EXHIBIT 10.20
FORM OF SENIOR MANAGEMENT
CHANGE OF CONTROL AGREEMENT
This Change of Control Agreement (the "Agreement") is made and entered
into effective as of May 13, 1997, by and between Employee (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"). 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.
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:
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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 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 officer or director-level employee 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.
(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 (the
"Option") 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 Option was 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 held by the Employee shall become vested on the
effective date of the transaction as to fifty percent (50%) of the Option
shares that have not otherwise vested as of such date. The Option 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 Agreement pursuant to which each such 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
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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 12 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; and (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 salary payable to
the Employee as a 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. 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.
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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, of securities 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 May 13, 1997 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 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 a
transaction or series of transactions that results in any Person becoming the
Beneficial Owner, directly or indirectly, of securities of the Company
representing more than 50% of the total voting power
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represented by the Company's then outstanding voting securities WITHOUT the
approval of the Board of Directors of the Company.
(d) 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
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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.
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) 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. 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.
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(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.
(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:
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Title:
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