment with the Company is terminated at any
time within two (2) years after a Change of Control, then the Employee shall be
entitled to receive severance benefits as follows:

 

(i)            VOLUNTARY RESIGNATION. If the Employee voluntarily resigns from
the Company (other than as an Involuntary Termination (as defined below) or if
the Company terminates the Employee’s employment for Cause (as defined below)),
then the

 

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Employee shall not be entitled to receive severance payments under this
Agreement. The Employee’s benefits will be terminated under the Company’s then
existing benefit plans and policies in accordance with such plans and policies
in effect on the date of termination or as otherwise determined by the Board of
Directors of the Company.

 

(ii)           INVOLUNTARY TERMINATION. If the Employee’s employment terminates
as a result of an Involuntary Termination other than for Cause, the Employee
shall be entitled to receive the following benefits: (i) severance payments
during the period from the date of the Employee’s termination until the date 12
months after the effective date of the termination (the “Severance Period”)
equal to the salary which the Employee was receiving immediately prior to the
change of control, which payments shall be paid during the Severance Period in
accordance with the Company’s standard payroll practices; (ii) monthly severance
payments during the Severance Period equal to 1/12th of the Employee’s “target
bonus” (as defined below) for the fiscal year in which the termination occurs
(or the most recent fiscal year for which a cash target bonus was determined if
a cash target bonus has not yet been determined for the fiscal year in which the
termination occurs); (iii) continuation of all health and life insurance
benefits through the end of the Severance Period substantially identical to
those to which the Employee was entitled immediately prior to the termination,
or to those being offered to officers of the Company, or a successor
corporation, if the Company’s benefit programs are changed during the Severance
Period; (iv) full and immediate vesting of each unvested Option and share of
restricted Company stock held by the Employee on the date of termination so that
each such option shall be exercisable in full and each share of restricted stock
shall be fully vested on the termination date in accordance with the provisions
of the option and/or restricted stock agreement, as applicable, and plan
pursuant to which such stock awards were granted; and (v) outplacement services
with a total value not to exceed $15,000. For purposes of this Agreement, the
term “target bonus” shall mean a cash bonus equal to the Employee’s base salary
in effect immediately prior to the change of control multiplied by that
percentage of such base salary that is prescribed by the Company under its
Officer Incentive Plan as the percentage of such base salary payable to the
Employee as a cash bonus if the Company pays bonuses at one-hundred percent
(100%) of its operating plan.

 

(iii)          INVOLUNTARY TERMINATION FOR CAUSE. If the Employee’s employment
is terminated for Cause, then the Employee shall not be entitled to receive
severance payments under this Agreement. The Employee’s benefits will be
terminated under the Company’s then existing benefit plans and policies in
accordance with such plans and policies in effect on the date of termination.

 

(b)           TERMINATION APART FROM A CHANGE OF CONTROL. In the event the
Employee’s employment terminates for any reason, either prior to the occurrence
of a Change of Control or after the two year period following the effective date
of a Change of Control, then the Employee shall not be entitled to receive any
severance payments under this Agreement. The Employee’s benefits will be
terminated under the terms of the Company’s then existing benefit plans and
policies in accordance with such plans and policies in effect on the date of
termination or as otherwise determined by the Board of Directors of the Company.
Notwithstanding anything contained in this Agreement to the contrary, if the
Employee’s employment is terminated prior to a Change of Control (other than a
termination for Cause) and it is determined

 

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that such termination (i) was at the request of a third party who has indicated
an intention or taken steps reasonably calculated to effect a Hostile Takeover
or Change of Control and who subsequently effectuates a Hostile Takeover or
Change of Control (a “Third Party”) or (ii) otherwise occurred in connection
with, or in anticipation of, a Hostile Takeover or Change of Control which
actually occurs, then, for all purposes of this Agreement, the date of a Hostile
Takeover or Change of Control with respect to the Employee shall mean the date
immediately prior to the date of such termination of the Employee’s employment,
and the Employee shall be entitled to payments and benefits commencing as of
such date.

