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PROSPECTUS SUPPLEMENT NO. 1 Filed pursuant to
(TO PROSPECTUS DATED OCTOBER 17, 1997) Rule 424(b)(3) and (c)
Commission File No. 333-36673
2,626,000 SHARES
INSITE VISION INCORPORATED
COMMON STOCK
This Prospectus Supplement (this "Supplement") relates to the offer and
sale by certain persons listed herein under "Selling Stockholders"
(collectively, the "Selling Stockholders") of a maximum of 2,626,000 shares
(collectively, the "Shares") of Common Stock, par value $0.01 per share (the
"Common Stock"), of InSite Vision Incorporated (the "Company") consisting of
shares of Common Stock to be issued from time to time to the Selling
Stockholders upon conversion of the Company's Series A Convertible Preferred
Stock (the "Preferred Shares"). It also relates, pursuant to Rule 416 under the
Securities Act of 1933, as amended (the "Securities Act"), to such presently
indeterminate number of additional Shares as may be issuable upon conversion of
the Preferred Shares or as a result of stock splits, stock dividends, a premium
payable on the Preferred Shares in Common Stock and antidilution provisions. The
Preferred Shares were originally issued in a private placement consummated in
September 1997. This Supplement is not complete without, and may not be
delivered or utilized except in connection with, the prospectus dated October
17, 1997, as amended and supplemented to date (the "Prospectus"). All
capitalized terms used but not defined in this Supplement shall have the
meanings given them in the Prospectus.
SELLING STOCKHOLDERS
In June 1998, the Company was informed that one of the Selling
Stockholders, Proprietary Convertible Investment Group, Inc. ("Proprietary"),
changed its name to Marshall Capital Management, Inc. ("Marshall"). Accordingly,
such entity is incorrectly named in the Prospectus. Set forth below, to the
Company's knowledge, is a restatement of the table of Selling Stockholders set
forth in the Prospectus.
The Company has no basis for knowledge of any sales of the Shares by
any Selling Stockholder that may have taken place subsequent to the date of the
Prospectus. Therefore, the following table sets forth certain information, as of
October 17, 1997, the date of the Prospectus, with respect to the number of
shares of Common Stock owned by each of the Selling Stockholders and as adjusted
to give effect to the sale of the Shares offered by the Prospectus. The Shares
have been registered to permit public secondary trading of the Shares, and the
Selling Stockholders may offer the Shares for resale from time to time.
The Company has agreed to register a specified number of Shares for
resale by the Selling Stockholders. The number of Shares shown in the following
table as being offered by the Selling Stockholders does not include such
presently indeterminate number of shares of Common Stock as may be issuable upon
conversion of or otherwise with respect to the Preferred Shares in accordance
with the terms of the Company's Certificate of Designations, Preferences and
Rights of Series A Convertible Preferred Stock, filed with the Secretary of
State of the State of Delaware as of September 11, 1997 (the "Certificate"), but
which shares are, in accordance with Rule 416 under the Securities Act, included
in the Registration Statement of which the Prospectus and this Supplement form a
part.
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The Shares covered by this Supplement and the Prospectus may be offered
from time to time by the Selling Stockholders named below:
<TABLE>
<CAPTION> OWNERSHIP
NUMBER OF AFTER OFFERING(1)
NUMBER OF SHARES SHARES ---------------------
NAME AND ADDRESS OF OWNED BEING NUMBER OF
SELLING STOCKHOLDERS PRIOR TO OFFERING (1)(2) OFFERED SHARES PERCENT
-------------------- ------------------------ ------------- ---------- --------
<S> <C> <C> <C> <C>
Capital Ventures International 555,555 555,555 0 0%
c/o Heights Capital Management
425 California Street
Suite 1100
San Francisco, CA 94104
Marshall Capital Management, Inc. 446,428 446,428 0 0%
11 Madison Avenue
New York, NY 10010
Special Situations Private Equity Fund, L.P. 327,381 327,381 0 0%
153 East 53rd Street
Fifty-First Floor
New York, NY 10022
Hull Overseas, Ltd. 39,682 39,682 0 0%
Charlotte House
Charlotte Street
Nassau, Bahamas
Banque du Credit Agricole 19,841 19,841 0 0%
40 Hull Capital Corp.
152 West 5th Street
New York, NY 10019
William Blair & Company LLC(3) 13,888 13,888 0 0%
222 West Adam Street
Suite 3300
Chicago, IL 60606
Total 1,402,775 1,402,775
</TABLE>
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(1) Percentage of beneficial ownership is calculated assuming 13,175,504
shares of Common Stock were outstanding as of September 12, 1997, the
date of the closing of sale of the Preferred Shares. Beneficial
ownership is determined in accordance with the rules of the Securities
and Exchange Commission and generally includes voting or investment
power with respect to securities. Shares of Common Stock subject to
options or warrants currently exercisable or convertible, or
exercisable or convertible within 60 days of September 12, 1997, are
deemed outstanding for computing the percentage of the person holding
such option or warrant but are not deemed outstanding for computing the
percentage of any other person.
(2) Represents the pro-rata allocation of the number of shares of Common
Stock issuable upon conversion of the Preferred Shares calculated using
an assumed conversion price of $5.04 (the "Fixed Conversion Price" set
forth in the Certificate, as of the date of the Certificate). The
conversion price has fluctuated and could continue to fluctuate from
time to time based on changes in the closing sale price of the Common
Stock as reported by The American Stock Exchange. The actual number of
shares of Common Stock issuable upon conversion of the Preferred Shares
will equal (i) the aggregate stated value of the Preferred Shares then
being converted ($1,000 per share) plus a premium in the amount of 6%
per annum accruing from September 12, 1997 through the date of
conversion, divided by (ii) a conversion price equal to the lower of
$2.127 (the "Fixed Conversion Price" as of the date hereof) or the
product of the average of the lowest closing bid prices for the Common
Stock for any five (5) trading days during the twenty-two (22)
consecutive trading day period immediately preceding the date of
conversion multiplied by a conversion percentage equal to (A) 90% if
the conversion occurs prior to June 10, 1998, (B) 87.5% if the
conversion occurs on or after June 10, 1998 and prior to September 13,
1998, (C) 85% if the conversion occurs on or after September 13, 1998
and prior to December 7, 1998, or (D) 82.5% if the conversion occurs on
or after December 7, 1998. For a complete description of the relative
rights, preferences, privileges, powers and restrictions of the
Preferred Shares, see the Certificate attached as Exhibit 4.1 to the
Registration Statement of which the Prospectus and this Supplement form
a part. Except under certain limited circumstances, no holder of the
Preferred Shares is entitled to convert or exercise such securities to
the extent that the shares to be received by such holder upon such
conversion or exercise would cause such holder to beneficially own more
than 4.9% of the Common Stock. In the event that the Company fails to
so convert any Preferred Shares, the holders of the Preferred Shares
shall have redemption rights and additional remedies as set forth in
the Certificate.
2.
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(3) Represents shares issuable upon exercise of a warrant to acquire 70
Preferred Shares issued to WB & Co. as a finder's fee in connection
with the Agreement. The exercise price equals the stated value of the
Preferred Shares, $1,000 per share, and the term of the warrant is
three years from the closing of the sale of the Preferred Shares.
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS SEPTEMBER 15, 1998
3.
