Document:

Exhibit 10.01
                             MODIFICATION AGREEMENT

MODIFICATION  AGREEMENT  made as of the  17th  day of June  2005 to the  Secured
Promissory  Note dated as of September  1, 2004,  and amended as of November 30,
2004,  as of April  30,  2005 and as of May 20,  2005 by and  between  Ronald L.
Schutt?,  hereinafter  referred to as  "Schutt?"  or the  "HOLDER"  and BROOKLYN
CHEESECAKE & DESSERTS COMPANY, INC. formerly know as CREATIVE BAKERIES,  INC., a
New York corporation  ("BROOKLYN CHEESECAKE & DESSERTS"),  and J.M. SPECIALTIES,
INC., a NEW JERSEY CORPORATION  ("JMS") (BROOKLYN  CHEESECAKE & DESSERTS and JMS
are collectively referred to as the "BORROWERS").

                              W I T N E S S E T H:
                              --------------------

      WHEREAS,  Borrowers issued to Schutte' a $317,000 Secured  Promissory Note
(the "PROMISSORY NOTE");

      WHEREAS,  the  parties  subsequently  amended  the  Promissory  Note as of
November 30, 2004 to extend the term of the Note

      WHEREAS,  the parties subsequently amended the Promissory Note as of April
30, 2005 to extend the term of the Note

      WHEREAS,  the parties  subsequently  amended the Promissory Note as of May
20, 2005 to extend the term of the Note and

      WHEREAS,  the  Promissory  Note is due June 17,  2005 and the  COMPANY and
Schutt? are desirous of further modifying the terms of the Promissory Note.

         NOW,  THEREFORE,  IN CONSIDERATION OF THE MUTUAL COVENANTS AND
         PROMISES  AND  OTHER  GOOD  AND  VALUABLE  CONSIDERATION,  THE
         RECEIPT OF WHICH IS HEREBY ACKNOWLEDGED, IT IS MUTUALLY AGREED
         AS FOLLOWS:

1.  Modifications:  Effective as of the date first written above, the Promissory
Note shall be modified as follows:

                  1.1  Extension of the term of modified  Promissory  Note.  The
maturity date of the Promissory Note will be extended to July 31, 2005.

                  1.2 Right to prepay Promissory Note. The COMPANY will have the
right to prepay without  penalty all or a portion of the Promissory  Note at any
time during the term of the Promissory Note.

2. Other Provisions.

                  2.1 Force and Effect.  All other terms of the Promissory  Note
shall remain in full force and effect.

                  2.2  Company   Representations.   The  Company  represents  to
Schutte'  that  there have been no  material  adverse  changes in the  Company's
public disclosures since the filing of the Company's most recent Form 10-KSB and
8-K Reports with the  Securities  and Exchange  Commission and that the Board of
Directors  of  the  Company  has  authorized  and  approved  this   modification
agreement.  The  Company  further  represents  that it has taken  the  necessary
corporate  action to authorize the within  agreement and the modification to the
Promissory Notes.

<PAGE>

                  2.3 HOLDER Representations.  HOLDER represents to Company that
it has been afforded an opportunity to consult with professional advisors and or
counsel and that all necessary  approvals and action have been obtained to enter
into this  modification  agreement to extend the due date of the Promissory Note
as previously modified.

                  2.4  Miscellaneous.  This  Agreement  shall be governed by the
laws of the State of New York,  and may be executed  in  multiple  counterparts,
each of which shall be considered an original but all of which shall  constitute
one and the same agreement.  All notices under this Agreement shall be in accord
with the  provisions as set forth in the New Note.  The terms of this  Agreement
and New Note may only be  modified  upon  mutual  agreement  of the  parties  in
writing.

      IN WITNESS WHEREOF, the parties have set their hands and seals on the day,
month and year first above written.

                                         Ronald L. Schutte'

                                By:      _______________________________

                                Brooklyn Cheesecake & Desert Company, Inc.

                                By:      ________________________________

                                         J.M. Specialties, Inc.

