Royalty Agreement - CONCEPTUS INC - 3-30-1998 by CPTS-Agreements

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									EXHIBIT 10.26 ROYALTY AGREEMENT This Agreement (the "Agreement") is made as of the 1st day of October, 1997, by and among Medical Scientific, Inc., a Massachusetts corporation having a principal place of business at 125 John Hancock Road, Taunton, Massachusetts 02780 ("MSI"), Conceptus, Inc., a Delaware corporation having a principal place of business at 1021 Howard Avenue, San Carlos, California 94070 ("Conceptus"), and Microgyn, Inc., a Massachusetts corporation and wholly owned subsidiary of Conceptus ("Microgyn"). (Conceptus and Microgyn are collectively referred to hereinafter as the "Company.") WITNESSETH WHEREAS, MSI and the Company are entering into that certain Manufacturing Transition Agreement, dated as of October 1, 1997 (the "Manufacturing Transition Agreement"), pursuant to which MSI is transferring to Microgyn, and Microgyn is acquiring from MSI, certain manufacturing know-how (as more fully described in the Manufacturing Transition Agreement, the "Manufacturing Know-How"); and WHEREAS, in consideration for the Manufacturing Know-How, the Company is paying the Purchase Price (as defined in the Manufacturing Transition Agreement), which includes the payment of royalties as provided herein; NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties agree as follows: ARTICLE I DEFINITIONS A. Capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Manufacturing Transition Agreement unless the context otherwise requires. B. "AFFILIATE" shall mean at any time, any person or legal entity then directly or indirectly controlled by, controlling or under common control with the party with respect to which this term is associated, and shall include, without limitation, any person or legal entity which owns, either of record or beneficially, 50% or more of the voting stock of any party hereto, or 50% or more of the voting stock of which is owned by any party hereto. C. "REVENUE-GENERATING SHEATH" shall mean any Sheath that the Company, its Affiliates or agents sell to end-users or to distributors or resellers for sale to end-users, as evidenced by the creation of an invoice by the Company; or any Sheath otherwise transferred or disposed of for value, but not including Sheaths provided to third parties solely for demonstration purposes or for use in clinical trials. D. "ROYALTY" shall have the meaning assigned to it in Article II. E. "ROYALTY PERIOD" shall mean the four-year period commencing on the first day following the Transfer Completion Date. F. "SHEATH" shall mean any disposable device that fits over an operative resectoscope and converts the resectoscope from a monopolar device into a bipolar device. The term "Sheath" includes the Products.

ARTICLE II ROYALTIES A. ROYALTY PAYMENTS. As part of the Purchase Price for the transfer of the Manufacturing Know-How

ARTICLE II ROYALTIES A. ROYALTY PAYMENTS. As part of the Purchase Price for the transfer of the Manufacturing Know-How from MSI to the Company, the Company hereby agrees to pay to MSI during the Royalty Period a royalty of three dollars ($3.00) per Revenue-Generating Sheath (the "Royalty"); provided, however, the Company shall have the right to offset any unused balance of the Excess Overhead Prepayment that is not offset against the Cash Component; provided, further, the Company shall not be obligated to pay any Royalty, and no Royalties shall accrue prior to the Transfer Completion Date. B. ROYALTY REPORTS. 1. For each calendar month during the Royalty Period, the Company shall furnish or cause to be furnished to MSI, within 20 days of the end of each calendar month, a written report showing: (i) the number of RevenueGenerating Sheaths sold, transferred or otherwise disposed of for value during such month; and (ii) the Royalties which shall have accrued hereunder in respect of such sales. The Company shall keep accurate records in sufficient detail to enable the Royalties hereunder to be determined and to be verified by MSI. All information provided pursuant to this paragraph shall be considered Confidential Information for purposes of Article IV hereof. 2. Royalties shown to have accrued by each report shall be due and payable on the date such report is due. Payments in whole or in part may be made in advance of such due date. All royalty payments due shall be paid in U.S. dollars via wire transfer. C. RIGHT TO AUDIT. MSI shall have the right, once every twelve months, at its own expense, to have an independent public accountant, reasonably acceptable to the Company, examine the relevant financial books and records of account of the Company during normal business hours, upon reasonable notice, to determine or verify the number of Revenue-Generating Sheaths sold during the Royalty Period. If errors of five percent (5%) or more during a 12-month period are discovered as a result of such examination, the Company shall reimburse MSI for the reasonable expense of such examination and pay the deficiency immediately. All information audited pursuant to this paragraph shall be considered Confidential Information for purposes of Article IV hereof. D. PAYMENT DELAY. In case of any delay in payment by the Company to MSI not occasioned by an event described in Section H of Article VII hereof, a late payment charge of one and one-half percent (1.5%) per month, assessed from the due date of said payment, shall be due and payable by the Company without any special notice. Any payments made by the Company subsequent to the determination that a late payment charge applies, shall first be applied to the late payment charge and then to the outstanding royalty payable. ARTICLE III INDEMNIFICATION The Company will indemnify and hold MSI harmless from and against any and all suits, actions, losses, obligations, deficiencies, liabilities, claims, damages, cost and expenses (including court costs and reasonable attorneys' fees) which arise out of, are caused by, relate to, or result or occur from or in connection with the Company's acts or omissions in connection with its activities under this Agreement. If any claim by a third party is made against MSI and MSI intends to seek indemnification with respect thereto as set forth in this Article III, MSI will promptly give written notice to the Company of such claim. The failure of MSI to give prompt notice shall not relieve the Company of its obligations hereunder, unless such -2-

failure materially prejudices the defense of the claim for which indemnification is sought. The Company will have ten days after such notice is given to elect, by written notice given to MSI, to undertake, conduct and control, through counsel of its own choosing and at the Company's sole risk and expense, the good faith settlement or defense of such claim, and MSI will cooperate with the Company in connection therewith; provided MSI will be

