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                                                                   EXHIBIT 10.25

                              AMENDED AND RESTATED
                              EMPLOYMENT AGREEMENT

      THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement"), made
this 1st day of July, 2002, by and between Brent Johnson (the "Executive") and
INVIVO CORPORATION, a Delaware corporation (the "Corporation").

                              W I T N E S S E T H:

      WHEREAS, the Corporation considers it essential to the best interests of
the Corporation and its stockholders to take steps to retain key personnel such
as the Executive; and

      WHEREAS, the Corporation recognizes particularly that uncertainty might
arise among personnel in the context of any possible or actual Change in
Control, as hereinafter defined, which could result in the departure or
distraction of key personnel to the detriment of the Corporation and its
stockholders;

      WHEREAS, the Corporation has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of key
personnel of the Corporation including the Executive to their assigned duties
without distraction in the face of potentially disturbing circumstances arising
from any possible or actual Change in Control;

      WHEREAS, the Executive and the Corporation entered into an Employment
Agreement dated October 16, 2001 ("2001 Agreement") and wish to amend and
replace that agreement hereby.

      NOW, THEREFORE, in consideration of the covenants, terms, and conditions
contained herein, the Corporation and the Executive agree:

      1. DEFINITIONS. For purposes of this Agreement, the following terms shall
have the meanings set forth in this Section 1.

            a. "Administrative Committee" shall mean the Board or a committee
      appointed by the Board to administer this Agreement.

            b. "Affiliate" shall mean, with respect to a first Person, a second
      Person that directly, or indirectly through one or more intermediaries,
      controls, or is controlled by, or is under common control with, the first
      Person.

            c. "Associate" shall mean, with respect to a Person, (a) any
      corporation or organization of which such Person is an officer or partner
      or, directly or indirectly, the beneficial owner of ten percent (10%) or
      more of any class of equity securities, (b) any trust or other estate in
      which such Person has a

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      substantial beneficial interest or as to which such Person serves as
      trustee or in a similar fiduciary capacity, and (c) any relative or spouse
      of such Person, or any relative of such spouse, who has the same home as
      such Person.

            d. "Benefit Continuation Period" shall mean the period beginning on
      the date of the Severance of Employment or Non-Change in Control
      Termination, as the case may be, and ending on the earlier to occur of (a)
      the one year anniversary of the Severance of Employment, where termination
      was a Severance of Employment, and the date six months from the date of
      such Non-Change in Control Termination where termination was a Non-Change
      in Control Termination, or (b) the date that the Executive and the
      Executive's dependents are eligible and elect coverage under the plans of
      a subsequent employer that provide substantially equivalent or greater
      benefits to the Executive and the Executive's dependents.

            e. "Board" shall mean the Board of Directors of the Corporation.

            f. "Business Combination" shall mean a merger or consolidation of
      the Corporation and one or more other entities in which the Corporation or
      a subsidiary of the Corporation is a merging or consolidating party.

            g. "Change in Control" shall mean (a) the sale of all or
      substantially all of the assets of the Corporation; (b) any change in
      ownership or control of the outstanding voting securities of the
      Corporation following which any Person beneficially owns, together with
      its Affiliates and Associates, fifty percent (50%) or more of the
      outstanding voting securities of the Corporation; (c) any change in the
      membership of the Corporation's Board following which Continuing Directors
      do not constitute a majority of the Board; or (d) a Business Combination
      immediately following which the stockholders of the Corporation
      immediately prior to such Business Combination do not hold more than fifty
      percent (50%) of the outstanding voting securities of the surviving
      entity, or the parent company of the surviving entity, of such Business
      Combination in the same proportion as such stockholders held Common Stock
      of the Corporation immediately prior to such Business Combination.
      Notwithstanding the foregoing, the occurrence of any of the events set
      forth in the prior sentence shall not constitute a Change in Control
      unless such event occurs on or prior to June 30,2003, or such event occurs
      on or prior to August 31, 2003 pursuant to the terms of definitive
      agreement providing for such Change in Control that is entered into on or
      before June 30, 2003.

            h. "Code" shall mean the Internal Revenue Code of 1986, as amended
      to date.

            i. "Constructive Discharge" shall mean (a) without the Executive's
      express written consent, the assignment to the Executive of any duties, or
      the removal from or reduction or limitation of the Executive's duties or
      responsibilities, which is inconsistent with the Executive's position,
      organization level, duties, responsibilities or compensation status with
      the Corporation immediately prior to such assignment, removal, reduction
      or limitation; (b) without the Executive's express written consent, a
      substantial reduction of the facilities and perquisites (including office
      space and location) available to the Executive; (c) a reduction by the
      Corporation in the base cash salary of the Executive; (d) a material
      reduction by the Corporation in the kind and level of employee benefits to
      which the Executive is entitled, with the result that the Executive's
      overall benefit package is materially reduced; or (e) without the
      Executive's express written consent, the relocation of the Executive to a
      facility or location more than thirty five (35) miles from the Executive's
      then present location.