 

4.             DEFINITION OF TERMS. The following terms referred to in this
Agreement shall have the following meanings:

 

(a)           CHANGE OF CONTROL. “Change of Control” shall mean the occurrence
of any of the following events:

 

(i)            OWNERSHIP. Any “Person” (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Act”)
in one or more related transactions is or becomes the “Beneficial Owner” (as
defined in Rule 13d-3 under the Act), directly or indirectly, of securities of
the Company representing fifty percent (50%) or more of the total voting power
represented by the Company’s outstanding voting securities without regard to
whether the Board has approved such acquisition(s).

 

(ii)           MERGER/SALE OF ASSETS. A merger or consolidation of the Company
whether or not approved by the Board of Directors of the Company, other than a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or the stockholders
of the Company approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially all
of the Company’s assets.

 

(iii)          CHANGE IN BOARD COMPOSITION. A change in the composition of the
Board of Directors of the Company, as a result of which fewer than a majority of
the directors are Incumbent Directors. “Incumbent Directors” shall mean
directors who either (A) are directors of the Company as of December 15, 2005 or
(B) are elected, or nominated for election, to the Board of Directors of the
Company with the affirmative votes of at least a majority of the Incumbent
Directors at the time of such election or nomination (but shall not include an
individual whose election or nomination is in connection with an actual or
threatened proxy contest relating to the election of directors to the Company).

 

(b)           CAUSE. “Cause” shall mean (i) gross negligence or willful
misconduct in the performance of the Employee’s duties to the Company where such
gross negligence or willful misconduct has resulted or is likely to result in
substantial and material damage to the Company or its subsidiaries,
(ii) repeated unexplained or unjustified absence from the Company, (iii) a
material and willful violation of any federal or state law; (iv) commission of
any act of fraud

 

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with respect to the Company; or (v) conviction of a felony or a crime involving
moral turpitude causing material harm to the standing and reputation of the
Company, in each case as determined in good faith by the Board of Directors of
the Company.

 

(c)           HOSTILE TAKEOVER. “Hostile Takeover” shall mean any transaction
(or one or more related transactions) pursuant to which any “Person” (as such
term is used in Sections 13(d) and 14(d) of the Act) is or becomes the
“Beneficial Owner” (as defined in Rule 13d-3 under the Act), directly or
indirectly, of securities of the Company representing fifty percent (50%) or
more of the total voting power represented by the Company’s outstanding voting
securities without regard to whether the Board has approved such acquisition(s).

 

(d)           INVOLUNTARY TERMINATION. “Involuntary Termination” means any
termination by the Company other than for Cause and the Employee’s voluntary
termination, upon 30 days prior written notice to the Company, following (i) any
reduction of the Employee’s base compensation, bonus opportunity or benefits
(other than equity or equity related benefits or reductions made in connection
with a general decrease in base salaries, bonus opportunities or benefits, as
applicable for most similarly situated executives of the successor corporation);
(ii) the Employee’s refusal to relocate to a location more than 50 miles from
the Company’s current location; (iii) any action by the Company that results in
a diminution in the Employee’s authority, duties and responsibilities; (iv) a
material breach by the Company of any of its obligations hereunder and (v) any
failure by a successor to assume and perform the Company’s obligations
hereunder.

 

5.             LIMITATION ON PAYMENTS. To the extent that any of the payments or
benefits provided for in this Agreement or otherwise to the Employee
(collectively the “Payments”) constitute “parachute payments” within the meaning
of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”)
and, but for this Section 5, would be subject to the excise tax imposed by
Section 4999 of the Code (the “Excise Tax”), then such Payment shall be equal to
the Reduced Amount. The “Reduced Amount” shall be either (x) the largest portion
of the Payments that would result in no portion of the Payments being subject to
the Excise Tax or (y) the largest portion, up to and including the total, of the
Payments, whichever amount, after taking into account all applicable federal,
state and local employment taxes, income taxes, and the Excise Tax (all computed
at the highest applicable marginal rate), results in the Employee’s receipt, on
an after-tax basis, of the greater amount of the Payments notwithstanding that
all or some portion of the Payment may be subject to the Excise Tax. If a
reduction in payments or benefits constituting “parachute payments” is necessary
so that the Payment equals the Reduced Amount, reduction shall occur in the
following order unless the Employee elects in writing a different order
(provided, however, that such election shall be subject to Company approval if
made on or after the effective date of the event that triggers the Payment):
reduction of cash payments; cancellation of accelerated vesting of stock options
and restricted stock; reduction of employee benefits. In the event that
acceleration of vesting of stock compensation is to be reduced, such
acceleration of vesting shall be cancelled in the reverse order of the date of
grant of the Employee’s stock options and restricted stock (i.e., earliest
granted stock awards cancelled last) unless the Employee elects in writing a
different order for cancellation.

