CHANGE IN CONTROL
AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT (this
“Agreement”) is made and entered into as of ___________
__, 2007 (the “Effective Date”) by and between INSITE
VISION INCORPORATED, a Delaware corporation (together with its
successors and assigns, the “Company”), and S. Kumar
Chandrasekaran, Ph.D. (the “Executive”) (collectively,
Company and Executive are referred to herein as the
“Parties”).
RECITALS
A. The Company desires to promote the success of
the Company by rewarding the Executive for dedicated service and
providing incentives for the Executive to remain in the employ of
the Company or an affiliate through a Change in Control of the
Company; and
B. The Company and the Executive desire to enter
into an agreement providing for the payment of certain benefits to
the Executive in the event that Executive’s employment with
the Company is terminated under certain circumstances following a
Change in Control upon the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the mutual
covenants contained herein and other good and valuable
consideration, receipt of which is hereby acknowledged, the Parties
agree as follows:
AGREEMENT
1.
Termination of Employment Prior
to a Change in Control .
If the Executive’s employment with the Company terminates
under any circumstances prior to the 60-day period preceding a
Change in Control of the Company or after the 12 month period
following a Change in Control, Executive shall not be (and shall
not in the future become) entitled to any payments or benefits
under or with respect to this Agreement. Nothing contained in this
Agreement shall confer upon the Executive any right to continue in
the employ or other service of the Company or any affiliate of the
Company, constitute any contract or agreement of employment or
other service or affect the Executive’s status as an employee
at will, nor shall anything in this Agreement interfere in any way
with the right of the Company or any affiliate to change the
Executive’s compensation or other benefits, or to terminate
the Executive’s employment or other service, with or without
cause at any time.
2.
Benefits Upon Certain
Terminations of Employment Following a Change in Control
. In the event that
Executive’s employment is terminated on, within sixty (60)
days before, or within 12 months following, a Change in Control,
due to (i) a termination by the Company without Cause, (ii) a
resignation by Executive within 45 days after the occurrence of an
event constituting Good Reason, or (iii) a termination due to
Executive’s death or Disability, the Company shall, subject
to Executive signing and not revoking a Separation and General
Release Agreement in a form satisfactory to the Company, provide
Executive the following severance benefits (the “Severance
Benefits”), subject to tax withholding and other authorized
deductions:
(a) The Company shall pay the Executive, no later
than thirty (30) days after the date on which Executive signs and
does not revoke a Separation and General Release Agreement, a lump
sum payment equal to the sum of (i) two (2) times the
Executive’s annual base salary as in effect immediately prior
to the date Executive’s employment with the Company is
terminated (such date of termination is hereby referred to as the
“Severance Date”) and (ii) two (2) times the
Executive’s annual target bonus opportunity for the fiscal
year in which the Severance Date occurs (or, if no annual target
bonus opportunity has been established for the fiscal year in which
the Severance Date occurs, the average annual bonus received by the
Executive in the three (3) fiscal years immediately preceding the
fiscal year in which the Severance Date occurs).
(b) Notwithstanding any provisions of the
Company’s stock option plans, stock purchase plans, stock
option agreements or addenda thereto, incentive plans, or other
similar plans, all equity-based awards granted by the Company to
the Executive that are outstanding and unvested as of the Severance
Date, shall immediately become fully vested, any repurchase right
in favor of the Company shall lapse, and the restricted period with
respect to any such awards shall lapse, immediately prior to the
Severance Date. Notwithstanding the foregoing, the exercisability
of any stock options held by the Executive shall continue to be
governed by the stock option plan and stock option agreement
applicable to such award. The parties hereby agree that this
Agreement supersedes and replaces the respective Addenda to each of
the Stock Option Agreements entered into by the Company and the
Executive, including those entered into on or about February 1,
2006, June 1, 2005, June 1, 2004, March 30, 2004, December 12,
2003, September 23, 2003, February 14, 2003, September 20, 2002,
June 18, 2001, February 23, 1999, and October 27, 1997, with
respect to the Executive’s outstanding stock options and that
each such Addendum shall be of no further force and effect as of
the Effective Date.
(c) For a period of twenty-four (24) months
following the Severance Date, the Company, through COBRA or
otherwise, shall continue to make available to the Executive and
the Executive’s spouse and dependents covered under any group
health plans or life insurance plans of the Company on the
Severance Date, all group health, life and other similar insurance
plans in which Executive or such spouse or dependents participate
on the Severance Date at the same cost to the Executive as the
Executive paid for such benefits prior to such date. To the extent
that the Company cannot continue to provide such Severance
Benefits, it will pay the Executive an amount that would be
sufficient to enable the Executive to purchase equivalent benefits
from a third party at the same cost to the Executive as the
Executive paid for such benefits immediately prior to the Severance
Date. Notwithstanding the foregoing, if the Executive becomes
re-employed with another employer and the Executive is eligible to
receive equivalent benefits under the employer’s welfare
benefit plans, at the same or a lesser cost to Executive, the
Company’s obligations to provide Severance Benefits under
this Section 2 shall terminate immediately.
For purposes of
clarity, subject to Section 1, benefits shall be payable to the
Executive under this Agreement only with respect to a single Change
in Control of the Company. Accordingly, no Change in Control of the
Company after the first Change in Control shall result in Executive
receiving any benefits under this Agreement.
3.
