Document:

Unassociated Document

    Schedule
      10.16

    Purchasers

    

    

    1. PFK
      Acquisition Group, LLC executed the Senior Secured Convertible Note and Warrant
      Purchase Agreement as of February 21, 2006. 

    

    2. Alfred
      F.
      Bracher, executed the Senior Secured Convertible Note and Warrant Purchase
      Agreement as of February 14, 2006. 

    

    3. Howard
      Goldberg executed the Senior Secured Convertible Note and Warrant Purchase
      Agreement as of March 13, 2006. 

    

    4. Thomas
      A.
      Nicolette executed the Senior Secured Convertible Note and Warrant Purchase
      Agreement as of March 24, 2006. 

    

    5. Real
      Path, Inc. executed the Senior Secured Convertible Note and Warrant Purchase
      Agreement as of February 14, 2006. 

    

    6. Robert
      Schachter Trust, Diane Schachter, Trustee executed the Senior Secured
      Convertible Note and Warrant Purchase Agreement as of February 7, 2006.

    

    7. Harvey
      Goldberg executed the Senior Secured Convertible Note and Warrant Purchase
      Agreement as of March 24, 2006. 

    

    8. Larry
      Chimerine executed the Senior Secured Convertible Note and Warrant Purchase
      Agreement as of March 21, 2006.Unassociated Document

    Schedule
      10.18

    Payees

    

    

    1. Senior
      Secured Convertible Promissory Note, dated February 21, 2006 by the Company
      in
      favor of PFK Acquisition Group, LLC in the amount of $100,000 

    

    2. Senior
      Secured Convertible Promissory Note, dated February 14, 2006, by the Company
      in
      favor of Alfred F. Bracher, III in the amount of $100,000. 

    

    3. Senior
      Secured Convertible Promissory Note, dated March 13, 2006, by the Company in
      favor of Howard Goldberg in the amount of $100,000. 

    

    4. Senior
      Secured Convertible Promissory Note, dated March 24, 2006, by the Company in
      favor of Thomas A. Nicolette in the amount of $100,000. 

    

    5. Senior
      Secured Convertible Promissory Note, dated February 14, 2006, by the Company
      in
      favor of Real Path, Inc. in the amount of $25,000. 

    

    6. Senior
      Secured Convertible Promissory Note, dated February 7, 2006, by the Company
      in
      favor of Schachter Trust, Diane Schachter, Trustee in the amount of $25,000.
      

    

    7. Senior
      Secured Convertible Promissory Note, dated March 24, 2006, by the Company in
      favor of Harvey Goldberg in the amount of $20,000. 

    

    8. Senior
      Secured Convertible Promissory Note, dated March 21, 2006, by the Company in
      favor of Larry Chimerine in the amount of $10,000.Unassociated Document

    Schedule
      10.20

    Holders

    

    

    1. Warrant,
      issued by the Company in favor of PFK Acquisition Group, LLC, dated February
      21,
      2006.

    

    2. Warrant,
      issued by the Company in favor of Alfred F. Bracher, III, dated February 14,
      2006. 

    

    3. Warrant,
      issued by the Company in favor of Howard Goldberg, dated March 13,
      2006.

    

    4. Warrant,
      issued by the Company in favor of Thomas A. Nicolette, dated March 24,
      2006.

    

    5. Warrant,
      issued by the Company in favor of Real Path, Inc., dated February 14,
      2006.

    

    6. Warrant,
      issued by the Company in favor of Robert Schachter Trust, Diane Schachter,
      Trustee, dated February 7, 2006.

    

    7. Warrant,
      issued by the Company in favor of Harvey Goldberg, dated March 24,
      2006.

    

    8. Warrant,
      issued by the Company in favor of Larry Chimerine, dated March 21,
      2006.Unassociated Document

    Schedule
      10.22

    Secured
      Parties

    

    

    1. PFK
      Acquisition Group, LLC became a party to the Security Agreement as of February
      21, 2006. 

    

    2. Alfred
      F.
      Bracher, became a party to the Security Agreement as of February 14, 2006.
      

    

    3. Howard
      Goldberg became a party to the Security Agreement as of March 13, 2006.

    

    4. Thomas
      A.
      Nicolette became a party to the Security Agreement as of March 24, 2006.

    

    5. Real
      Path, Inc. became a party to the Security Agreement as of February 14, 2006.
      

    

    6. Robert
      Schachter Trust, Diane Schachter, Trustee became a party to the Security
      Agreement as of February 7, 2006. 