failure materially prejudices the defense of the claim for which indemnification is sought. The Company will have ten days after such notice is given to elect, by written notice given to MSI, to undertake, conduct and control, through counsel of its own choosing and at the Company's sole risk and expense, the good faith settlement or defense of such claim, and MSI will cooperate with the Company in connection therewith; provided MSI will be entitled to participate in such settlement or defense through counsel chosen by MSI, and the fees and expense of such counsel will be borne by MSI; and, provided further, that the Company shall not make any settlement involving the payment of money by MSI without first making available the funds needed to pay the settlement and will not make any settlement involving any injunction or similar restriction against MSI without the consent of MSI, which consent shall not be unreasonably withheld. If the Company does not make a timely election to undertake the good faith defense or settlement of the claim as aforesaid, or if the Company fails to proceed with the good faith defense or settlement of the matter after making such election, in either such event, MSI will have the right to contest, settle or compromise the claim at its exclusive discretion, at the risk and expense of the Company to the full extent set forth above, as the case may be. The provisions of this Article III shall survive termination of the Agreement. ARTICLE IV CONFIDENTIALITY For purposes of this Agreement, "Confidential Information" shall mean any information of a confidential and/or proprietary nature as to which either party has acquired or, during the term of this Agreement, acquires, any interest, including, but not limited to, all discoveries, inventions, improvements and ideas related to any process, formula, machine, device, manufacture, composition of matter, plan or design, whether patentable or not, or relating to the conduct of its business which, prior to the date hereof or during the term of this Agreement, was or is disclosed to the other party. In order for any information to be deemed Confidential Information, it must be in written form and appropriately marked confidential at the time of disclosure to the other party, or alternatively, if the information is disclosed orally, it must be confirmed as confidential in writing by the disclosing party within ten days of such disclosure. Notwithstanding the foregoing, the term "Confidential Information" shall not include any information which: (i) has been published or otherwise becomes a matter of public knowledge by any means other than the receiving party's default in the observance or performance of any term or provision of this Article on its part to be observed and performed; (ii) was known to the receiving party at the time of such disclosure or as evidenced by its business records maintained in the ordinary course; (iii) is at any time disclosed to the receiving party by any person or entity not a party hereto who it believes, after reasonable inquiry, has the right to do disclose same; or (iv) is independently developed by the receiving party. For a period of five years from the date of this Agreement, each party will maintain the other party's Confidential Information in confidence and will not disclose the same to any person or entity not a party hereto or use the same for the benefit of any such third party. The receiving party will keep and maintain complete and accurate written records of the Confidential Information of the other party, will mark such Confidential Information with such legends as the disclosing party may reasonably direct, and will promptly deliver same to the disclosing party upon the expiration or termination hereof or at such other times as the disclosing party may request. -3-

ARTICLE V REPRESENTATIONS AND WARRANTIES A. REPRESENTATIONS AND WARRANTIES OF MSI. MSI hereby represents and warrants to the Company the following: 1. MSI is a corporation organized, validly existing and in corporate good standing under the laws of Massachusetts, has all requisite corporate power and authority to own and operate its property and carry on its business and is not required to qualify to do business in any other jurisdiction. 2. The execution and delivery of this Agreement has been duly and validly authorized by all necessary corporate

ARTICLE V REPRESENTATIONS AND WARRANTIES A. REPRESENTATIONS AND WARRANTIES OF MSI. MSI hereby represents and warrants to the Company the following: 1. MSI is a corporation organized, validly existing and in corporate good standing under the laws of Massachusetts, has all requisite corporate power and authority to own and operate its property and carry on its business and is not required to qualify to do business in any other jurisdiction. 2. The execution and delivery of this Agreement has been duly and validly authorized by all necessary corporate action on the part of MSI, and (assuming valid execution by the Company) this Agreement is a valid and binding obligation of MSI enforceable against it. 3. As of the date of this Agreement, MSI is not a party to any lawsuit, nor is there any outstanding claim against MSI, alleging that use of the Manufacturing Know-How infringes the proprietary rights of any third party. B. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby represents and warrants to MSI the following: 1. Conceptus is a corporation organized, validly existing and in corporate good standing under the laws of Delaware, has all requisite corporate power and authority to own and operate its property and carry on its business and is not required to qualify to do business in any other jurisdiction in which the failure to be so qualified would have a material adverse effect on the business, results of operations or financial condition of Conceptus. Microgyn is a corporation organized, validly existing and in corporate good standing under the laws of Massachusetts, has all requisite corporate power and authority to own and operate its property and carry on its business and is not required to qualify to do business in any other jurisdiction. 2. The execution and delivery of this Agreement has been duly and validly authorized by all necessary corporate action on the part of each of Conceptus and Microgyn, and (assuming valid execution by MSI) this Agreement is a valid and binding obligation of each of Conceptus and Microgyn enforceable against each of them. 3. As of the date of this Agreement, neither Conceptus nor Microgyn is a party to any lawsuit, nor is there any outstanding claim against Conceptus or Microgyn, respectively, alleging that use of the Manufacturing KnowHow infringes the proprietary rights of any third party. 4. As of the date of this Agreement, neither Conceptus nor Microgyn is a party to any agreement or understanding, oral or written, which would, in any manner, be inconsistent with the rights granted herein to MSI and neither Conceptus nor Microgyn shall enter into any agreement or understanding, oral or written, during the term of this Agreement, nor during the term of this Agreement, directly or indirectly, engage in any activity which would, in any manner, be inconsistent with the rights herein granted to MSI. -4-

ARTICLE VI TERM AND TERMINATION A. TERM. This Agreement shall be effective as of the Transfer Completion Date and shall continue until the end of the month following the due date of the last payment to be made by the Company to MSI hereunder unless sooner terminated in accordance with the provisions of this Agreement. B. Termination. This Agreement may be terminated only upon the express written consent of all of the parties hereto. Upon the expiration or termination of this Agreement, all rights and obligations of the parties hereunder

