**Exhibit 10.1**

 

**AMENDED AND RESTATED**

**CHANGE OF CONTROL AGREEMENT**

 

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

 

**RECITALS**

 

A.            Itis expected that another company or other entity may from time to timeconsider the possibility of acquiring the Company or that a change of control may otherwiseoccur, 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 theEmployee, an executive officer or director-level employee of the Company, andcan cause the Employee to consider alternative employment opportunities. TheBoard has determined that it is in the best interests of the Company and itsstockholders to assure that the Company will have the continued dedication andobjectivity of the Employee, notwithstanding the possibility, threat or occurrenceof a Change of Control (as defined below) of the Company.

 

B.            TheBoard believes that it is in the best interests of the Company and itsstockholders to provide the Employee with an incentive to continue his or heremployment with the Company.

 

C.            TheBoard believes that it is imperative to provide the Employee with certainbenefits upon a Change of Control and, under certain circumstances, upontermination of the Employee’s employment in connection with a Change ofControl, which benefits are intended to provide the Employee with financialsecurity and provide sufficient income and encouragement to the Employee toremain with the Company notwithstanding the possibility of a Change of Control.

 

D.            Toaccomplish the foregoing objectives, the Board of Directors has directed theCompany, upon execution of this Agreement by the Employee, to agree to theterms provided in this Agreement.

 

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

 

**AGREEMENT**

 

Inconsideration of the mutual covenants contained in this Agreement, and inconsideration of the continuing employment of Employee by the Company, theparties agree as follows:

 

1.             AT-WILLEMPLOYMENT. The Company and the Employee acknowledge that the Employee’semployment is and shall continue to be at-will, as defined under applicable law.If the Employee’s employment terminates for any reason, including (withoutlimitation) any termination prior to a Change of Control, the Employee shallnot be entitled to any payments or 

 

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benefits, other than asrequired under applicable law or as provided by this Agreement, or as may otherwisebe available in accordance with the terms of the Company’s then existingemployee plans and written policies in effect at the time of termination. Theterms of this Agreement shall terminate upon the earliest of (i) the dateon which Employee ceases to be employed as an executive officer ordirector-level employee of the Company; (ii) the date that all obligationsof the parties hereunder have been satisfied, or (iii) two (2) yearsafter a Change of Control. A termination of the terms of this Agreementpursuant to the preceding sentence shall be effective for all purposes, exceptthat such termination shall not affect the payment or provision of compensationor benefits on account of a termination of employment occurring prior to thetermination of the terms of this Agreement.

 

2.             STOCKOPTIONS.

 

(a)           HOSTILETAKEOVER. Subject to Sections 5 and 6 below, in the event of a Hostile Takeoverand regardless of whether the Employee’s employment with the Company isterminated in connection with the Hostile Takeover, each stock option grantedfor the Company’s securities (collectively the “Options”) and each share ofrestricted stock of the Company held by the Employee shall become fully vestedand/or immediately exercisable, as applicable, immediately prior to theconsummation of the transaction and with respect to the Options shall beexercisable to the extent so vested in accordance with the provisions of theCompany’s stock option agreement and stock option plan pursuant to which suchOptions were granted.

 

(b)           CHANGEOF CONTROL. Subject to Sections 5 and 6 below, in the event of a Change ofControl and regardless of whether the Employee’s employment with the Company isterminated in connection with the Change of Control, each Option and share ofrestricted Company Stock held by the Employee shall become vested and/orimmediately exercisable immediately prior to the consummation of thetransaction as to fifty percent (50%) of the Option and restricted shares thathave not otherwise vested as of such date. The Option and restricted sharesthat remain unvested as of the effective date of the transaction shallthereafter vest at the same rate (that is, the same number of shares shall vestduring 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 vestingperiod that would otherwise be then remaining under the terms of the option orrestricted stock agreement pursuant to which each such Option or restrictedstock was granted, subject to any acceleration based on the subsequentattainment of performance targets.

 

3.             CHANGEOF CONTROL.

 

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

 

(i)            VOLUNTARYRESIGNATION. If the Employee voluntarily resigns from the Company (other thanas an Involuntary Termination (as defined below) or if the Company terminatesthe Employee’s employment for Cause (as defined below)), then the 

 

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

 

(ii)           INVOLUNTARYTERMINATION. If the Employee’s employment terminates as a result of anInvoluntary Termination other than for Cause, the Employee shall be entitled toreceive the following benefits: (i) severance payments during the periodfrom the date of the Employee’s termination until the date 12 months after theeffective date of the termination (the “Severance Period”) equal to the salarywhich the Employee was receiving immediately prior to the change of control,which payments shall be paid during the Severance Period in accordance with theCompany’s standard payroll practices; (ii) monthly severance paymentsduring 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 themost recent fiscal year for which a cash target bonus was determined if a cashtarget bonus has not yet been determined for the fiscal year in which thetermination occurs); (iii) continuation of all health and life insurancebenefits through the end of the Severance Period substantially identical tothose to which the Employee was entitled immediately prior to the termination,or to those being offered to officers of the Company, or a successorcorporation, if the Company’s benefit programs are changed during the SeverancePeriod; (iv) full and immediate vesting of each unvested Option and shareof restricted Company stock held by the Employee on the date of termination sothat each such option shall be exercisable in full and each share of restrictedstock shall be fully vested on the termination date in accordance with theprovisions of the option and/or restricted stock agreement, as applicable, andplan pursuant to which such stock awards were granted; and (v) outplacementservices with a total value not to exceed $15,000. For purposes of thisAgreement, the term “target bonus” shall mean a cash bonus equal to theEmployee’s base salary in effect immediately prior to the change of controlmultiplied by that percentage of such base salary that is prescribed by theCompany under its Officer Incentive Plan as the percentage of such base salarypayable to the Employee as a cash bonus if the Company pays bonuses atone-hundred percent (100%) of its operating plan.

