Conceptus (CPTS)

10.01           CONVERSION PRIVILEGE; RESTRICTIVE LEGENDS.

(A)               Subject to the provisions of Article III, the Securities shall be convertible into cash and, if applicable, shares of Common Stock in accordance with this Article X and as set forth below if any of the following conditions are satisfied:

(i)          Conversion Based on Closing Sale Price of Common Stock.  The Securities may be surrendered for conversion into cash and, if applicable, shares of Common Stock on any Business Day of a calendar quarter after the calendar quarter ending March 31, 2007, if the Closing Sale Price for each of twenty (20) or more Trading Days in a period of thirty (30) consecutive Trading Days ending on the last Trading Day of the immediately preceding calendar quarter exceeds one hundred and twenty percent (120%) of the Conversion Price in effect on the last Trading Day of the immediately preceding calendar quarter.  Solely for purposes of determining whether

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the Securities shall have become convertible pursuant to this Section 10.01(A)(i), the Board of Directors shall, in its good faith determination, which shall be described in a Board Resolution, make appropriate adjustments to the Closing Sale Prices and/or such Conversion Price used to determine whether the Securities shall have become convertible pursuant to this Section 10.01(A)(i) to account for any adjustments to the Conversion Rate which shall have become effective, or any event requiring an adjustment to the Conversion Rate where the Ex Date of such event occurs, during the period of thirty (30) consecutive Trading Days ending on the last Trading Day of the immediately preceding calendar quarter.

(ii)        Conversion Upon Satisfaction of Trading Price Condition.  The Securities may be surrendered for conversion into cash and, if applicable, shares of Common Stock during the five (5) consecutive Business Days immediately after any five (5) consecutive Trading Day period (such five (5) consecutive Trading Day period, the “Note Measurement Period”) in which the average Trading Price per $1,000 principal amount of the Securities was equal to or less than ninety seven percent (97%) of the average Conversion Value per $1,000 principal amount of Securities (as defined below) during the Note Measurement Period (such condition, the “Trading Price Condition”).  The Bid Solicitation Agent shall not have any obligation to determine the Trading Price unless the Company has requested such determination, and the Company shall have no obligation to make such request unless a Holder provides the Company with reasonable evidence that the Trading Price per $1,000 principal amount of the Securities would be equal to or less than ninety seven percent (97%) of the product of the Closing Sale Price and the Conversion Rate.  Upon receipt of such evidence, the Company shall instruct the Bid Solicitation Agent to determine the Trading Price per $1,000 principal amount of the Securities for each of the five (5) successive Trading Days immediately after the Company receives such evidence and on each Trading Day thereafter until the first Trading Day on which the Trading Price Condition is no longer satisfied.  For purposes of this paragraph, the “Conversion Value” per $1,000 principal amount of Securities, on a given Trading Day, means the product of the Closing Sale Price on such Trading Day and the Conversion Rate in effect on such Trading Day.

(iii)       Conversion Based on Redemption.  A Security, or portion of a Security, which has been called for Redemption pursuant to paragraph 6 of the Securities may be surrendered for conversion into cash and, if applicable, shares of Common Stock; provided, however, that such Security or portion thereof may be surrendered for conversion pursuant to this paragraph only until the close of business on the Business Day immediately preceding the Redemption Date.

(iv)      Conversion Upon Certain Distributions.  If the Company takes any action, or becomes aware of any event, that would require an adjustment to the Conversion Rate pursuant to Sections 10.05(b), 10.05(c), 10.05(d) or 10.05(e), the Securities may be surrendered for conversion into cash and, if applicable, shares of Common Stock beginning on the date the Company mails the notice to the Holders as provided in Section 10.10 (or, if earlier, the date the Company is required to mail such notice) and at any time thereafter until the close of business on the Business Day

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immediately preceding the Ex Date of the applicable transaction or until the Company announces that such transaction will not take place.