    

    7. Harvey
      Goldberg became a party to the Security Agreement as of March 24, 2006.

    

    8. Larry
      Chimerine became a party to the Security Agreement as of March 21, 2006.December
      16, 2005

    

    

    InSite
      Vision Incorporated

    S.
      Kumar
      Chandrasekaran, Ph.D.

    President
      and Chief Executive Officer

    965
      Atlantic Avenue

    Alameda,
      CA 94501

    

    Placement
      Agency Agreement (the “Agreement”)

    

    Dear
      Dr.
      Chandrasekaran:

    

    Reference
      is made to our recent discussions relating to the proposed private placement
      by
      InSite Vision Incorporated (the “Company”) of certain of its securities for sale
      solely pursuant to Section 4(2) of the Securities Act of 1933, as amended (the
      “Act”), or Rule 506 (“Rule 506”) of Regulation D (“Regulation D”) promulgated
      under the Act, as hereinafter described. On the basis of the
      representations,
      warranties,
      covenants and agreements
      set
      forth herein, Paramount BioCapital, Inc., having a principal place of business
      at 787 Seventh Avenue, 48th
      Floor,
      New York, New York 10019 (“Paramount”) hereby agrees to act as exclusive
      placement agent for the Company, on a “best efforts” basis, to introduce the
      Company to “accredited investors” as defined in Rule 501 of Regulation D (“Rule
      501”) promulgated under the Act (“Investors”) in connection with a private
      placement offering (the “Offering”) of the Company's debt or equity securities,
      upon the following basic terms and conditions:

    

    1. The
      Offering. The
      Company will offer to sell debt or equity securities (the ”Securities”) to
      Investors, upon terms to be agreed upon by the Company and the Placement Agent
      and intended to be in the form attached as Exhibit
      A,
      yielding aggregate gross proceeds to the Company of at least $3,000,000 (the
      “Minimum Offering”) and up to $5,000,000 (the “Maximum Offering”), with an
      over-allotment option granted in favor of Paramount and the Company (to be
      agreed upon mutually) to offer for sale additional Securities which would
      provide the Company with gross proceeds of up to an additional $1,000,000 (the
      “Over-allotment”). The terms and conditions of the purchase and sale of the
      Securities in the Offering will be evidenced by a written subscription agreement
      between the Company and each Investor in the Offering (the “Subscription
      Agreement”). For purposes of this Agreement, the term “Offering Documents” shall
      mean each Subscription Agreement and any related transaction document to be
      drafted subsequent to the date hereof and any other document prepared or
      approved by the Company and provided to Investors in connection with the
      Offering, if any (including, without limitation, any offering
      memoranda).

    

    2. Closing. Subject
      to obtaining subscriptions in an aggregate amount equal to or greater than
      the
      Minimum Offering, the Company intends to conduct one or more closings (each,
      a
“Closing”) of the Offering on or before December 31, 2005, subject to extension
      at the Company’s and Paramount’s mutual discretion without notice to Investors
      for up to an additional 90 days (the “Final Closing Date”), until the date on
      which the Maximum Offering, including the Over-allotment, if applicable, is
      met,
      whichever event occurs first. Prior to any Closing, all subscription amounts
      will be deposited in a segregated escrow account with an escrow agent reasonably
      acceptable to the Company and Paramount.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    3. Placement
      Fees. (a)
      Upon
      (i) each Closing and (ii) the closing of any Investment (as defined below),
      the
      Company will pay to Paramount or its designees placement fees, in cash, equal
      to
      seven percent (7%) of the gross proceeds received by the Company at such Closing
      or the closing of any Investment, as applicable (provided, however, that such
      cash placement fee shall not be payable with respect to any gross proceeds
      received by the Company at such Closing or the closing of any Investment from
      any of Valesco Healthcare Partners I LP, Valesco Healthcare Partners II LP
      and
      Valesco Healthcare Overseas Fund, Ltd. (collectively, the “Valesco Entities”).
      In addition, upon the Final Closing Date (as defined below), the Company shall
      issue to Paramount’s designees warrants (the “Placement Warrants”) to purchase
      200,000 shares of the Company’s common stock, par value $0.01 per share (the
“Common Stock”) (such shares issuable upon the exercise of the Placement
      Warrants, the “Placement Warrant Shares”). The Placement Warrants shall have an
      exercise price per share equal to the exercise price of the Investor Warrants
      sold at the Closing, be subject to adjustments for stock splits, reverse stock
      splits, re-organizations, etc., have a cashless exercise feature, be exercisable
      for 5 years from the date on which the final Closing occurs (the “Final Closing
      Date”), and otherwise be substantially in the form attached hereto as
Exhibit
      B.
      For
      purposes of this Agreement, an “Investment” shall mean any original issuance of
      securities of the Company which is made during the 12-month period following
      the
      Final Closing Date or earlier termination or expiration of the Offering to
      an
      Investor set forth on Annex A hereto (other than the Valesco Entities), which
      contains each Investor which the Company and Paramount agree will be introduced
      by Paramount to the Company. Annex A hereto shall be updated to reflect
      additional Investors introduced by Paramount to the Company, provided that
      each
      such additional Investor is approved in writing by the Company prior to such
      introduction. Notwithstanding the foregoing, Annex A will automatically be
      deemed to include each Investor that participates in the Offering. Paramount,
      its employees and its affiliates shall have the right to invest in the Offering
      provided they are “accredited investors” as defined in Rule 501(a) of Regulation
      D.