 

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

 

(b)           TERMINATIONAPART FROM A CHANGE OF CONTROL. In the event the Employee’s employmentterminates for any reason, either prior to the occurrence of a Change ofControl or after the two year period following the effective date of a Changeof Control, then the Employee shall not be entitled to receive any severancepayments under this Agreement. The Employee’s benefits will be terminated underthe terms of the Company’s then existing benefit plans and policies inaccordance with such plans and policies in effect on the date of termination oras otherwise determined by the Board of Directors of the Company. Notwithstandinganything contained in this Agreement to the contrary, if the Employee’semployment is terminated prior to a Change of Control (other than a terminationfor Cause) and it is determined 

 

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that such termination (i) wasat the request of a third party who has indicated an intention or taken stepsreasonably calculated to effect a Hostile Takeover or Change of Control and whosubsequently effectuates a Hostile Takeover or Change of Control (a “ThirdParty”) or (ii) otherwise occurred in connection with, or in anticipationof, a Hostile Takeover or Change of Control which actually occurs, then, forall purposes of this Agreement, the date of a Hostile Takeover or Change ofControl with respect to the Employee shall mean the date immediately prior tothe date of such termination of the Employee’s employment, and the Employeeshall be entitled to payments and benefits commencing as of such date.

 

4.             DEFINITIONOF TERMS. The following terms referred to in this Agreement shall have thefollowing meanings:

 

(a)           CHANGEOF CONTROL. “Change of Control” shall mean the occurrence of any of thefollowing events:

 

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

 

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

 

(iii)          CHANGEIN BOARD COMPOSITION. A change in the composition of the Board of Directors ofthe Company, as a result of which fewer than a majority of the directors areIncumbent Directors. “Incumbent Directors” shall mean directors who either (A) aredirectors 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 theaffirmative votes of at least a majority of the Incumbent Directors at the timeof such election or nomination (but shall not include an individual whoseelection or nomination is in connection with an actual or threatened proxycontest relating to the election of directors to the Company).

 

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

 

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with respect to theCompany; or (v) conviction of a felony or a crime involving moralturpitude 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 theCompany.

 

(c)           HOSTILETAKEOVER. “Hostile Takeover” shall mean any transaction (or one or more relatedtransactions) pursuant to which any “Person” (as such term is used in Sections13(d) and 14(d) of the Act) is or becomes the “Beneficial Owner” (asdefined in Rule 13d-3 under the Act), directly or indirectly, ofsecurities of the Company representing fifty percent (50%) or more of the totalvoting power represented by the Company’s outstanding voting securities withoutregard to whether the Board has approved such acquisition(s).

 

(d)           INVOLUNTARYTERMINATION. “Involuntary Termination” means any termination by the Companyother than for Cause and the Employee’s voluntary termination, upon 30 daysprior written notice to the Company, following (i) any reduction of theEmployee’s base compensation, bonus opportunity or benefits (other than equityor equity related benefits or reductions made in connection with a generaldecrease in base salaries, bonus opportunities or benefits, as applicable formost similarly situated executives of the successor corporation); (ii) theEmployee’s refusal to relocate to a location more than 50 miles from theCompany’s current location; (iii) any action by the Company that resultsin a diminution in the Employee’s authority, duties and responsibilities; (iv) amaterial breach by the Company of any of its obligations hereunder and (v) anyfailure by a successor to assume and perform the Company’s obligationshereunder.

 

5.             LIMITATIONON PAYMENTS. To the extent that any of the payments or benefits provided for inthis Agreement or otherwise to the Employee (collectively the “Payments”)constitute “parachute payments” within the meaning of Section 280G of theInternal 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 thatwould 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 andlocal employment taxes, income taxes, and the Excise Tax (all computed at thehighest applicable marginal rate), results in the Employee’s receipt, on anafter-tax basis, of the greater amount of the Payments notwithstanding that allor some portion of the Payment may be subject to the Excise Tax. If areduction in payments or benefits constituting “parachute payments” isnecessary so that the Payment equals the Reduced Amount, reduction shall occurin the following order unless the Employee elects in writing a different order(provided, however*,* that such election shall be subject to Company approval ifmade on or after the effective date of the event that triggers the Payment):reduction of cash payments; cancellation of accelerated vesting of stockoptions and restricted stock; reduction of employee benefits. In the event thatacceleration of vesting of stock compensation is to be reduced, suchacceleration of vesting shall be cancelled in the reverse order of the date ofgrant of the Employee’s stock options and restricted stock (i.e., earliestgranted stock awards cancelled last) unless the Employee elects in writing adifferent order for cancellation.

