Document:

EXHIBIT 4.11

	 	THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”),
OR ANY OTHER SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF (1) AN EFFECTIVE REGISTRATION
STATEMENT COVERING SUCH SECURITIES UNDER THE ACT AND ANY OTHER APPLICABLE
SECURITIES LAWS, OR (2) AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.	

INSITE
VISION INCORPORATED
WARRANT TO PURCHASE 94,525 SHARES OF COMMON STOCK

	December 31, 2003		Warrant No._______

        For
value received, InSite Vision Incorporated, a Delaware corporation (the
“Company”), hereby certifies that Xmark Fund,
L.P., or its registered transferees, successors or assigns (each person
or entity holding all or part of this Warrant being referred to as a
“Holder”), is the registered holder of warrants
(the “Warrants”) to subscribe for and purchase
Ninety Four Thousand, Five Hundred Twenty-Five (94,525) shares (as adjusted
pursuant to Section 3 hereof, the “Warrant
Shares”) of the fully paid and nonassessable common stock,
par value $0.01 per share (the “Common Stock”),
of the Company, at a purchase price per share initially equal to Fifty Eight
Cents ($0.58) (the “Warrant Price”) on or
before, 5:00 P.M., Eastern Time, on December 31, 2006 (except as otherwise
extended pursuant to Section 17(a) below) (the “Expiration
Date”), subject to the provisions and upon the terms and
conditions hereinafter set forth; provided,
however, that in the event that any portion of this Warrant is
unexercised as of the Expiration Date, the terms of Section 1(b) below
shall apply. As used in this Warrant, the term “Business
Day” means any day other than a Saturday or Sunday on which
commercial banks located in New York, New York are open for the general
transaction of business. 

          
Section 1.          Exercise.

                    (a)          Method of Exercise; Payment; Issuance of New Warrant.

                              
(i)     Subject  to the provisions  hereof,  the Holder
may exercise  this  Warrant,  in whole or in part and from time to time,  by the
surrender  of this  Warrant  (with the  Notice of  Exercise  attached  hereto as
Appendix  A duly executed) at the principal office of the Company,
or such other office or agency of the Company as it may reasonably  designate by
written notice to the Holder,  during normal business hours on any Business Day,
and the payment by the Holder by cash, certified check payable to the Company or
wire transfer of  immediately  available  funds to an account  designated to the
exercising  Holder  by the  Company  of an amount  equal to the then  applicable
Warrant Price  multiplied by the number of Warrant Shares then being  purchased,
or in the event of a cashless  exercise pursuant to Section 1(c) below, with the
Net Issue  Election  Notice  attached  hereto as  Appendix  B duly
executed and completed.  On the date on which the Holder shall have satisfied in
full the Holder's  obligations  set forth  herein  regarding an exercise of this
Warrant  (provided  such date is prior to the Expiration  Date),  the Holder (or
such other  person or persons as directed by the Holder,  subject to  compliance
with applicable securities laws) shall be treated for all purposes as the holder
of  record  of  such  Warrant  Shares  as of  the  close  of  business  on  such
date. 

                              (ii)  In the  event  of any  exercise  of the  rights  represented  by this  Warrant,
certificates  for the whole  number of shares of Common  Stock so  purchased  shall be  delivered to the Holder (or
such other person or persons as directed by the Holder,  subject to compliance with applicable  securities laws) as
promptly as is  reasonably  practicable  (but not later than  five (5)  Business  Days) after such  exercise at the
Company's expense,  and, unless this Warrant has been fully exercised,  a new Warrant representing the whole number
of Warrant  Shares,  if any,  with respect to which this Warrant shall not then have been  exercised  shall also be
issued to the Holder as soon as  reasonably  practicable  thereafter  (but not later than five (5)  Business  Days)
after such exercise.

                    (b)   Automatic  Exercise.  If any  portion  of this  Warrant  remains  unexercised  as of the
Expiration  Date and the Fair Market  Value (as defined  below) of one share of Common  Stock as of the  Expiration
Date is greater than the applicable  Warrant Price as of the Expiration  Date, then this Warrant shall be deemed to
have been exercised  automatically  immediately  prior to the close of business on the Expiration  Date (or, in the
event that the Expiration  Date is not a Business Day, the  immediately  preceding  Business Day) (the  "Automatic
Exercise  Date") in the manner  provided in Section 1(c) below,  and the Holder (or such other person or persons as
directed by the Holder,  subject to compliance with applicable  securities  laws) shall be treated for all purposes
as the holder of record of such Warrant  Shares as of the close of business on such Automatic  Exercise Date.  This
Warrant shall be deemed to be surrendered to the Company on the Automatic  Exercise Date by virtue of this Section
1(b)  without  any action by the  Holder.  As  promptly  as is  reasonably  practicable  on or after the  Automatic
Exercise  Date,  but in no event  prior to the date on which this  Warrant  is  surrendered  to the  Company at the
principal  office of the Company,  or such other office or agency of the Company as it may reasonably  designate by
written  notice to the Holder,  during normal  business hours on any Business Day, the Company at its expense shall
issue and deliver to the Holder (or such other person or persons as directed by the Holder,  subject to  compliance
with  applicable  securities  laws) a certificate or  certificates  for the number of Warrant Shares  issuable upon
such exercise, in accordance with Section 1(c).

                    (c)   Cashless  Right to Convert  Warrant  into  Common  Stock.  In  addition  to and  without
limiting  the rights of the  Holder  hereof  under the terms of this  Warrant,  the  Holder  may elect to  receive,
without the payment by the Holder of the Warrant  Price,  Warrant  Shares equal to the value of this Warrant or any
portion  hereof by the  surrender of this Warrant (or such portion of this  Warrant  being so  exercised)  together
with the Net Issue Election  Notice annexed hereto as Appendix B duly executed and completed,  at the office of the
Company,  or such other office or agency of the Company as it may  reasonably  designate  by written  notice to the
Holder,  during normal  business hours on any Business Day.  Thereupon,  the Company shall issue to the Holder such
number of fully paid, validly issued and nonassessable Warrant Shares, as is computed using the following formula:

-2-

	 	X=Y(A-B)
          A	 

where

                    X =     the number of shares of Common  Stock to be issued to the Holder (or such other
person or persons as directed by the Holder, subject to compliance with all applicable laws) upon
such exercise of the rights under this Section 1(c) 

                    Y =     the total  number of shares of Common Stock  covered by this Warrant  which the
Holder has surrendered for cashless exercise

                    A =     the "Fair  Market  Value"  of one  share of  Common  Stock on the date that the
Holder delivers the Net Issue Election Notice to the Company as provided herein

                    B =     the  Warrant  Price in effect  under  this  Warrant on the date that the Holder
delivers the Net Issue Election Notice to the Company as provided herein

The “Fair Market
Value” of a share of Common Stock as of a particular date
(the “Valuation Date”) shall mean the following: 

                    (i)     if the Common  Stock is then  listed on a  national  securities  exchange,  the
average  closing sale price of one share of Common Stock on such exchange over the ten (10)  trading days ending on
the last  trading  day prior to the  Valuation  Date;  provided  that if such stock has not traded in the  ten (10)
consecutive  trading days prior to the Valuation  Date, the Fair Market Value shall be the average closing price of
one share of Common Stock in the most recent  ten (10)  trading days during which the Common Stock has traded prior
to the Valuation Date;

                    (ii)     if the  Common  Stock  is  then  included  in The  Nasdaq  Stock  Market,  Inc.
(“Nasdaq”), the average closing sale price of one share of Common Stock on Nasdaq over the
ten (10) trading days ending on the last trading day prior to the Valuation
Date or, if no closing sale price is available for any of such ten (10)
trading days, the closing sale price for such day shall be determined as the
average of the high bid and the low ask price quoted on Nasdaq as of the end of
such trading day; provided that if the Common Stock has not traded in the
ten (10) consecutive trading days prior to the Valuation Date, the Fair
Market Value shall be the average closing price of one share of Common Stock in
the most recent ten (10) trading days during which the Common Stock has
traded prior to the Valuation Date; 

-3-

                    (iii)     If the Common Stock is then included in the  Over-the-Counter  Bulletin  Board,
the  average  closing  sale  price of one share of Common  Stock on the  Over-the-Counter  Bulletin  Board over the
ten (10)  trading days ending on the last trading day prior to the  Valuation  Date or, if no closing sale price is
available  for any of such ten (10)  trading  days,  the closing sale price for such day shall be determined as the
average of the high bid and the low ask price quoted on the  Over-the-Counter  Bulletin Board as of the end of such
trading day;  provided  that if the Common Stock has not traded in the ten (10)  consecutive  trading days prior to
the Valuation  Date,  the Fair Market Value shall be the average  closing price of one share of Common Stock in the
most recent ten (10) trading days during which the Common Stock has traded prior to the Valuation Date;

                    (iv)     if the Common Stock is then included in the "pink sheets",  the average closing
sale price of one share of Common  Stock on the "pink  sheets"  over the  ten (10)  trading days ending on the last
trading  day prior to the  Valuation  Date or, if no  closing  sale  price is  available  for any of such  ten (10)
trading  days,  the closing sale price for such day shall be  determined as the average of the high bid and the low
ask price  quoted on the "pink  sheets" as of the end of such trading  day;  provided  that if the Common Stock has
not traded in the ten (10)  consecutive  trading days prior to the Valuation  Date,  the Fair Market Value shall be
the average  closing price of one share of Common Stock in the most recent  ten (10)  trading days during which the
Common Stock has traded prior to the Valuation Date; or

                    (v)     if the Common  Stock is not then  listed on a national  securities  exchange or
quoted on Nasdaq or the  Over-the-Counter  Bulletin Board or the "pink sheets",  the Fair Market Value of one share
of Common Stock as of the  Valuation  Date shall be  determined  in good faith by mutual  agreement of the Board of
Directors of the Company (the  "Board") and the Holder;  provided  that if, in such case,  the Board and the Holder
are  unable to agree as to the Fair  Market  Value of a share of Common  Stock,  such Fair  Market  Value  shall be
determined by an investment  banker of national  reputation  selected by the Company and  reasonably  acceptable to
the Holder,  the fees and  expenses of which shall be borne by the  Company.  The Board shall  respond  promptly in
writing to a written  inquiry by the Holder prior to the exercise  hereunder as to the Fair Market Value of a share
of Common Stock.

          Section 2.          
  Reservation of Shares; Stock Fully Paid; Listing. The
Company shall keep reserved a sufficient number of shares of the authorized and
unissued shares of Common Stock to provide for the exercise of the rights of
purchase represented by this Warrant in compliance with its terms. All Warrant
Shares issued upon exercise of this Warrant shall be, at the time of delivery of
the certificates for such Warrant Shares upon payment in full of the Warrant
Price therefor in accordance with the terms of this Warrant (or proper exercise
of the cashless exercise rights contained in Section 1(c) hereof), duly
authorized, validly issued, fully paid and non-assessable shares of Common Stock
of the Company. The Company shall during all times prior to the Expiration Date
when the shares of Common Stock issuable upon the exercise of this Warrant are
authorized for listing or quotation on any national securities exchange, Nasdaq
(or the Over-the-Counter Bulletin Board or the “pink sheets”, as the
case may be), keep the shares of Common Stock issuable upon the exercise of this
Warrant authorized for listing or quotation on such national securities
exchange, Nasdaq (or the Over-the-Counter Bulletin Board or the “pink
sheets”, as the case may be). 

-4-

          Section 3.
          Adjustments and Distributions. The number and kind of
securities purchasable upon the exercise of this Warrant and the Warrant Price
shall be subject to adjustment from time to time upon the occurrence of certain
events, as follows: 

          (a)   If the  Company  shall  at any  time  or  from  time  to  time  while  this  Warrant  is
outstanding,  pay a dividend or make a  distribution  on its Common Stock in shares of Common Stock,  subdivide its
outstanding  shares of Common  Stock into a greater  number of shares or combine its  outstanding  shares of Common
Stock  into a smaller  number of shares,  then the  number of Warrant  Shares  purchasable  upon  exercise  of this
Warrant  and the  Warrant  Price in effect  immediately  prior to the date upon  which  such  change  shall  become
effective shall be  proportionally  adjusted by the Company so that the Holder  thereafter  exercising this Warrant
shall be entitled to receive the number of shares of Common  Stock or other  capital  stock which the Holder  would
have received if this Warrant had been  exercised  immediately  prior to such event upon payment of a Warrant Price
that  has been  proportionally  adjusted  to  reflect  such  event.  Such  adjustments  shall be made  successively
whenever any event listed above shall occur.

          (b)   If any  recapitalization,  reclassification  or  reorganization  of the capital stock of
the Company  (other than a change in par value or a  subdivision  or  combination  as provided  for in Section 3(a)
above) shall be effected in such a manner  (including,  without  limitation,  in connection with a consolidation or
merger in which the  Company is the  continuing  corporation),  that  holders of Common  Stock shall be entitled to
receive  stock,  securities,  or other  assets or  property (a  "Reorganization"),  then,  as a  condition  of such
Reorganization,  lawful and  adequate  provisions  shall be made by the  Company  whereby the Holder  hereof  shall
thereafter  have the right to  purchase  and  receive  (in lieu of the  shares of the Common  Stock of the  Company
immediately  theretofore  purchasable  and  receivable  upon the  exercise of the rights  represented  hereby) such
shares of stock,  securities  or other  assets or  property  as may be issued  or  payable  with  respect  to or in
exchange  for a number of  outstanding  shares of such  Common  Stock  equal to the number of shares of such Common
Stock immediately  theretofore  purchasable and receivable upon the exercise of the rights  represented  hereby. In
the event of any  Reorganization,  appropriate  provision  shall be made by the Company  with respect to the rights
and interests of the Holder of this Warrant to the end that the provisions hereof (including,  without  limitation,
provisions  for  adjustments  of the  Warrant  Price and of the  number of  Warrant  Shares)  shall  thereafter  be
applicable,  in relation to any shares of stock,  securities  or assets  thereafter  deliverable  upon the exercise
hereof.  The provisions of this Section 3(b) shall similarly apply to successive Reorganizations.

