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EXHIBIT 99.5
INSITE VISION INCORPORATED
1994 STOCK OPTION PLAN
NON-EMPLOYEE DIRECTOR OPTION AGREEMENT
RECITALS
A. Under the Automatic Option Grant Program in effect under
the Corporation's 1994 Stock Option Plan (the "Plan"), the non-employee
members of the Corporation's Board of Directors (the "Board") will
automatically receive periodic option grants designed to reward them for
services they have rendered to the Corporation and to encourage them to
continue in the service of the Corporation.
B. Optionee is a non-employee member of the Board, and this
Agreement is executed pursuant to, and is intended to carry out the purposes
of, the Plan in connection with the automatic grant on this day of a stock
option to purchase shares of the Corporation's common stock ("Common Stock")
under Article Three of the Plan.
C. The granted option is intended to be a non-statutory
option which does not meet the requirements of Section 422 of the Internal
Revenue Code.
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT OF OPTION. Subject to and upon the terms and
conditions set forth in this Agreement, the Corporation hereby grants to
Optionee, as of the automatic grant date (the "Grant Date") specified in the
accompanying Notice of Automatic Option Grant (the "Grant Notice"), a stock
option to purchase up to that number of shares of common stock (the "Option
Shares") as is specified in the Grant Notice. The Option Shares shall be
purchasable from time to time during the option term at the option price per
share (the "Option Price") specified in the Grant Notice, which is one hundred
percent (100%) of the fair market value of the Common Stock on the Grant Date.
2. OPTION TERM. This option shall have a term of ten
(10) years measured from the Grant Date and shall accordingly expire at the
close of business on the expiration date specified in the Grant Notice
("Expiration Date"), unless sooner terminated in accordance with Paragraph 5 or
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3. LIMITED TRANSFERABILITY. This option may, in
connection with the Optionee's estate plan, be assigned in whole or in part
during the Optionee's lifetime to one or more members of the Optionee's
immediate family or to a trust established exclusively for one or more such
family members. The assigned portion may only be exercised by the person or
persons who acquire a proprietary interest in the option pursuant to the
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assignment. The terms applicable to the assigned portion shall be the same as
those in effect for the option immediately prior to such assignment and shall
be set forth in such documents issued to the assignee as the Plan Administrator
may deem appropriate.
4. EXERCISABILITY. This option shall become exercisable
for the Option Shares one (1) year after the Grant Date, provided Optionee
remains in Board service through such date. This option shall thereafter
remain so exercisable until the expiration or sooner termination of the option
term.
5. CESSATION OF BOARD SERVICE. Should Optionee's
service as a Board member cease while this option remains outstanding, then the
option term specified in Paragraph 2 shall terminate (and this option shall
cease to be exercisable) prior to the Expiration Date in accordance with the
following provisions:
(i) This option shall immediately terminate and
cease to be outstanding for any Option Shares for which the option is
not exercisable at the time of Optionee's cessation of Board service.
(ii) Should Optionee cease Board service (for any
reason other than Permanent Disability or death) while this option
remains outstanding, then the period for exercising this option shall
be reduced to a three (3)-month period commencing with the date of
such cessation of Board service. During such limited period of
exercisability, this option may not be exercised for more than the
number of Option Shares (if any) for which it is exercisable on the
date of Optionee's cessation of Board service. Upon the expiration of
such three (3)-month period or (if earlier) upon the Expiration Date,
this option shall terminate and cease to be exercisable.
(iii) Should Optionee cease Board service by reason
of Permanent Disability while this option is outstanding, then
Optionee shall have a period of six (6) months (commencing with the
date of such cessation of Board service) during which to exercise this
option for any or all of the Option Shares for which this option is
exercisable at the time of Optionee's cessation of Board service.
Upon the expiration of such six (6)-month period or (if earlier) upon
the Expiration Date, this option shall terminate and cease to be
exercisable. "Permanent Disability" shall mean the inability to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to
result in death or which has lasted or can be expected to last for a
continuous period of not less than twelve (12) months.