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            j. "Continuing Director" shall mean, at any given time, a member of
      the Board who was (a) a member of the Board on August 31, 2000, (b)
      elected to the Board by the Board after August 31, 2000, provided that a
      majority of the Continuing Directors voted in favor of such election, or
      (c) nominated to the Board by the Board after August 31, 2000, provided
      that a majority of the Continuing Directors voted in favor of such
      nomination, and subsequently elected to the Board by the stockholders of
      the Corporation.

            k. "Just Cause Termination" shall mean a termination by the
      Corporation of the Executive's employment in connection with the good
      faith determination of the Corporation's Board of Directors that the
      Executive has engaged in:

                  (i) any material breach of any written agreement between
            Executive and the Corporation, if such breach causes material harm
            to the Corporation;

                  (ii) any gross negligence or willful misconduct by Executive
            in performance of duties to the Corporation that causes material
            harm to the Corporation;

                  (iii) the substantial and repeated failure of Executive to
            follow the lawful written directions of the Board or to the person
            whom Executive reports;

                  (iv) commission of a felony under the laws of the United
            States or any state thereof;

                  (v) commission of any material act of fraud, embezzlement or
            dishonesty; or

                  (vi) the abuse of alcohol or controlled substances that has a
            materially detrimental effect upon Executive's performance of his
            duties.

            l. "Non-Change in Control Termination" shall mean that either (i)
      the Executive's employment is terminated by the Corporation and the
      termination is not a Just Cause Termination and is not by reason of the
      Executive's death or disability, or (ii) the Executive terminates his or
      her employment with the Corporation by resignation following a
      Constructive Discharge, and, in either event, no Change in Control has
      occurred prior to such termination or resignation.

            m. "Person" shall mean any individual, corporation, partnership,
      limited liability company, sole proprietorship, joint venture or other
      organization.

            n. "Severance of Employment" shall mean (a) the termination of the
      Executive's employment with the Corporation within two (2) years after the
      date of a Change in Control by (i) discharge by the Corporation or (ii)
      resignation of the Executive following a Constructive Discharge, or (b)
      the termination of the Executive's employment with the Corporation by
      resignation of the Executive within the thirty (30) day period immediately
      following the first anniversary of a Change in Control. Despite the
      foregoing, neither of the following will constitute a Severance of
      Employment:

                  i. The termination of the Executive's employment by reason of
            death or disability.

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                  ii. A Just Cause Termination of the Executive's employment.

2.    2001 AGREEMENT; POSITION.

      The 2001 Agreement is hereby superceded by this Agreement and shall be of
no further force and effect. During the term of this Agreement, Corporation will
employ the Executive, and the Executive will serve the Corporation, in the
capacity of Vice President of Sales and Marketing of Invivo Research.

3.    TERM OF EMPLOYMENT.

      The Corporation agrees to continue the Executive's employment, and the
Executive agrees to remain in the employ of the Corporation, for a period of one
(1) year from the date hereof unless the Executive's employment is earlier
terminated pursuant to the provisions of this Agreement.

4.    COMPENSATION AND BENEFITS.

            a. The Corporation agrees to pay the Executive a minimum annual
salary of $141,750, or in the event of any portion of a year, a pro rata amount
of such annual salary. The Executive's salary will be payable as earned in
accordance with Corporation's customary payroll practice.

            b. The Executive will be eligible to receive an annual cash bonus in
the discretion of the Corporation's Board of Directors.

            c. The Executive will be eligible to participate in Corporation's
employee benefit plans of general application, including without limitation
pension and profit-sharing plans, deferred compensation, supplemental retirement
or excess-benefit plans, stock option, incentive or other bonus plans, life,
health and dental insurance programs, 401(k) plan, paid vacations and sabbatical
leave plans, and similar plans or programs, in accordance with the rules
established for individual participation in any such plan. The Executive shall
be entitled each year to three (3) weeks leave for vacation at full pay. The
Executive shall also be entitled to reasonable holidays and illness days with
full pay in accordance with the Corporation's policy from time to time in
effect.

            d. The Corporation will reimburse the Executive for all reasonable
and necessary expenses incurred by the Executive in connection with the
Corporation's business.

5.    ADMINISTRATION.

      The Administrative Committee shall administer this Agreement and shall
have the power and the duty to make all determinations necessary for the
implementation of this Agreement, including by way of example and not as a
limitation, the occurrence of a Change in Control and the date of such change.
Any such determination (a) shall be made on the basis of all information known
to the persons making the determination, after reasonable inquiry, (b) may be
made prospectively and subject to one or more contingent events, and (c) will be
binding on the Corporation but not the Executive. Any disagreement between the
Corporation and the Executive concerning any such determination or the
administration, implementation or interpretation of this Agreement shall be
subject to the claims and arbitration procedures set forth in Section 16
hereunder.