          (c)   If any  consolidation  or merger of the Company with another entity in which the Company
is not the survivor,  or sale,  transfer or other  disposition of all or substantially  all of the Company's assets
to another entity shall be effected,  then, as a condition of such consolidation,  merger,  sale, transfer or other
disposition,  lawful and adequate  provision  shall be made whereby the Holder shall  thereafter  have the right to
purchase and receive upon the basis and upon the terms and conditions  herein  specified and in lieu of the Warrant
Shares immediately  theretofore issuable upon exercise of this Warrant, such shares of stock,  securities or assets
as would have been  issuable or payable with respect to or in exchange for a number of Warrant  Shares equal to the
number of Warrant Shares immediately  theretofore  issuable upon exercise of this Warrant,  had such consolidation,
merger,  sale,  transfer or other disposition not taken place, and in any such case appropriate  provision shall be
made with  respect to the rights and  interests  of the Holder to the end that the  provisions  hereof  (including,
without  limitation,  provision  for  adjustment  of the Warrant  Price and of the number of Warrant  Shares) shall
thereafter  be  applicable,  as nearly  equivalent  as may be  practicable,  in  relation  to any  shares of stock,
securities or properties  thereafter  deliverable upon the exercise thereof.  The Company shall not effect any such
consolidation,   merger,  sale,  transfer  or  other  disposition  unless  prior  to  or  simultaneously  with  the
consummation  thereof  the  successor  entity (if other than the  Company)  resulting  from such  consolidation  or
merger,  or the entity purchasing or otherwise  acquiring such assets or other appropriate  entity shall assume the
obligation  to  deliver  to the Holder  such  shares of stock,  securities  or assets  as, in  accordance  with the
foregoing  provisions,  such Holder may be entitled to purchase,  and the other obligations under this Warrant. The
provisions of this Section 3(c) shall similarly apply to successive  consolidations,  mergers,  sales, transfers or
other dispositions.

-5-

          (d)   In case the Company  shall fix a payment  date for the making of a  distribution  to all
holders of Common Stock of evidences of indebtedness or assets (other than dividends or  distributions  referred to
in Section 3(a) hereof), or subscription  rights or warrants,  the Warrant Price to be in effect after such payment
date shall be determined by  multiplying  the Warrant Price in effect  immediately  prior to such payment date by a
fraction,  the  numerator of which shall be the total number of shares of Common Stock  outstanding  multiplied  by
the Fair Market  Value per share of Common  Stock  immediately  prior to such  payment  date,  less the fair market
value (as determined by the Board in good faith) of said assets or evidences of  indebtedness  so  distributed,  or
of such  subscription  rights or  warrants,  and the  denominator  of which shall be the total  number of shares of
Common Stock  outstanding  multiplied by such Fair Market Value per share of Common Stock immediately prior to such
payment date.  Such adjustment shall be made successively whenever such a payment date is fixed.

                    
(i)   In the event that any  dividend  or  distribution  for which this  Section 3(d)
would  require an  adjustment  is not so paid or made,  the Warrant Price shall be adjusted to be the Warrant Price
which would then be in effect if such dividend or distribution had not been declared.

                    (ii)   In the event that the Company  implements a new  shareholder  rights plan, such
rights plan shall  provide that upon  exercise of this Warrant the Holder will  receive,  in addition to the Common
Stock  issuable upon such  exercise,  the rights issued under such rights plan (as if the Holder had exercised this
Warrant prior to implementing  the rights plan and  notwithstanding  the occurrence of an event causing such rights
to separate  from the Common Stock at or prior to the time of  exercise).  Any  distribution  of rights or warrants
pursuant to a shareholder  rights plan  complying  with the  requirements  set forth in the  immediately  preceding
sentence of this  paragraph  shall not  constitute  a  distribution  of rights or warrants for the purposes of this
Section 3(d).

          (e)   For the term of this  Warrant,  in  addition  to the  provisions  contained  above,  the
Warrant  Price shall be subject to adjustment  as provided  below.  An adjustment to the Warrant Price shall become
effective  immediately  after the payment date in the case of each dividend or distribution  and immediately  after
the effective date of each other event which  requires an  adjustment.  No adjustment to the Warrant Price shall be
made in an amount less than $0.01,  but any such lesser  amount shall be carried  forward and shall be given effect
in the next Warrant Price adjustment, if any.

-6-

          (f)   In the event that,  as a result of an  adjustment  made  pursuant to this Section 3, the
Holder  shall  become  entitled to receive any shares of capital  stock of the Company  other than shares of Common
Stock,  the number of such other shares so receivable upon exercise of this Warrant shall be subject  thereafter to
adjustment  from time to time in a manner and on terms as nearly  equivalent as practicable to the provisions  with
respect to the Warrant Shares contained in this Warrant.

          (g)   Except as provided in Section  3(h) hereof,  if and whenever the Company  shall issue or
sell, or is, in accordance with any of Sections  3(g)(i) through  3(g)(vi)  hereof,  deemed to have issued or sold,
any shares of Common Stock for a consideration  per share less than the Warrant Price in effect  immediately  prior
to the time of such issue or sale,  then and in each such case (a "Trigger  Issuance")  the  then-existing  Warrant
Price shall be reduced,  as of the close of business on the effective  date of the Trigger  Issuance,  to a Warrant
Price determined as follows:

	 	Adjusted Warrant Price =Y(A x B) + D
                          
              
   A+C	 

where

                    A =     the  number  of  shares  of  Common  Stock   outstanding   (including  any
Additional Shares of Common Stock (as defined below) immediately preceding such Trigger Issuance)

                    B =     the Warrant Price in effect immediately preceding such Trigger Issuance

                    C =     the number of  Additional  Shares of Common  Stock (as  adjusted for stock
splits, stock combinations, recapitalizations, and dividends and the like) outstanding or deemed outstanding
hereunder as a result of such Trigger Issuance 

                    D =     the  aggregate  consideration,  if any,  received or deemed to be received
by the Company upon such Trigger Issuance

          For purposes of this
subsection (g), “Additional Shares of Common
Stock” shall mean all shares of Common Stock issued by the
Company or deemed to be issued pursuant to this Section 3(g), other than
Excluded Issuances (as defined in Section 3(h) hereof). 

-7-

For purposes of this
Section 3(g), the following Sections 3(g)(i) to 3(g)(vi) shall
also be applicable (subject, in each such case, to the provisions of Section
3(h) hereof) and to each other subsection contained in this Section
3(g): 

                    (i)   Issuance  of Rights or Options.  In case at any time the  Company  shall in any
manner grant  (directly and not by  assumption in a merger or otherwise)  any warrants or other rights to subscribe
for or to purchase,  or any options for the purchase of, Common Stock or any stock or security  convertible into or
exchangeable  for Common Stock (such  warrants,  rights or options being called  "Options" and such  convertible or
exchangeable stock or securities being called "Convertible  Securities"),  whether or not such Options or the right
to convert or exchange any such  Convertible  Securities are immediately  exercisable,  and the price per share for
which  Common  Stock is issuable  upon the  exercise  of such  Options or upon the  conversion  or exchange of such
Convertible   Securities  (determined  by  dividing  (A)  the  sum  (which  sum  shall  constitute  the  applicable
consideration)  of (x) the total amount,  if any,  received or receivable by the Company as  consideration  for the
granting of such Options,  plus (y) the aggregate  amount of additional  consideration  payable to the Company upon
the exercise of all such  Options,  plus (z) in the case of such Options  which relate to  Convertible  Securities,
the  aggregate  amount of  additional  consideration,  if any,  payable upon the issue or sale of such  Convertible
Securities and upon the conversion or exchange  thereof,  by (B) the total maximum number of shares of Common Stock
issuable upon the exercise of such Options or upon the  conversion or exchange of all such  Convertible  Securities
issuable upon the exercise of such Options)  shall be less than the Warrant  Price in effect  immediately  prior to
the time of the  granting  of such  Options,  then the total  number of shares of Common  Stock  issuable  upon the
exercise  of such  Options or upon  conversion  or  exchange  of the total  amount of such  Convertible  Securities
issuable  upon the exercise of such Options  shall be deemed to have been issued for such price per share as of the
date of granting of such Options or the issuance of such  Convertible  Securities and thereafter shall be deemed to
be outstanding  for purposes of adjusting the Warrant  Price.  Except as otherwise  provided in Section  3(g)(iii),
no  adjustment  of the  Warrant  Price  shall  be made  upon  the  actual  issue  of such  Common  Stock or of such
Convertible  Securities  upon  exercise  of such  Options  or upon the  actual  issue  of such  Common  Stock  upon
conversion or exchange of such Convertible Securities.

                    (ii)   Issuance of  Convertible  Securities.  In case the Company  shall in any manner
issue  (directly and not by assumption in a merger or  otherwise) or sell any  Convertible  Securities,  whether or
not the rights to exchange or convert any such Convertible  Securities are immediately  exercisable,  and the price
per share for which Common Stock is issuable upon such  conversion or exchange  (determined by dividing (A) the sum
(which sum shall  constitute the applicable  consideration)  of (x) the total amount  received or receivable by the
Company as  consideration  for the issue or sale of such Convertible  Securities,  plus (y) the aggregate amount of
additional  consideration,  if any,  payable to the Company upon the  conversion  or exchange  thereof,  by (B) the
total  number  of  shares  of Common  Stock  issuable  upon the  conversion  or  exchange  of all such  Convertible
Securities)  shall be less than the Warrant  Price in effect  immediately  prior to the time of such issue or sale,
then the total  maximum  number of  shares  of Common  Stock  issuable  upon  conversion  or  exchange  of all such
Convertible  Securities  shall be deemed to have been  issued  for such price per share as of the date of the issue
or sale of such  Convertible  Securities and thereafter shall be deemed to be outstanding for purposes of adjusting
the Warrant  Price;  provided  that (C) except as otherwise  provided in Section  3(g)(iii),  no  adjustment of the
Warrant  Price  shall be made upon the actual  issuance of such Common  Stock upon  conversion  or exchange of such
Convertible  Securities and (D) no further  adjustment of the Warrant Price shall be made by reason of the issue or
sale of Convertible  Securities upon exercise of any Options to purchase any such Convertible  Securities for which
adjustments of the Warrant Price have been made pursuant to the other provisions of Section 3(g).

-8-

                    (iii)   Change in Option Price or  Conversion  Rate.  Upon the  happening of any of the
following  events,  namely,  if (A) the purchase  price provided for in any Option  referred to in Section  3(g)(i)
hereof,  (B) the  additional  consideration,  if any,  payable upon the  conversion or exchange of any  Convertible
Securities  referred to in Sections 3(g)(i) or 3(g)(ii),  or (C) the rate at which Convertible  Securities referred
to in Sections  3(g)(i) or  3(g)(ii)  are  convertible  into or  exchangeable  for Common  Stock shall  increase or
decrease at any time (including,  but not limited to, changes under or by reason of provisions  designed to protect
against  dilution),  the Warrant  Price in effect at the time of such event shall  forthwith be  readjusted  to the
Warrant  Price  which  would have been in effect at such time had such  Options  or  Convertible  Securities  still
outstanding  provided for such changed  purchase price,  additional  consideration  or conversion rate, as the case
may be, at the time initially  granted,  issued or sold. On the  termination of any Option for which any adjustment
was made  pursuant to this Section 3(g) or any right to convert or exchange  Convertible  Securities  for which any
adjustment was made pursuant to this Section 3(g) (including,  without limitation,  upon the redemption or purchase
for  consideration  of Convertible  Securities by the Company),  the Warrant Price then in effect  hereunder  shall
forthwith  be changed to the  Warrant  Price which  would have been in effect at the time of such  termination  had
such Option or Convertible Securities never been issued.

                    (iv)   Consideration  for  Stock.  In case any  shares of  Common  Stock,  Options  or
Convertible  Securities shall be issued or sold for cash, the  consideration  received  therefor shall be deemed to
be the amount  received by the Company  therefor,  without  deduction  therefrom  of any  expenses  incurred or any
underwriting  commissions  or  concessions  paid or allowed by the  Company in  connection  therewith.  In case any
shares of Common Stock,  Options or Convertible  Securities shall be issued or sold for a consideration  other than
cash or for a consideration  including cash and such other  consideration,  the amount of the  consideration  other
than cash  received by the Company  shall be deemed to be the fair value of such  consideration  as  determined  in
good  faith  by the  Board,  without  deduction  of  any  expenses  incurred  or any  underwriting  commissions  or
concessions  paid or allowed  by the  Company  in  connection  therewith.  In case any  Options  shall be issued in
connection  with the  issue  and  sale of  other  securities  of the  Company,  together  comprising  one  integral
transaction in which no specific  consideration is allocated to such Options by the parties  thereto,  such Options
shall be  deemed  to have been  issued  for such  consideration  as  determined  in good  faith by the  Board.  The
determination  of the fair value of  consideration  (or the allocation  thereof) for purposes of this  Section 3(g)
need not be the  amount  recorded  in the  books and  records  of the  Company  if the  Board  determines  that the
determination  of  different  amounts  for  different  contexts  is in the best  interest  of the  Company  and its
stockholders and creditors as a whole.

-9-

          
          (v)   Record  Date.  In case the  Company  shall take a record of the  holders of its
Common Stock for the purpose of entitling  them (A) to receive a dividend or other  distribution  payable in Common
Stock,  Options or Convertible  Securities or (B) to subscribe for or purchase Common Stock, Options or Convertible
Securities,  then such  record  date  shall be  deemed to be the date of the issue or sale of the  shares of Common
Stock  deemed to have been  issued  or sold upon the  declaration  of such  dividend  or the  making of such  other
distribution  or the date of the granting of such right of  subscription  or  purchase,  as the case may be. If the
Company  shall have taken a record of the holders of its Common Stock for the purpose of entitling  them to receive
a dividend or distribution or  subscription  or purchase rights and shall,  thereafter and before the  distribution
to stockholders thereof,  legally abandon its plan to pay or deliver such dividend,  distribution,  subscription or
purchase  rights,  then  thereafter no adjustment  shall be required by reason of the taking of such record and any
such adjustment previously made in respect thereof shall be automatically rescinded and annulled.

          
          (vi)   Treasury  Shares.  The  number of shares of  Common  Stock  outstanding  at any
given time shall not include  shares owned or held by or for the account of the Company or any of its  wholly-owned
subsidiaries,  and the disposition of any such shares (other than the cancellation or retirement  thereof) shall be
considered an issue or sale of Common Stock for the purpose of this Section 3(g).

          
          (h)   Excluded  Issuances.  Anything  herein  to the  contrary  notwithstanding,  the  Company
shall  not be  required  to make  any  adjustment  of the  Warrant  Price  (x) where  such an  adjustment  would be
duplicative  of another  adjustment  of the Warrant  Price  resulting  from the same event that is made pursuant to
other  provisions  of this  Warrant or (y) in the case of  (i) capital  stock,  Options or  Convertible  Securities
issued or issuable to  directors,  officers,  employees  or  consultants  of the Company in  connection  with their
service as directors of the Company,  their  employment  by the Company or their  retention as  consultants  by the
Company  pursuant to any  employee  benefit  plans or  programs  approved  by the Board or any  committee  thereof;
(ii) capital  stock,  Options or Convertible  Securities issued or issuable to landlords or in connection with bank
debt  or  equipment  leases,  (iii) capital  stock,  Options  or  Convertible  Securities  issued  or  issuable  to
collaborative  partners in  licensing or  partnering  transactions  (the  primary  purpose of which is not to raise
equity  capital);  (iv) shares of Common Stock issued or issuable upon the  conversion of the Company's  Series A-1
Preferred  Stock,  (v) shares  of Common Stock  issued or issuable  upon the  conversion  or exercise of Options or
Convertible  Securities  outstanding  on the date  hereof,  and  (vi) shares  of Common Stock issued or issuable by
reason of a dividend,  stock split or other distribution  payable pro rata to all holders of Common Stock (but only
to the extent that such a dividend,  split or  distribution  results in an adjustment in the Warrant Price pursuant
to the other provisions of this Warrant) (collectively, "Excluded Issuances").