    

    (b) The
      Company agrees that the Placement Warrant Shares shall be afforded equivalent
      registration rights as the Securities sold in the Offering pursuant to which
      the
      Placement Warrants are issued. In consideration for the Company’s inclusion of
      the Placement Warrant Shares in the Registration Statement (as defined below),
      Paramount agrees that it shall be deemed a “Holder” under the Subscription
      Agreement or other document granting the Investors registration rights in the
      Offering or as otherwise provided in the Offering Documents prepared for the
      Investments and, accordingly, it shall abide by all of the terms, conditions
      and
      limitations set forth in such documents. 

    

    4. Expense
      Allowance.
      At the
      Closing or upon the earlier termination or expiration of the Offering, the
      Company shall reimburse Paramount for its reasonable, documented expenses
      (including attorneys’ fees) actually incurred in connection with the Offering,
      up to a maximum of $75,000 (the “Expense Allowance”). Legal fees and expenses in
      connection with blue sky matters and the Registration Statement, if any, will
      be
      the responsibility of the Company. Paramount
      agrees and acknowledges that, except as expressly set forth in any Subscription
      Agreement, the Company shall have no obligation to reimburse any Investor for
      any expenses incurred by such Investor in connection with the
      Offering.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

       

    

    5. Confidentiality.
      Unless
      required by law, any services and communications
      rendered
      by or
      involving Paramount
      pursuant to this Agreement (and the existence of this Agreement) shall not
      be
      disclosed publicly in any manner without Paramount’s prior written approval and
      shall be treated by the Company as confidential information. All material
      non-public information given to Paramount by the Company shall be treated by
      Paramount as confidential information and, subject to applicable law, shall
      not
      be disclosed in any manner without the Company’s prior written approval and
      shall not be used by Paramount except in rendering its services pursuant to
      this
      Agreement.
      Notwithstanding anything to the contrary contained herein, the Company shall
      not
      disclose material non-public information of any company with a public market
      (other than material non-public information of the Company) to Paramount or
      its
      representatives, unless prior to disclosure of such information the Company
      identifies such information as being material non-public information and
      provides Paramount and its representatives with the opportunity to accept or
      refuse to accept such material non-public information for review. 

    

    6. Conditions
      to Paramount's Obligations.
      The
      obligations of Paramount hereunder are subject to (i) the accuracy of the
      representations and warranties of the Company (A) herein contained as of the
      date hereof and as of the date of each Closing; and (B) in each of the Offering
      Documents as of the date of each Closing; (ii) to the performance by the Company
      of its obligations hereunder; and (iii) to the following additional
      conditions:

    

    (a) Due
      Qualification or Exemption.
      (1) The
      Offering contemplated by this Agreement shall become qualified or be exempt
      from
      qualification under the securities laws of the jurisdictions in which the
      Securities are contemplated to be offered in accordance with applicable laws,
      rules, and regulations, but in any event not later than the initial Closing
      Date, subject to any filings to be made thereafter, and (2) at the Final Closing
      Date no stop order suspending the sale of the Securities shall have been issued,
      and no proceeding for that purpose shall have been initiated or
      threatened;

    

    (b) Compliance
      with Agreements.
      Except
      for such agreements and conditions that expressly may be performed or satisfied
      after the Final Closing Date, the Company shall have complied with all
      agreements and satisfied all conditions that the Company is required to perform
      or satisfy hereunder and under the Offering Documents at or prior to each
      Closing;