                                By:      _________________________________Unassociated Document

    
      Exhibit
        4.2

      CERTIFICATE
        OF AMENDMENT OF

      RESTATED
        CERTIFICATION OF INCORPORATION

      OF

      INSITE
        VISION INCORPORATED

       

      
      

      InSite
        Vision Incorporated, a corporation organized and existing under the General
        Corporation Law of the State of Delaware (the “Corporations”), does hereby
        certify:

       

      The
        amendment to the Corporation’s Restated Certificate of Incorporation set forth
        in the following resolutions approved by the Corporation’s Board of Directors
        were duly adopted in accordance with the provisions of Section 242 of the
        General Corporation Law of the State of Delaware (“General Corporation Law”) and
        by the vote of the majority of the outstanding shares of Common Stock entitled
        to vote thereon taken at an Annual Meeting of the Stockholders duly called
        and
        held upon notice in accordance with Section 222 of the General Corporation
        Law.

      

      NOW
        THEREFORE BE IT RESOLVED, that Article X of the
        Restated Certificate of Incorporation is hereby deleted
        and restated in its entirely as follows:

      

      “[Intentionally
        Omitted]”

       

      RESOLVED
        FURTHER, that the foregoing amendment of the
        restated Certificate of Incorporation is hereby approved
        and adopted. 

      

      

      

      

      

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      IN
        WITNESS THEREOF, InSite Vision Incorporated has caused this certificate to
        be
        signed and attested by its duly authorized officers this 3
        of
        JUNE,
        1994.

      

      
        	 	 	 
	 	INSITE
                VISION INCORPORATED
	 
 	 
 	 
 
	 	By:  	/s/ S.
                Kumar Chandrasekaran
	 	
                
S.
                Kumar Chandrasekaran,
	 	Chairman
                if the Board, Chief
Executive
                Officer and Chief
Financial
                Officer

      

       

      
        	 	 	 
	 	 
	 	Attest:  	/s/ Clifford
                Orant
	 	
                
Clifford
                Orant
	 	President,
                Chief Operating
Officer
                and SecretaryUnassociated Document

    

      Exhibit
        4.7

       

      SUBSCRIPTION
        AGREEMENT

      

      

      This
        SUBSCRIPTION AGREEMENT (this “Agreement”)
        made
        as of the date set forth on the signa-ture page hereof between INSITE VISION
        INCORPORATED, a Delaware corporation having a place of business at 965 Atlantic
        Avenue, Alameda, California 94501 (the “Company”)
        and
        the undersigned (each, a “Subscriber”
        and
        collectively, the “Subscribers”).

      

      W
        I T N E
        S S E T H:

      

      WHEREAS,
        the Company desires to sell Units (as defined below) to persons who qualify
        as
“accredited investors” as defined in Rule 501 of Regulation D promulgated under
        the Securities Act of 1933 (the “Securities
        Act”);
        and

      

      WHEREAS,
        the Subscribers desire to purchase that number of Units set forth on the
        signature page hereof on the terms and conditions hereinafter set
        forth;

      

      NOW,
        THEREFORE, in consideration of the promis-es and the mutual representations
        and
        covenants hereinaf-ter set forth, the parties hereto do hereby agree as
        follows:

      

      I. 
SUBSCRIPTION
        FOR UNITS 

      

      1.1 Amount
        of the Offering.
        The
        Company will offer to sell to persons who qualify as “accredited investors” as
        defined in Rule 501 of Regulation D (“Regulation
        D”)
        promulgated under the Securities Act (the “Offering”).
        

      

      (a)
        Each
“Unit”
        may be
        sold as a whole Unit or as a fraction thereof, and shall consist
        of:

      

      (i)
        a
        number of shares of common stock of the Company, par value $0.01 per share
        (the
“Common
        Stock”),
        determined by dividing $200,000 (the “Unit
        Price”)
        by the
        last per share closing price of the Common Stock as reported by the American
        Stock Exchange (“AMEX”)
        on the
        date hereof (the “Per
        Share Price”);
        and

      

      (ii)
        warrants (the “Warrants”)
        to
        purchase a number of shares of Common Stock equal to 30% of the Common Stock
        included in such Unit.

       

      (b)
        The
        aggregate number of shares of Common Stock issuable under the Units (excluding
        the Warrants) shall not exceed 18,000,000.