          
          (i)   Adjustment of Number of Shares.  Upon each  adjustment in the Warrant Price  pursuant to
this Section 3, the number of Warrant Shares purchasable  hereunder shall be adjusted,  to the nearest whole share,
to the  product  obtained  by  multiplying  the  number of Warrant  Shares  purchasable  immediately  prior to such
adjustment  by a  fraction,  (i) the  numerator  of which  shall be the  Warrant  Price  immediately  prior to such
adjustment, and (ii) the denominator of which shall be the Warrant Price immediately thereafter.

-10-

          
          (j)   Notice of  Adjustments.  With each  adjustment  pursuant to this  Section 3, the Company
shall  deliver a  certificate  signed by its chief  financial or executive  officer  setting  forth,  in reasonable
detail, the event requiring the adjustment,  the amount of the adjustment,  the method by which such adjustment was
calculated,  and the Warrant Price and the number of Warrant Shares  purchasable  hereunder  after giving effect to
such adjustment, which shall be mailed by first class mail, postage prepaid to the Holder.

          Section4.
          Transfer Taxes. The Company will pay any
documentary stamp taxes attributable to the initial issuance of Warrant Shares
issuable upon the exercise of the Warrant; provided,
however, that the Company shall not be required to pay any
tax or taxes which may be payable in respect of any transfer involved in the
issuance or delivery of any certificates for Warrant Shares in a name other than
that of the registered holder of this Warrant in respect of which such shares
are issued, and in such case, the Company shall not be required to issue or
deliver any certificate for Warrant Shares or any Warrant until the person
requesting the same has paid to the Company the amount of such tax or has
established to the Company’s reasonable satisfaction that such tax has been
paid. 

          Section 5.
          Mutilated or Missing Warrants. In case this
Warrant shall be mutilated, lost, stolen, or destroyed, the Company shall issue
in exchange and substitution of and upon cancellation of the mutilated Warrant,
or in lieu of and substitution for the Warrant lost, stolen or destroyed, a new
Warrant of like tenor and for the purchase of a like number of Warrant Shares,
but only upon receipt of evidence reasonably satisfactory to the Company of such
loss, theft or destruction of the Warrant, and with respect to a lost, stolen or
destroyed Warrant, reasonable indemnity or bond with respect thereto, if
requested by the Company. 

          Section 6.
          Fractional Shares. No fractional shares of Common
Stock shall be issued in connection with any exercise or cashless exercise
hereunder, and in lieu of any such fractional shares the Company shall make a
cash payment therefor to the Holder (or such other person or persons as directed
by the Holder, subject to compliance with all applicable laws) based on the Fair
Market Value of a share of Common Stock on the date of exercise or cashless
exercise of this Warrant. 

          Section 7.          Securities Act and Representations and Warranties of Holder.

                    (a)   Compliance  with Securities Act and Legends.  The Holder,  by acceptance  hereof,  agrees that it will not
offer, sell or otherwise  dispose of this Warrant,  or any shares of Common Stock to be issued upon exercise hereof
except under  circumstances  which will not result in a violation of the Securities Act of 1933, as amended, or the
rules and regulations  promulgated  thereunder,  as amended (the "Act"), or any state's securities laws. All shares
of Common  Stock  issued  upon  exercise  of this  Warrant  (unless  registered  under the Act) shall be stamped or
imprinted with a legend as follows:

	 	THIS SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY OTHER
SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF (1) AN EFFECTIVE REGISTRATION STATEMENT COVERING
THESE SECURITIES UNDER THE ACT AND ANY OTHER APPLICABLE SECURITIES LAWS, OR (2)
AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.	

-11-

          (b)   Representations and Warranties of Holder.  By acceptance of this Warrant, Holder
hereby represents and warrants to the Company that:

          
          (i)   Holder is acquiring this Warrant, and will acquire the Warrant Shares, for
investment for the Holder's own account, not as a nominee or agent, and not with a view to the resale or
distribution of all or any part of this Warrant or the Warrant Shares.  Holder is prepared to hold this
Warrant and the Warrant Shares for an indefinite period of time and has no present intention of selling,
granting any participation in, or otherwise distributing any portion of this Warrant or the Warrant Shares.
Holder does not have any contract, undertaking, agreement or arrangement with any person or entity to sell,
transfer or grant a participating interest in any of the Warrant Shares.

          
          (ii)   Holder believes it has received all the information it considers necessary
or appropriate for deciding whether to invest in the Warrant Shares, and Holder has had an opportunity to ask
questions and receive answers from the Company regarding the terms and conditions of the issuance of the
Warrant Shares.

          
          (iii)   Holder is an "accredited investor" within the meaning of Rule 501 of
Regulation D promulgated by the Securities and Exchange Commission (the "SEC") under the Act.

          
          (iv)   Holder understands that neither this Warrant nor the Warrant Shares have been
registered under the Act or under any state securities laws, and, as a result thereof, are subject to substantial
restrictions on transfer.  Holder acknowledges that this Warrant and the Warrant Shares must be held
indefinitely, unless subsequently registered under the Act and all applicable state securities laws or unless
exemptions from registration under the Act and such laws are available.

          Section 8.
          Rights as a Stockholder. Except as expressly
provided in this Warrant, no Holder, as such, shall be entitled to vote or
receive dividends or be deemed the holder of Common Stock or any other
securities of the Company which may at any time be issuable on the exercise
hereof for any purpose, nor shall anything contained herein be construed to
confer upon the Holder, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of the directors or upon any
matter submitted to stockholders at any meeting thereof, or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise, until
this Warrant shall have been exercised and the Warrant Shares purchasable upon
the exercise hereof shall have become deliverable, as provided herein. 

-12-

          Section 9.
          Modification and Waiver. This Warrant and any
provision hereof may be changed, waived, discharged or terminated only by an
instrument in writing signed by the Company and the then current Holder, and
such change, waiver, discharge or termination shall be binding on any future
Holder. 

          Section 10.
          Notices. Unless otherwise specifically provided
herein, all communications under this Warrant shall be in writing and shall be
deemed to have been duly given (a) on the date personally delivered to the party
to whom notice is to be given, (b) on the day of transmission if sent by
facsimile transmission to a party at the facsimile number set forth for such
party on the signature page hereto and provided that the sending party receives
confirmation of the completion of such transmission, (c) on the Business Day
after submitted for next day delivery to Federal Express or similar overnight
courier which utilizes a written form of receipt, or (d) on the fifth day after
mailing, if mailed to the party to whom notice is to be given, by first class
mail, registered or certified, postage prepaid, and properly addressed, return
receipt requested, to the registered Holder at its address as shown on the books
of the Company or to the Company at the address indicated therefor on the
signature page of this Warrant. Any party hereto may change its address for
purposes of this Section 10 by giving the other party written notice of
the new address in the manner set forth herein. 

          Section 11.
          Descriptive Headings. The descriptive headings
contained in this Warrant are inserted for convenience only and do not
constitute a part of this Warrant. 

          Section 12.
          Governing Law. The validity, interpretation and
performance of this Warrant shall be governed by, and construed in accordance
with, the laws of the State of New York applicable to contracts made and to be
performed entirely within such State, regardless of the law that might be
applied under principles of conflicts of law. The Company and, by accepting this
Warrant, the Holder, each irrevocably submits to the exclusive jurisdiction of
the state and federal courts located in New York for the purpose of any suit,
action, proceeding or judgment relating to or arising out of this Warrant and
the transactions contemplated hereby. Service of process in connection with any
such suit, action or proceeding may be served on each party hereto anywhere in
the world by the same methods as are specified for the giving of notices under
this Warrant. The Company and, by accepting this Warrant, the Holder, each
irrevocably consents to the jurisdiction of any such court in any such suit,
action or proceeding and to the laying of venue in such court. The Company and,
by accepting this Warrant, the Holder, each irrevocably waives any objection to
the laying of venue of any such suit, action or proceeding brought in such
courts and irrevocably waives any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum. 

          Section 13.
          Acceptance. Receipt and execution of this Warrant
by the Holder hereof shall constitute acceptance of and agreement to the
foregoing terms and conditions. 

          Section 14.
          Identity of Transfer Agent. The Transfer Agent for
the Common Stock is Mellon Investor Services. Upon the appointment of any
subsequent transfer agent for the Common Stock or other shares of the
Company’s capital stock issuable upon the exercise of the rights of
purchase represented by this Warrant, the Company will mail to the Holder a
statement setting forth the name and address of such transfer agent. 

-13-

          Section 15.
          No Impairment of Rights. The Company will not, by
amendment of its Certificate of Incorporation or through any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the holder of this Warrant against
material impairment. 

          Section 16.
          Assignment. Subject to the terms hereof and
compliance with applicable federal and state securities laws, this Warrant
(including without limitation the rights and obligations granted in Sections 17
and 18 (which rights and obligations may only be transferred together)) may be
transferred by the Holder with respect to any or all of the Warrant Shares then
purchasable hereunder. Upon surrender of this Warrant to the Company, together
with a properly endorsed notice of transfer, for transfer of this Warrant in its
entirety by the Holder, the Company shall issue a new warrant of the same
denomination to the designated transferee. Upon surrender of this Warrant to the
Company, together with a properly endorsed notice of transfer, by the Holder for
transfer with respect to a portion of the Warrant Shares then purchasable
hereunder, the Company shall issue a new warrant to the designated transferee,
in such denomination as shall be requested by the Holder hereof, and shall issue
to such Holder a new warrant covering the number of Warrant Shares in respect of
which this Warrant shall not have been transferred. In addition to, and not in
limitation of, the foregoing, a Holder that is a corporation, a partnership or a
limited liability company, may distribute any portion of this Warrant to its
respective shareholders, partners or members. Unless and until the provisions
for assignment set forth herein have been fully complied with, the Company may
treat the last registered Holder as the absolute owner of this Warrant for all
purposes, notwithstanding any notice to the contrary. 

          Section 17.          Registration Rights.

          (a)   Piggyback  Registration  Rights.  If (but without any  obligation  to do so), at any time between
the date hereof and the  Expiration  Date,  the Company  proposes to register  any shares of Common Stock under the
Act  (including for this purpose any  registration  to be effected by the Company for any of its  stockholders)  in
connection with the public offering of such securities  solely for cash (other than a registration  relating solely
to the sale of securities to  participants  in a Company stock plan, a registration  relating solely to an SEC Rule
145 transaction,  a registration on any  registration  form which does not permit secondary sales or a registration
on any form which does not  include  substantially  the same  information  as would be required to be included in a
registration  statement  covering the sale of Common Stock (a "Registration  Statement") or a registration in which
the only Common Stock being  registered is Common Stock issuable upon conversion of debt securities  which are also
being registered),  the Company shall, at such time,  promptly give the Holder written notice of its intent to file
such a  Registration  Statement.  Upon the written  request of the Holder given within ten (10) business days after
the  provision  of such notice by the Company in  accordance  with  Section 10, the Company  shall,  subject to the
provisions  of this Section 17,  cause to be  registered  under the Act all of the Warrant  Shares then held by the
Holder and all of the Warrant  Shares then  issuable upon exercise of this Warrant  (including  without  limitation
such  indeterminate  number of additional  shares of Common Stock  resulting from stock splits,  stock dividends or
similar  transactions  with respect to the Registrable  Securities)  that the Holder has requested to be registered
(the "Registrable  Securities").  Notwithstanding  the foregoing,  if the Holder may immediately sell all shares of
Registrable  Securities  under Rule 144 during any 90-day  period ending on the date on which notice is to be given
under this  Section  17(a),  then the Company  shall not be obligated  to provide  notice  pursuant to this Section
17(a) or  register  any  Warrant  Shares  pursuant  to this  Section  17.  If,  before  June 30,  2004,  all of the
Registrable  Securities  have not been either (i) sold pursuant to Rule 144 as described in the preceding  sentence
or (ii) registered  under the Act pursuant to the provisions of this Section 17 then,  solely in such an event, the
Expiration  Date of this  Warrant  shall be  extended  to  December  31,  2008 and all  references  herein  to such
Expiration Date shall be deemed to mean December 31, 2008.

-14-

          
(b)     Length of  Registration.  Subject to the  provisions  of Section 17(h) below,  whenever  required
under  Section 17 to effect  the  registration  of any  Registrable  Securities,  the  Company  shall (i) keep such
Registration  Statement  effective  for a period  equal to the  shorter of up to one hundred  twenty  (120) days or
until the distribution  contemplated in such Registration  Statement has been completed  (provided,  however,  that
such 120-day  period shall be extended  for a period of time equal to the period the Holder  refrains  from selling
any securities  included in such  registration  at the request of the Company or an underwriter of Common Stock (or
other  securities)  of the  Company)  and (ii)  furnish  to the  Holder  such  numbers  of copies of a  prospectus,
including a preliminary  prospectus,  in conformity  with the  requirements of the Act, and such other documents as
the Holder may reasonably  request in order to facilitate the  disposition  of Registrable  Securities  included in
such registration.

          
(c)     Underwritten  Offering.  In connection  with any offering  involving an underwriting of shares of
Common  Stock,  the Company  shall not be required  under  Section 17 to include any of the Holder's  securities in
such  underwriting  unless the Holder accepts the terms of the  underwriting as agreed upon between the Company and
the underwriters  selected by the Company (or by other persons entitled to select the underwriters),  and then only
in such quantity as the  underwriters  determine in their sole  discretion  will not  jeopardize the success of the
offering by the  Company.  If the total  amount of  securities,  including  Registrable  Securities,  requested  by
stockholders  to be included in such offering  exceeds the amount of securities sold other than by the Company that
the  underwriters  determine in their sole  discretion  is compatible  with the success of the  offering,  then the
Company shall be required to include in the offering  only that number of such  securities,  including  Registrable
Securities,  which the  underwriters  determine in their sole  discretion  will not  jeopardize  the success of the
offering (the  securities so included to be apportioned  pro rata among the selling  stockholders  according to the
total amount of  securities  entitled to be included  therein  owned by each selling  stockholder  or in such other
proportions  as shall  mutually be agreed to by such  selling  stockholders)  but in no event shall any  securities
being sold by a stockholder  exercising a demand  registration right be excluded from such offering prior to or pro
rata with the securities of the Holder.

          
(d)     Intentionally omitted.