6.    OBLIGATIONS OF THE CORPORATION UPON CHANGE IN CONTROL.

      a. Within fifteen (15) days after a Change in Control or at such earlier
time as may be required by law, the Corporation shall pay to the Executive:

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            i. The full amount of any earned but unpaid base salary through the
      date of the Change in Control, plus a cash payment for all reasonable
      travel, entertainment and other expenses properly incurred by the
      Executive in connection with his or her employment by the Corporation to
      the extent the Executive has not already been reimbursed for such
      expenses.

            ii. The full amount of any unpaid annual cash bonus for any fiscal
      year of the Corporation prior to the year in which the Change in Control
      occurs, and a pro rata amount of any unpaid annual cash bonus for the
      fiscal year in which the Change in Control occurs calculated by
      multiplying (A) the number of full calendar months that the Executive was
      employed by the Corporation in such fiscal year divided by 12 and (B) the
      amount of $95,000, representing the target annual cash bonus amount.

      b. In the event that the Executive is employed by the Corporation on the
date of a Change in Control, then on the earlier to occur of (i) ninety (90)
days after the date of the Change in Control or (ii) three (3) business days
after the date that the Executive ceases to be employed by the Corporation, then
the Corporation shall pay to the Executive the amount of $244,000, representing
an amount equal to the aggregate of the Executive's annual base salary and
target bonus plus other benefits and expenses, unless the Executive ceases to be
employed by the Corporation for either of the following reasons prior to the
date which is ninety (90) days after the date that the Change in Control occurs,
in which event no amount shall be due under this Section 6.b.: (1) a Just Cause
Termination of the Executive prior to ninety (90) days after the date of a
Change in Control or (2) the voluntary resignation of the Executive prior to
ninety (90) days after the date of a Change in Control, other than a resignation
following a Constructive Discharge. The Executive shall be eligible to make
contributions to the Corporation's Section 401(k) plan, to the extent allowed
under the plan, from amounts payable to the Executive under this Section 6.

      c. If and to the extent that the Executive continues to be employed by the
Corporation following a Change in Control, the Executive shall continue to
receive his salary and be eligible for bonus notwithstanding the payment of the
amounts provided herein.

      d. Immediately prior to a Change in Control, any unvested stock options to
purchase shares of Common Stock from the Corporation then held by the Executive
shall become fully vested and exercisable at the time of the Change in Control.

7.    OBLIGATIONS OF THE CORPORATION UPON NON-CHANGE IN CONTROL TERMINATION.

      a. Within fifteen (15) days after a Non-Change in Control Termination that
occurs during the term of this Agreement, or at such earlier time as may be
required by law, the Corporation shall pay to the Executive:

            i. The full amount of any earned but unpaid base salary through the
      date of the Non-Change in Control Termination, plus a cash payment for (a)
      all unused vacation time which the Executive has accrued as of the
      Non-Change in Control Termination, and (b) all reasonable travel,
      entertainment and other expenses properly incurred by the Executive in
      connection with his or her employment by the Corporation to the extent the
      Executive has not already been reimbursed for such expenses.

            ii. The full amount of any unpaid annual cash bonus for any fiscal
      year of the Corporation prior to the year in which the Non-Change in
      Control Termination occurs, and a pro rata amount of any unpaid annual
      cash bonus for the fiscal year in which the Non-Change in Control
      Termination occurs calculated by multiplying (A) the number of full
      calendar months that the Executive was employed by the

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      Corporation in such fiscal year divided by 12 and (B) the amount of
      $95,000, representing the target annual cash bonus amount.

      b. In addition to any payment required by subsection a above, within 30
days after a Non-Change in Control Termination, the Corporation shall pay to the
Executive the amount of $122,000 and no further payments (other than as provided
in this Agreement) shall be due in respect of the Executive's salary or bonus
for such year.

8.    TERMINATION DUE TO DEATH OR DISABILITY.

      If Executive is terminated during the term of this Agreement due to death
or disability, within 15 days of such termination, or at such earlier time as
may be required by law, the Corporation shall pay (a) to the Executive, if the
Executive has been terminated due to disability, or (b) if the Executive has
died, to the Executive's surviving spouse, issue by right of representation or
estate, in that order:

      a. The full amount of any earned but unpaid base salary through the date
of termination, plus a cash payment for (a) all unused vacation time which the
Executive has accrued as of the date of termination, and (b) all reasonable
travel, entertainment and other expenses properly incurred by the Executive in
connection with his or her employment by the Corporation to the extent the
Executive has not already been reimbursed for such expenses.

      b. The full amount of any unpaid annual cash bonus for any fiscal year of
the Corporation prior to the year in which the termination due to death or
disability occurs, and a pro rata amount of any unpaid annual cash bonus for the
fiscal year in which the termination due to death or disability occurs
calculated by multiplying (A) the number of full calendar months that the
Executive was employed by the Corporation in such fiscal year divided by 12 and
(B) the amount of $95,000, representing the target annual cash bonus amount.

      c. If the termination due to death or disability occurs after the date of
a Change in Control and prior to ninety (90) days after the date of a Change in
Control, the full amount otherwise payable to the Executive under Section 6.b.
hereof.