      

      (c)
        The
        exercise price of the Warrants shall also be no lower than 115.0% of the
        last
        sale price of a share of the Company’s Common Stock on the date of this
        Agreement and shall be payable in cash or by cashless exercise as further
        provided in the Warrants. The terms of the Warrants shall provide that the
        Warrants may not be exercised or transferred for a period of six (6) months
        from
        the Closing (as defined below). The terms of the Warrants shall provide that
        the
        exercise price and the number of shares that may be purchased under the Warrants
        may be adjusted in the event of a stock split, combination or stock dividend
        with respect to the Company’s Common Stock, but the Warrants shall not otherwise
        contain antidilution provisions or other terms that would reset the exercise
        price of the Warrants.

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      1.2 Closing. Upon
        receipt of binding subscription agreements for up to the number of Units
        in the
        Offering (the “Subscriptions”),
        and
        subject to the other terms and conditions of this Agreement, at a time to
        be
        agreed upon by the Company and Paramount BioCapital, Inc. (the “Placement
        Agent”)
        and of
        which the Subscribers will be notified by the Placement Agent by facsimile
        transmittal or otherwise, the Company will (a) sell to the Subscribers and
        the
        Subscribers will purchase from the Company, on a pro-rata basis, the Common
        Stock and Warrants included in the Units subscribed for by Subscribers under
        the
        terms of the Offering (the “Closing”
        and
        such date the “Closing
        Date”),
        and
        the Subscribers will remit to the Escrow Agent prior to the Closing the
        applicable pro-rata portion of the Aggregate Purchase Price for the Closing
        (each, a “Closing
        Amount”)
        for
        release to the Company at the Closing; (b) issue to the Placement Agent or
        its
        designees the Placement Warrants pursuant to that certain Placement Agent
        Agreement, dated February 24, 2005 (the “Placement
        Agent Agreement”)
        by and
        between the Company and the Placement Agent (the “Placement
        Warrants”);
        and
        (c) pay to the Placement Agent or its designees the Cash Commissions (as
        defined
        in the Placement Agent Agreement). The Placement Agent will notify each
        Subscriber, after consultation with the Company, as to such Subscriber’s Closing
        Amount (each a “Subscriber
        Amount”)
        by
        providing such Subscriber with a notice substantially similar to that attached
        hereto as Exhibit
        A.
        The
“Aggregate
        Purchase Price”
        shall
        mean the product of the amount of Units sold to Subscribers and the Unit
        Price
        and shall equal the aggregate of all Subscribers’ Closing Amounts. Upon
        compliance with all conditions to the Closing, the Placement Agent, with
        notice
        to the Company, shall authorize the Escrow Agent to release the proceeds
        of the
        Closing to the Company, less fees and expenses due to the Placement Agent.
        Interest, if any, that has accrued with respect to the Aggregate Purchase
        Price
        while in escrow shall also be distributed to the Company at the Closing and
        Subscribers will have no right to such interest.

      

      1.3 Offering
        Termination Date.
        Unless
        terminated earlier in the Placement Agent’s or the Company’s sole discretion,
        the Offering will expire on the earlier to occur of the Closing Date and
        11:59
        p.m. New York City time on May 4, 2005 (subject to extension at the Company’s
        sole discretion without notice to the Subscribers) (the “Offering
        Termination Date”).
        

      

      1.4 Closing
        Mechanics.
        Prior
        to the Closing, the Aggregate Purchase Price will be deposited in a segregated
        escrow account with the Escrow Agent pursuant to the instructions provided
        below
        in this Section 1.4. Subject to the terms and conditions of this Agreement
        (including, without limitation, the Company’s and the Placement Agent’s option,
        each at its sole discretion, to refuse to accept Subscriptions from any
        Subscriber), the Subscriber hereby subscribes for and agrees to purchase
        from
        the Company such number of Units and the Company agrees to sell such number
        of
        Units to the Subscriber as is set forth upon the signature page hereof at
        the
        Unit Price (as defined on the signature page hereto). Pursuant to Section
        1.2,
        the Closing Amount, is payable by wire transfer, certified bank check, personal
        or business check, or money order made payable to “US Bank Trust National
        Association Corporation Trust, (the “Escrow
        Agent”)
        F/B/O
        InSite Vision Incorporated.” Subscribers paying by check should direct such
        check to: Basil Christakos, Paramount BioCapital, Inc., 787 Seventh Ave.,
        48th
        Floor, New York, NY 10019. Subscribers paying by wire transfer should direct
        such wire transfer to: 

      

      
        
          
          

        

        
          B-2

          
            

          

        

        
          
          

        

      

       

      US
        Bank
        Trust National Association Corporation Trust

      ABA
        Routing Number: 091000022

      US
        Bank
        Trust N.A. 