Definitions
. For purposes of this Agreement the
following terms shall have the following meanings:
(a) “Cause” shall mean, as reasonably
determined by the Board of Directors of the Company or its
successor, as applicable, (the “Board”) (excluding the
Executive, if he is then a member of the Board), (i) any act of
personal dishonesty taken by the Executive in connection with his
responsibilities as an employee of the Company which is intended to
result in substantial personal enrichment of the Executive and is
reasonably likely to result in material harm to the Company, (ii)
the Executive’s conviction of a felony or any other crime,
which the Board reasonably believes has had or will have a material
detrimental effect on the Company’s reputation or business,
(iii) a willful act by the Executive which constitutes misconduct
and is materially injurious to the Company, or (iv) continued acts
of gross negligence or willful violations by the Executive of the
Executive’s obligations to the Company after there has been
delivered to the Executive a written demand for performance from
the Company which describes the basis for the Company’s
belief that the Executive has committed gross negligence or
wilfully violated his obligations to the Company, and Executive has
failed to cure such activities within 30 days of receipt of such
notice.
(b) “Change in Control” shall mean the
occurrence of any of the following:
(i) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) (a “Person”) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of more than 40% of either (1) the then-outstanding shares of
common stock of the Company (the “Outstanding Company Common
Stock”) or (2) the combined voting power of the
then-outstanding voting securities of the Company entitled to vote
generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that, for
purposes of this clause (i), the following acquisitions shall not
constitute a Change in Control; (A) any acquisition directly from
the Company, unless the acquirer or the securityholders and/or
creditors of an entity as a group acquire 50% or more of the
Outstanding Company Common Stock or the Outstanding Voting
Securities in such transaction in which case it shall constitute a
Change in Control, (B) any acquisition by the Company, (C) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any affiliate of the
Company or a successor, (D) any acquisition by any entity pursuant
to a transaction that complies with clauses (iii)(1), (2) and (3)
below, and (E) any acquisition by a Person who owned more than 40%
of either the Outstanding Company Common Stock or the Outstanding
Company Voting Securities as of the Effective Date or an affiliate
of any such Person;
(ii) A change in the Board or its members such that
individuals who, as of the later of the Effective Date or the date
that is two years prior to such change (the later of such two dates
is referred to as the “Measurement Date”), constitute
the Board (the “Incumbent Board”) cease for any reason
to constitute at least a majority of the Board; provided, however,
that any individual becoming a director subsequent to the
Measurement Date whose election, or nomination for election by the
Corporation’s stockholders, was approved by a vote of at
least three fourths of the directors then comprising the Incumbent
Board (including for these purposes, the new members whose election
or nomination was so approved, without counting the member and his
predecessor twice) shall be considered as though such individual
were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board; or
(iii) The consummation of a reorganization, merger,
statutory share exchange or consolidation or similar corporate
transaction involving the Company or any of its subsidiaries, a
sale or other disposition of all or substantially all of the assets
of the Company, or the acquisition of assets or stock of another
entity by the Company or any of its subsidiaries (each, a
“Business Combination”), in each case unless, following
such Business Combination, (1) all or substantially all of the
individuals and entities that were the beneficial owners of the
Outstanding Company Common Stock and the Outstanding Company Voting
Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of the
then-outstanding shares of common stock and the combined voting
power of the then-outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the
entity resulting from such Business Combination (including, without
limitation, an entity that, as a result of such transaction, owns
the Company or all or substantially all of the Company’s
assets directly or through one or more subsidiaries (a
“Parent”)) in substantially the same proportions as
their ownership immediately prior to such Business Combination of
the Outstanding Company Common Stock and the Outstanding Company
Voting Securities, as the case may be, (2) no Person (excluding any
entity resulting from such Business Combination or a Parent or any
employee benefit plan (or related trust) of the Corporation or such
entity resulting from such Business Combination or Parent)
beneficially owns, directly or indirectly, more than 40% of,
respectively, the then-outstanding shares of common stock of the
entity resulting from such Business Combination or the combined
voting power of the then-outstanding voting securities of such
entity, except to the extent that the ownership in excess of 40%
existed prior to the Business Combination, and (3) at least a
majority of the members of the board of directors or trustees of
the entity resulting from such Business Combination or a Parent
were members of the Incumbent Board (determined pursuant to clause
(ii) above using the date that is the later of the Effective
Date or the date that is two years prior to the Business
Combination as the Measurement Date) at the time of the execution
of the initial agreement or of the action of the Board providing
for such Business Combination.
(c) “Disability” shall mean a physical
or mental impairment which, as reasonably determined by a mutually
agreed upon physician (with requisite and applicable expertise),
renders the Executive unable to perform the essential functions of
his employment with the Company, even with reasonable accommodation
that does not impose an undue hardship on the Company, for more
than 120 days in any 12-month period.
(d)
“
Good Reason” shall mean the
occurrence of any of the following: (i) without the
Executive’s express written consent, a material reduction of
the Executive’s duties, position or responsibilities relative
to the Executive’s duties, title, position or
responsibilities in effect immediately prior to such reduction, or
the removal of the Executive from such duties, title, position and
responsibilities; (ii) without the Executive’s express
written consent, a material reduction of the facilities and
perquisites (including without limitation office space, location
and administrative support) available to the Executive immediately
prior to such reduction; (iii) a reduction by the Company of the
Executive’s base salary or annual target bonus opportunity as
in effect immediately prior to such reduction; (iv) a material
reduction by the Company in the kind or level of employee benefits
to which the Executive is entitled immediately prior to such
reduction with the result that the Executive’s overall
benefits package is materially reduced; or (v) without
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