9.    OTHER TERMINATION.

      Within fifteen (15) days after (a) a Just Cause Termination of the
Executive or (b) the voluntary resignation of the Executive, other than a
resignation following a Constructive Discharge or at such earlier time as may be
required by law, the Corporation shall pay to the Executive the full amount of
any earned but unpaid base salary through the date of such termination or
resignation, plus a cash payment for (i) all unused vacation time which the
Executive has accrued as of date of such termination or resignation, and (ii)
all reasonable travel, entertainment and other expenses properly incurred by the
Executive in connection with his or her employment by the Corporation to the
extent the Executive has not already been reimbursed for such expenses.

10.   CONTINUATION OF BENEFITS AFTER TERMINATION.

      a. After a Severance of Employment or a Non-Change in Control Termination,
the Executive and the Executive's eligible dependents shall continue to be
eligible to participate during the Benefit Continuation Period in the medical,
dental, vision, health, disability, life and other similar plans and
arrangements applicable to the Executive immediately prior to the Severance of
Employment or Non-Change in Control Termination. The

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Executive shall participate on the same terms and conditions in effect
throughout the Benefit Continuation Period for active employees of the
Corporation.

      b. If, at the conclusion of the Benefit Continuation Period, the Executive
is not eligible to receive coverage under the plans of a subsequent employer
that provide substantially equivalent or greater benefits to the Executive and
the Executive's dependents, the Executive may exercise his or her right under
the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA"), to continue to participate in the Corporation's medical, dental,
vision, health, disability, life and other similar plans and arrangements
applicable to the Executive, subject to the terms and conditions set forth in
COBRA and any rules and regulations promulgated thereunder.

11.   FEDERAL EXCISE TAX.

      a. If any amounts payable to the Executive under this Agreement are
characterized as excess parachute payments pursuant to Section 4999 of the Code
and Executive thereby would be subject to any United States federal excise tax
due to that characterization, then Executive may elect, in Executive's sole
discretion, to reduce the amounts payable under this Agreement or to have any
portion of applicable options not vest in order to avoid any "excess parachute
payment" under Section 280G(b)(1) of the Code.

      b. Unless the Corporation and Executive otherwise agree in writing, any
determination required under this Section 11 shall be made in writing by
independent public accountants for the Corporation (the "Accountants"), whose
determination shall be conclusive and binding upon Executive and the Corporation
for all purposes. For purposes of making the calculations required by this
Section 11, the Accountants may rely on reasonable, good faith interpretations
concerning the application of Sections 280G and 4999 of the Code. The
Corporation and Executive shall furnish to the Accountants such information and
documents as the Accountants may reasonably request in order to make the
required determinations. The Corporation shall bear all fees and expenses the
Accountants may reasonably charge in connection with the services contemplated
by this Section 11. The Corporation shall pay all reasonable legal fees and
expenses incurred in defending against any claim by the Internal Revenue Service
that would require payment of any tax under Section 4999 of the Code and shall
promptly reimburse them for the reasonable expenses incurred by Executive in
connection with defending such claim provided that Executive: (i) give the
Corporation any information reasonably requested by the Corporation relating to
the claim; (ii) accept legal representation with respect to such claim by an
attorney reasonably selected by the Corporation and reasonably acceptable to
Executive; (iii) cooperate with the Corporation in good faith in contesting the
claim; and (iv) permit the Corporation to participate in and control any
proceedings relating to the claim.

12.   TAXES.

      The Corporation shall deduct from any payments to the Executive under this
Agreement amounts that the Corporation is required to withhold and pay either to
government agencies on behalf of the Executive or under court order to any
Person.

13.   DEATH PRIOR TO PAYMENT OF AMOUNTS DUE.

      In the event of the Executive's death after a Change in Control, Severance
of Employment or Non-Change in Control Termination but prior to payment to the
Executive of amounts due under this Agreement, such payment shall be made to the
Executive's surviving spouse, issue by right of representation or estate, in
that order.

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14.   ASSIGNMENT.

      This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and the successors and assigns of the Corporation, including any
successor or assign pursuant to a Change in Control.

15.   NON-ASSIGNMENT BY THE EXECUTIVE.

      The Executive shall not assign, hypothecate, or transfer any of the rights
herein to any Person other than pursuant to the laws of descent and
distribution. Any attempt to assign, hypothecate or transfer the rights
hereunder shall immediately terminate all of the Executive's rights under this
Agreement.