          
(e)     Registration  Expenses.  The Company shall pay all  Registration  Expenses (as defined  below) in
connection  with any  registration,  qualification  or compliance  hereunder,  and the Holder shall pay all Selling
Expenses (as defined  below) and other  expenses that are not  Registration  Expenses  relating to the  Registrable
Securities  resold by such Holder.  "Registration  Expenses" shall mean all expenses,  except for Selling Expenses,
incurred  by the Company in  complying  with the  registration  provisions  herein  described,  including,  without
limitation,  all registration,  qualification and filing fees, printing expenses, fees and disbursements of counsel
for the Company and up to an  aggregate  of $10,000 for the  reasonable  legal fees and  expenses of one counsel to
the Holder,  blue sky fees and expenses and the expense of any special  audits  incident to or required by any such
registration.  "Selling  Expenses" shall mean all selling  commissions,  underwriting fees and stock transfer taxes
applicable to the Registrable Securities.

-15-

          
(f)     Additional  Company  Obligations.  In  the  case  of any  registration  effected  by the  Company
pursuant to these  registration  provisions,  the Company  will use its  reasonable  best efforts to: (i) cause all
such Registrable  Securities  registered as described herein to be listed on each securities exchange and quoted on
each quotation service on which similar  securities  issued by the Company are then listed or quoted;  (ii) provide
a transfer agent and registrar for all Registrable  Securities  registered  pursuant to the Registration  Statement
and a CUSIP number for all such Registrable  Securities;  (iii) comply with all applicable rules and regulations of
the SEC and each securities  exchange or each quotation  service on which securities issued by the Company are then
listed or quoted,  (iv) file the  documents  required of the  Company and  otherwise  maintain  requisite  blue sky
clearance in (A) all  jurisdictions  in which any of the  Registrable  Securities are  originally  sold and (B) all
other states  specified  in writing by the Holder as may  reasonably  be required to sell the Holder's  Registrable
Securities,  provided as to clause (B),  however,  that the Company shall not be required to qualify to do business
or consent to service of  process in any state in which it is not now so  qualified  or has not so  consented,  (v)
prepare and file with the SEC such amendments and post-effective  amendments to the Registration  Statement and the
prospectus as may be necessary to keep the  Registration  Statement  effective for the period  specified in Section
17(b) and to comply with the  provisions  of the Act and all other federal and state  securities  laws with respect
to the  distribution of all  Registrable  Securities,  and (vi) provide copies to and permit counsel  designated by
the Holder to review each  Registration  Statement and all amendments and  supplements  thereto no fewer than three
(3) business days prior to their filing with the SEC.

          
(g)     Providing  Information.  The Holder shall furnish to the Company such information  regarding such
Holder and the distribution  proposed by such Holder as the Company may reasonably  request in writing and as shall
be reasonably  required in connection with any  registration,  qualification or compliance  described  herein.  The
Holder shall represent that such information is true and complete.

          
(h)     Limitations  on Sale.  The  Company  may at any time  refuse to permit  the  Holder to resell any
Registrable  Securities  pursuant to the  Registration  Statement  as set forth in this  Section  17(h);  provided,
however,  that in order to exercise this right,  the Company must deliver a certificate in writing to the Holder to
the effect  that a delay in such sales is  necessary  because,  in the good faith  judgment of the  Company,  sales
pursuant  to the  Registration  Statement  would  require  the  public  disclosure  of  information  that would not
otherwise be required to be disclosed (which  disclosure  would, in the good faith judgment of the Company,  have a
significant  adverse  effect on the  Company) or could in other  respects  constitute  a  violation  of the federal
securities laws or otherwise  materially  adversely affect the Company.  In such an event, the Company shall notify
the  Holder  promptly  after it has  determined  that such  circumstances  no  longer  exist.  Notwithstanding  the
foregoing or anything  contained herein to the contrary,  the Company shall not under any circumstances be entitled
to refuse to permit the Holder to resell any  Registrable  Securities  under this  Section  17(h) more than two (2)
times in any twelve  (12) month  period  following  the date  hereof,  and the two periods in any twelve (12) month
period  during  which the Company may refuse to permit the Holder to resell any  Registrable  Securities  shall not
exceed  sixty  (60) days in the  aggregate.  The  Holder  hereby  covenants  and  agrees  that it will not sell any
Registrable  Securities  pursuant to the  Registration  Statement  during the periods the Company refuses to permit
the Holder to resell any Registrable Securities as set forth in this Section 17(h).

-16-

          
(i)     Future  Registration  Rights.  The Company  shall not be  restricted  in any way in entering into
any  agreement  with any holder or  prospective  holder of any  securities  of the  Company  which would allow such
holder or  prospective  holder to include such  securities  in any  registration  filed by the  Company;  provided,
however,  subject to the last  sentence of Section  17(c),  no such  agreement  shall limit the  Holder's  right to
include its Registrable Securities in any such registration statement pursuant to this Section 17.

          Section 18.          Indemnification and Contribution.

          
(a)     Indemnification  by the Company.  The Company  agrees to indemnify  and hold  harmless the Holder
and its officers,  directors,  members,  partners,  employees and agents,  successors  and assigns,  and each other
person,  if any, who controls or is under common  control with the Holder  within the meaning of the Act,  from and
against any losses,  claims,  damages or  liabilities  (or actions or  proceedings  in respect  thereof),  joint or
several, to which such Holder, officer,  director,  member, partner,  employee,  agent or controlling or controlled
person may become subject (under the Act or otherwise) insofar as such losses,  claims,  damages or liabilities (or
actions  or  proceedings  in respect  thereof)  arise out of, or are based  upon,  (A) any  untrue  statement  of a
material  fact  contained  in the  Registration  Statement or in any final  prospectus  contained  therein,  or any
amendment or  supplement  thereof,  (B) the omission or alleged  omission to state therein a material fact required
to be stated therein or necessary to make the statements  therein not misleading,  (C) any violation by the Company
or its agents of any rule or  regulation  promulgated  under the Act  applicable  to the  Company or its agents and
relating to action or inaction  required of the Company in connection  with such  registration,  or (D) any failure
to register or qualify the Registrable  Securities  included in any such Registration  Statement in any state where
the Company or its agents has  affirmatively  undertaken or agreed in writing that the Company will  undertake such
registration or qualification on the Holder's behalf;  provided,  however,  that the Company shall not be liable in
any such case to the extent  that such loss,  claim,  damages or  liability  arises out of, or is based upon (i) an
untrue  statement  or  alleged  untrue  statement  made in such  Registration  Statement  in  reliance  upon and in
conformity with written  information  furnished to the Company by or on behalf of such Holder  specifically for use
in preparation of the  Registration  Statement or (ii) any untrue  statement in any prospectus that is corrected in
any  subsequent  prospectus or addendum or supplement  that was delivered to the Holder prior to the pertinent sale
or sales by the Holder, and the Company will reimburse the Holder and its officers,  directors,  members, partners,
employees,  agents or  controlling  or  controlled  person for the expenses of a single legal counsel and all other
expenses  reasonably  incurred in  investigating,  defending or preparing to defend any such action,  proceeding or
claim;  provided,  however,  that the indemnity  contained in this Section 18(a) shall not apply to amounts paid in
settlement of any such loss,  claim,  damages or liability if such  settlement  is effected  without the consent of
the Company (which consent shall not be unreasonably conditioned or withheld).

-17-

          
(b)     Indemnification  by the Holder.  The Holder  agrees to  indemnify  and hold  harmless the Company
and its officers,  directors,  members,  partners,  employees and agents,  successors  and assigns,  and each other
person,  if any, who controls or is under common  control with the Company  within the meaning of the Act, from and
against any losses,  claims,  damages or liabilities  (or actions or  proceedings in respect  thereof) to which the
Company or its officers,  directors,  members, partners,  employees, agents or controlling or controlled person may
become subject (under the Act or otherwise) insofar as such losses,  claims,  damages or liabilities (or actions or
proceedings  in respect  thereof)  arise out of, or are based upon an untrue  statement  made in such  Registration
Statement in reliance upon and in conformity with written  information  furnished to the Company by or on behalf of
such Holder specifically for use in preparation of the Registration Statement,  provided,  however, that the Holder
shall not be liable in any such case for any untrue  statement  included in any prospectus which statement has been
corrected,  in writing,  by such Holder and  delivered to the Company at least seven (7)  business  days before the
sale from which such loss  occurred,  and the Holder will,  as incurred,  reimburse  the Company and its  officers,
directors,  members,  partners,  employees,  agents or  controlling  or  controlled  person  for any legal or other
expenses  reasonably  incurred in  investigating,  defending or preparing to defend any such action,  proceeding or
claim;  provided,  however,  that the Holder  shall not be required to pay an  indemnity in any amount in excess of
the net  amount  received  by the  Holder  from the sale of the  Registrable  Securities  to which  such  indemnity
relates;  provided further,  that the indemnity  contained in this Section 18(b) shall not apply to amounts paid in
settlement of any such loss,  claim,  damages or liability if such  settlement  is effected  without the consent of
the Holder (which consent shall not be unreasonably conditioned or withheld).

          
(c)     Indemnification  Procedures.  Promptly after receipt by any  indemnified  person of a notice of a
claim or the beginning of any action in respect of which indemnity is to be sought against an  indemnifying  person
pursuant to this  Section 18, such  indemnified  person  shall  notify the  indemnifying  person in writing of such
claim or of the commencement of such action,  and, subject to the provisions  hereinafter  stated, in case any such
action  shall be brought  against  an  indemnified  person and the  indemnifying  person  shall have been  notified
thereof, the indemnifying person shall be entitled to participate  therein,  and, to the extent that it shall wish,
to assume the defense thereof, with counsel reasonably satisfactory to the indemnified person;  provided,  however,
that the failure of any  indemnified  party to give notice as provided  herein  shall not relieve the  indemnifying
party of its  obligations  hereunder  unless  the  failure  to give such  notice is  materially  prejudicial  to an
indemnifying  party's ability to defend such action.  After notice from the indemnifying person to such indemnified
person of the indemnifying  person's election to assume the defense thereof,  the indemnifying  person shall not be
liable to such  indemnified  person for any legal  expenses  subsequently  incurred by such  indemnified  person in
connection  with the  defense  thereof;  provided,  however,  that if there  exists or shall  exist a  conflict  of
interest that would make it inappropriate in the reasonable  opinion of counsel for the indemnified  person for the
same counsel to represent both the indemnified  person and such  indemnifying  person or any affiliate or associate
thereof,  the  indemnified  person shall be entitled to retain its own counsel at the expense of such  indemnifying
person;  provided,  however,  that in the case of the immediately  preceding proviso,  and notwithstanding  Section
18(a) above, the  indemnifying  person shall not be responsible for the legal expenses of more than one counsel for
all indemnified persons.

-18-

          
(d)     Contribution  in Lieu of  Indemnity.  If the  indemnification  provided for in this Section 18 is
unavailable  to or  insufficient  to hold  harmless  an  indemnified  party under  Section  18(a) or 18(b) above in
respect of any losses,  claims,  damages or liabilities (or actions or proceedings in respect thereof)  referred to
therein,  then each indemnifying  party shall contribute to the amount paid or payable by such indemnified party as
a result of such losses,  claims,  damages or  liabilities  (or actions in respect  thereof)  based on the relative
fault  of  the  indemnifying   party  and  the  indemnified   party  as  well  as  any  other  relevant   equitable
considerations.  The relative  fault shall be determined  by reference  to, among other things,  whether the untrue
or alleged  untrue  statement  of a material  fact or the  omission or alleged  omission  to state a material  fact
relates  to  information  supplied  by the  Company  on the one hand or the  Holder on the  other and the  parties'
relative  intent,  knowledge,  access to  information  and  opportunity  to correct or prevent  such  statement  or
omission.  The Company and the Holder  agree that it would not be just and  equitable if  contribution  pursuant to
this Section  18(d) were  determined by pro rata  allocation  or by any other method of  allocation  which does not
take account of the equitable  considerations  referred to above in this Section 18(d).  The amount paid or payable
by an indemnified party as a result of the losses,  claims,  damages or liabilities (or actions in respect thereof)
referred  to above in this  Section  18(d)  shall be  deemed to  include  any  legal or other  expenses  reasonably
incurred  by such  indemnified  party in  connection  with  investigating  or  defending  any such action or claim.
Notwithstanding  the  provisions of this Section  18(d),  the Holder shall not be required to contribute any amount
in excess of the net amount received by the Holder from the sale of the  Registrable  Securities to which such loss
relates.  No person or entity  guilty of fraudulent  misrepresentation  (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

          (e)     
Underwriting  Agreement  Indemnification.  Notwithstanding the foregoing,  to the extent that the
provisions on indemnification and contribution  contained in the underwriting  agreement entered into by the Holder
in connection with the underwritten public offering are in conflict with the foregoing  provisions,  the provisions
in the underwriting agreement shall control.

          (f)     Survival of  Indemnification.  The  obligations of the Company and the Holders under this Section
18 shall survive the completion of any offering of Registrable  Securities in a Registration  Statement  under this
Section 18, and otherwise.

[Remainder of Page Left Intentionally Blank]

-19-

        IN
WITNESS WHEREOF, the Company and the Holder have caused this Warrant to be
executed on their behalf by one of their officers thereunto duly authorized. 

	 	 	 	INSITE VISION INCORPORATED

	 	 	 	By:  /s/ S. Kumar Chandrasekaran
Name:  S. Kumar Chandrasekaran, Ph.D
Title:  CEO, CFO and Chairman of the Board

Address:  965 Atlantic Avenue
Alameda, California 94501

Acknowledged and Agreed:

XMARK FUND,
L.P.

By:  /s/ Mitchell D. Kaye

Name:  Mitchell D. Kaye
Title:  CIO

Address:  152 West 57th Street
21st Floor
New York, NY  10019

-20-

APPENDIX A

                                                NOTICE OF EXERCISE

To:   INSITE VISION INCORPORATED

1.     The  undersigned  hereby  irrevocably  elects to purchase  [_____] shares of Common Stock of InSite Vision
Incorporated  pursuant to the terms of the attached Warrant,  and tenders herewith payment of the purchase price of
such shares in full, by [cash,  certified  check/wire  transfer,  or surrender of the originally  executed Warrant]
[select the applicable method of payment].

2.     Please issue a certificate or certificates representing said shares in the name of the undersigned or in
such other name or names as are specified below:

____________________________________

____________________________________

            
            (Name)

____________________________________

            
            (Address)

____________________________________ (Signature)

____________________________________ (Date)

3.     Please  issue a new  Warrant of  equivalent  form and tenor for the  unexercised  portion of the  attached
Warrant in the name of the undersigned or in such other name as is specified below:

____________________________________

Date: ____________________________________

(Warrantholder) ____________________________________

Name: (Print) ____________________________________

By: ____________________________________

-21-

APPENDIX B

                                             Net Issue Election Notice

To: InSite Vision Incorporated

Date:[_________________________]

        The
undersigned hereby elects under Section 1(c) of this Warrant to surrender
the right to purchase [____________] shares of Common Stock pursuant to this
Warrant and hereby requests the issuance of [_____________] shares of Common
Stock. The certificate(s) for the shares issuable upon such net issue election
shall be issued in the name of the undersigned or as otherwise indicated below. 