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(iv) Should Optionee die while serving as a Board
member or during the three (3)-month period following Optionee's
cessation of Board service, then the personal representative of
Optionee's estate or the person or persons to whom this option is
transferred pursuant to Optionee's will or in accordance with the laws
of descent and distribution shall have the right to exercise the
option for any or all of the Option Shares for which this option is
exercisable at the time of Optionee's cessation of Board service (less
any Option Shares subsequently purchased by Optionee prior to death).
Such right shall lapse, and this option shall terminate and cease to
remain outstanding, upon the earlier of (A) the expiration of the six
(6)-month period measured from the date of Optionee's death or (B) the
Expiration Date.
6. ADJUSTMENT IN OPTION SHARES. In the event any change
is made to the Common Stock issuable under the Plan by reason of any stock
split, stock dividend, recapitalization, combination of shares, exchange of
shares, or other change affecting the outstanding Common Stock as a class
without receipt of consideration, then appropriate adjustments shall be made to
(i) the total number and/or class of Option Shares subject to this option and
(ii) the Option Price payable per share in order to reflect such change and
thereby preclude the dilution or enlargement of Optionee's rights and benefits
hereunder.
7. SPECIAL ACCELERATION OF OPTION.
A. In the event of any of the following
stockholder-approved transactions (a "Corporate Transaction"):
(i) a merger or consolidation in which securities
possessing more than fifty percent (50%) of the total combined voting
power of the Corporation's outstanding securities are transferred to a
person or persons different from those who held those securities
immediately prior to such transaction, or
(ii) the sale, transfer or other disposition of
all or substantially all of the Corporation's assets in complete
liquidation or dissolution of the Corporation,
the exercisability of this option shall, to the
extent the option is at such time outstanding but not otherwise fully
exercisable, automatically accelerate so that such option shall, immediately
prior to the specified effective date for the Corporate Transaction, become
fully exercisable for all of the Option Shares and may be exercised for all or
any portion of such shares.
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B. This option, to the extent not previously exercised,
shall terminate upon the consummation of the Corporate Transaction and cease to
be outstanding, except to the extent assumed by the successor corporation (or
its parent company) in such Corporate Transaction.
C. This Agreement shall not in any way affect the right
of the Corporation to adjust, reclassify, reorganize or otherwise make changes
in its capital or business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or assets.
8. CHANGE IN CONTROL/HOSTILE TAKE-OVER.
A. In the event of any Change in Control (as defined
below), the exercisability of this option shall automatically accelerate so that
the option shall, immediately prior to the specified effective date for the
Change in Control, become fully exercisable for all of the Option Shares at the
time subject to this option and may be exercised for all or any portion of the
Option Shares at any time prior to the expiration or sooner termination of the
option term.
B. For all purposes under the Plan, a Change in Control
shall mean a change in control of the Corporation of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), whether or not the Corporation is then subject to such
reporting requirement; provided that, without limitation, a Change in Control
shall be deemed to have occurred if:
(i) any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other
entity, or any syndicate or group deemed to be a person under
Section 14(d)(2) of the Exchange Act, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 of the General
Rules and Regulations under the Exchange Act), directly or
indirectly, of securities of the Corporation representing
forty percent (40%) or more of the combined voting power of
the Corporation's then outstanding securities entitled to vote
in the election of directors of the Corporation, pursuant to a
tender or exchange offer made directly to the Corporation's
stockholders which the Board does not recommend such
stockholders to accept; or
(ii) a change in the composition of the Board occurs
over any period of two (2) consecutive years or less such that
a majority of the Board ceases for any reason to be comprised
of individuals who either (A) have been Board members
continuously since the beginning of that period or (B) have
been elected or nominated for election as Board members during
such period by
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a vote of at least three-fourths (3/4) of the Board members
described in clause (A) who were still in office at the time
Board approved such election or nomination.