16.   CLAIMS PROCEDURE AND ARBITRATION.

      a. In the event of a disagreement between the Corporation and the
Executive on any matter arising under this Agreement, the Executive, in claiming
a benefit or requesting an interpretation or ruling under this Agreement, shall
submit the claim or request in writing to the Administrative Committee, which
shall respond in writing as soon as practicable.

      b. If a claim or request is denied, the Administrative Committee shall
prepare and deliver to the Executive a written notice of denial which shall
state (a) the reason for denial, with specific reference to the provisions of
this Agreement on which denial is based; (b) a description of any additional
material or information required to prevail with the claim or request and an
explanation of why it is necessary; and (c) an explanation of the Agreement's
claim review procedure.

      c. If the Administrative Committee fails to respond in writing to any
claim or request within thirty (30) days of the date such claim or request is
submitted, such failure to respond shall constitute a denial of the claim or
request.

      d. If a claim or request is denied, the Executive may submit the claim or
request to mandatory and binding arbitration (an "Arbitration"). The Executive
may initiate an Arbitration by sending the Corporation an Arbitration demand in
writing. The Arbitration shall be presided over by a single arbitrator (the
"Arbitrator") selected in accordance with the Commercial Arbitration Rules (the
"Arbitration Rules") of the American Arbitration Association. Any Arbitration
shall be conducted in San Francisco, California in accordance with the
Arbitration Rules and the substantive law of the State of California; provided,
however, that the Arbitrator will have no power or authority, under the
Arbitration Rules or otherwise, to relieve the parties from their obligation
hereunder to arbitrate, or otherwise to amend or disregard any provision of this
Agreement. Judgment upon any award rendered in an Arbitration may be entered in
any court of competent jurisdiction.

17.   ATTORNEYS' FEES.

      In the event that any Arbitration, suit, action or proceeding (including
any appeal therefrom, but excluding any and all proceedings before the
Administrative Committee) is brought by the Executive to review any decision of
the Administrative Committee pertaining to this Agreement or to enforce any
right hereunder, and the Executive is the prevailing party in such Arbitration,
suit, action or proceeding, the Executive shall be entitled to recover from the
Corporation his or her attorneys' fees and other reasonable costs incurred in
connection therewith. During the

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pendency of any such Arbitration, suit, action or proceeding, the Corporation
shall promptly pay all of the Executive's attorneys' fees and reasonable costs
incurred by the Executive with respect to such Arbitration, suit, action or
proceeding, subject to the Executive's obligation hereunder to repay all such
sums if the Corporation is the prevailing party in such Arbitration, suit,
action or proceeding.

18.   PARTIAL INVALIDITY.

      Invalidity of any part or provision of this Agreement shall not affect the
enforceability of any other part or provision of this Agreement.

19.   NO RIGHT TO CONTINUED EMPLOYMENT.

      Nothing herein shall confer, nor shall it be construed to confer, on the
Executive any right to, guarantee of, or contract for a continued employment by
the Corporation, or in any way limit the right of the Corporation to terminate
the employment of the Executive.

20.   GOVERNING LAW.

      This Agreement shall be governed by and construed in accordance with the
laws of the State of California, as applied to contracts executed and performed
entirely in California.

21.   NOTICES.

      Any notices given hereunder must be in writing and may be delivered in
person or by certified or registered mail, return receipt requested, postage
prepaid. Notices to the Corporation should be delivered to Invivo Corporation,
4900 Hopyard Road, Suite 210, Pleasanton, CA 94588, Attn: President, or to such
other address as Corporation from time to time furnishes to the Executive in a
notice. Notices to Executive should be delivered to the address shown beneath
Executive's signature below, or to such other address as the Executive from time
to time furnishes to the Corporation in a notice.

22.   ENTIRE AGREEMENT.

      This Agreement sets forth the entire agreement between the parties hereto.
This Agreement fully supersedes any and all prior agreements or understandings
pertaining to similar benefits.

23.   COUNTERPARTS.

      This Agreement may be executed in two or more counterparts, each of which
shall be deemed to be an original but all of which, taken together, constitute
one and the same agreement.

24.   AMENDMENTS.

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      This Agreement may not be modified except by a writing signed by both
parties.

           [The remainder of this page is intentionally left blank.]

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      IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
on the day and year first above written.

EXECUTIVE                                           INVIVO CORPORATION

                                        By:
----------------------------------          ------------------------------------
              (signature)

Street Address                              (One of Two Required and
City, State and Zip Code                    Authorized Signatures)

                                            And By:
                                                    ----------------------------

                                       11<PAGE>
                                                                     EXHIBIT 4.5

                          CERTIFICATE OF DESIGNATIONS,

                             PREFERENCES AND RIGHTS

                                       OF

                           SERIES A-1 PREFERRED STOCK

                                       OF

                           INSITE VISION INCORPORATED

                         (Pursuant to Section 151 of the
                        Delaware General Corporation Law)

        InSite Vision Incorporated, a corporation organized and existing under
the laws of the State of Delaware (the "CORPORATION"), hereby certifies that the
following resolutions were adopted by the Board of Directors of the Corporation
pursuant to authority of the Board of Directors as required by Section 151 of
the Delaware General Corporation Law.

        RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Corporation (the "BOARD OF DIRECTORS" or the "BOARD")
in accordance with the provisions of its Certificate of Incorporation and
Bylaws, each as amended and restated through the date hereof, the Board of
Directors hereby authorizes a series of the Corporation's previously authorized
Preferred Stock, par value $0.01 per share (the "PREFERRED STOCK"), and hereby
states the designation and number of shares, and fixes the relative rights,
preferences, privileges, powers and restrictions thereof as follows:

                            I. DESIGNATION AND AMOUNT

        The designation of this series, which consists of 15,000 shares of
Preferred Stock, is the Series A-1 Preferred Stock (the "SERIES A-1 PREFERRED
STOCK") and the face amount shall be One Thousand U.S. Dollars ($1,000.00) per
share (the "FACE AMOUNT").

                                  II. DIVIDENDS

        The holders of the Series A-1 Preferred Stock shall be entitled to
receive dividends at the rate of $60.00 per share (as adjusted for any stock
dividends, combinations, splits or the like with respect to such shares) per
annum, respectively, payable out of funds legally available therefor. Such
dividends shall be cumulative but shall be payable only when, if and as declared
by the Board of Directors.
<PAGE>

                                 III. CONVERSION

        A.     Conversion at the Option of the Holder. Solely upon the
determination by Bausch & Lomb Incorporated or its successors or assigns
(collectively, "B&L") to terminate the license agreement (the "LICENSE
AGREEMENT") between the Corporation and Bausch & Lomb Incorporated (i) pursuant
to Section 19.3 thereof at anytime or (ii) pursuant to Section 19.4 thereof on
or prior to the later to occur of January 1, 2004 or completion of the
initiation of enrollment for Phase II/III clinical trials for the Corporation's
ISV-403 product ((i) or (ii), a "TERMINATION"), holder, at holder's sole option,
may convert shares of Series A-1 Preferred Stock into shares of the
Corporation's Common Stock (the "COMMON STOCK") upon two (2) business days'
written notice (the "NOTICE") within sixty (60) days following the Termination
in accordance with the following provisions (an "OPTIONAL CONVERSION"):

               (i)    if holder elects to convert the Series A-1 Preferred Stock
into Common Stock, all shares of Series A-1 Preferred Stock that may be
converted pursuant to subsection (ii) below must be converted into shares of
Common Stock so that after one such conversion (and the redemption provided for
herein under Article V.A(ii)) no shares of Series A-1 Preferred Stock will
remain outstanding.

               (ii)   shares of Series A-1 Preferred Stock shall be converted
into the aggregate number of shares of Common Stock of the Corporation that is
equal to (A) the aggregate Value of all shares of Series A-1 Preferred Stock
divided by (B) the then current Fair Market Value of the Common Stock; provided,
that in no event shall the total number of shares of Common Stock issued upon
conversion of shares of Series A-1 Preferred Stock exceed 4,300,000 (as adjusted
for any stock dividends, combinations, splits or the like with respect to such
shares) (the "CAP AMOUNT").

               (iii)  The "VALUE" of a share of Series A-1 Preferred Stock for
purposes of a conversion hereunder shall be the purchase price of such share of
Series A-1 Preferred Stock, plus accumulated and unpaid dividends (without any
interest thereon) on such share of Series A-1 Preferred Stock.

               (iv)   The "FAIR MARKET VALUE" of the Corporation's Common Stock
is equal to the average of the closing sales prices for the five trading days
immediately preceding the date of the Notice of conversion of the Corporation's
Common Stock on any national securities exchange, or on the National Association
of Securities Dealers Automated Quotation System (NASDAQ), or if the Common
Stock is not traded on any such market, Fair Market Value Shall mean the per
share value of the Common Stock in the reasonable opinion of an independent
investment banker of national reputation reasonably acceptable to holder and the
Corporation.

        B.     Mechanics of Conversion. In order to effect an Optional
Conversion, the holder of Series A-1 Preferred Stock shall surrender the
certificate or certificates therefor, duly endorsed, at the office of the
Corporation or of any transfer agent for such stock, and shall give written
notice to the Corporation at such office that holder elects to convert the same
and shall state therein the name or names in which holder wishes the certificate
or certificates for shares of Common Stock to be issued. The Corporation shall,
as soon as practicable thereafter, issue and deliver at such office to such
holder of Series A-1 Preferred Stock, a certificate or certificates for

                                       2
<PAGE>

the number of shares of Common Stock to which holder shall be entitled as
aforesaid. Such conversion shall be deemed to have been made immediately prior
to the close of business on the date of surrender of the shares of Series A-1
Preferred Stock to be converted, and the person or persons entitled to receive
the shares of Common Stock issuable upon such conversion shall be treated for
all purposes as the record holder or holders of such shares of Common Stock on
such date.

               (i)    Taxes. The holder shall pay any and all taxes which may be
imposed upon it with respect to the issuance and delivery of the shares of
Common Stock upon the conversion of the Series A-1 Preferred Stock.