    

    (c)
       Corporate
      Action.
      The
      Company shall have taken all corporate action necessary in order to permit
      the
      valid execution, delivery and performance of the Offering Documents by the
      Company, including, without limitation, obtaining the approval of the Company's
      board of directors for the execution and delivery of the Offering Documents,
      the
      performance by the Company of its obligations hereunder and the Offering
      contemplated hereby. Such corporate action shall be in form and substance
      reasonably satisfactory to Paramount;

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    (d) Opinion
      of Counsel to the Company.
      Paramount shall have received an opinion of counsel to the Company reasonably
      satisfactory to Paramount and its counsel (which opinion shall also be addressed
      to the Investors in the Offering), in the form attached hereto as Exhibit
      C;

    

    (e) Officer's
      Certificate.
      Paramount shall have received an officer's certificate of the Company, duly
      executed and in the form mutually agreed to in good faith by the parties. The
      certificate shall state, among other things, that the representations and
      warranties contained herein and in the Offering Documents are true and accurate
      in all material respects at such Closing date with the same effect as though
      expressly made at such Closing date and Paramount shall be entitled to rely
      on
      such representations of the Company in the Offering Documents as if they were
      made directly to Paramount;

    

    (f) Escrow
      Agreement.
      The
      Company, Paramount and an escrow agent reasonably acceptable to the parties
      shall execute an Escrow Agreement for the purpose of holding funds until each
      Closing; and

    

    (g) No
      Adverse Changes.
      There
      shall not have occurred, at any time prior to each Closing, in Paramount’s
      reasonable discretion: (i) any domestic or international event, act or other
      similar occurrence which has disrupted, or will materially disrupt, the
      securities markets; (ii) a general suspension of, or a general limitation on
      prices for, trading in securities on the principal market or exchange on which
      the Common Stock is then traded for more than one-trading day; (iii) any
      outbreak of major hostilities or terrorist act or other national or
      international calamity having a material effect on the performance of this
      Agreement; (iv) any banking moratorium declared by a state or federal authority;
      (v) any material interruption in the mail service or other means of
      communication within the United States; (vi) any event or events which,
      individually or in the aggregate, would reasonably be likely to have a material
      adverse effect on the business, prospects, operations, conditions (financial
      or
      otherwise), assets or results of operations of the Company as a whole (a
“Material Adverse Effect”); or (vii) any change in the market for securities in
      general or in political, financial or economic conditions which makes it
      inadvisable to proceed with the offering, sale, and delivery of the
      Securities.

    

    7. Covenants
      of the Company.

    

    (a) Notification.
      The
      Company shall notify Paramount immediately, and in writing, when any event
      shall
      have occurred during the period commencing on the date hereof and ending on
      the
      Final Closing Date as a result of which the Offering Documents would include
      any
      untrue statement of a material fact or omit to state any material fact required
      to be stated therein or necessary to make the statements therein not misleading
      in light of the circumstances under which they were made. 

    

    (b) Use
      of
      Proceeds.
      The net
      proceeds from the Offering will be used for working capital and general
      corporate purposes. Except as set forth in the Offering Documents, the Company
      shall not use any proceeds from the Offering to repay any current indebtedness
      of the Company, including, but not limited to, any indebtedness to current
      executive officers or principal stockholders of the Company, but excluding
      accounts payable and accrued expenses incurred in the ordinary course of
      business.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    (c) Expenses
      of Offering.
      The
      Company shall be responsible for and shall bear all Company Expenses (as defined
      below). For the purposes of this Agreement, the “Company Expenses” shall
      include: the costs of preparing and duplicating the Offering Documents and
      all
      exhibits thereto; the costs of preparing, printing and filing with the
      Securities and Exchange Commission (“SEC”) any registration statement described
      in the Subscription Agreement, if any (a “Registration Statement”) and any
      amendments, post-effective amendments and supplements thereto; preparing,
      duplicating and delivering exhibits thereto and copies of the preliminary,
      final
      and supplemental prospectus; preparing, duplicating and delivering (including
      by
      facsimile) all selling documents, including but not limited to the Offering
      Documents, this Agreement, blue sky memoranda and certificates evidencing the
      Securities; blue sky fees and other filing fees in connection with blue sky
      matters; legal expenses of the Company; fees and disbursements of the transfer
      agent for the Common Stock; and reasonable fees and expenses (including legal
      fees and expenses, if any) incurred or made by the Investors or their collateral
      agent in connection with the creation and/or perfection of the security interest
      relating to the Securities, including without limitation any filing or recording
      fees in connection with any financing statements or filings to be made with
      the
      USPTO or any other governmental agency. (collectively, the “Company Expenses”).
      In addition, if the Offering is not completed for any reason, then the Company
      shall be responsible for and shall reimburse Paramount for all reasonable costs
      incurred in connection with the preparation of the Offering Documents and the
      Offering (including, without limitation, attorney’s fees, expenses and
      disbursements); provided,
      however,
      that
      the Company shall not be obligated to reimburse Paramount an amount greater
      than
      the Expense Allowance.