      Account
        Number: 180121167365

      For:
        Paramount BioCapital & InSite Vision

      SEI
        Number: 789272000

      Attn:
        Andrea Friessen

      Tel
        #
        651-495-3725

      Fax
        #
        651-495-8087

      

      Each
        Subscriber must complete and return a duly executed, unaltered copy of this
        Agreement (including the completed Confidential Subscriber Questionnaire
        included in Article VIII hereof) to the Placement Agent at the Placement
        Agent’s
        address indicated in the Memorandum on or before the date indicated to you
        by
        the Placement Agent to be eligible to participate in the Offering. The Company
        and the Placement Agent retain complete discretion to accept or reject any
        Subscriptions unless and until the Company executes a counterpart to this
        Agreement that includes such Subscriber’s signature.

      

      1.5 Delivery
        of Certificates.
        The
        certificates representing the Common Stock and Warrants included in the Units
        purchased at the Closing will be delivered by the Compa-ny within 10 business
        days following the Closing as set forth in Article IV hereof. 

      

      II.          
         REPRESENTATIONS,
        WARRANTIES AND COVENANTS OF SUBSCRIBERS

      

      Each
        Subscriber hereby represents, warrants and covenants to the Company as
        follows:

      

      2.1 The
        Subscriber recognizes and acknowledges that the purchase of the Units involves
        a
        high degree of risk including, but not limited to, the following: (i) an
        investment in the Company is highly speculative, and only Subscribers who
        can
        afford the loss of their entire investment should consider investing in the
        Company and the Units; (ii) the Subscriber may not be able to liquidate
        his/her/its investment; (iii) transferability of the Common Stock and Warrants
        included in the Units, and the common stock issuable upon exercise of the
        Warrants (collectively the “Securities”)
        is
        extremely limited; (iv) in the event of a disposition of the Securities,
        the
        Subscriber could sustain the loss of his/its entire investment; and (v) the
        Company has not paid any dividends on its Common Stock since inception and
        does
        not anticipate the payment of dividends in the foreseeable future. 

      

      2.2 The
        Subscriber is an “accredited investor” as such term is defined in Rule 501 of
        Regulation D promulgated under the Securities Act, as indicated by the
        Subscriber’s responses to the questions contained in Article VIII hereof which
        responses are true and correct as of the date hereof and shall be true and
        correct as of the Closing, and that the Subscriber is able to bear the economic
        risk of an invest-ment in the Company. If the Subscriber is a natural person,
        the Subscriber has reached the age of majority in the state or other
        jurisdiction in which the Subscriber resides, has adequate means of providing
        for the Subscriber’s current financial needs and contingencies, is able to bear
        the substantial economic risks of an investment in the Securities for an
        indefinite period of time, has no need for liquidity in such investment and
        could afford a complete loss of such investment. After giving effect to the
        purchase of the Units requested to be purchased by Subscriber hereunder,
        Subscriber represents and warrants that Subscriber neither individually nor
        together as a group (except as permitted by Rule 13d-5(b)(2) promulgated
        under
        the Exchange Act (as defined below)) shall own more than 19.9% of the Company’s
        outstanding Common Stock or voting power.

       

      
        
          
          

        

        
          B-3

          
            

          

        

        
          
          

        

      

       

      2.3 The
        Subscriber hereby acknowledges and represents that (i) the Subscriber is
        knowledgeable, sophisticated and has experience in making, and is qualified
        to
        make, decisions with respect to investments representing an investment decision
        like that involved in the purchase of the Units and has prior investment
        experience, including investment in securities which are non-listed,
        unregistered and/or not traded on the NASDAQ National or SmallCap Market
        or
        listed on AMEX; (ii) the Subscriber recognizes the highly speculative nature
        of
        this investment, that an investment in the Units and the underlying Securities
        involves a significant degree of risk, that the market price of the Common
        Stock
        has been and continues to be volatile, and Subscriber has carefully evaluated
        the risks of an investment in the Units; and (iii) the Subscriber is able
        to
        bear the economic risk of an investment in the Units and the potential loss
        of
        such investment, which risk the Subscriber hereby assumes.