               (ii)   No Fractional Share. If any conversion of Series A-1
Preferred Stock would result in the issuance of a fractional share of Common
Stock, such fractional share shall be disregarded and the number of shares of
Common Stock issuable upon conversion of the Series A-1 Preferred Stock shall be
rounded down to the nearest whole number of shares.

                    IV. RESERVATION OF SHARES OF COMMON STOCK

        Upon the initial issuance of the shares of Series A-1 Preferred Stock,
Corporation shall reserve Four Million Three Hundred Thousand (4,300,000) shares
of the authorized but unissued shares of Common Stock (as adjusted for any stock
dividends, combinations, splits or the like with respect to such shares) for
issuance upon conversion of the Series A-1 Preferred Stock and thereafter the
number of authorized but unissued shares of Common Stock so reserved (the
"RESERVED AMOUNT") shall not be decreased and shall at all times be sufficient
to provide for the conversion of the Series A-1 Preferred Stock (as adjusted for
any stock dividends, combinations, splits or the like with respect to such
shares).

               V.     REDEMPTION UPON THE HAPPENING OF CERTAIN EVENTS

        A.     Redemption Events. In the event (each of the events described in
clauses (i)-(iv) being a "REDEMPTION EVENT"):

        (i) of the First Commercial Sale of the Product pursuant to the terms of
        the License Agreement, assuming B&L exercises reasonable efforts to
        commercialize the Product following New Drug Application approval (but
        in any event no later than six (6) months after New Drug Application
        approval);

        (ii) shares of Series A-1 Preferred Stock convert into Common Stock
        pursuant to Article III hereof upon a Termination;

        (iii) that the Corporation, in its sole discretion, elects to repurchase
        and redeem all then outstanding shares of Series A-1 Preferred stock
        upon any (a) acquisition of the Corporation by means of merger, stock
        sale or other form of corporate reorganization in which outstanding
        shares of the Corporation are exchanged for securities, cash or other
        consideration issued, or caused to be issued, by the acquiring
        corporation or its subsidiary (other than a mere reincorporation
        transaction) and pursuant to which the holders of the outstanding voting
        securities of the Corporation immediately prior to such merger or

                                       3
<PAGE>

        other form of corporate reorganization fail to hold equity securities
        representing a majority of the voting power of the Corporation or
        surviving entity immediately following such merger or other form of
        corporate reorganization or (b) sale of all or substantially all of the
        assets of the Corporation ((a) or (b), a "CORPORATE Change"); or

        (iv) upon termination of the License Agreement upon (a) the
        determination by the Corporation to terminate the License Agreement
        pursuant to Section 19.3 thereof at anytime or (b) the determination by
        B&L to terminate the License Agreement pursuant to Section 19.4 thereof
        after the later to occur of January 1, 2004 or completion of the
        initiation of enrollment of Phase II/III clinical trials for the
        Corporation's ISV-403 product;

then, (x) with respect to the Redemption Events set forth in Article V.A(i),
(ii) and (iv) above, two business days after the applicable Redemption Event and
(y) with respect to the Redemption Event set forth in (iii) above,
contemporaneous with the closing of the Corporate Change (each, a "REDEMPTION
DATE") from any source of funds legally available therefor, the Corporation
shall redeem the Series A-1 Preferred Stock as follows: (a) upon the Redemption
Event set forth in Article V.A(i) above, the Corporation shall redeem (i) for
one dollar ($1.00), two-thirds (66.667%) of the Series A Preferred Stock then
outstanding (including accumulated and unpaid dividends on such shares of Series
A-1 Preferred Stock) and (ii) in exchange for a pre-paid royalty having a value
equal to the aggregate Value of the remaining one-third (33.333%) of the Series
A-1 Preferred Stock then outstanding (the "REMAINING PREFERRED STOCK"), the
Remaining Preferred Stock; (b) upon the Redemption Event set forth in Article
V.A(ii) above, the Corporation shall redeem all then outstanding shares of
Series A-1 Preferred Stock which cannot be converted to Common Stock pursuant to
Article III because of the Cap (the "AVAILABLE SHARES") in exchange for a
promissory note with a principal balance equal to the aggregate Value of the
Available Shares and a rate per annum equal to the Available Shares Interest
Rate (expressed as a percentage) without compounding; (c) upon the Redemption
Event set forth in Article V.A(iii) above, the Corporation shall redeem all then
outstanding shares of Series A-1 Preferred Stock in exchange for a promissory
note with a principal balance equal to the aggregate Value of the Series A-1
Preferred Stock being redeemed and a rate per annum equal to the Corporate
Change Interest Rate (expressed as a percentage) without compounding; and (d)
upon either Redemption Event set forth in Article V.A(iv)(a) or (b) above, the
Corporation shall redeem, at no cost, all then outstanding shares of Series A-1
Preferred Stock (including accumulated and unpaid dividends on such shares of
Series A-1 Preferred Stock). For purposes hereof, the "AVAILABLE SHARES INTEREST
RATE" shall be equal to the "prime" rate of interest published by Citibank N.A.
on the applicable Redemption Date for loans to its commercial customers, plus
two percent (2.00%) per annum. For purposes hereof, the "CORPORATE CHANGE
INTEREST RATE" shall be equal to the quotient of: (i) the product of (a) the
aggregate purchase price paid for the Series A-1 Preferred Stock being redeemed
in exchange for a promissory note and (b) 0.06 over (ii) the aggregate Value of
the Series A-1 Preferred Stock being redeemed in exchange for a promissory note.
In the event of a redemption in connection with a Corporate Change, the
Corporation shall provide holder with at least 5 days advance written notice of
its election to redeem the Series A-1 Preferred Stock.