    

    (d) Blue
      Sky.
      The
      Company shall use its best efforts to qualify the Securities for offering and
      sale under exemptions from qualification or registration requirements under
      the
      securities or blue sky laws of such jurisdictions, as Paramount may reasonably
      request; provided however, that the Company will not be obligated to qualify
      as
      a dealer in securities in any jurisdiction in which it is not so qualified.
      The
      Company will not consummate any sale of Securities in any jurisdiction in which
      it is not so qualified or in any manner in which such sale may not be lawfully
      made.

    

    (e) Securities
      Law Compliance.
      The
      Offering Documents shall, as of their respective dates and each Closing,
      describe all material aspects of an investment in the Company and conform in
      all
      respects with the requirements of Section 4(2) of the Act and Regulation D
      and
      with the requirements of all other published rules and regulations of the SEC
      currently in effect relating to “private offerings” to “accredited investors” as
      that term is defined in Rule 501. The Offering Documents will not, as of their
      respective dates and each Closing, contain any untrue statement of a material
      fact or omit to state any material fact necessary in order to make the
      statements therein, in light of the circumstances under which they were made,
      not misleading. If, at any time prior to the completion of the Offering or
      other
      termination of this Agreement, any event shall occur as a result of which it
      might become necessary to amend or supplement the Offering Documents so that
      they do not include any untrue statement of any material fact or omit to state
      any material fact necessary in order to make the statements therein, in the
      light of the circumstances then existing, not misleading, the Company will
      promptly notify Paramount and will supply Paramount and all offerees and
      Investors participating in the Offering with amendments or supplements
      correcting such statement or omission. The Company shall also provide Paramount,
      for delivery to all offerees and Investors participating in the Offering and
      their representatives, if any, any information, documents and instruments that
      Paramount or the Company’s counsel reasonably deem necessary to comply with
      applicable law. 

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    The
      Company acknowledges that Paramount: (i) will not draft the Offering Documents
      and has not supplied any information for inclusion in the Offering Documents
      other than information relating to Paramount furnished in writing to the Company
      by Paramount specifically for inclusion in the Offering Documents; (ii) has
      no
      obligation (and has not undertaken) to independently verify any of the
      information in the Offering Documents; and (iii) has no responsibility for
      the
      accuracy or completeness of the Offering Documents, except for the information
      relating to Paramount furnished in writing by Paramount to the Company
      specifically for inclusion in the Offering Documents.

    

    (f) No
      "Integration" with Future Offers.
      The
      Company agrees that no future offer and sale of securities by it will be made
      if, as a result of the doctrine of "integration" referred to in Rule 502 under
      the Act or for any other reason, such offer or sale would render invalid the
      entitlement of the Securities to the exemption from the registration
      requirements of the Act provided by Section 4(2) thereof.

    

    (g) Rule
      144 Information.
      The
      Company will make available, upon request, to Paramount and to each holder
      and
      prospective purchaser or transferee of any Securities, reasonably current
      information ("Rule 144 Information") required to allow the resale or other
      transfer of such Securities pursuant to Rule 144, in each case as are reasonably
      requested. If at any time an event occurs or condition exists as a result of
      which any Rule 144 Information would not comply in a material respect with
      the
      requirements of Rule 144 or would contain an untrue statement of a material
      fact
      or omit to state a material fact required to be stated therein or necessary
      in
      order to make the statements therein, in the light of the circumstances under
      which they were made not misleading, the Company will promptly notify Paramount
      (by telephone, confirmed in writing) and will promptly prepare an amendment
      or
      supplement to such Rule 144 Information (in form and substance satisfactory
      to
      Paramount) which will correct such noncompliance or such untrue statement or
      omission. 