       

      2.4 The
        Subscriber hereby acknowledges that he/she/it has received and carefully
        reviewed this Agreement, the Confidential Private Offering Memorandum prepared
        by the Company and dated as of April 20, 2005, as amended or supplemented,
        including all documents attached thereto or incorporated by reference therein,
        including the following documents filed by the Company with the Securities
        and
        Exchange Commission (the “SEC”
        or the
“Commission”,
        and
        such documents, the “SEC
        Filings”):
        SEC
        Form 10-K, filed March 31, 2005; and SEC Form 8-K filed March 31, 2005; and
        any
        future filings that the Company makes with the SEC under Sections 13(a),
        13(c),
        14, or 15(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange
        Act”),
        until
        the Offering Termination Date (as defined herein) (the confidential offering
        memorandum, including the SEC Filings and all other exhibits and information
        incorporated by reference therein is referred to herein as the “Memorandum”).
        Any
        information that the Company subsequently files with the SEC that is
        incorporated by reference will automatically update and supersede any previous
        information that is part of this Memorandum. The Subscriber further represents
        that the Subscriber has been fur-nished by the Company during the course
        of this
        transaction with all information regarding the Company which the Subscriber,
        its
        investment advisor, attorney and/or accountant has requested or desired to
        know
        or which is otherwise relevant to an investment decision, has been afforded
        the
        opportunity to ask questions of and receive answers from duly authorized
        officers or other representatives of the Company concerning the terms and
        conditions of the Offering, and has received any additional information which
        the Subscriber or its advisors or agents has requested.

      

      2.5 (a) The
        Subscriber has relied solely upon the information provided by the Company
        in
        making the decision to invest in the Units. The Subscriber is familiar with
        and
        understands the terms of the Offering, including the rights to which the
        Subscriber is entitled under this Agreement. In evaluating the suitability
        of an
        investment in the Company, the Subscriber has not relied upon any representation
        or other information (whether oral or written) from the Company, or any agent,
        employee or affiliate of the Company other than as set forth in the Memorandum,
        in this Agreement or resulting from Subscriber’s own independent investigation.
        Subscriber understands and acknowledges that nothing in this Agreement, the
        Memorandum or any other materials provided to Subscriber in connection with
        the
        Subscription for the Units or sale of the Securities constitutes investment,
        tax
        or legal advice. To the extent deemed necessary or advisable by Subscriber
        in
        his/her/its sole discretion, the Subscriber has retained, at his/her/its
        sole
        expense, and relied upon appropriate professional advice regarding the
        investment, tax and legal merits and consequences of this Agreement and its
        purchase of the Units hereunder. 

      

      
        
          
          

        

        
          B-4

          
            

          

        

        
          
          

        

      

       

      (b) The
        Subscriber represents that no Units or other securities were offered or sold
        to
        it by means of any form of general solicitation or general advertising, and
        in
        connection therewith the Subscriber did not: (A) receive or review any
        advertisement, article, notice or other communication published in a newspaper
        or magazine or similar media or broadcast over television or radio whether
        closed circuit, or generally available; or (B) attend any seminar meeting
        or
        industry or Subscriber conference whose attendees were invited by any general
        solicitation or general advertising.

      

      2.6 The
        Subscriber hereby acknowledges that the Offering has not been reviewed,
        recommended or endorsed by the SEC or any state securities regulatory authority
        or other governmental body or agency, since the Offering is intended to be
        exempt from the registration requirements of Section 5 of the Securities
        Act
        pursuant to Regulation D promulgated under the Securities Act. The Subscriber
        shall not sell or otherwise transfer the Units unless such transfer is
        registered under the Securities Act or unless an exemption from such
        registration is available. The Subscriber understands that if required by
        the
        laws or regulations or any applicable jurisdictions, the Offering contemplated
        hereby will be submitted to the appropriate authorities of such state(s)
        for
        registration or exemption therefrom and the Offering contemplated hereby
        will be
        specifically subject to the receipt of such registration or exemption.