____________________________________

Signature

____________________________________

Name for Registration

____________________________________

Mailing Address

-22-EXHIBIT 4.12

	 	THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”),
OR ANY OTHER SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF (1) AN EFFECTIVE REGISTRATION
STATEMENT COVERING SUCH SECURITIES UNDER THE ACT AND ANY OTHER APPLICABLE
SECURITIES LAWS, OR (2) AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.	

INSITE
VISION INCORPORATED
WARRANT TO PURCHASE 155,475 SHARES OF COMMON STOCK

	December 31, 2003		Warrant No._______

        For
value received, InSite Vision Incorporated, a Delaware corporation (the
“Company”), hereby certifies that Xmark Fund,
Ltd., or its registered transferees, successors or assigns (each person
or entity holding all or part of this Warrant being referred to as a
“Holder”), is the registered holder of warrants
(the “Warrants”) to subscribe for and purchase
One Hundred Fifty-Five Thousand, Four Hundred Seventy-Five  (155,475) shares (as adjusted
pursuant to Section 3 hereof, the “Warrant
Shares”) of the fully paid and nonassessable common stock,
par value $0.01 per share (the “Common Stock”),
of the Company, at a purchase price per share initially equal to Fifty Eight
Cents ($0.58) (the “Warrant Price”) on or
before, 5:00 P.M., Eastern Time, on December 31, 2006 (except as otherwise
extended pursuant to Section 17(a) below) (the “Expiration
Date”), subject to the provisions and upon the terms and
conditions hereinafter set forth; provided,
however, that in the event that any portion of this Warrant is
unexercised as of the Expiration Date, the terms of Section 1(b) below
shall apply. As used in this Warrant, the term “Business
Day” means any day other than a Saturday or Sunday on which
commercial banks located in New York, New York are open for the general
transaction of business. 

          
Section 1.          Exercise.

                    (a)          Method of Exercise; Payment; Issuance of New Warrant.

                              
(i)     Subject  to the provisions  hereof,  the Holder
may exercise  this  Warrant,  in whole or in part and from time to time,  by the
surrender  of this  Warrant  (with the  Notice of  Exercise  attached  hereto as
Appendix  A duly executed) at the principal office of the Company,
or such other office or agency of the Company as it may reasonably  designate by
written notice to the Holder,  during normal business hours on any Business Day,
and the payment by the Holder by cash, certified check payable to the Company or
wire transfer of  immediately  available  funds to an account  designated to the
exercising  Holder  by the  Company  of an amount  equal to the then  applicable
Warrant Price  multiplied by the number of Warrant Shares then being  purchased,
or in the event of a cashless  exercise pursuant to Section 1(c) below, with the
Net Issue  Election  Notice  attached  hereto as  Appendix  B duly
executed and completed.  On the date on which the Holder shall have satisfied in
full the Holder's  obligations  set forth  herein  regarding an exercise of this
Warrant  (provided  such date is prior to the Expiration  Date),  the Holder (or
such other  person or persons as directed by the Holder,  subject to  compliance
with applicable securities laws) shall be treated for all purposes as the holder
of  record  of  such  Warrant  Shares  as of  the  close  of  business  on  such
date. 

  

                              (ii)  In the  event  of any  exercise  of the  rights  represented  by this  Warrant,
certificates  for the whole  number of shares of Common  Stock so  purchased  shall be  delivered to the Holder (or
such other person or persons as directed by the Holder,  subject to compliance with applicable  securities laws) as
promptly as is  reasonably  practicable  (but not later than  five (5)  Business  Days) after such  exercise at the
Company's expense,  and, unless this Warrant has been fully exercised,  a new Warrant representing the whole number
of Warrant  Shares,  if any,  with respect to which this Warrant shall not then have been  exercised  shall also be
issued to the Holder as soon as  reasonably  practicable  thereafter  (but not later than five (5)  Business  Days)
after such exercise.

                    (b)   Automatic  Exercise.  If any  portion  of this  Warrant  remains  unexercised  as of the
Expiration  Date and the Fair Market  Value (as defined  below) of one share of Common  Stock as of the  Expiration
Date is greater than the applicable  Warrant Price as of the Expiration  Date, then this Warrant shall be deemed to
have been exercised  automatically  immediately  prior to the close of business on the Expiration  Date (or, in the
event that the Expiration  Date is not a Business Day, the  immediately  preceding  Business Day) (the  "Automatic
Exercise  Date") in the manner  provided in Section 1(c) below,  and the Holder (or such other person or persons as
directed by the Holder,  subject to compliance with applicable  securities  laws) shall be treated for all purposes
as the holder of record of such Warrant  Shares as of the close of business on such Automatic  Exercise Date.  This
Warrant shall be deemed to be surrendered to the Company on the Automatic  Exercise Date by virtue of this Section
1(b)  without  any action by the  Holder.  As  promptly  as is  reasonably  practicable  on or after the  Automatic
Exercise  Date,  but in no event  prior to the date on which this  Warrant  is  surrendered  to the  Company at the
principal  office of the Company,  or such other office or agency of the Company as it may reasonably  designate by
written  notice to the Holder,  during normal  business hours on any Business Day, the Company at its expense shall
issue and deliver to the Holder (or such other person or persons as directed by the Holder,  subject to  compliance
with  applicable  securities  laws) a certificate or  certificates  for the number of Warrant Shares  issuable upon
such exercise, in accordance with Section 1(c).

                    (c)   Cashless  Right to Convert  Warrant  into  Common  Stock.  In  addition  to and  without
limiting  the rights of the  Holder  hereof  under the terms of this  Warrant,  the  Holder  may elect to  receive,
without the payment by the Holder of the Warrant  Price,  Warrant  Shares equal to the value of this Warrant or any
portion  hereof by the  surrender of this Warrant (or such portion of this  Warrant  being so  exercised)  together
with the Net Issue Election  Notice annexed hereto as Appendix B duly executed and completed,  at the office of the
Company,  or such other office or agency of the Company as it may  reasonably  designate  by written  notice to the
Holder,  during normal  business hours on any Business Day.  Thereupon,  the Company shall issue to the Holder such
number of fully paid, validly issued and nonassessable Warrant Shares, as is computed using the following formula:

-2-

	 	X=Y(A-B)
          A	 

where

                    X =     the number of shares of Common  Stock to be issued to the Holder (or such other
person or persons as directed by the Holder, subject to compliance with all applicable laws) upon
such exercise of the rights under this Section 1(c) 

                    Y =     the total  number of shares of Common Stock  covered by this Warrant  which the
Holder has surrendered for cashless exercise

                    A =     the "Fair  Market  Value"  of one  share of  Common  Stock on the date that the
Holder delivers the Net Issue Election Notice to the Company as provided herein

                    B =     the  Warrant  Price in effect  under  this  Warrant on the date that the Holder
delivers the Net Issue Election Notice to the Company as provided herein

The “Fair Market
Value” of a share of Common Stock as of a particular date
(the “Valuation Date”) shall mean the following: 

                    (i)     if the Common  Stock is then  listed on a  national  securities  exchange,  the
average  closing sale price of one share of Common Stock on such exchange over the ten (10)  trading days ending on
the last  trading  day prior to the  Valuation  Date;  provided  that if such stock has not traded in the  ten (10)
consecutive  trading days prior to the Valuation  Date, the Fair Market Value shall be the average closing price of
one share of Common Stock in the most recent  ten (10)  trading days during which the Common Stock has traded prior
to the Valuation Date;

                    (ii)     if the  Common  Stock  is  then  included  in The  Nasdaq  Stock  Market,  Inc.
(“Nasdaq”), the average closing sale price of one share of Common Stock on Nasdaq over the
ten (10) trading days ending on the last trading day prior to the Valuation
Date or, if no closing sale price is available for any of such ten (10)
trading days, the closing sale price for such day shall be determined as the
average of the high bid and the low ask price quoted on Nasdaq as of the end of
such trading day; provided that if the Common Stock has not traded in the
ten (10) consecutive trading days prior to the Valuation Date, the Fair
Market Value shall be the average closing price of one share of Common Stock in
the most recent ten (10) trading days during which the Common Stock has
traded prior to the Valuation Date; 

-3-

                    (iii)     If the Common Stock is then included in the  Over-the-Counter  Bulletin  Board,
the  average  closing  sale  price of one share of Common  Stock on the  Over-the-Counter  Bulletin  Board over the
ten (10)  trading days ending on the last trading day prior to the  Valuation  Date or, if no closing sale price is
available  for any of such ten (10)  trading  days,  the closing sale price for such day shall be determined as the
average of the high bid and the low ask price quoted on the  Over-the-Counter  Bulletin Board as of the end of such
trading day;  provided  that if the Common Stock has not traded in the ten (10)  consecutive  trading days prior to
the Valuation  Date,  the Fair Market Value shall be the average  closing price of one share of Common Stock in the
most recent ten (10) trading days during which the Common Stock has traded prior to the Valuation Date;

                    (iv)     if the Common Stock is then included in the "pink sheets",  the average closing
sale price of one share of Common  Stock on the "pink  sheets"  over the  ten (10)  trading days ending on the last
trading  day prior to the  Valuation  Date or, if no  closing  sale  price is  available  for any of such  ten (10)
trading  days,  the closing sale price for such day shall be  determined as the average of the high bid and the low
ask price  quoted on the "pink  sheets" as of the end of such trading  day;  provided  that if the Common Stock has
not traded in the ten (10)  consecutive  trading days prior to the Valuation  Date,  the Fair Market Value shall be
the average  closing price of one share of Common Stock in the most recent  ten (10)  trading days during which the
Common Stock has traded prior to the Valuation Date; or

                    (v)     if the Common  Stock is not then  listed on a national  securities  exchange or
quoted on Nasdaq or the  Over-the-Counter  Bulletin Board or the "pink sheets",  the Fair Market Value of one share
of Common Stock as of the  Valuation  Date shall be  determined  in good faith by mutual  agreement of the Board of
Directors of the Company (the  "Board") and the Holder;  provided  that if, in such case,  the Board and the Holder
are  unable to agree as to the Fair  Market  Value of a share of Common  Stock,  such Fair  Market  Value  shall be
determined by an investment  banker of national  reputation  selected by the Company and  reasonably  acceptable to
the Holder,  the fees and  expenses of which shall be borne by the  Company.  The Board shall  respond  promptly in
writing to a written  inquiry by the Holder prior to the exercise  hereunder as to the Fair Market Value of a share
of Common Stock.

          Section 2.          
  Reservation of Shares; Stock Fully Paid; Listing. The
Company shall keep reserved a sufficient number of shares of the authorized and
unissued shares of Common Stock to provide for the exercise of the rights of
purchase represented by this Warrant in compliance with its terms. All Warrant
Shares issued upon exercise of this Warrant shall be, at the time of delivery of
the certificates for such Warrant Shares upon payment in full of the Warrant
Price therefor in accordance with the terms of this Warrant (or proper exercise
of the cashless exercise rights contained in Section 1(c) hereof), duly
authorized, validly issued, fully paid and non-assessable shares of Common Stock
of the Company. The Company shall during all times prior to the Expiration Date
when the shares of Common Stock issuable upon the exercise of this Warrant are
authorized for listing or quotation on any national securities exchange, Nasdaq
(or the Over-the-Counter Bulletin Board or the “pink sheets”, as the
case may be), keep the shares of Common Stock issuable upon the exercise of this
Warrant authorized for listing or quotation on such national securities
exchange, Nasdaq (or the Over-the-Counter Bulletin Board or the “pink
sheets”, as the case may be). 

-4-

          Section 3.
          Adjustments and Distributions. The number and kind of
securities purchasable upon the exercise of this Warrant and the Warrant Price
shall be subject to adjustment from time to time upon the occurrence of certain
events, as follows: 

          (a)   If the  Company  shall  at any  time  or  from  time  to  time  while  this  Warrant  is
outstanding,  pay a dividend or make a  distribution  on its Common Stock in shares of Common Stock,  subdivide its
outstanding  shares of Common  Stock into a greater  number of shares or combine its  outstanding  shares of Common
Stock  into a smaller  number of shares,  then the  number of Warrant  Shares  purchasable  upon  exercise  of this
Warrant  and the  Warrant  Price in effect  immediately  prior to the date upon  which  such  change  shall  become
effective shall be  proportionally  adjusted by the Company so that the Holder  thereafter  exercising this Warrant
shall be entitled to receive the number of shares of Common  Stock or other  capital  stock which the Holder  would
have received if this Warrant had been  exercised  immediately  prior to such event upon payment of a Warrant Price
that  has been  proportionally  adjusted  to  reflect  such  event.  Such  adjustments  shall be made  successively
whenever any event listed above shall occur.

          (b)   If any  recapitalization,  reclassification  or  reorganization  of the capital stock of
the Company  (other than a change in par value or a  subdivision  or  combination  as provided  for in Section 3(a)
above) shall be effected in such a manner  (including,  without  limitation,  in connection with a consolidation or
merger in which the  Company is the  continuing  corporation),  that  holders of Common  Stock shall be entitled to
receive  stock,  securities,  or other  assets or  property (a  "Reorganization"),  then,  as a  condition  of such
Reorganization,  lawful and  adequate  provisions  shall be made by the  Company  whereby the Holder  hereof  shall
thereafter  have the right to  purchase  and  receive  (in lieu of the  shares of the Common  Stock of the  Company
immediately  theretofore  purchasable  and  receivable  upon the  exercise of the rights  represented  hereby) such
shares of stock,  securities  or other  assets or  property  as may be issued  or  payable  with  respect  to or in
exchange  for a number of  outstanding  shares of such  Common  Stock  equal to the number of shares of such Common
Stock immediately  theretofore  purchasable and receivable upon the exercise of the rights  represented  hereby. In
the event of any  Reorganization,  appropriate  provision  shall be made by the Company  with respect to the rights
and interests of the Holder of this Warrant to the end that the provisions hereof (including,  without  limitation,
provisions  for  adjustments  of the  Warrant  Price and of the  number of  Warrant  Shares)  shall  thereafter  be
applicable,  in relation to any shares of stock,  securities  or assets  thereafter  deliverable  upon the exercise
hereof.  The provisions of this Section 3(b) shall similarly apply to successive Reorganizations.