    

    (h) Form
      D
      Filing.
      The
      Company shall file five copies of a Notice of Sales of Securities on Form D
      with
      the SEC no later than 15 days after the date of the first Closing. The Company
      shall promptly file such amendments to such Notices on Form D as shall become
      necessary and shall also comply with any filing requirement imposed by the
      laws
      of any state or jurisdiction in which offers and sales are made. 

    

    (i) Press
      Releases, Etc.
      Except
      as otherwise required by applicable law or the rules of a regulatory body (which
      shall be reasonably determined by the Company upon advice of its legal counsel),
      the Company shall not, during the period commencing on the date hereof and
      ending upon the effectiveness of the Registration Statement, issue any press
      release or other communication (other than its year-end or quarterly earnings
      releases and conference calls or other releases or communications made in the
      ordinary course of the Company’s business consistent with past practice
      (provided that “ordinary course of the Company’s business consistent with past
      practice” shall include but not be limited to announcements regarding the
      results of the Company’s clinical trials and communications with the U.S. Food
      and Drug Administration), provided, however, that Paramount is provided a
      reasonable opportunity to review and comment on such release or other written
      communication), make any written or oral statement to any media organization
      or
      publication or hold any press conference, presentation or seminar, or engage
      in
      any other publicity with respect to the Company, its condition (financial or
      otherwise), results of operations, business, prospects, properties, assets,
      or
      liabilities, or the Offering, without the prior consent of Paramount, which
      consent shall not be unreasonably withheld, conditioned or delayed.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    (j) No
      Statements.
      Except
      as otherwise required by applicable law or the rules of a regulatory body,
      the
      Company shall not use the name of Paramount or any officer, director, employee
      or stockholder thereof without the express consent of such party and such
      person.

    

    (k) Right
      of First Refusal:
      The
      Company hereby grants Paramount a right of first refusal (the “Right of First
      Refusal”) to act as the Company's exclusive placement agent in connection with
      any offering by the Company of its debt or equity securities to be conducted
      with the assistance of a placement agent during the period commencing on the
      Final Closing Date and ending on the earlier of (i) the close of business on
      the
      six month anniversary of the Final Closing Date; and (ii) earlier repayment
      in
      full of the promissory notes included in the Securities. Prior to engaging
      another placement agent in connection with such an offering (an “Alternative
      Engagement”), the Company shall provide notice to Paramount setting forth in
      reasonable detail the terms and conditions of such proposed Alternative
      Engagement, which notice shall be deemed to be an offer by the Company to enter
      into a comparable engagement with Paramount on the terms and subject to the
      conditions set forth in the notice (the “Alternative Engagement Notice”).
      Paramount shall have ten (10) business days following the date it receives
      the
      Alternative Engagement Notice to elect, in writing, to accept the engagement
      pursuant to the terms and conditions set forth in the Alternative Engagement
      Notice. Paramount shall notify the Company in writing of its decision to accept
      or reject the engagement terms set forth in the Alternative Engagement Notice
      before the expiration of such 10-day period, and failure by Paramount to provide
      the Company with such notice shall be deemed to be a rejection by Paramount.
      In
      the event Paramount elects to reject or fails to respond to the Alternative
      Engagement Notice, the Company shall have the right to consummate the proposed
      Alternative Engagement substantially in accordance with the terms described
      in
      the Alternative Engagement Notice (with such other terms and conditions which
      are customary and appropriate for such transactions to be agreed upon by the
      parties); provided that an Alternative Engagement not substantially in
      accordance with the terms described in the Alternative Engagement Notice will
      again become subject to the Right of First Refusal.

    

    (l) Restrictions
      on Securities.
      Except
      as a result of any stock splits and reverse stock splits and except as otherwise
      contemplated hereby, or required by a pre-existing legal or contractual
      obligation, during the time during which any promissory notes issued to
      Investors are outstanding , the Company will not extend the expiration date
      or
      lower the exercise or the conversion price of any options, warrants, convertible
      securities or other security purchase rights without Paramount’s prior written
      consent.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

       (m) Reliance.
      Paramount shall be entitled to rely on the Company’s representations and
      warranties given to each Investor in the Offering in the Subscription Agreement
      as if such representation and warranty was given by the Company to Paramount.
      