C. In the event there should occur a Hostile Take-Over
(as defined below), then this option shall be automatically cancelled on the
fifth (5th) business day following such Hostile Take-Over in exchange for a
cash distribution from the Corporation in an amount equal to the excess of (I)
the Take-Over Price of all the Option Shares at the time subject to the
cancelled option, over (II) the aggregate Option Price payable for such shares.
Stockholder approval of the March 17, 1997 restatement of the Plan at the 1997
Annual Meeting shall constitute pre-approval of the cancellation of this option
in accordance with the terms of this Paragraph 8.C. No additional approval of
the Board or any Plan Administrator shall be required at the time of the actual
option cancellation and cash distribution.
D. Definitions:
A "Hostile Take-Over" shall be deemed to occur in the
event any person or related group of persons (other than the
Corporation or a person that directly or indirectly controls, is
controlled by or is under common control with, the Corporation)
directly or indirectly acquires beneficial ownership (within the
meaning of Rule 13d-3 of the Exchange Act) of securities possessing
more than fifty percent (50%) of the total combined voting power of
the Corporation's outstanding securities pursuant to a tender or
exchange offer which the Board does not recommend the Corporation's
stockholders to accept.
The "Take-Over Price" per share shall be deemed to be
equal to the greater of (a) the Fair Market Value per share on the
date of cancellation (as determined in accordance with the provisions
of Paragraph 9.B below) or (b) the highest reported price per share
paid in effecting such Hostile Take-Over.
E. This Agreement shall in no way affect the right of
the Corporation to adjust, reclassify, reorganize or otherwise change its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.
9. MANNER OF EXERCISING OPTION.
A. In order to exercise this option with respect to all
or any part of the Option Shares for which this option is at the time
exercisable, Optionee (or in the case of exercise after Optionee's death,
Optionee's executor, administrator, heir or legatee, as the case may be) must
take the following actions:
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(i) Execute and deliver to the Secretary of the
Corporation a written notice of exercise in substantially the form of Exhibit I
attached hereto in which there is specified the number of Option Shares for
which the option is exercised.
(ii) Pay the aggregate Option Price for the purchased
shares in one or more of the following alternative forms:
(a) Cash or check made payable to the Corporation's
order;
(b) Shares of Common Stock held by Optionee for the
requisite period necessary to avoid a charge to the Corporation's earnings for
financial reporting purposes and valued at Fair Market Value on the Exercise
Date (as such terms are defined below); or
(c) Through a broker-dealer sale and remittance procedure
pursuant to which the Optionee shall provide irrevocable instructions (I) to a
designated brokerage firm to effect the immediate sale of the purchased shares
and remit to the Corporation, out of the sale proceeds available on the
settlement date, sufficient funds to cover the aggregate Option Price payable
for the purchased shares plus all applicable federal and state income and
employment taxes required to be withheld by the Corporation in connection with
such purchase and (II) to the Corporation to deliver the certificates for the
purchased shares directly to such brokerage firm in order to complete the sale
transaction; or
(iii) Furnish to the Corporation appropriate documentation
that the person or persons exercising the option (if other than Optionee) have
the right to exercise this option.
B. For purposes of this Agreement the Exercise Date
shall be the date on which the Exercise Notice shall have been delivered to the
Corporation. Except to the extent the sale and remittance procedure specified
in subparagraph (ii)(c) of paragraph A above may be utilized to exercise this
option, payment of the Option Price for the purchased shares must accompany
such notice. For all valuation purposes under this Agreement, the Fair Market
Value per share of Common Stock on any relevant date shall be the closing
selling price per share of Common Stock on the date in question on the Nasdaq
National Market, as such price is reported by the National Association of
Securities Dealers on the Nasdaq National Market or any successor system. If
there is no closing selling price on the date in question, then the Fair Market
Value shall be the closing selling price on the last preceding date for which
such quotation exists on the Nasdaq National Market.
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C. As soon as practical after the Exercise Date, the
Corporation shall issue to or on behalf of Optionee (or any other person or
persons exercising this option) a certificate or certificates representing the
Option Shares purchased and paid for in accordance herewith.
D. In no event may this option be exercised for any
fractional shares.