 

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The accounting firm engaged by the Company for general audit purposes as of the
day prior to the effective date of the Hostile Takeover or Change of Control
shall perform the foregoing calculations. If the accounting firm so engaged by
the Company is serving as accountant or auditor for the individual, entity or
group effecting the Hostile Takeover or Change of Control, the Company shall
appoint a nationally recognized accounting firm to make the determinations
required hereunder. The Company shall bear all expenses with respect to the
determinations by such accounting firm required to be made hereunder.

 

The accounting firm engaged to make the determinations hereunder shall provide
its calculations, together with detailed supporting documentation, to the
Employee and the Company within fifteen (15) calendar days after the date on
which the Employee’s right to a Payment is triggered (if requested at that time
by the Employee or the Company) or such other time as requested by the Employee
or the Company. If the accounting firm determines that no Excise Tax is payable
with respect to the Payments, either before or after the application of the
Reduced Amount, it shall furnish the Employee and the Company with an opinion
reasonably acceptable to the Employee that no Excise Tax will be imposed with
respect to such Payment. Any good faith determinations of the accounting firm
made hereunder shall be final, binding and conclusive upon the Employee and the
Company.

 

6.             SUCCESSORS. Any successor to the Company (whether direct or
indirect and whether by purchase, lease, merger, consolidation, liquidation or
otherwise) to all or substantially all of the Company’s business and/or assets
shall assume the obligations under this Agreement and agree expressly to
perform the obligations under this Agreement in the same manner and to the same
extent as the Company would be required to perform such obligations in the
absence of a succession. The terms of this Agreement and all of the Employee’s
rights hereunder shall inure to the benefit of, and be enforceable by, the
Employee’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.

 

7.             NOTICE. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. Mailed notices to the Employee shall be
addressed to the Employee at the home address which the Employee most recently
communicated to the Company in writing. In the case of the Company, mailed
notices shall be addressed to its corporate headquarters, and all notices shall
be directed to the attention of its Secretary.

 

8.             MISCELLANEOUS PROVISIONS.

 

(a)           NO DUTY TO MITIGATE. The Employee shall not be required to
mitigate the amount of any payment contemplated by this Agreement (whether by
seeking new employment or in any other manner), nor, except as otherwise
provided in this Agreement, shall any such payment be reduced by any earnings
that the Employee may receive from any other source.

 

(b)           WAIVER. No provision of this Agreement shall be modified, waived
or discharged unless the modification, waiver or discharge is agreed to in
writing and signed by the Employee and by an authorized officer of the Company
(other than the Employee). No waiver by either party of any breach of, or of
compliance with, any condition or provision of this

 

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Agreement by the other party shall be considered a waiver of any other condition
or provision or of the same condition or provision at another time.

 

(c)           WHOLE AGREEMENT. No agreements, representations or understandings
(whether oral or written and whether express or implied) which are not expressly
set forth in this Agreement have been made or entered into by either party with
respect to the subject matter hereof. This Agreement supersedes any agreement of
the same title or concerning similar subject matter dated prior to the date of
this Agreement, and by execution of this Agreement both parties agree that any
such predecessor agreement shall be deemed null and void.

 

(d)           CHOICE OF LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California without reference to conflict of laws provisions.

 

(e)           SEVERABILITY. If any term or provision of this Agreement or the
application thereof to any circumstance shall, in any jurisdiction and to any
extent, be invalid or unenforceable, such term or provision shall be ineffective
as to such jurisdiction to the extent of such invalidity or unenforceability
without invalidating or rendering unenforceable the remaining terms and
provisions of this Agreement or the application of such terms and provisions to
circumstances other than those as to which it is held invalid or unenforceable,
and a suitable and equitable term or provision shall be substituted therefor to
carry out, insofar as may be valid and enforceable, the intent and purpose of
the invalid or unenforceable term or provision.

 

(f)            ARBITRATION.