    

    (n) Noncircumvention.
      Pending
      completion or termination of the Offering, the Company agrees that it will
      not,
      directly or indirectly, through any officer, director, agent or otherwise,
      initiate, solicit, encourage, negotiate or discuss with any third party
      (including by way of furnishing non-public information concerning the Company
      or
      its businesses, assets or properties), or take any other action to facilitate
      any inquiries with respect to the making of, any proposal that constitutes
      or
      may reasonably be expected to lead to a (i) possible public offering or private
      placement of its securities, other than negotiations or discussions currently
      pending and solely concerning a corporate partnership, or (ii) sale, merger,
      consolidation or other transaction by or with the Company and/or any of its
      subsidiaries or affiliates, other than negotiations or discussions currently
      pending and solely concerning a corporate partnership. In addition, pending
      completion or termination of the Offering, the Company agrees that it will
      not
      dispose of any assets or subsidiaries of the Company (including, without
      limitation, creating, suffering to exist or permitting the imposition of any
      liens) other than inventory in the ordinary course of business.

    

    (o) Lockup.
      The
      Company shall obtain from its officers, directors and principal stockholders,
      an
      agreement that, for a period of time commencing immediately upon the Closing
      date until the earlier to occur of (i) the repayment of amounts due under the
      promissory notes included in the Securities; and (ii) 30 days from the date
      the
      SEC declares the Registration Statement effective, they will not sell, assign
      or
      transfer any of their shares of the Company's securities without Paramount’s
      prior written consent. 

    

    8.
       Indemnification. In
      consideration for Paramount’s services on behalf of the Company in connection
      with the Offering, the Company agrees to indemnify and hold harmless Paramount
      and each of its affiliates, stockholders, directors, officers, employees, agents
      and controlling persons (within the meaning of Section 15 of the Act or Section
      20 of the Exchange Act) to the extent set forth, and as provided for, in the
      indemnification and contribution provisions (the “Indemnification Provisions”)
      attached hereto as Exhibit
      

    D
      and
      incorporated herein in their entirety. Paramount shall indemnify and hold
      harmless the Company and each of its affiliates, stockholders, directors,
      officers, employees, agents and controlling persons within the meaning of the
      Act and Exchange Act to the same extent as set forth in the indemnity from
      the
      Company to Paramount in Exhibit
      D,
      but
      only in connection with (i) information relating to Paramount furnished in
      writing to the Company by Paramount for the specific purpose of including such
      information in the Offering Documents or any SEC filing, (ii) material breaches
      of the representations and warranties of Paramount set forth in Section 9(a)
      hereof; and (iii) any and all losses, claims, expenses, damages and liabilities
      that arise out of the bad faith, gross negligence or willful misconduct of
      Paramount.
      To the
      fullest extent permitted by applicable law, it is agreed that Paramount and
      any
      of its officers, directors, employees or former employees and affiliates shall
      not have or be deemed to have any fiduciary or financial advisory duty to the
      Company, its stockholders, creditors, employees or its affiliates. The
      provisions of this Section 8 shall be enforceable to the fullest extent
      permitted by law.

    

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    

    9. Representations
      and Warranties of the Parties. 

    

    (a) Paramount
      represents and warrants to the Company, as of the date hereof, and as of the
      date of each Closing as follows:

    

    (i) it
      is a
      member in good standing of the National Association of Securities Dealers,
      Inc.
      (“NASD”) and it has, and at all times while taking any actions constituting an
      offer or sale of the Securities had, all governmental licenses (including both
      federal and state broker dealer licenses) required to act as placement agent
      for
      the Securities;

    

    (ii) it
      has
      not used any general solicitation or general advertising in its offering of
      the
      Securities or used any offering materials not approved by the Company;
      and

    

    (iii) it
      reasonably believes that the subscribers contacted by Paramount satisfy the
      investor suitability standards set forth in Regulation D.

    

    (b) The
      Company represents and warrants to Paramount that:

    

    (i) it
      has
      all requisite corporate power and authority to execute and deliver this
      Agreement and to carry out the transactions contemplated by this Agreement;
      it
      is not in violation of or default under, nor will the execution and delivery
      of
      this Agreement and consummation of the transactions contemplated herein will
      not
      result in a violation of, or constitute a default in the performance or
      observance of any law (with or without giving of notice, the lapse of time,
      or
      both), obligation under its certificate of incorporation, as amended, or its
      by-laws, or any indenture, contract, material purchase order or other agreement
      or instrument to which the Company is a party or by which it or its property
      or
      assets is bound or affected;

    