10. STOCKHOLDER RIGHTS. The holder of this option
shall not have any of the rights of a stockholder with respect to the Option
Shares until such individual shall have exercised this option, paid the Option
Price for the purchased shares and been issued one or more certificates for the
purchased shares.
11. NO IMPAIRMENT OF RIGHTS. Nothing in this Agreement
shall be construed or interpreted so as to affect adversely or otherwise impair
the right of the Corporation or the stockholders to remove Optionee from Board
service at any time in accordance with the provisions of applicable law.
12. COMPLIANCE WITH LAWS AND REGULATIONS.
A. The exercise of this option and the issuance of the
Option Shares upon such exercise shall be subject to compliance by the
Corporation and Optionee with all applicable requirements of law relating
thereto and with all applicable regulations of any stock exchange on which
shares of the Corporation's Common Stock may be listed at the time of such
exercise and issuance.
B. In connection with the exercise of this option,
Optionee shall execute and deliver to the Corporation such representations in
writing as may be requested by the Corporation in order for it to comply with
the applicable requirements of federal and state securities laws.
13. SUCCESSORS AND ASSIGNS. Except to the extent
otherwise provided in Paragraph 3 or 7, the provisions of this Agreement shall
inure to the benefit of, and be binding upon, the successors, administrators,
heirs, legal representatives and assigns of Optionee and the successors and
assigns of the Corporation.
14. LIABILITY OF CORPORATION.
A. If the Option Shares covered by this Agreement
exceed, as of the Grant Date, the number of shares of Common Stock which may
without stockholder approval be issued under the Plan, then this option shall
be void with respect to such excess shares unless stockholder approval of an
amendment sufficiently increasing the number of shares
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of Common Stock issuable under the Plan is obtained in accordance with the
provisions of Article Four, Section III of the Plan.
B. The inability of the Corporation to obtain approval
from any regulatory body having authority deemed by the Corporation to be
necessary to the lawful issuance and sale of any Common Stock pursuant to this
option shall relieve the Corporation of any liability with respect to the
non-issuance or sale of the Common Stock as to which such approval shall not
have been obtained. However, the Corporation shall use its best efforts to
obtain all such approvals.
15. NOTICES. Any notice required to be given or
delivered to the Corporation under the terms of this Agreement shall be in
writing and addressed to the Corporation in care of the Corporate Secretary at
the Corporate Offices at 000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000. Any
notice required to be given or delivered to Optionee shall be in writing and
addressed to Optionee at the address indicated below Optionee's signature line
on the Grant Notice. All notices shall be deemed to have been given or
delivered upon personal delivery or upon deposit in the U.S. mail, postage
prepaid and properly addressed to the party to be notified.
16. CONSTRUCTION/GOVERNING LAW. This Agreement and the
option evidenced hereby are made and granted pursuant to the Plan and are in
all respects limited by and subject to the express terms and provisions of the
Plan. The interpretation, performance and enforcement of this Agreement shall
be governed by the laws of the State of California without resort to that
state's conflict-of-laws rules.
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EXHIBIT I
NOTICE OF EXERCISE OF STOCK OPTION
I hereby notify InSite Vision Incorporated (the "Corporation")
that I elect to purchase _________ shares of the Corporation's Common Stock
(the "Purchased Shares") pursuant to that certain option (the "Option") granted
to me on ________________, 199__ to purchase up to __________ shares of such
Common Stock at an option price of $_________ per share (the "Option Price").
Concurrently with the delivery of this Exercise Notice to the
Secretary of the Corporation, I shall pay to the Corporation the Option Price
for the Purchased Shares in accordance with the provisions of my agreement with
the Corporation evidencing the Option and shall deliver whatever additional
documents may be required by such agreement as a condition for exercise.
___________________________ __________________________________
Date Optionee
Address: ______________________
______________________
Print name in exact manner
it is to appear on the
stock certificate:
______________________
______________________
Address to which certificate
is to be sent, if different
from address above:
______________________
______________________
Social Security Number: ______________________