 

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The accountingfirm engaged by the Company for general audit purposes as of the day prior tothe effective date of the Hostile Takeover or Change of Control shall perform theforegoing calculations. If the accounting firm so engaged by the Company isserving as accountant or auditor for the individual, entity or group effectingthe Hostile Takeover or Change of Control, the Company shall appoint anationally recognized accounting firm to make the determinations requiredhereunder. The Company shall bear all expenses with respect to thedeterminations by such accounting firm required to be made hereunder.

 

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

 

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

 

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

 

8.             MISCELLANEOUSPROVISIONS.

 

(a)           NODUTY TO MITIGATE. The Employee shall not be required to mitigate the amount ofany payment contemplated by this Agreement (whether by seeking new employmentor 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 receivefrom any other source.

 

(b)           WAIVER.No provision of this Agreement shall be modified, waived or discharged unlessthe modification, waiver or discharge is agreed to in writing and signed by theEmployee 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, anycondition or provision of this 

 

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

 

(c)           WHOLEAGREEMENT. No agreements, representations or understandings (whether oral orwritten and whether express or implied) which are not expressly set forth inthis Agreement have been made or entered into by either party with respect tothe subject matter hereof. This Agreement supersedes any agreement of the sametitle or concerning similar subject matter dated prior to the date of thisAgreement, and by execution of this Agreement both parties agree that any suchpredecessor agreement shall be deemed null and void.

 

(d)           CHOICEOF LAW. The validity, interpretation, construction and performance of thisAgreement shall be governed by the laws of the State of California withoutreference to conflict of laws provisions.

 

(e)           SEVERABILITY.If any term or provision of this Agreement or the application thereof to anycircumstance shall, in any jurisdiction and to any extent, be invalid orunenforceable, such term or provision shall be ineffective as to suchjurisdiction to the extent of such invalidity or unenforceability withoutinvalidating or rendering unenforceable the remaining terms and provisions ofthis Agreement or the application of such terms and provisions to circumstancesother than those as to which it is held invalid or unenforceable, and asuitable and equitable term or provision shall be substituted therefor to carryout, insofar as may be valid and enforceable, the intent and purpose ofthe invalid or unenforceable term or provision.

 

(f)            ARBITRATION.

 

(i)            Except asprovided below, any controversy or dispute which establishes a legal orequitable cause of action (“Claim”) between the Employee and the Companyarising out of, or relating to Employee’s employment and/or this Agreementshall be submitted to final and binding arbitration as the sole and exclusiveremedy for such controversy or dispute. It is the parties’ intent that issues ofarbitrability of any dispute shall be decided by the Arbitrator.

 

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

 

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

 

(iv)          Thearbitration shall be held at the office of AAA nearest the Company facility towhich Employee was assigned prior to the dispute; provided, however, if suchoffice is 

 

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

 

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

 

(vi)          The awardor decision of the arbitrator shall be rendered in writing; shall be final andbinding on the parties; and may be enforced by judgment or order of acourtof competentjurisdiction.

 

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

 

(viii)        Notwithstandingthis Section (f), the Company and the Employee shall have the right toseek from a court of competent jurisdiction provisional non-monetary remediesincluding, but not limited to, temporary restraining orders or preliminaryinjunctions before, during or after arbitration to the extent such remedies arenot available through arbitration or cannot be obtained in a timely fashionthrough arbitration. The Company and the Employee need not await the outcome ofthe arbitration before seeking provisional remedies. Seeking any such remediesshall not be deemed to be a waiver of such person’s right to compelarbitration.

 

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

 

(h)           NOASSIGNMENT OF BENEFITS. The rights of any person to payments or benefits underthis Agreement shall not be made subject to option or assignment, either byvoluntary or involuntary assignment or by operation of law, including (withoutlimitation) bankruptcy, garnishment, attachment or other creditor’s process,and any action in violation of this subsection (h) shall be void.

 

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

 

(j)            ASSIGNMENTBY COMPANY. The Company may assign its rights under this Agreement to anaffiliate, and an affiliate may assign its rights under this Agreement toanother affiliate of the Company or to the Company; provided, however, that noassignment shall be made if the net worth of the assignee is less than the networth of the Company at the time of assignment. In the case of any suchassignment, the term “Company” when used in a section of this Agreementshall 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 bedeemed an original, but all of which together will constitute one and the sameinstrument.

 

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INWITNESS WHEREOF, each of the parties has executed this Agreement, in the caseof the Company by its duly authorized officer, as of the day and year firstabove written.

 

 
| CONCEPTUS, INC.      |                    | EMPLOYEE |
|---------------------------|-------------------------|----------|
|                      |                    |
|                      |                    |
| By:                       | /S/ Mark M.  Sieczkarek |     | By: | /S/ Patricia  Gray |   |
|                      |                    |
|                      |                    |
| Title: President  and CEO |                    |
|                           |                         |          |  |  |  |  |

 

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