          (c)   If any  consolidation  or merger of the Company with another entity in which the Company
is not the survivor,  or sale,  transfer or other  disposition of all or substantially  all of the Company's assets
to another entity shall be effected,  then, as a condition of such consolidation,  merger,  sale, transfer or other
disposition,  lawful and adequate  provision  shall be made whereby the Holder shall  thereafter  have the right to
purchase and receive upon the basis and upon the terms and conditions  herein  specified and in lieu of the Warrant
Shares immediately  theretofore issuable upon exercise of this Warrant, such shares of stock,  securities or assets
as would have been  issuable or payable with respect to or in exchange for a number of Warrant  Shares equal to the
number of Warrant Shares immediately  theretofore  issuable upon exercise of this Warrant,  had such consolidation,
merger,  sale,  transfer or other disposition not taken place, and in any such case appropriate  provision shall be
made with  respect to the rights and  interests  of the Holder to the end that the  provisions  hereof  (including,
without  limitation,  provision  for  adjustment  of the Warrant  Price and of the number of Warrant  Shares) shall
thereafter  be  applicable,  as nearly  equivalent  as may be  practicable,  in  relation  to any  shares of stock,
securities or properties  thereafter  deliverable upon the exercise thereof.  The Company shall not effect any such
consolidation,   merger,  sale,  transfer  or  other  disposition  unless  prior  to  or  simultaneously  with  the
consummation  thereof  the  successor  entity (if other than the  Company)  resulting  from such  consolidation  or
merger,  or the entity purchasing or otherwise  acquiring such assets or other appropriate  entity shall assume the
obligation  to  deliver  to the Holder  such  shares of stock,  securities  or assets  as, in  accordance  with the
foregoing  provisions,  such Holder may be entitled to purchase,  and the other obligations under this Warrant. The
provisions of this Section 3(c) shall similarly apply to successive  consolidations,  mergers,  sales, transfers or
other dispositions.

-5-

          (d)   In case the Company  shall fix a payment  date for the making of a  distribution  to all
holders of Common Stock of evidences of indebtedness or assets (other than dividends or  distributions  referred to
in Section 3(a) hereof), or subscription  rights or warrants,  the Warrant Price to be in effect after such payment
date shall be determined by  multiplying  the Warrant Price in effect  immediately  prior to such payment date by a
fraction,  the  numerator of which shall be the total number of shares of Common Stock  outstanding  multiplied  by
the Fair Market  Value per share of Common  Stock  immediately  prior to such  payment  date,  less the fair market
value (as determined by the Board in good faith) of said assets or evidences of  indebtedness  so  distributed,  or
of such  subscription  rights or  warrants,  and the  denominator  of which shall be the total  number of shares of
Common Stock  outstanding  multiplied by such Fair Market Value per share of Common Stock immediately prior to such
payment date.  Such adjustment shall be made successively whenever such a payment date is fixed.

                    
(i)   In the event that any  dividend  or  distribution  for which this  Section 3(d)
would  require an  adjustment  is not so paid or made,  the Warrant Price shall be adjusted to be the Warrant Price
which would then be in effect if such dividend or distribution had not been declared.

                    (ii)   In the event that the Company  implements a new  shareholder  rights plan, such
rights plan shall  provide that upon  exercise of this Warrant the Holder will  receive,  in addition to the Common
Stock  issuable upon such  exercise,  the rights issued under such rights plan (as if the Holder had exercised this
Warrant prior to implementing  the rights plan and  notwithstanding  the occurrence of an event causing such rights
to separate  from the Common Stock at or prior to the time of  exercise).  Any  distribution  of rights or warrants
pursuant to a shareholder  rights plan  complying  with the  requirements  set forth in the  immediately  preceding
sentence of this  paragraph  shall not  constitute  a  distribution  of rights or warrants for the purposes of this
Section 3(d).

          (e)   For the term of this  Warrant,  in  addition  to the  provisions  contained  above,  the
Warrant  Price shall be subject to adjustment  as provided  below.  An adjustment to the Warrant Price shall become
effective  immediately  after the payment date in the case of each dividend or distribution  and immediately  after
the effective date of each other event which  requires an  adjustment.  No adjustment to the Warrant Price shall be
made in an amount less than $0.01,  but any such lesser  amount shall be carried  forward and shall be given effect
in the next Warrant Price adjustment, if any.

-6-

          (f)   In the event that,  as a result of an  adjustment  made  pursuant to this Section 3, the
Holder  shall  become  entitled to receive any shares of capital  stock of the Company  other than shares of Common
Stock,  the number of such other shares so receivable upon exercise of this Warrant shall be subject  thereafter to
adjustment  from time to time in a manner and on terms as nearly  equivalent as practicable to the provisions  with
respect to the Warrant Shares contained in this Warrant.

          (g)   Except as provided in Section  3(h) hereof,  if and whenever the Company  shall issue or
sell, or is, in accordance with any of Sections  3(g)(i) through  3(g)(vi)  hereof,  deemed to have issued or sold,
any shares of Common Stock for a consideration  per share less than the Warrant Price in effect  immediately  prior
to the time of such issue or sale,  then and in each such case (a "Trigger  Issuance")  the  then-existing  Warrant
Price shall be reduced,  as of the close of business on the effective  date of the Trigger  Issuance,  to a Warrant
Price determined as follows:

	 	Adjusted Warrant Price =Y(A x B) + D
                          
              
   A+C	 

where

                    A =     the  number  of  shares  of  Common  Stock   outstanding   (including  any
Additional Shares of Common Stock (as defined below) immediately preceding such Trigger Issuance)

                    B =     the Warrant Price in effect immediately preceding such Trigger Issuance

                    C =     the number of  Additional  Shares of Common  Stock (as  adjusted for stock
splits, stock combinations, recapitalizations, and dividends and the like) outstanding or deemed outstanding
hereunder as a result of such Trigger Issuance 

                    D =     the  aggregate  consideration,  if any,  received or deemed to be received
by the Company upon such Trigger Issuance

          For purposes of this
subsection (g), “Additional Shares of Common
Stock” shall mean all shares of Common Stock issued by the
Company or deemed to be issued pursuant to this Section 3(g), other than
Excluded Issuances (as defined in Section 3(h) hereof). 

-7-

For purposes of this
Section 3(g), the following Sections 3(g)(i) to 3(g)(vi) shall
also be applicable (subject, in each such case, to the provisions of Section
3(h) hereof) and to each other subsection contained in this Section
3(g): 

                    (i)   Issuance  of Rights or Options.  In case at any time the  Company  shall in any
manner grant  (directly and not by  assumption in a merger or otherwise)  any warrants or other rights to subscribe
for or to purchase,  or any options for the purchase of, Common Stock or any stock or security  convertible into or
exchangeable  for Common Stock (such  warrants,  rights or options being called  "Options" and such  convertible or
exchangeable stock or securities being called "Convertible  Securities"),  whether or not such Options or the right
to convert or exchange any such  Convertible  Securities are immediately  exercisable,  and the price per share for
which  Common  Stock is issuable  upon the  exercise  of such  Options or upon the  conversion  or exchange of such
Convertible   Securities  (determined  by  dividing  (A)  the  sum  (which  sum  shall  constitute  the  applicable
consideration)  of (x) the total amount,  if any,  received or receivable by the Company as  consideration  for the
granting of such Options,  plus (y) the aggregate  amount of additional  consideration  payable to the Company upon
the exercise of all such  Options,  plus (z) in the case of such Options  which relate to  Convertible  Securities,
the  aggregate  amount of  additional  consideration,  if any,  payable upon the issue or sale of such  Convertible
Securities and upon the conversion or exchange  thereof,  by (B) the total maximum number of shares of Common Stock
issuable upon the exercise of such Options or upon the  conversion or exchange of all such  Convertible  Securities
issuable upon the exercise of such Options)  shall be less than the Warrant  Price in effect  immediately  prior to
the time of the  granting  of such  Options,  then the total  number of shares of Common  Stock  issuable  upon the
exercise  of such  Options or upon  conversion  or  exchange  of the total  amount of such  Convertible  Securities
issuable  upon the exercise of such Options  shall be deemed to have been issued for such price per share as of the
date of granting of such Options or the issuance of such  Convertible  Securities and thereafter shall be deemed to
be outstanding  for purposes of adjusting the Warrant  Price.  Except as otherwise  provided in Section  3(g)(iii),
no  adjustment  of the  Warrant  Price  shall  be made  upon  the  actual  issue  of such  Common  Stock or of such
Convertible  Securities  upon  exercise  of such  Options  or upon the  actual  issue  of such  Common  Stock  upon
conversion or exchange of such Convertible Securities.

                    (ii)   Issuance of  Convertible  Securities.  In case the Company  shall in any manner
issue  (directly and not by assumption in a merger or  otherwise) or sell any  Convertible  Securities,  whether or
not the rights to exchange or convert any such Convertible  Securities are immediately  exercisable,  and the price
per share for which Common Stock is issuable upon such  conversion or exchange  (determined by dividing (A) the sum
(which sum shall  constitute the applicable  consideration)  of (x) the total amount  received or receivable by the
Company as  consideration  for the issue or sale of such Convertible  Securities,  plus (y) the aggregate amount of
additional  consideration,  if any,  payable to the Company upon the  conversion  or exchange  thereof,  by (B) the
total  number  of  shares  of Common  Stock  issuable  upon the  conversion  or  exchange  of all such  Convertible
Securities)  shall be less than the Warrant  Price in effect  immediately  prior to the time of such issue or sale,
then the total  maximum  number of  shares  of Common  Stock  issuable  upon  conversion  or  exchange  of all such
Convertible  Securities  shall be deemed to have been  issued  for such price per share as of the date of the issue
or sale of such  Convertible  Securities and thereafter shall be deemed to be outstanding for purposes of adjusting
the Warrant  Price;  provided  that (C) except as otherwise  provided in Section  3(g)(iii),  no  adjustment of the
Warrant  Price  shall be made upon the actual  issuance of such Common  Stock upon  conversion  or exchange of such
Convertible  Securities and (D) no further  adjustment of the Warrant Price shall be made by reason of the issue or
sale of Convertible  Securities upon exercise of any Options to purchase any such Convertible  Securities for which
adjustments of the Warrant Price have been made pursuant to the other provisions of Section 3(g).

-8-

                    (iii)   Change in Option Price or  Conversion  Rate.  Upon the  happening of any of the
following  events,  namely,  if (A) the purchase  price provided for in any Option  referred to in Section  3(g)(i)
hereof,  (B) the  additional  consideration,  if any,  payable upon the  conversion or exchange of any  Convertible
Securities  referred to in Sections 3(g)(i) or 3(g)(ii),  or (C) the rate at which Convertible  Securities referred
to in Sections  3(g)(i) or  3(g)(ii)  are  convertible  into or  exchangeable  for Common  Stock shall  increase or
decrease at any time (including,  but not limited to, changes under or by reason of provisions  designed to protect
against  dilution),  the Warrant  Price in effect at the time of such event shall  forthwith be  readjusted  to the
Warrant  Price  which  would have been in effect at such time had such  Options  or  Convertible  Securities  still
outstanding  provided for such changed  purchase price,  additional  consideration  or conversion rate, as the case
may be, at the time initially  granted,  issued or sold. On the  termination of any Option for which any adjustment
was made  pursuant to this Section 3(g) or any right to convert or exchange  Convertible  Securities  for which any
adjustment was made pursuant to this Section 3(g) (including,  without limitation,  upon the redemption or purchase
for  consideration  of Convertible  Securities by the Company),  the Warrant Price then in effect  hereunder  shall
forthwith  be changed to the  Warrant  Price which  would have been in effect at the time of such  termination  had
such Option or Convertible Securities never been issued.

                    (iv)   Consideration  for  Stock.  In case any  shares of  Common  Stock,  Options  or
Convertible  Securities shall be issued or sold for cash, the  consideration  received  therefor shall be deemed to
be the amount  received by the Company  therefor,  without  deduction  therefrom  of any  expenses  incurred or any
underwriting  commissions  or  concessions  paid or allowed by the  Company in  connection  therewith.  In case any
shares of Common Stock,  Options or Convertible  Securities shall be issued or sold for a consideration  other than
cash or for a consideration  including cash and such other  consideration,  the amount of the  consideration  other
than cash  received by the Company  shall be deemed to be the fair value of such  consideration  as  determined  in
good  faith  by the  Board,  without  deduction  of  any  expenses  incurred  or any  underwriting  commissions  or
concessions  paid or allowed  by the  Company  in  connection  therewith.  In case any  Options  shall be issued in
connection  with the  issue  and  sale of  other  securities  of the  Company,  together  comprising  one  integral
transaction in which no specific  consideration is allocated to such Options by the parties  thereto,  such Options
shall be  deemed  to have been  issued  for such  consideration  as  determined  in good  faith by the  Board.  The
determination  of the fair value of  consideration  (or the allocation  thereof) for purposes of this  Section 3(g)
need not be the  amount  recorded  in the  books and  records  of the  Company  if the  Board  determines  that the
determination  of  different  amounts  for  different  contexts  is in the best  interest  of the  Company  and its
stockholders and creditors as a whole.

-9-

          
          (v)   Record  Date.  In case the  Company  shall take a record of the  holders of its
Common Stock for the purpose of entitling  them (A) to receive a dividend or other  distribution  payable in Common
Stock,  Options or Convertible  Securities or (B) to subscribe for or purchase Common Stock, Options or Convertible
Securities,  then such  record  date  shall be  deemed to be the date of the issue or sale of the  shares of Common
Stock  deemed to have been  issued  or sold upon the  declaration  of such  dividend  or the  making of such  other
distribution  or the date of the granting of such right of  subscription  or  purchase,  as the case may be. If the
Company  shall have taken a record of the holders of its Common Stock for the purpose of entitling  them to receive
a dividend or distribution or  subscription  or purchase rights and shall,  thereafter and before the  distribution
to stockholders thereof,  legally abandon its plan to pay or deliver such dividend,  distribution,  subscription or
purchase  rights,  then  thereafter no adjustment  shall be required by reason of the taking of such record and any
such adjustment previously made in respect thereof shall be automatically rescinded and annulled.

          
          (vi)   Treasury  Shares.  The  number of shares of  Common  Stock  outstanding  at any
given time shall not include  shares owned or held by or for the account of the Company or any of its  wholly-owned
subsidiaries,  and the disposition of any such shares (other than the cancellation or retirement  thereof) shall be
considered an issue or sale of Common Stock for the purpose of this Section 3(g).

          
          (h)   Excluded  Issuances.  Anything  herein  to the  contrary  notwithstanding,  the  Company
shall  not be  required  to make  any  adjustment  of the  Warrant  Price  (x) where  such an  adjustment  would be
duplicative  of another  adjustment  of the Warrant  Price  resulting  from the same event that is made pursuant to
other  provisions  of this  Warrant or (y) in the case of  (i) capital  stock,  Options or  Convertible  Securities
issued or issuable to  directors,  officers,  employees  or  consultants  of the Company in  connection  with their
service as directors of the Company,  their  employment  by the Company or their  retention as  consultants  by the
Company  pursuant to any  employee  benefit  plans or  programs  approved  by the Board or any  committee  thereof;
(ii) capital  stock,  Options or Convertible  Securities issued or issuable to landlords or in connection with bank
debt  or  equipment  leases,  (iii) capital  stock,  Options  or  Convertible  Securities  issued  or  issuable  to
collaborative  partners in  licensing or  partnering  transactions  (the  primary  purpose of which is not to raise
equity  capital);  (iv) shares of Common Stock issued or issuable upon the  conversion of the Company's  Series A-1
Preferred  Stock,  (v) shares  of Common Stock  issued or issuable  upon the  conversion  or exercise of Options or
Convertible  Securities  outstanding  on the date  hereof,  and  (vi) shares  of Common Stock issued or issuable by
reason of a dividend,  stock split or other distribution  payable pro rata to all holders of Common Stock (but only
to the extent that such a dividend,  split or  distribution  results in an adjustment in the Warrant Price pursuant
to the other provisions of this Warrant) (collectively, "Excluded Issuances").