 

(i)            Except as provided below, any controversy or dispute which
establishes a legal or equitable cause of action (“Claim”) between the Employee
and the Company arising out of, or relating to Employee’s employment and/or this
Agreement shall be submitted to final and binding arbitration as the sole and
exclusive remedy for such controversy or dispute. It is the parties’ intent that
issues of arbitrability of any dispute shall be decided by the Arbitrator.

 

(ii)           Regardless of whether the Federal Arbitration Act would apply by
operation of law, Employee and Company agree that the right and duty to resolve
any controversy or dispute by arbitration shall be governed exclusively by the
Federal Arbitration Act, as amended, and arbitration shall take place according
to the applicable rules of the American Arbitration Association (“AAA”)] in
effect as of the date the demand for arbitration is filed. If for any reason the
Federal Arbitration Act is found not to apply or govern, this agreement to
arbitrate shall be governed by applicable state law.

 

(iii)          The arbitration shall take place before one arbitrator. Such
arbitrator shall be provided through the AAA by mutual agreement of the parties
to the arbitration; provided that, absent such agreement, the arbitrator shall
be selected in accordance with the rules of AAA then in effect. In either event,
such arbitrator may not have any preexisting, direct or indirect relationship
with any party to the arbitration.

 

(iv)          The arbitration shall be held at the office of AAA nearest the
Company facility to which Employee was assigned prior to the dispute; provided,
however, if such office is

 

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outside the state in which Employee resides, Employee may cause the arbitration
to be held within Employee’s state of residence at a place mutually convenient
to the parties thereto and arbitrator.

 

(v)           The costs of arbitration to be paid shall not include any costs
unique to arbitration, nor exceed the amount such person would have had to pay
in court costs had the matter been pursued in court. The Company shall be
responsible for all other cost payable to AAA in connection with the
arbitration, including the cost and fees of the arbitrator. The arbitrator shall
make such orders with respect to attorneys’ fees and other costs and expenses
related to the arbitration as provided by applicable law.

 

(vi)          The award or decision of the arbitrator shall be rendered in
writing; shall be final and binding on the parties; and may be enforced by
judgment or order of a court of competent jurisdiction.

 

(vii)         The arbitrator shall have no authority to amend or modify the
terms and conditions of this Agreement, it being expressly understood and agreed
that the arbitrator shall have all such powers as a court would have, sitting
without a jury, to determine the validity and enforceability of any of the
provisions hereof.

 

(viii)        Notwithstanding this Section (f), the Company and the Employee
shall have the right to seek from a court of competent jurisdiction provisional
non-monetary remedies including, but not limited to, temporary restraining
orders or preliminary injunctions before, during or after arbitration to the
extent such remedies are not available through arbitration or cannot be obtained
in a timely fashion through arbitration. The Company and the Employee need not
await the outcome of the arbitration before seeking provisional remedies.
Seeking any such remedies shall not be deemed to be a waiver of such person’s
right to compel arbitration.

 

(g)           LEGAL FEES AND EXPENSES. The parties shall each bear their own
expenses, legal fees and other fees incurred in connection with this Agreement.

 

(h)           NO ASSIGNMENT OF BENEFITS. The rights of any person to payments or
benefits under this Agreement shall not be made subject to option or assignment,
either by voluntary or involuntary assignment or by operation of law, including
(without limitation) bankruptcy, garnishment, attachment or other creditor’s
process, and any action in violation of this subsection (h) shall be void.

 

(i)            EMPLOYMENT TAXES. All payments made pursuant to this Agreement
will be subject to withholding of applicable income and employment taxes.

 

(j)            ASSIGNMENT BY COMPANY. The Company may assign its rights under
this Agreement to an affiliate, and an affiliate may assign its rights under
this Agreement to another affiliate of the Company or to the Company; provided,
however, that no assignment shall be made if the net worth of the assignee is
less than the net worth of the Company at the time of assignment. In the case of
any such assignment, the term “Company” when used in a section of this Agreement
shall mean the corporation that actually employs the Employee.

 

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(k)           COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together will constitute
one and the same instrument.

 

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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case
of the Company by its duly authorized officer, as of the day and year first
above written.

 

 

CONCEPTUS, INC.

 

EMPLOYEE

 

 

 

 

By:

/S/ Mark M. Sieczkarek

 

By:

/S/ Patricia Gray

 

 

 

 

 

Title: President and CEO

 

 

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