ARTICLE VI TERM AND TERMINATION A. TERM. This Agreement shall be effective as of the Transfer Completion Date and shall continue until the end of the month following the due date of the last payment to be made by the Company to MSI hereunder unless sooner terminated in accordance with the provisions of this Agreement. B. Termination. This Agreement may be terminated only upon the express written consent of all of the parties hereto. Upon the expiration or termination of this Agreement, all rights and obligations of the parties hereunder shall cease except that the provisions of Articles I, III, IV, VI and VII shall survive, and any obligations of the Company to pay Royalties or other amounts to MSI which have accrued as of the date of termination or expiration shall not be affected. ARTICLE VII MISCELLANEOUS A. NO ASSIGNMENT. The Company shall have no right to assign any of its rights or obligations under this Agreement, other than to its successor by merger, consolidation or sale of assets, without the prior written consent of MSI, which consent shall not be unreasonably withheld. B. SEVERABILITY. Any provision of this Agreement which is found to be prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Each provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. If any provision contained in this Agreement shall be held to be excessively broad as to scope, activity or subject so as to be unenforceable at law, such provision shall be construed by limiting and reducing it so as to be enforceable to the extent compatible with the applicable law as then in effect. C. NOTICE. All notices or other communications required or permitted to be given under this Agreement shall be in writing and will be deemed effective and given when delivered in person, sent by delivery service or by certified or registered mail, postage and certification prepaid, or sent by telecopier or facsimile with confirmation to the following addresses:
If to MSI: Medical Scientific, Inc. 125 John Hancock Road Taunton, Massachusetts 02780 Fax: 508.880.7347 Attn: President Warner & Stackpole LLP 75 State Street Boston, Massachusetts 02109 Fax: 617.951.9151 Attn: Michael A. Hickey, Esq.

With a copy to:

-5If to Microgyn: Microgyn, Inc. 1021 Howard Avenue San Carlos, California 94070 Fax: 650.508.7600 Attn: President Conceptus, Inc. 1021 Howard Avenue San Carlos, California 94070 Fax: 650.508.7600 Attn: President

If to Conceptus:

If to Microgyn:

Microgyn, Inc. 1021 Howard Avenue San Carlos, California 94070 Fax: 650.508.7600 Attn: President Conceptus, Inc. 1021 Howard Avenue San Carlos, California 94070 Fax: 650.508.7600 Attn: President Venture Law Group 2800 Sand Hill Road Menlo Park, California 94025 Fax: 650.233.8386 Attn: Michael W. Hall, Esq.

If to Conceptus:

With a copy to:

D. COUNTERPARTS. This Agreement may be executed by the parties in separate counterparts, each of which when so executed and delivered will be an original, but all of which together will constitute one and the same instrument. In pleading or proving this Agreement, it will not be necessary to produce or account for more than one such counterpart. E. CAPTIONS. The captions of sections or subsections of this Agreement are for reference only and will not affect the interpretation or construction of this Agreement. F. WAIVERS. No waiver of any breach or default hereunder will be valid unless in a writing signed by the waiving party. No failure or other delay by either party in exercising any right, power, or privilege hereunder will be or operate as a waiver thereof, nor will any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power, or privilege. G. FURTHER ASSURANCES; COOPERATION. From time to time on and after the date hereof, MSI and the Company will promptly execute and deliver all such further instruments and other documents, and will promptly take all such further actions, as the other may reasonably request in order to effect or confirm the transactions hereby contemplated and to carry out the purposes of this Agreement. In addition, each of MSI and the Company will cooperate with the other in all reasonable respects relating to the transactions and relationship between the parties contemplated hereby. H. FORCE MAJEURE. Any delay in the performance of any of the duties or obligations of any party hereto shall not be considered a breach of this Agreement and the time required for performance shall be extended for a period equal to the period of such delay; provided, that such delay has been caused by or is the result of any act of God, acts of a public enemy, insurrections, riots, embargoes, labor disputes (including strikes, lockouts, job actions, or boycotts), fires, explosions, earthquakes, floods, shortages of material or energy or other unforeseeable causes beyond the control and without the fault or negligence of the party so affected. The party so affected shall give prompt notice to the other party of such cause, and shall take whatever reasonable steps are necessary to relieve the effect of such cause as rapidly as possible. I. ENTIRE AGREEMENT. This Agreement and the Manufacturing Transition Agreement, together with the exhibits hereto and thereto, contain the entire understanding and agreement among the parties, and supersedes any prior understandings or agreements among them, with respect to the subject matter hereof. -6-

J. GOVERNING LAW. This Agreement will to the maximum lawful extent be governed by and interpreted and construed in accordance with the internal laws of the Commonwealth of Massachusetts, as applied to contracts made, and entirely to be performed, within Massachusetts, and without reference to principles of conflicts or choice of law. K. RELATIONSHIP OF PARTIES. The relationship of the Company and MSI will be one of independent contracting parties, and not that of partners, joint venturers, principal-and-agent, or otherwise. Neither the

J. GOVERNING LAW. This Agreement will to the maximum lawful extent be governed by and interpreted and construed in accordance with the internal laws of the Commonwealth of Massachusetts, as applied to contracts made, and entirely to be performed, within Massachusetts, and without reference to principles of conflicts or choice of law. K. RELATIONSHIP OF PARTIES. The relationship of the Company and MSI will be one of independent contracting parties, and not that of partners, joint venturers, principal-and-agent, or otherwise. Neither the Company nor MSI will have or purport to have any right, power, or authority to bind the other. L. ARBITRATION. The parties agree to work together in good faith to resolve any disputes arising under or in connection with this Agreement and the transactions and relationship between the parties contemplated hereby, and to explore resolution of the dispute through methods of alternative dispute resolution. If the parties are unable to resolve a dispute, it shall be finally settled by a panel of three arbitrators, each having at least five years of experience as an arbitrator and otherwise mutually acceptable to the parties, in an arbitration administered by American Arbitration Association in accordance with the internal laws of the Commonwealth of Massachusetts (except that any dispute relating to the construction or effect of any patent shall be resolved under the applicable laws of the United States or such other jurisdiction as granted such patent). Any demand for arbitration hereunder must be made before the running of the legal statute of limitations applicable to the claim at issue. Any such arbitration shall take place in Boston, Massachusetts, unless otherwise agreed by the parties, and shall be subject to the then applicable Federal Rules of Civil Procedure. Each of the Company and MSI will be responsible for one-half of the fees and expenses of the panel of arbitrators, and all of such party's own costs and expenses, in connection with any such arbitration. Judgment upon any award rendered by the panel of arbitrators, if such award is in accordance with applicable law and the terms of this Agreement, may be entered in any court of competent jurisdiction. The decision of the panel of arbitrators shall be in writing and shall set forth in reasonable detail the basis for such decision. -7-

IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date above first written. MICROGYN, INC.
By: /s/ Sanford Fitch Name: Sanford Fitch Title: Chief Financial Officer

CONCEPTUS, INC.
By: /s/ Kathryn Tunstall Name: Kathryn Tunstall Title: President and Chief Executive Officer

MEDICAL SCIENTIFIC, INC.
By: /s/ Paul C. Nardella Name: Paul C. Nardella Title: President

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EXHIBIT 10.27

IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date above first written. MICROGYN, INC.
By: /s/ Sanford Fitch Name: Sanford Fitch Title: Chief Financial Officer

CONCEPTUS, INC.
By: /s/ Kathryn Tunstall Name: Kathryn Tunstall Title: President and Chief Executive Officer

MEDICAL SCIENTIFIC, INC.
By: /s/ Paul C. Nardella Name: Paul C. Nardella Title: President

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EXHIBIT 10.27 CONCEPTUS, INC. MASTER CONSULTING AGREEMENT This Agreement is entered into by and between Conceptus, Inc., a Delaware corporation, ("Conceptus"), and Howard Palefsky (hereinafter "Consultant"), this 15th day of October, 1997. In consideration of the mutual promises contained herein, the parties hereto agree as follows: SECTION 1: CONSULTING 1.1 SERVICES. Consultant shall render consulting services in the area of corporate development/strategic acquisitions, including working with the CEO and Board to develop a strategy to acquire complimentary companies, products and technologies and strategy implementation to include identifying/ obtaining sources of financing and structuring the transaction. (hereinafter its "Duties"). Consultant shall consult with the Board of Directors, officers, and department heads of Conceptus, and such other personnel as designated by the President and CEO of Conceptus, in regard to its Duties. 1.2 PROJECT DESIGNATION. Consultant shall work on a per project basis. Upon identification of a project to be performed by Consultant during the term of this Agreement, Conceptus shall prepare a Project Designation in the form attached hereto and marked Exhibit A (the "Project Designation") which shall detail the scope, duration and payment terms for the project in question. Upon obtaining Consultant's consent to work on the project, the Project Designation shall be signed by the parties and attached hereto. Consultant's relationship with respect to such project shall thereafter be governed by this Agreement as supplemented and/or amended by the terms and conditions set forth in the Project Designation. 1.3 SERVICES FOR OTHERS. Consultant shall be free to represent or perform services for other persons during the term of this Agreement, provided that performance of such services does not interfere with Consultant's Duties under this Agreement. However, Consultant agrees that Consultant does not presently

EXHIBIT 10.27 CONCEPTUS, INC. MASTER CONSULTING AGREEMENT This Agreement is entered into by and between Conceptus, Inc., a Delaware corporation, ("Conceptus"), and Howard Palefsky (hereinafter "Consultant"), this 15th day of October, 1997. In consideration of the mutual promises contained herein, the parties hereto agree as follows: SECTION 1: CONSULTING 1.1 SERVICES. Consultant shall render consulting services in the area of corporate development/strategic acquisitions, including working with the CEO and Board to develop a strategy to acquire complimentary companies, products and technologies and strategy implementation to include identifying/ obtaining sources of financing and structuring the transaction. (hereinafter its "Duties"). Consultant shall consult with the Board of Directors, officers, and department heads of Conceptus, and such other personnel as designated by the President and CEO of Conceptus, in regard to its Duties. 1.2 PROJECT DESIGNATION. Consultant shall work on a per project basis. Upon identification of a project to be performed by Consultant during the term of this Agreement, Conceptus shall prepare a Project Designation in the form attached hereto and marked Exhibit A (the "Project Designation") which shall detail the scope, duration and payment terms for the project in question. Upon obtaining Consultant's consent to work on the project, the Project Designation shall be signed by the parties and attached hereto. Consultant's relationship with respect to such project shall thereafter be governed by this Agreement as supplemented and/or amended by the terms and conditions set forth in the Project Designation. 1.3 SERVICES FOR OTHERS. Consultant shall be free to represent or perform services for other persons during the term of this Agreement, provided that performance of such services does not interfere with Consultant's Duties under this Agreement. However, Consultant agrees that Consultant does not presently perform, and does not intend to perform, during the term of this Agreement, consulting or other services for third parties whose businesses or proposed businesses in any way involve the design or use of products that are or would be competitive with the products or proposed products of Conceptus (except for companies previously disclosed by Consultant to Conceptus in writing). Should Consultant propose to perform consulting or other services for any such third party, Consultant agrees to notify Conceptus in writing in advance (specifying the name of the organization for whom Consultant proposes to perform such services) and to provide information to Conceptus sufficient to allow it to determine if the performance of such services would conflict with areas of interest to Conceptus, or any further services that Conceptus might request of Consultant under this Agreement.