          
          (i)   Adjustment of Number of Shares.  Upon each  adjustment in the Warrant Price  pursuant to
this Section 3, the number of Warrant Shares purchasable  hereunder shall be adjusted,  to the nearest whole share,
to the  product  obtained  by  multiplying  the  number of Warrant  Shares  purchasable  immediately  prior to such
adjustment  by a  fraction,  (i) the  numerator  of which  shall be the  Warrant  Price  immediately  prior to such
adjustment, and (ii) the denominator of which shall be the Warrant Price immediately thereafter.

-10-

          
          (j)   Notice of  Adjustments.  With each  adjustment  pursuant to this  Section 3, the Company
shall  deliver a  certificate  signed by its chief  financial or executive  officer  setting  forth,  in reasonable
detail, the event requiring the adjustment,  the amount of the adjustment,  the method by which such adjustment was
calculated,  and the Warrant Price and the number of Warrant Shares  purchasable  hereunder  after giving effect to
such adjustment, which shall be mailed by first class mail, postage prepaid to the Holder.

          Section4.
          Transfer Taxes. The Company will pay any
documentary stamp taxes attributable to the initial issuance of Warrant Shares
issuable upon the exercise of the Warrant; provided,
however, that the Company shall not be required to pay any
tax or taxes which may be payable in respect of any transfer involved in the
issuance or delivery of any certificates for Warrant Shares in a name other than
that of the registered holder of this Warrant in respect of which such shares
are issued, and in such case, the Company shall not be required to issue or
deliver any certificate for Warrant Shares or any Warrant until the person
requesting the same has paid to the Company the amount of such tax or has
established to the Company’s reasonable satisfaction that such tax has been
paid. 

          Section 5.
          Mutilated or Missing Warrants. In case this
Warrant shall be mutilated, lost, stolen, or destroyed, the Company shall issue
in exchange and substitution of and upon cancellation of the mutilated Warrant,
or in lieu of and substitution for the Warrant lost, stolen or destroyed, a new
Warrant of like tenor and for the purchase of a like number of Warrant Shares,
but only upon receipt of evidence reasonably satisfactory to the Company of such
loss, theft or destruction of the Warrant, and with respect to a lost, stolen or
destroyed Warrant, reasonable indemnity or bond with respect thereto, if
requested by the Company. 

          Section 6.
          Fractional Shares. No fractional shares of Common
Stock shall be issued in connection with any exercise or cashless exercise
hereunder, and in lieu of any such fractional shares the Company shall make a
cash payment therefor to the Holder (or such other person or persons as directed
by the Holder, subject to compliance with all applicable laws) based on the Fair
Market Value of a share of Common Stock on the date of exercise or cashless
exercise of this Warrant. 

          Section 7.          Securities Act and Representations and Warranties of Holder.

                    (a)   Compliance  with Securities Act and Legends.  The Holder,  by acceptance  hereof,  agrees that it will not
offer, sell or otherwise  dispose of this Warrant,  or any shares of Common Stock to be issued upon exercise hereof
except under  circumstances  which will not result in a violation of the Securities Act of 1933, as amended, or the
rules and regulations  promulgated  thereunder,  as amended (the "Act"), or any state's securities laws. All shares
of Common  Stock  issued  upon  exercise  of this  Warrant  (unless  registered  under the Act) shall be stamped or
imprinted with a legend as follows:

	 	THIS SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY OTHER
SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF (1) AN EFFECTIVE REGISTRATION STATEMENT COVERING
THESE SECURITIES UNDER THE ACT AND ANY OTHER APPLICABLE SECURITIES LAWS, OR (2)
AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.	

-11-

          (b)   Representations and Warranties of Holder.  By acceptance of this Warrant, Holder
hereby represents and warrants to the Company that:

          
          (i)   Holder is acquiring this Warrant, and will acquire the Warrant Shares, for
investment for the Holder's own account, not as a nominee or agent, and not with a view to the resale or
distribution of all or any part of this Warrant or the Warrant Shares.  Holder is prepared to hold this
Warrant and the Warrant Shares for an indefinite period of time and has no present intention of selling,
granting any participation in, or otherwise distributing any portion of this Warrant or the Warrant Shares.
Holder does not have any contract, undertaking, agreement or arrangement with any person or entity to sell,
transfer or grant a participating interest in any of the Warrant Shares.

          
          (ii)   Holder believes it has received all the information it considers necessary
or appropriate for deciding whether to invest in the Warrant Shares, and Holder has had an opportunity to ask
questions and receive answers from the Company regarding the terms and conditions of the issuance of the
Warrant Shares.

          
          (iii)   Holder is an "accredited investor" within the meaning of Rule 501 of
Regulation D promulgated by the Securities and Exchange Commission (the "SEC") under the Act.

          
          (iv)   Holder understands that neither this Warrant nor the Warrant Shares have been
registered under the Act or under any state securities laws, and, as a result thereof, are subject to substantial
restrictions on transfer.  Holder acknowledges that this Warrant and the Warrant Shares must be held
indefinitely, unless subsequently registered under the Act and all applicable state securities laws or unless
exemptions from registration under the Act and such laws are available.

          Section 8.
          Rights as a Stockholder. Except as expressly
provided in this Warrant, no Holder, as such, shall be entitled to vote or
receive dividends or be deemed the holder of Common Stock or any other
securities of the Company which may at any time be issuable on the exercise
hereof for any purpose, nor shall anything contained herein be construed to
confer upon the Holder, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of the directors or upon any
matter submitted to stockholders at any meeting thereof, or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise, until
this Warrant shall have been exercised and the Warrant Shares purchasable upon
the exercise hereof shall have become deliverable, as provided herein. 

-12-

          Section 9.
          Modification and Waiver. This Warrant and any
provision hereof may be changed, waived, discharged or terminated only by an
instrument in writing signed by the Company and the then current Holder, and
such change, waiver, discharge or termination shall be binding on any future
Holder. 

          Section 10.
          Notices. Unless otherwise specifically provided
herein, all communications under this Warrant shall be in writing and shall be
deemed to have been duly given (a) on the date personally delivered to the party
to whom notice is to be given, (b) on the day of transmission if sent by
facsimile transmission to a party at the facsimile number set forth for such
party on the signature page hereto and provided that the sending party receives
confirmation of the completion of such transmission, (c) on the Business Day
after submitted for next day delivery to Federal Express or similar overnight
courier which utilizes a written form of receipt, or (d) on the fifth day after
mailing, if mailed to the party to whom notice is to be given, by first class
mail, registered or certified, postage prepaid, and properly addressed, return
receipt requested, to the registered Holder at its address as shown on the books
of the Company or to the Company at the address indicated therefor on the
signature page of this Warrant. Any party hereto may change its address for
purposes of this Section 10 by giving the other party written notice of
the new address in the manner set forth herein. 

          Section 11.
          Descriptive Headings. The descriptive headings
contained in this Warrant are inserted for convenience only and do not
constitute a part of this Warrant. 

          Section 12.
          Governing Law. The validity, interpretation and
performance of this Warrant shall be governed by, and construed in accordance
with, the laws of the State of New York applicable to contracts made and to be
performed entirely within such State, regardless of the law that might be
applied under principles of conflicts of law. The Company and, by accepting this
Warrant, the Holder, each irrevocably submits to the exclusive jurisdiction of
the state and federal courts located in New York for the purpose of any suit,
action, proceeding or judgment relating to or arising out of this Warrant and
the transactions contemplated hereby. Service of process in connection with any
such suit, action or proceeding may be served on each party hereto anywhere in
the world by the same methods as are specified for the giving of notices under
this Warrant. The Company and, by accepting this Warrant, the Holder, each
irrevocably consents to the jurisdiction of any such court in any such suit,
action or proceeding and to the laying of venue in such court. The Company and,
by accepting this Warrant, the Holder, each irrevocably waives any objection to
the laying of venue of any such suit, action or proceeding brought in such
courts and irrevocably waives any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum. 

          Section 13.
          Acceptance. Receipt and execution of this Warrant
by the Holder hereof shall constitute acceptance of and agreement to the
foregoing terms and conditions. 

          Section 14.
          Identity of Transfer Agent. The Transfer Agent for
the Common Stock is Mellon Investor Services. Upon the appointment of any
subsequent transfer agent for the Common Stock or other shares of the
Company’s capital stock issuable upon the exercise of the rights of
purchase represented by this Warrant, the Company will mail to the Holder a
statement setting forth the name and address of such transfer agent. 

-13-

          Section 15.
          No Impairment of Rights. The Company will not, by
amendment of its Certificate of Incorporation or through any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the holder of this Warrant against
material impairment. 

          Section 16.
          Assignment. Subject to the terms hereof and
compliance with applicable federal and state securities laws, this Warrant
(including without limitation the rights and obligations granted in Sections 17
and 18 (which rights and obligations may only be transferred together)) may be
transferred by the Holder with respect to any or all of the Warrant Shares then
purchasable hereunder. Upon surrender of this Warrant to the Company, together
with a properly endorsed notice of transfer, for transfer of this Warrant in its
entirety by the Holder, the Company shall issue a new warrant of the same
denomination to the designated transferee. Upon surrender of this Warrant to the
Company, together with a properly endorsed notice of transfer, by the Holder for
transfer with respect to a portion of the Warrant Shares then purchasable
hereunder, the Company shall issue a new warrant to the designated transferee,
in such denomination as shall be requested by the Holder hereof, and shall issue
to such Holder a new warrant covering the number of Warrant Shares in respect of
which this Warrant shall not have been transferred. In addition to, and not in
limitation of, the foregoing, a Holder that is a corporation, a partnership or a
limited liability company, may distribute any portion of this Warrant to its
respective shareholders, partners or members. Unless and until the provisions
for assignment set forth herein have been fully complied with, the Company may
treat the last registered Holder as the absolute owner of this Warrant for all
purposes, notwithstanding any notice to the contrary. 

          Section 17.          Registration Rights.

          (a)   Piggyback  Registration  Rights.  If (but without any  obligation  to do so), at any time between
the date hereof and the  Expiration  Date,  the Company  proposes to register  any shares of Common Stock under the
Act  (including for this purpose any  registration  to be effected by the Company for any of its  stockholders)  in
connection with the public offering of such securities  solely for cash (other than a registration  relating solely
to the sale of securities to  participants  in a Company stock plan, a registration  relating solely to an SEC Rule
145 transaction,  a registration on any  registration  form which does not permit secondary sales or a registration
on any form which does not  include  substantially  the same  information  as would be required to be included in a
registration  statement  covering the sale of Common Stock (a "Registration  Statement") or a registration in which
the only Common Stock being  registered is Common Stock issuable upon conversion of debt securities  which are also
being registered),  the Company shall, at such time,  promptly give the Holder written notice of its intent to file
such a  Registration  Statement.  Upon the written  request of the Holder given within ten (10) business days after
the  provision  of such notice by the Company in  accordance  with  Section 10, the Company  shall,  subject to the
provisions  of this Section 17,  cause to be  registered  under the Act all of the Warrant  Shares then held by the
Holder and all of the Warrant  Shares then  issuable upon exercise of this Warrant  (including  without  limitation
such  indeterminate  number of additional  shares of Common Stock  resulting from stock splits,  stock dividends or
similar  transactions  with respect to the Registrable  Securities)  that the Holder has requested to be registered
(the "Registrable  Securities").  Notwithstanding  the foregoing,  if the Holder may immediately sell all shares of
Registrable  Securities  under Rule 144 during any 90-day  period ending on the date on which notice is to be given
under this  Section  17(a),  then the Company  shall not be obligated  to provide  notice  pursuant to this Section
17(a) or  register  any  Warrant  Shares  pursuant  to this  Section  17.  If,  before  June 30,  2004,  all of the
Registrable  Securities  have not been either (i) sold pursuant to Rule 144 as described in the preceding  sentence
or (ii) registered  under the Act pursuant to the provisions of this Section 17 then,  solely in such an event, the
Expiration  Date of this  Warrant  shall be  extended  to  December  31,  2008 and all  references  herein  to such
Expiration Date shall be deemed to mean December 31, 2008.

-14-

          
(b)     Length of  Registration.  Subject to the  provisions  of Section 17(h) below,  whenever  required
under  Section 17 to effect  the  registration  of any  Registrable  Securities,  the  Company  shall (i) keep such
Registration  Statement  effective  for a period  equal to the  shorter of up to one hundred  twenty  (120) days or
until the distribution  contemplated in such Registration  Statement has been completed  (provided,  however,  that
such 120-day  period shall be extended  for a period of time equal to the period the Holder  refrains  from selling
any securities  included in such  registration  at the request of the Company or an underwriter of Common Stock (or
other  securities)  of the  Company)  and (ii)  furnish  to the  Holder  such  numbers  of copies of a  prospectus,
including a preliminary  prospectus,  in conformity  with the  requirements of the Act, and such other documents as
the Holder may reasonably  request in order to facilitate the  disposition  of Registrable  Securities  included in
such registration.

          
(c)     Underwritten  Offering.  In connection  with any offering  involving an underwriting of shares of
Common  Stock,  the Company  shall not be required  under  Section 17 to include any of the Holder's  securities in
such  underwriting  unless the Holder accepts the terms of the  underwriting as agreed upon between the Company and
the underwriters  selected by the Company (or by other persons entitled to select the underwriters),  and then only
in such quantity as the  underwriters  determine in their sole  discretion  will not  jeopardize the success of the
offering by the  Company.  If the total  amount of  securities,  including  Registrable  Securities,  requested  by
stockholders  to be included in such offering  exceeds the amount of securities sold other than by the Company that
the  underwriters  determine in their sole  discretion  is compatible  with the success of the  offering,  then the
Company shall be required to include in the offering  only that number of such  securities,  including  Registrable
Securities,  which the  underwriters  determine in their sole  discretion  will not  jeopardize  the success of the
offering (the  securities so included to be apportioned  pro rata among the selling  stockholders  according to the
total amount of  securities  entitled to be included  therein  owned by each selling  stockholder  or in such other
proportions  as shall  mutually be agreed to by such  selling  stockholders)  but in no event shall any  securities
being sold by a stockholder  exercising a demand  registration right be excluded from such offering prior to or pro
rata with the securities of the Holder.

          
(d)     Intentionally omitted.

          
(e)     Registration  Expenses.  The Company shall pay all  Registration  Expenses (as defined  below) in
connection  with any  registration,  qualification  or compliance  hereunder,  and the Holder shall pay all Selling
Expenses (as defined  below) and other  expenses that are not  Registration  Expenses  relating to the  Registrable
Securities  resold by such Holder.  "Registration  Expenses" shall mean all expenses,  except for Selling Expenses,
incurred  by the Company in  complying  with the  registration  provisions  herein  described,  including,  without
limitation,  all registration,  qualification and filing fees, printing expenses, fees and disbursements of counsel
for the Company and up to an  aggregate  of $10,000 for the  reasonable  legal fees and  expenses of one counsel to
the Holder,  blue sky fees and expenses and the expense of any special  audits  incident to or required by any such
registration.  "Selling  Expenses" shall mean all selling  commissions,  underwriting fees and stock transfer taxes
applicable to the Registrable Securities.