    (ii) the
      Chief
      Executive Officer and the Chief Financial Officer of the Company have signed,
      and the Company has furnished to the SEC, all certifications required by
      Sections 302 and 906 of the Sarbanes-Oxley Act of 2002; such certifications
      contain no qualifications or exceptions to the matters certified therein and
      have not been modified or withdrawn; and neither the Company nor any of its
      officers has received notice from any governmental entity questioning or
      challenging the accuracy, completeness, form or manner of filing or submission
      of such certifications; and 

    

    (iii) complete
      and correct copies of all certifications filed with the SEC pursuant to Sections
      302 and 906 of Sarbanes-Oxley Act of 2002 are available on the SEC’s EDGAR
      filing system and the Company hereby reaffirms, represents and warrants to
      Paramount the matters and statements made in such certificates.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    10. Termination;
      Survival. Either
      the Company or Paramount may terminate this Agreement at any time prior to
      any
      Closing in their respective sole discretion, with or without cause, and without
      liability whatsoever. Sections 3, 4, 5, 7, 9, and 10 through 15 of this
      Agreement shall remain operative and in full force and effect regardless of
      any
      expiration or termination of this Agreement
      and
      regardless of any investigation made by or on behalf of Paramount or any
      controlling person thereof.

    

    11. Selected
      Dealers. Paramount
      may engage other persons, selected by it in its discretion, who are members
      of
      the NASD, or who are located outside the United States and that have executed
      a
      Selected Dealers Agreement and Paramount may allow such persons such part of
      the
      compensation and payment of expenses payable to Paramount hereunder as Paramount
      shall determine; provided,
      however,
      that any
      such compensation shall be received pursuant to Section 3 hereof.

    

    12. Choice
      of Law; Consent to Jurisdic-tion.
      This
      Agree-ment shall be governed by and construed in accor-dance with the internal
      laws (without giving effect to the con-flicts of law principles) of the State
      of
      New York. Each of the parties hereto submits to the exclusive jurisdiction
      of
      any state or federal court sitting in the Borough of Manhattan, County of New
      York, in any action or proceeding arising out of or relating to this Agreement,
      agrees that all claims in respect of the action or proceeding may be heard
      and
      determined in any such court and agrees not to bring any action or proceeding
      arising out of or relating to this Agreement in any other court. Each of the
      parties waives any defense of inconvenient forum to the maintenance of any
      action or proceeding so brought and waives any bond, surety or other security
      that might be required of any other party with respect thereto. Any party may
      make service on any other party hereto by sending or delivering a copy of the
      process to the party to be served at the address for each respective party
      first
      written above. Nothing in this Section, however, shall affect the right of
      any
      party to serve legal process in any other manner permitted by law.

    

    13. Binding
      Agreement; Non-Assignability. This
      Agreement shall be binding upon and inure to the benefit of Paramount and the
      Company and each of their successors and permitted assigns. This Agreement
      may
      not be assigned by either party without the prior written consent of the
      other.

    

    14. Other
      Services.
      Subject
      to Section 5 of this Agreement, nothing herein shall restrict or otherwise
      limit
      Paramount from performing similar or dissimilar services for any other party
      or
      for its own account.

    

    15. Miscellaneous.
      This
      Agreement embodies the entire agreement and understanding between the parties
      hereto and supersedes any prior agreements or understandings, oral or written,
      relating to the subject matter hereof. If any provision of this Agreement is
      determined to be invalid or unenforceable in any respect, such determination
      will not affect such provision in any other respect or any other provision
      of
      this Agreement, which will remain in full force and effect. This Agreement
      may
      not be amended or otherwise modified or waived except by an instrument in
      writing signed by both the Company and Paramount.
      The
      parties may execute this Agreement in counterparts, and each such counterpart
      shall be, and shall be deemed to be, an original instrument, but all such
      counterparts taken together shall constitute one and the same Agreement.

     

     

    *
      * * *
      *

    

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    If
      the
      foregoing conforms to your understanding, please sign and return to us the
      enclosed copy of this letter.

    

    
      	 	 	 
	 	
              Very
                truly yours,

               

              PARAMOUNT BIOCAPITAL,
                INC.

            
	 
 	 
 	 
 
	
            	By:  	 
	 	
              
Name: Lindsay
              A. Rosenwald, M.D.
	 	Title: Chairman
              & Chief Executive Officer

    

     

    
      	 	 INSITE
              VISION INCORPORATED
	 By:	
            
	 	
              
Name:
              Lyle Bowman
	 	Title: Vice
              President, Development and
              Operations

    

    

    
      
         

      

      
        11

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