1.4 PAYMENT. Conceptus agrees to pay Consultant for its services to be rendered under this Agreement in accordance with the payment terms set forth in each Project Designation. Conceptus shall not be responsible for payment of Consultant's expenses in the performance of its Duties, including, but not limited to, expenses for travel and similar items, unless such expense, which shall be reasonable in amount, is expressly authorized in writing by an Officer or the Controller of Conceptus, prior to the incurring of such expenses, or is permitted under the terms of a Project Designation. Conceptus will reimburse Consultant for such reasonable, authorized expenses incurred by Consultant upon the presentation by Consultant, from time to time, of a detailed and itemized account of such expenses substantiated by receipts. 1.5 TERM. This Agreement shall be for a period of twenty-four (24) months, commencing on October 15, 1997 and terminating on October 14, 1999; however, this Agreement may be terminated at any time by either party by sixty (60) days written notice to the other party. 1.6 INDEPENDENT CONTRACTOR. Consultant's services are to be performed as an independent contractor with the customary and usual independence associated therewith and Consultant shall not be deemed to be an

1.4 PAYMENT. Conceptus agrees to pay Consultant for its services to be rendered under this Agreement in accordance with the payment terms set forth in each Project Designation. Conceptus shall not be responsible for payment of Consultant's expenses in the performance of its Duties, including, but not limited to, expenses for travel and similar items, unless such expense, which shall be reasonable in amount, is expressly authorized in writing by an Officer or the Controller of Conceptus, prior to the incurring of such expenses, or is permitted under the terms of a Project Designation. Conceptus will reimburse Consultant for such reasonable, authorized expenses incurred by Consultant upon the presentation by Consultant, from time to time, of a detailed and itemized account of such expenses substantiated by receipts. 1.5 TERM. This Agreement shall be for a period of twenty-four (24) months, commencing on October 15, 1997 and terminating on October 14, 1999; however, this Agreement may be terminated at any time by either party by sixty (60) days written notice to the other party. 1.6 INDEPENDENT CONTRACTOR. Consultant's services are to be performed as an independent contractor with the customary and usual independence associated therewith and Consultant shall not be deemed to be an employee of Conceptus or to have the authority to enter into any contract on behalf of Conceptus or to otherwise bind Conceptus to any agreement unless expressly authorized in writing to do so. Consultant shall be responsible for payment of all income, social security and other taxes incurred by Consultant. Consultant agrees to indemnify and hold harmless Conceptus to the extent of any obligations imposed by law on Conceptus to pay any withholding taxes, social security, unemployment or disability insurance, or similar items in connection with any payment made to Consultant by Conceptus for Consultant's services provided hereunder. 1.7 NO ASSIGNMENT. Because of the nature of the services to be rendered by Consultant, this Agreement may not be assigned by Consultant without the prior written consent of Conceptus. This Agreement may be assigned in whole or in part by Conceptus without restriction. SECTION 2: CONFIDENTIALITY In consideration of its access to the premises of Conceptus and/or its access to certain Confidential Information of Conceptus, in connection with its business relationship with Conceptus, Consultant hereby represents and agrees as follows: 2.1. CONFIDENTIAL INFORMATION. For purposes of this Agreement, the term "Confidential Information" means: (a) Any information which Conceptus possesses that has been created, discovered or developed by or for Conceptus or which has otherwise been made known to Conceptus, and which has or could have commercial value or utility in the business in which Conceptus is engaged; or

(b) Any information that is related to the business of Conceptus and is generally not known by non-Conceptus personnel. By way of illustration, but not limitation, Confidential Information includes trade secrets and any information concerning products, processes, formulas, designs, inventions (whether or not patentable or registrable under copyright or similar laws and whether or not reduced to practice), discoveries, concepts, ideas, improvements, techniques, methods, research, development and test results, specifications, data, know-how, software, formats, marketing plans and analyses, business plans and analyses, strategies, forecasts, customer and supplier identities, characteristics and agreements. 2.2 EXCLUSIONS. Notwithstanding the foregoing, the term Confidential Information shall not include: (a) Any information which becomes generally available to the public other than as a result of a breach of the confidentiality portions of this Consulting Agreement or any other agreement requiring confidentiality between Conceptus and Consultant;

(b) Any information that is related to the business of Conceptus and is generally not known by non-Conceptus personnel. By way of illustration, but not limitation, Confidential Information includes trade secrets and any information concerning products, processes, formulas, designs, inventions (whether or not patentable or registrable under copyright or similar laws and whether or not reduced to practice), discoveries, concepts, ideas, improvements, techniques, methods, research, development and test results, specifications, data, know-how, software, formats, marketing plans and analyses, business plans and analyses, strategies, forecasts, customer and supplier identities, characteristics and agreements. 2.2 EXCLUSIONS. Notwithstanding the foregoing, the term Confidential Information shall not include: (a) Any information which becomes generally available to the public other than as a result of a breach of the confidentiality portions of this Consulting Agreement or any other agreement requiring confidentiality between Conceptus and Consultant; (b) Information received from a third party in rightful possession of such information who is not restricted from disclosing such information; and (c) Information known by Consultant prior to its receipt of such information from Conceptus which prior knowledge can be documented. 2.3 DOCUMENTS. Consultant agrees that, without the express written consent of Conceptus, Consultant will not remove from Conceptus's premises, any notes, formulas, programs, data, records, machines or any other documents or items which in any manner contain or constitute Confidential Information, nor will Consultant make reproductions or copies of same. In the event Consultant receives any such documents or items by personal delivery from any duly designated or authorized personnel of Conceptus, Consultant shall be deemed to have received such express written consent of Conceptus. In the event that Consultant receives any such documents or items, other than through personal delivery as described in the preceding sentence, Consultant agrees to inform Conceptus promptly of its possession of such documents or items. Consultant shall promptly return any such documents or items, along with any reproductions or copies, to Conceptus upon Conceptus's demand or upon termination of this Agreement. 2.4 NO DISCLOSURE. Consultant agrees that Consultant will hold in trust and confidence all Confidential Information and will not disclose to others, directly or indirectly, any Confidential Information or anything relating to such information without the prior written consent of Conceptus, except as may be necessary in the course of its business relationship with Conceptus. Consultant further agrees that Consultant will not use any Confidential Information without the prior written consent of Conceptus, except as may be necessary in the course of its business relationship with Conceptus, and that the provisions of this Section 2.4 shall survive termination of this Agreement.