-15-

          
(f)     Additional  Company  Obligations.  In  the  case  of any  registration  effected  by the  Company
pursuant to these  registration  provisions,  the Company  will use its  reasonable  best efforts to: (i) cause all
such Registrable  Securities  registered as described herein to be listed on each securities exchange and quoted on
each quotation service on which similar  securities  issued by the Company are then listed or quoted;  (ii) provide
a transfer agent and registrar for all Registrable  Securities  registered  pursuant to the Registration  Statement
and a CUSIP number for all such Registrable  Securities;  (iii) comply with all applicable rules and regulations of
the SEC and each securities  exchange or each quotation  service on which securities issued by the Company are then
listed or quoted,  (iv) file the  documents  required of the  Company and  otherwise  maintain  requisite  blue sky
clearance in (A) all  jurisdictions  in which any of the  Registrable  Securities are  originally  sold and (B) all
other states  specified  in writing by the Holder as may  reasonably  be required to sell the Holder's  Registrable
Securities,  provided as to clause (B),  however,  that the Company shall not be required to qualify to do business
or consent to service of  process in any state in which it is not now so  qualified  or has not so  consented,  (v)
prepare and file with the SEC such amendments and post-effective  amendments to the Registration  Statement and the
prospectus as may be necessary to keep the  Registration  Statement  effective for the period  specified in Section
17(b) and to comply with the  provisions  of the Act and all other federal and state  securities  laws with respect
to the  distribution of all  Registrable  Securities,  and (vi) provide copies to and permit counsel  designated by
the Holder to review each  Registration  Statement and all amendments and  supplements  thereto no fewer than three
(3) business days prior to their filing with the SEC.

          
(g)     Providing  Information.  The Holder shall furnish to the Company such information  regarding such
Holder and the distribution  proposed by such Holder as the Company may reasonably  request in writing and as shall
be reasonably  required in connection with any  registration,  qualification or compliance  described  herein.  The
Holder shall represent that such information is true and complete.

          
(h)     Limitations  on Sale.  The  Company  may at any time  refuse to permit  the  Holder to resell any
Registrable  Securities  pursuant to the  Registration  Statement  as set forth in this  Section  17(h);  provided,
however,  that in order to exercise this right,  the Company must deliver a certificate in writing to the Holder to
the effect  that a delay in such sales is  necessary  because,  in the good faith  judgment of the  Company,  sales
pursuant  to the  Registration  Statement  would  require  the  public  disclosure  of  information  that would not
otherwise be required to be disclosed (which  disclosure  would, in the good faith judgment of the Company,  have a
significant  adverse  effect on the  Company) or could in other  respects  constitute  a  violation  of the federal
securities laws or otherwise  materially  adversely affect the Company.  In such an event, the Company shall notify
the  Holder  promptly  after it has  determined  that such  circumstances  no  longer  exist.  Notwithstanding  the
foregoing or anything  contained herein to the contrary,  the Company shall not under any circumstances be entitled
to refuse to permit the Holder to resell any  Registrable  Securities  under this  Section  17(h) more than two (2)
times in any twelve  (12) month  period  following  the date  hereof,  and the two periods in any twelve (12) month
period  during  which the Company may refuse to permit the Holder to resell any  Registrable  Securities  shall not
exceed  sixty  (60) days in the  aggregate.  The  Holder  hereby  covenants  and  agrees  that it will not sell any
Registrable  Securities  pursuant to the  Registration  Statement  during the periods the Company refuses to permit
the Holder to resell any Registrable Securities as set forth in this Section 17(h).

-16-

          
(i)     Future  Registration  Rights.  The Company  shall not be  restricted  in any way in entering into
any  agreement  with any holder or  prospective  holder of any  securities  of the  Company  which would allow such
holder or  prospective  holder to include such  securities  in any  registration  filed by the  Company;  provided,
however,  subject to the last  sentence of Section  17(c),  no such  agreement  shall limit the  Holder's  right to
include its Registrable Securities in any such registration statement pursuant to this Section 17.

          Section 18.          Indemnification and Contribution.

          
(a)     Indemnification  by the Company.  The Company  agrees to indemnify  and hold  harmless the Holder
and its officers,  directors,  members,  partners,  employees and agents,  successors  and assigns,  and each other
person,  if any, who controls or is under common  control with the Holder  within the meaning of the Act,  from and
against any losses,  claims,  damages or  liabilities  (or actions or  proceedings  in respect  thereof),  joint or
several, to which such Holder, officer,  director,  member, partner,  employee,  agent or controlling or controlled
person may become subject (under the Act or otherwise) insofar as such losses,  claims,  damages or liabilities (or
actions  or  proceedings  in respect  thereof)  arise out of, or are based  upon,  (A) any  untrue  statement  of a
material  fact  contained  in the  Registration  Statement or in any final  prospectus  contained  therein,  or any
amendment or  supplement  thereof,  (B) the omission or alleged  omission to state therein a material fact required
to be stated therein or necessary to make the statements  therein not misleading,  (C) any violation by the Company
or its agents of any rule or  regulation  promulgated  under the Act  applicable  to the  Company or its agents and
relating to action or inaction  required of the Company in connection  with such  registration,  or (D) any failure
to register or qualify the Registrable  Securities  included in any such Registration  Statement in any state where
the Company or its agents has  affirmatively  undertaken or agreed in writing that the Company will  undertake such
registration or qualification on the Holder's behalf;  provided,  however,  that the Company shall not be liable in
any such case to the extent  that such loss,  claim,  damages or  liability  arises out of, or is based upon (i) an
untrue  statement  or  alleged  untrue  statement  made in such  Registration  Statement  in  reliance  upon and in
conformity with written  information  furnished to the Company by or on behalf of such Holder  specifically for use
in preparation of the  Registration  Statement or (ii) any untrue  statement in any prospectus that is corrected in
any  subsequent  prospectus or addendum or supplement  that was delivered to the Holder prior to the pertinent sale
or sales by the Holder, and the Company will reimburse the Holder and its officers,  directors,  members, partners,
employees,  agents or  controlling  or  controlled  person for the expenses of a single legal counsel and all other
expenses  reasonably  incurred in  investigating,  defending or preparing to defend any such action,  proceeding or
claim;  provided,  however,  that the indemnity  contained in this Section 18(a) shall not apply to amounts paid in
settlement of any such loss,  claim,  damages or liability if such  settlement  is effected  without the consent of
the Company (which consent shall not be unreasonably conditioned or withheld).

-17-

          
(b)     Indemnification  by the Holder.  The Holder  agrees to  indemnify  and hold  harmless the Company
and its officers,  directors,  members,  partners,  employees and agents,  successors  and assigns,  and each other
person,  if any, who controls or is under common  control with the Company  within the meaning of the Act, from and
against any losses,  claims,  damages or liabilities  (or actions or  proceedings in respect  thereof) to which the
Company or its officers,  directors,  members, partners,  employees, agents or controlling or controlled person may
become subject (under the Act or otherwise) insofar as such losses,  claims,  damages or liabilities (or actions or
proceedings  in respect  thereof)  arise out of, or are based upon an untrue  statement  made in such  Registration
Statement in reliance upon and in conformity with written  information  furnished to the Company by or on behalf of
such Holder specifically for use in preparation of the Registration Statement,  provided,  however, that the Holder
shall not be liable in any such case for any untrue  statement  included in any prospectus which statement has been
corrected,  in writing,  by such Holder and  delivered to the Company at least seven (7)  business  days before the
sale from which such loss  occurred,  and the Holder will,  as incurred,  reimburse  the Company and its  officers,
directors,  members,  partners,  employees,  agents or  controlling  or  controlled  person  for any legal or other
expenses  reasonably  incurred in  investigating,  defending or preparing to defend any such action,  proceeding or
claim;  provided,  however,  that the Holder  shall not be required to pay an  indemnity in any amount in excess of
the net  amount  received  by the  Holder  from the sale of the  Registrable  Securities  to which  such  indemnity
relates;  provided further,  that the indemnity  contained in this Section 18(b) shall not apply to amounts paid in
settlement of any such loss,  claim,  damages or liability if such  settlement  is effected  without the consent of
the Holder (which consent shall not be unreasonably conditioned or withheld).

          
(c)     Indemnification  Procedures.  Promptly after receipt by any  indemnified  person of a notice of a
claim or the beginning of any action in respect of which indemnity is to be sought against an  indemnifying  person
pursuant to this  Section 18, such  indemnified  person  shall  notify the  indemnifying  person in writing of such
claim or of the commencement of such action,  and, subject to the provisions  hereinafter  stated, in case any such
action  shall be brought  against  an  indemnified  person and the  indemnifying  person  shall have been  notified
thereof, the indemnifying person shall be entitled to participate  therein,  and, to the extent that it shall wish,
to assume the defense thereof, with counsel reasonably satisfactory to the indemnified person;  provided,  however,
that the failure of any  indemnified  party to give notice as provided  herein  shall not relieve the  indemnifying
party of its  obligations  hereunder  unless  the  failure  to give such  notice is  materially  prejudicial  to an
indemnifying  party's ability to defend such action.  After notice from the indemnifying person to such indemnified
person of the indemnifying  person's election to assume the defense thereof,  the indemnifying  person shall not be
liable to such  indemnified  person for any legal  expenses  subsequently  incurred by such  indemnified  person in
connection  with the  defense  thereof;  provided,  however,  that if there  exists or shall  exist a  conflict  of
interest that would make it inappropriate in the reasonable  opinion of counsel for the indemnified  person for the
same counsel to represent both the indemnified  person and such  indemnifying  person or any affiliate or associate
thereof,  the  indemnified  person shall be entitled to retain its own counsel at the expense of such  indemnifying
person;  provided,  however,  that in the case of the immediately  preceding proviso,  and notwithstanding  Section
18(a) above, the  indemnifying  person shall not be responsible for the legal expenses of more than one counsel for
all indemnified persons.

-18-

          
(d)     Contribution  in Lieu of  Indemnity.  If the  indemnification  provided for in this Section 18 is
unavailable  to or  insufficient  to hold  harmless  an  indemnified  party under  Section  18(a) or 18(b) above in
respect of any losses,  claims,  damages or liabilities (or actions or proceedings in respect thereof)  referred to
therein,  then each indemnifying  party shall contribute to the amount paid or payable by such indemnified party as
a result of such losses,  claims,  damages or  liabilities  (or actions in respect  thereof)  based on the relative
fault  of  the  indemnifying   party  and  the  indemnified   party  as  well  as  any  other  relevant   equitable
considerations.  The relative  fault shall be determined  by reference  to, among other things,  whether the untrue
or alleged  untrue  statement  of a material  fact or the  omission or alleged  omission  to state a material  fact
relates  to  information  supplied  by the  Company  on the one hand or the  Holder on the  other and the  parties'
relative  intent,  knowledge,  access to  information  and  opportunity  to correct or prevent  such  statement  or
omission.  The Company and the Holder  agree that it would not be just and  equitable if  contribution  pursuant to
this Section  18(d) were  determined by pro rata  allocation  or by any other method of  allocation  which does not
take account of the equitable  considerations  referred to above in this Section 18(d).  The amount paid or payable
by an indemnified party as a result of the losses,  claims,  damages or liabilities (or actions in respect thereof)
referred  to above in this  Section  18(d)  shall be  deemed to  include  any  legal or other  expenses  reasonably
incurred  by such  indemnified  party in  connection  with  investigating  or  defending  any such action or claim.
Notwithstanding  the  provisions of this Section  18(d),  the Holder shall not be required to contribute any amount
in excess of the net amount received by the Holder from the sale of the  Registrable  Securities to which such loss
relates.  No person or entity  guilty of fraudulent  misrepresentation  (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

          (e)     
Underwriting  Agreement  Indemnification.  Notwithstanding the foregoing,  to the extent that the
provisions on indemnification and contribution  contained in the underwriting  agreement entered into by the Holder
in connection with the underwritten public offering are in conflict with the foregoing  provisions,  the provisions
in the underwriting agreement shall control.

          (f)     Survival of  Indemnification.  The  obligations of the Company and the Holders under this Section
18 shall survive the completion of any offering of Registrable  Securities in a Registration  Statement  under this
Section 18, and otherwise.

[Remainder of Page Left Intentionally Blank]

-19-

        IN
WITNESS WHEREOF, the Company and the Holder have caused this Warrant to be
executed on their behalf by one of their officers thereunto duly authorized. 

	 	 	 	INSITE VISION INCORPORATED

	 	 	 	By:  /s/ S. Kumar Chandrasekaran
Name:  S. Kumar Chandrasekaran, Ph.D
Title:  CEO, CFO and Chairman of the Board

Address:  965 Atlantic Avenue
Alameda, California 94501

Acknowledged and Agreed:

XMARK FUND,
LTD.

By:  /s/ Mitchell D. Kaye

Name:  Mitchell D. Kaye
Title:  CIO

Address:  152 West 57th Street
21st Floor
New York, NY  10019

-20-

APPENDIX A

                                                NOTICE OF EXERCISE

To:   INSITE VISION INCORPORATED

1.     The  undersigned  hereby  irrevocably  elects to purchase  [_____] shares of Common Stock of InSite Vision
Incorporated  pursuant to the terms of the attached Warrant,  and tenders herewith payment of the purchase price of
such shares in full, by [cash,  certified  check/wire  transfer,  or surrender of the originally  executed Warrant]
[select the applicable method of payment].

2.     Please issue a certificate or certificates representing said shares in the name of the undersigned or in
such other name or names as are specified below:

____________________________________

____________________________________

            
            (Name)

____________________________________

            
            (Address)

____________________________________ (Signature)

____________________________________ (Date)

3.     Please  issue a new  Warrant of  equivalent  form and tenor for the  unexercised  portion of the  attached
Warrant in the name of the undersigned or in such other name as is specified below:

____________________________________

Date: ____________________________________

(Warrantholder) ____________________________________

Name: (Print) ____________________________________

By: ____________________________________

-21-

APPENDIX B

                                             Net Issue Election Notice

To: InSite Vision Incorporated

Date:[_________________________]

        The
undersigned hereby elects under Section 1(c) of this Warrant to surrender
the right to purchase [____________] shares of Common Stock pursuant to this
Warrant and hereby requests the issuance of [_____________] shares of Common
Stock. The certificate(s) for the shares issuable upon such net issue election
shall be issued in the name of the undersigned or as otherwise indicated below. 

____________________________________

Signature

____________________________________

Name for Registration

____________________________________

Mailing Address

-22-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00068-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00068-of-00352.parquet"}]]