(v)        Conversion Upon Occurrence of Certain Corporate Transactions.  If either:

(a)                 a Fundamental Change or a Make-Whole Fundamental Change occurs; or

(b)                 the Company is a party to a consolidation, merger or binding share exchange pursuant to which the Common Stock would be converted into or exchanged for, or would constitute solely the right to receive, cash or other securities or property,

then, in each case, the Securities may be surrendered for conversion into cash and, if applicable, shares of Common Stock at any time during the period that begins on, and includes, the date that is thirty (30) calendar days prior to the date originally announced by the Company as the anticipated effective date of such transaction (which anticipated effective date the Company shall disclose, in good faith, in the written notice, public announcement and publication referred to in Section 10.01(D)) and ends on, and includes, the date that is thirty (30) calendar days after the actual effective date of such transaction; provided, however, that if such transaction is a Make-Whole Fundamental Change, then the Securities may also be surrendered for conversion into cash and, if applicable, shares of Common Stock at any time during the Make-Whole Conversion Period applicable to such Make-Whole Fundamental Change; provided, further, that if such transaction is a Fundamental Change, then the Securities may also be surrendered for conversion into cash and, if applicable, shares of Common Stock at any time until, and including, the Fundamental Change Repurchase Date applicable to such Fundamental Change; provided, further, that if the Company shall announce a transaction that shall cause the Securities to become convertible pursuant to this Section 10.01(A)(v), but such transaction shall not be consummated, then on the date the Company shall announce that such transaction will not occur, the Securities shall cease to be convertible pursuant to this Section 10.01(A)(v) on account of such announcement of such transaction (it being understood that nothing in this proviso shall affect whether the Securities shall become convertible pursuant to this Section 10.01(A)(v) on account of another announcement by the Company).

(vi)      Conversion from and including December 15, 2011 to and including February 15, 2012 and on or after February 15, 2025.  The Securities may be surrendered for conversion into cash and, if applicable, shares of Common Stock at any time from, and including, December 15, 2011 to, and including, February 15, 2012 and at any time on or after February 15, 2025.

(B)                Notwithstanding anything herein to the contrary, the right to convert the Securities pursuant to this Article X shall terminate at the close of business on the Business Day immediately preceding the Maturity Date.

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(C)                The initial Conversion Rate shall be 35.8616 shares of Common Stock per $1,000 principal amount of Securities.  The Conversion Rate shall be subject to adjustment in accordance with Sections 10.05 through 10.14.

(D)                Whenever any event described in Section 10.01 shall occur which shall cause the Securities to become convertible as provided in this Article X, the Company shall promptly deliver, in accordance with Section 10.2 of the Base Indenture, written notice of the convertibility of the Securities to the Trustee and each Holder and shall, as soon practicable, but in no event later than the open of business on the third Business Day following the first date the Securities shall become convertible as provided in this Article X as a result of such event, publicly announce, through a reputable national newswire service, that the Securities have become convertible.  Such written notice and public announcement shall include:

(i)          a description of such event;

(ii)        a description of the periods during which the Securities shall be convertible as provided in this Article X as a result of such event;

(iii)       the anticipated effective date of such event, if applicable; and

(iv)      the procedures Holders must follow to convert their notes in accordance with this Article X, including the name and address of the Conversion Agent.

If the Company shall fail to make such public announcement on or before the open of business on the first date the Securities shall become convertible as provided in this Article X as a result of such event, then (1) the Securities shall remain convertible for an additional Business Day for each Business Day, on or after such first date the Securities become convertible, that the Company shall fail to make such public announcement (an “Extension Period”); and (2) if the event causing the Securities to become convertible shall be a Make-Whole Fundamental Change, then the increased Conversion Rate applicable, pursuant to Section10.14, to Securities surrendered within the time periods specified in Section10.14 shall continue to apply to Securities surrendered for conversion during any such Extension Period.

(E)                 A Holder may convert a portion of the principal amount of a Security if such portion is $1,000 principal amount or an integral multiple of $1,000 principal amount.  Provisions of this Indenture that apply to conversion of all of a Security also apply to conversion of a portion of such Security.