2.5 PATENTS; COPYRIGHTS. Consultant acknowledges and agrees that all Confidential Information existing or developed by or for Conceptus shall be the sole property of Conceptus, and Conceptus shall be the sole owner of all patent, copyright and other rights and protections in connection therewith. Consultant hereby assigns to Conceptus all right, title and interest that Consultant may have to or acquire in all such Confidential Information. Upon learning of any Confidential Information not already disclosed to Conceptus during the term of this Agreement, Consultant agrees that Consultant will promptly disclose its knowledge of such Confidential Information to Conceptus. 2.6 OWNERSHIP. Consultant agrees that all Confidential Information that is related to or which results from work performed by Consultant for Conceptus ("Inventions") shall be the sole and exclusive property of Conceptus or its nominees. Conceptus and its nominees shall have the right to use and/or to apply for patents, copyrights or other statutory or common law protections for such Inventions in any and all countries. Consultant further agrees (i) to assist Conceptus in every proper way to obtain and from time to time to enforce such patents, copyrights and other rights and protections relating to Inventions, and (ii) to execute and deliver to Conceptus or its nominee upon request all such documents as Conceptus or its nominee may determine are

2.5 PATENTS; COPYRIGHTS. Consultant acknowledges and agrees that all Confidential Information existing or developed by or for Conceptus shall be the sole property of Conceptus, and Conceptus shall be the sole owner of all patent, copyright and other rights and protections in connection therewith. Consultant hereby assigns to Conceptus all right, title and interest that Consultant may have to or acquire in all such Confidential Information. Upon learning of any Confidential Information not already disclosed to Conceptus during the term of this Agreement, Consultant agrees that Consultant will promptly disclose its knowledge of such Confidential Information to Conceptus. 2.6 OWNERSHIP. Consultant agrees that all Confidential Information that is related to or which results from work performed by Consultant for Conceptus ("Inventions") shall be the sole and exclusive property of Conceptus or its nominees. Conceptus and its nominees shall have the right to use and/or to apply for patents, copyrights or other statutory or common law protections for such Inventions in any and all countries. Consultant further agrees (i) to assist Conceptus in every proper way to obtain and from time to time to enforce such patents, copyrights and other rights and protections relating to Inventions, and (ii) to execute and deliver to Conceptus or its nominee upon request all such documents as Conceptus or its nominee may determine are necessary or appropriate (including assignments of inventions). (Such documents may be necessary to: (a) vest in Conceptus or its nominee clear and marketable title in and to Inventions, (b) apply for, prosecute and obtain patents, copyrights and other rights and protections relating to Inventions, or (c) enforce patents, copyrights and other rights and protections relating to Inventions.) Consultant's obligations pursuant to this Section shall continue beyond the termination of its consulting relationship with Conceptus, but Conceptus agrees to compensate Consultant after the termination of the consulting relationship at a reasonable rate for time actually spent or expenses incurred by Consultant at Conceptus's request. 2.7 LIMITS OF APPLICATION. Consultant has been informed and understands that the provisions of Section 2.5 above do not apply to any Invention that qualifies in all respects under Section 2870 of the California Labor Code, which provides: "(a) Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer's equipment, supplies, facilities, or trade secret information except for those that either: (i) Relate at the time of conception or reduction to practice of the invention to the employer's business, or actual or demonstrably anticipated research or development of the employer. (ii) Result from any work performed by the employee for the employer. (b) To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable."

2.8 NO CONFLICTING AGREEMENTS. Consultant represents that Consultant has not brought, and will not bring, to Conceptus, and will not use in the performance of its responsibilities for Conceptus, any materials or documents of a former employer that are not generally available to the public, unless Consultant has obtained the express written consent of such former employer for Consultant's possession and use of such materials or documents for the specific purposes that Consultant proposes to make of such materials or documents under this Agreement. Moreover, Consultant represents that its performance of this Agreement and the performance of its Duties as a consultant of Conceptus does not and will not breach any agreement or relationship of trust and confidence Consultant may have with any third party, whether oral, written or implied. Consultant agrees that Consultant has not entered into and will not enter into any agreement in conflict with this Agreement. 2.9 PUBLICATION. Consultant shall not submit for publication or publish any scientific writing, oral presentation, poster session or any similar disclosure of results or conclusions resulting from the services performed under this Agreement without the prior express written consent of Conceptus. 2.10 REMEDIES. Consultant understands that, in the event Consultant fails to comply with this Article 2 of this

2.8 NO CONFLICTING AGREEMENTS. Consultant represents that Consultant has not brought, and will not bring, to Conceptus, and will not use in the performance of its responsibilities for Conceptus, any materials or documents of a former employer that are not generally available to the public, unless Consultant has obtained the express written consent of such former employer for Consultant's possession and use of such materials or documents for the specific purposes that Consultant proposes to make of such materials or documents under this Agreement. Moreover, Consultant represents that its performance of this Agreement and the performance of its Duties as a consultant of Conceptus does not and will not breach any agreement or relationship of trust and confidence Consultant may have with any third party, whether oral, written or implied. Consultant agrees that Consultant has not entered into and will not enter into any agreement in conflict with this Agreement. 2.9 PUBLICATION. Consultant shall not submit for publication or publish any scientific writing, oral presentation, poster session or any similar disclosure of results or conclusions resulting from the services performed under this Agreement without the prior express written consent of Conceptus. 2.10 REMEDIES. Consultant understands that, in the event Consultant fails to comply with this Article 2 of this Agreement, Conceptus may suffer irreparable harm that may not be adequately compensated by monetary damages. Accordingly, Consultant agrees that, in the event of its breach or threatened breach of any term of this Article 2, Conceptus shall be entitled to injunctive or other preliminary or equitable relief in addition to such other remedies as may be available to Conceptus for such breach or threatened breach, including damages. SECTION 3: MISCELLANEOUS 3.1 ACTIONS; EXPENSES. In the event of any action at law or in equity to enforce the provisions of this Agreement, the unsuccessful party shall pay to the other all costs and expenses so incurred, including attorneys' fees. 3.2 GOVERNING LAW. This Agreement shall be construed in accordance with and governed by the laws of the State of California. 3.3 NOTICE. Any notice required or permitted to be given by Conceptus under this Agreement shall be in writing and shall be deemed received and sufficient when delivered personally or sent by telecopy or seventy-two (72) hours after being deposited in the U.S. mail or with a courier service. Any notice required or permitted to be given by Consultant under this Agreement shall be in writing and shall be deemed received and sufficient when received by Conceptus. The parties hereto agree that all such notices shall be delivered to the addresses specified below. 3.4 ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Agreement expresses the entire understanding with respect to the subject matter hereof and supersedes and terminates any prior