                                       4
<PAGE>

        B.     Redemption Procedures. On the Redemption Date, each holder of
Series A-1 Preferred Stock to be redeemed shall surrender to this Corporation
the certificate or certificates representing such shares, and thereupon the
related redemption price (which may be zero) of such shares shall be payable to
the order of the person whose name appears on such certificate or certificates
as the owner thereof and each surrendered certificate shall be cancelled.

        From and after the Redemption Date, unless there shall have been a
default in payment of the related redemption price (which may be zero), all
rights of the holders of shares of Series A-1 Preferred Stock (except the right
to receive the related redemption price (which may be zero) without interest
upon surrender of their certificate or certificates) shall cease with respect to
such shares, and such shares shall not thereafter be transferred on the books of
the Corporation or be deemed to be outstanding for any purpose whatsoever. If
the funds of the Corporation legally available for redemption of shares of
Series A-1 Preferred Stock on any Redemption Date are insufficient to redeem the
total number of shares of Series A-1 Preferred Stock to be redeemed on such
date, those funds which are legally available will be used to redeem the maximum
possible number of such shares ratably among the holders of such shares to be
redeemed based upon their holdings of Series A-1 Preferred Stock. The shares of
Series A-1 Preferred Stock not redeemed shall remain outstanding and entitled to
all the rights and preferences provided herein. At any time thereafter when
additional funds of the Corporation are legally available for the redemption of
shares of Series A-1 Preferred Stock such funds will immediately be used to
redeem the balance of the shares which the Corporation has become obliged to
redeem on any Redemption Date but which it has not redeemed.

             VI. ADJUSTMENTS FOR RECLASSIFICATION AND REORGANIZATION

        If the Common Stock issuable upon conversion of the Series A-1 Preferred
Stock shall be changed into the same or a different number of shares of any
other class or classes of stock, or into any other property whether by
recapitalization, reclassification, reorganization (including a Corporate
Change) or otherwise (other than a subdivision or combination of shares or a
Corporate Change transaction in which the Corporation exercises its redemption
right under Article V.A(iii) above) in any such event the Series A-1 Preferred
Stock shall thereafter be convertible into the kind and amount of stock and
other securities and property receivable upon such recapitalization,
reclassification, reorganization or other change by holders of the maximum
number of shares of Common Stock into which such shares of Series A-1 Preferred
Stock could have been converted immediately prior to such recapitalization,
reclassification or change.

                               VII. VOTING RIGHTS

        The holders of the Series A-1 Preferred Stock have no voting power
whatsoever, except as otherwise provided by the Delaware General Corporation
Law.

                               VIII. MISCELLANEOUS

        A.     Cancellation of Series A-1 Preferred Stock. If any shares of
Series A-1 Preferred Stock are converted or redeemed as provided hereunder, the
shares so converted or redeemed shall be canceled, shall return to the status of
authorized, but unissued preferred stock of no designated series, and shall not
be issuable by the Corporation as Series A-1 Preferred Stock.

                                       5
<PAGE>

        B.     Lost or Stolen Certificates. Upon receipt by the Corporation of
(i) evidence of the loss, theft, destruction or mutilation of any Preferred
Stock Certificate(s) and (ii) (y) in the case of loss, theft or destruction, of
indemnity reasonably satisfactory to the Corporation, or (z) in the case of
mutilation, upon surrender and cancellation of the Preferred Stock
Certificate(s), the Corporation shall execute and deliver new Preferred Stock
Certificate(s) of like tenor and date. However, the Corporation shall not be
obligated to reissue such lost or stolen Preferred Stock Certificate(s) if the
holder contemporaneously requests the Corporation to convert such Series A-1
Preferred Stock.

                                       6
<PAGE>

        IN WITNESS WHEREOF, this Certificate of Designation is executed on
behalf of the Corporation this 3rd day of July, 2002.

                                      INSITE VISION INCORPORATED

                                      By: /s/ S. Kumar Chandrasekaran
                                          -------------------------------------
                                          S. Kumar Chandrasekaran, Ph.D.
                                          President and Chief Executive Officer

                                       7

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