EXHIBIT 10.39
FORM OF SENIOR MANAGEMENT
CHANGE OF CONTROL AGREEMENT
This Change of Control Agreement (the "Agreement") is made and entered into
effective as of JANUARY 3, 2000 by and between XXXXX XXXXXX (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 in
control may otherwise occur, with or without the approval of the Company's Board
of Directors (the "Board"). TheBoard recognizes that such consideration can be a
distraction to the Employee, an executive officer 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.
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 EmpIoyment. 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 (withoutlimitation) any termination prior to a Change of Control, the
Employee shall not be entitled to any payments or benefits, other than 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 earlier of (i) the date on which Employee ceases to be employed as an
executive
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officer of the Company, other than as a result of an involuntary
termination by the Company without Cause (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. 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 stock
option granted for the Company's securities held by the Employee shall become
fully vested and immediately exercisable on the effective date of the
transaction and shall be exercisable to the extent so vested in accordance with
the provisions of the Stock Option Agreement and Stock Option Plan pursuant to
which such stock option was granted.
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 Employee shall not be entitled to receive severance
payments. 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 is
terminated 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 18 months after the effective date of the
termination (the "Severance Period") equal to the salary which the Employee
was receiving at the time of such termination, 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 for the prior
fiscal year if a 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 held by the Employee on the date of
termination so that each such option shall be exercisable in full on the
termination date in accordance with the provisions of the Option Agreement
and Plan pursuant to which such option was granted; (v) outplacement
services with a total value not to exceed $15,000. For purposes of this
Agreement, the term "target bonus" shall mean the Employee's base salary in
effect on the termination date multiplied by that percentage of such base
salary that is prescribed by the Company under its Executive Bonus Program
as the percentage of such base
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salary payable to the Employee as a bonus if the Company pays bonuses at
one-hundred percent and (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. 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.
(a) 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.
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) is
or becomes the "Beneficial Owner" (as defined in Rule 13d-3 under said
Act), directly or indirectly, ofsecurities of the Company representing
twenty percent (20%) or more of the total voting power represented by
the Company's then outstanding voting securities without the approval
of the Board of Directors of the Company; or
(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 January 3, 2000 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
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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
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) INVOLUNTARY TERMINATION. "Involuntary Termination" shall include
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 (other than
in connection with a general decrease in base salaries for most similarly
situated employees of the successor corporation); or (ii) the Employee's
refusal to relocate to a location more than 50 miles from the Company's
current location.
5. LIMITATION ON PAYMENTS. To the extent that any of the payments or
benefits provided for in this Agreement to the Employee 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 Company shall reduce the
aggregate amount of such payments and benefits such that the present value
thereof (as determined under the Code and the applicable regulations) is equal
to 2.99 times the Employee's "base amount" as defined in Section 280G(b)(3) of
the Code.
6. CERTAIN BUSINESS COMBINATIONS. In the event it is determined by the
Board, upon consultation with Company management and the Company's independent
auditors, that the enforcement of any Section of this Agreement, including, but
not limited to, Section 2 hereof, which allows for the acceleration of vesting
of option shares upon the effective date of a Change of Control, would preclude
accounting for any proposed business combination of the Company involving a
Change of Control as a pooling of interests, and the Board otherwise desires to
approve such a proposed business transaction which requires as a condition to
the closing of such transaction that it be accounted for as a pooling of
interests, then any such Section of this Agreement shall be null and void. For
purposes of this Section 6, the Board's determination shall require the
unanimous approval of the non-employee Board members.
7. 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.
8. 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.
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9. 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 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 and 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) SEVERABILITV. 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 therefore to
carry out, insofar as may be valid and enforceable, the intent and purpose of
the invalid or unenforceable term or provision.
(f) ARBITRATION. Any dispute or controversy arising under or in connection
with this Agreement may be settled at the option of either party by binding
arbitration in the County of Santa Clara, California, in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction. Punitive
damages shall not be awarded.
(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.
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(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.
(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.
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/ Xxxxxxx Xxxxxxxx By: /s/ Xxxxx Xxxxxx
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Title: Chairman Title: CEO
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Date: 2/16/00 Date: 2/15/00
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