oral or written agreements with respect to the subject matter hereof. Any term of this Agreement may be amended and observance of any term of this Agreement may be waived only with the written consent of the parties hereto. Waiver of any term or condition of this Agreement by any party shall not be construed as a waiver of any subsequent breach or failure of the same term or condition or a waiver of any other term or condition of this Agreement. The failure of any party at any time to require performance by any other party of any provision of this Agreement shall not affect the right of any such party to require future performance of such provision or any other provision of Agreement.

Consultant and Conceptus hereby accept and agree to the above terms and acknowledge receipt of a copy of this Agreement. CONCEPTUS, INC. (HIRING AUTHORITY)
By: /s/ Kathryn Tunstall ------------------------------------------

oral or written agreements with respect to the subject matter hereof. Any term of this Agreement may be amended and observance of any term of this Agreement may be waived only with the written consent of the parties hereto. Waiver of any term or condition of this Agreement by any party shall not be construed as a waiver of any subsequent breach or failure of the same term or condition or a waiver of any other term or condition of this Agreement. The failure of any party at any time to require performance by any other party of any provision of this Agreement shall not affect the right of any such party to require future performance of such provision or any other provision of Agreement.

Consultant and Conceptus hereby accept and agree to the above terms and acknowledge receipt of a copy of this Agreement. CONCEPTUS, INC. (HIRING AUTHORITY)
By: /s/ Kathryn Tunstall -----------------------------------------Name: Kathryn Tunstall --------------------------------------Title: President and Chief Executive Officer ----------------------------------------

Address: 1021 Howard Avenue San Carlos, CA 94070 Telephone: (415) 802-7240 CONCEPTUS, INC. (CHIEF FINANCIAL OFFICER)
By: /s/ Sanford Fitch -----------------------------------------

Name: Sanford Fitch --------------------------------------Title: Chief Financial Officer ---------------------------------------

Address: 1021 Howard Avenue San Carlos, CA 94070 Telephone: (415) 802-7240 "CONSULTANT"
By: /s/ Howard D. Palefsky -----------------------------------------Name: Howard D. Palefsky ----------------------------------------

Address: 2800 Sand Hill Road, Suite 120 Menlo Park, CA 94025 Telephone: (650) 234-8215

EXHIBIT A

Consultant and Conceptus hereby accept and agree to the above terms and acknowledge receipt of a copy of this Agreement. CONCEPTUS, INC. (HIRING AUTHORITY)
By: /s/ Kathryn Tunstall -----------------------------------------Name: Kathryn Tunstall --------------------------------------Title: President and Chief Executive Officer ----------------------------------------

Address: 1021 Howard Avenue San Carlos, CA 94070 Telephone: (415) 802-7240 CONCEPTUS, INC. (CHIEF FINANCIAL OFFICER)
By: /s/ Sanford Fitch -----------------------------------------

Name: Sanford Fitch --------------------------------------Title: Chief Financial Officer ---------------------------------------

Address: 1021 Howard Avenue San Carlos, CA 94070 Telephone: (415) 802-7240 "CONSULTANT"
By: /s/ Howard D. Palefsky -----------------------------------------Name: Howard D. Palefsky ----------------------------------------

Address: 2800 Sand Hill Road, Suite 120 Menlo Park, CA 94025 Telephone: (650) 234-8215

EXHIBIT A PROJECT DESIGNATION 1. DESCRIPTION OF PROJECT: Consultant shall render consulting services in the area of corporate development/strategic acquisitions, including working with the CEO and Board to develop a strategy to acquire complimentary companies, products and technologies and strategy implementation to include identifying/ obtaining sources of financing and structuring the transaction. Consultant shall consult with the Board of Directors, officers, and department heads of Conceptus, and such other personnel as designated by the President and CEO of Conceptus, in regard to its Duties.

EXHIBIT A PROJECT DESIGNATION 1. DESCRIPTION OF PROJECT: Consultant shall render consulting services in the area of corporate development/strategic acquisitions, including working with the CEO and Board to develop a strategy to acquire complimentary companies, products and technologies and strategy implementation to include identifying/ obtaining sources of financing and structuring the transaction. Consultant shall consult with the Board of Directors, officers, and department heads of Conceptus, and such other personnel as designated by the President and CEO of Conceptus, in regard to its Duties. 2. TIME DEVOTED TO PROJECT: One day per week (52 days per year) 3. COMPENSATION: $100,000.00 per year, and 90,000 shares of stock, vested 1/24 monthly over two years. (a) PAYMENT SCHEDULE: $ 8,333.33 monthly (b) EXPENSES AUTHORIZED FOR REIMBURSEMENT BY CONCEPTUS: Out-of-pocket expenses, including local travel and local telephone calls, shall be reimbursed by Conceptus. Conceptus shall reimburse Consultant for any pre-approved out-of-area travel and long-distance telephone calls, including car and cellular telephone calls. (c) INVOICE SUBMISSION AND PAYMENT: Invoices shall be submitted to Conceptus monthly. Invoices shall be paid by Conceptus within thirty (30) days of invoice date. Conceptus will not be liable for reimbursable expenses incurred but not billed within three months after the date of such expenses. 5. DURATION OF PROJECT: Two Years

Signatures: CONCEPTUS, INC. (HIRING AUTHORITY)
By: /s/ Kathryn Tunstall -----------------------------------------Name: Kathryn Tunstall ---------------------------------------Title: President and Chief Executive Officer -----------------------------------------

Address: 1021 Howard Avenue San Carlos, CA 94070 Telephone: (415) 802-7240 CONCEPTUS, INC. (CHIEF FINANCIAL OFFICER)
By: /s/ Sanford Fitch ------------------------------------Name: Sanford Fitch ----------------------------------Title: Chief Financial Officer

Signatures: CONCEPTUS, INC. (HIRING AUTHORITY)
By: /s/ Kathryn Tunstall -----------------------------------------Name: Kathryn Tunstall ---------------------------------------Title: President and Chief Executive Officer -----------------------------------------

Address: 1021 Howard Avenue San Carlos, CA 94070 Telephone: (415) 802-7240 CONCEPTUS, INC. (CHIEF FINANCIAL OFFICER)
By: /s/ Sanford Fitch ------------------------------------Name: Sanford Fitch ----------------------------------Title: Chief Financial Officer ---------------------------------

Address: 1021 Howard Avenue San Carlos, CA 94070 Telephone: (415) 802-7240 "CONSULTANT"
By: /s/ Howard D. Palefsky -----------------------------------------

Name: Howard D. Palefsky ----------------------------------------

Address: 2800 Sand Hill Road, Suite 120 Menlo Park, CA 94025 Telephone: (650) 234-8215

Exhibit 23.1 Consent of Ernst & Young LLP, Independent Auditors We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-4186 and 33330149) pertaining to the 1995 Directors Stock Option Plan, 1995 Employee Stock Purchase Plan, 1993 Stock Plan of Conceptus, Inc. of our report dated February 2, 1998, with respect to the consolidated financial statements of Conceptus, Inc. included in this Annual Report (Form 10-K) for the year ended December 31, 1997, filed with the Securities and Exchange Commission. Palo Alto, California

Exhibit 23.1 Consent of Ernst & Young LLP, Independent Auditors We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-4186 and 33330149) pertaining to the 1995 Directors Stock Option Plan, 1995 Employee Stock Purchase Plan, 1993 Stock Plan of Conceptus, Inc. of our report dated February 2, 1998, with respect to the consolidated financial statements of Conceptus, Inc. included in this Annual Report (Form 10-K) for the year ended December 31, 1997, filed with the Securities and Exchange Commission. Palo Alto, California March 25, 1998

ARTICLE 5 MULTIPLIER: 1,000

PERIOD TYPE FISCAL YEAR END PERIOD START PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY SALES TOTAL REVENUES CGS TOTAL COSTS OTHER EXPENSES LOSS PROVISION INTEREST EXPENSE INCOME PRETAX INCOME TAX INCOME CONTINUING DISCONTINUED EXTRAORDINARY CHANGES NET INCOME EPS PRIMARY EPS DILUTED ARTICLE 5 MULTIPLIER: 1,000

YEAR DEC 31 1997 JAN 01 1997 DEC 31 1997 9,250 17,808 617 77 355 28,243 2,060 (970) 29,480 1,635 0 0 0 63,505 (36,001) 29,480 1,426 1,426 3,516 3,516 11,752 (96) 13 (12,058) 0 (12,058) 0 0 0 (12,058) (1.29) (1.29)

PERIOD TYPE FISCAL YEAR END PERIOD START PERIOD END CASH SECURITIES

3 MOS DEC 31 1996 JAN 01 1996 MAR 31 1996 46,666 1,281

ARTICLE 5 MULTIPLIER: 1,000

PERIOD TYPE FISCAL YEAR END PERIOD START PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY SALES TOTAL REVENUES CGS TOTAL COSTS OTHER EXPENSES LOSS PROVISION INTEREST EXPENSE INCOME PRETAX INCOME TAX INCOME CONTINUING DISCONTINUED EXTRAORDINARY CHANGES NET INCOME EPS PRIMARY EPS DILUTED ARTICLE 5 MULTIPLIER: 1,000

YEAR DEC 31 1997 JAN 01 1997 DEC 31 1997 9,250 17,808 617 77 355 28,243 2,060 (970) 29,480 1,635 0 0 0 63,505 (36,001) 29,480 1,426 1,426 3,516 3,516 11,752 (96) 13 (12,058) 0 (12,058) 0 0 0 (12,058) (1.29) (1.29)

PERIOD TYPE FISCAL YEAR END PERIOD START PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY SALES TOTAL REVENUES CGS TOTAL COSTS OTHER EXPENSES LOSS PROVISION INTEREST EXPENSE

3 MOS DEC 31 1996 JAN 01 1996 MAR 31 1996 46,666 1,281 93 42 8 48,262 965 485 48,765 1,288 0 0 0 61,583 (14,216) 48,765 82 82 159 159 1,780 0 8

ARTICLE 5 MULTIPLIER: 1,000

PERIOD TYPE FISCAL YEAR END PERIOD START PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY SALES TOTAL REVENUES CGS TOTAL COSTS OTHER EXPENSES LOSS PROVISION INTEREST EXPENSE INCOME PRETAX INCOME TAX INCOME CONTINUING DISCONTINUED EXTRAORDINARY CHANGES NET INCOME EPS PRIMARY EPS DILUTED

3 MOS DEC 31 1996 JAN 01 1996 MAR 31 1996 46,666 1,281 93 42 8 48,262 965 485 48,765 1,288 0 0 0 61,583 (14,216) 48,765 82 82 159 159 1,780 0 8 (1,465) 0 (1,465) 0 0 0 (1,465) (0.24) (0.24)


								
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