      

      2.7 The
        Subscriber understands and acknowledges that neither the Units nor the
        Securities have been registered under the Securities Act in reliance upon
        a
        claimed exemption under the provisions of the Securities Act which depends,
        in
        part, upon the Subscriber’s investment intention and the truth and accuracy of,
        and Subscriber’s compliance with, the representations, warranties,
        acknowledgments and covenants of Subscriber set forth herein. In this
        connection, the Subscriber hereby represents that the representations,
        warranties, acknowledgments and covenants of Subscriber set forth herein
        are
        true and accurate, Subscriber will comply with the covenants set forth herein,
        and the Subscriber is purchasing the Units and underlying Securities for
        the
        Subscriber’s own account for investment purposes only and not with a view toward
        the resale or distribution to others and has no contract, undertaking, agreement
        or other arrangement, in existence or contemplated, to sell, pledge, assign
        or
        otherwise transfer the Units or underlying Securities to any other person.
        The
        Subscriber, if an entity, also represents that it was not formed for the
        purpose
        of purchasing the Units or underlying Securities. The Subscriber has no current
        plans to effect a “change of control” of the Company, as such term is understood
        in Rule 13d of the Exchange Act.

      

      
        
          
          

        

        
          B-5

          
            

          

        

        
          
          

        

      

       

      2.8 The
        Subscriber understands that neither the Units nor the Securities will be
        registered or available for sale in the public markets except as specifically
        provided herein, and Rule 144 promulgated under the Securities Act
        (“Rule
        144”)
        requires, among other conditions, a one-year holding period of the Company
        prior
        to the resale (in limited amounts) of securities acquired in a non-public
        offering without having to satisfy the registration requirements under the
        Securities Act. The Subscriber understands and hereby acknowledges that the
        Company is under no obligation to register any of the Units or Securities
        under
        the Securities Act or any state securities or “blue sky” laws or assist the
        Subscriber in obtaining an exemption from various registration requirements,
        other than as set forth in Article VI herein. The Subscriber agrees to hold
        the
        Company and its directors, officers, employees, controlling persons and agents
        and their respective heirs, representatives, successors and assigns harmless
        and
        to indemnify them against all liabilities, costs and expenses incurred by
        them
        as a result of (i) any misrepresentation made by the Subscriber contained
        in
        this Agreement (including the Confidential Subscriber Questionnaire contained
        in
        Article VIII herein), (ii) any sale or distribution by the Subscriber in
        violation of the Securities Act or any applicable state securities or “blue sky”
        laws or (iii) any untrue statement of a material fact made by the Subscriber
        and
        contained herein (including the Confidential Subscriber Questionnaire contained
        in Article VIII herein) or omission of a material fact asked for by such
        questionnaire necessary to make such statements made by the Subscriber and
        contained herein (including the Confidential Subscriber Questionnaire contained
        in Article VIII herein), in light of the circumstances in which they are
        made,
        not misleading.

      

      2.9 The
        Subscriber consents to the placement of a legend on any certificate, warrant
        or
        other document evidencing the Units substantially as set forth below, that
        such
        Units have not been registered under the Securities Act or any state securities
        or “blue sky” laws and setting forth or referring to the restrictions on
        transferability and sale thereof contained in this Agreement. The Subscriber
        is
        aware that the Company will make a notation in its appropriate records and
        with
        its transfer agent with respect to the restrictions on the transferability
        of
        the Units. 

       

      THE
        SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
        ACT
        OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE SECURITIES LAWS OF ANY
        STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
        RESALE AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
        EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
        ACT AND
        APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE
        AND SCOPE REASONABLY SATISFACTORY TO THE COMPANY, REGISTRATION IS NOT REQUIRED
        UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD
        PURSUANT TO RULE 144 UNDER THE SECURITIES ACT.

       

      
        
          
          

        

        
          B-6

          
            

          

        

        
          
          

        

      

       

      2.10 The
        Subscriber agrees to supply
        the Company, as soon as practical but in no event later than five (5) days
        after
        the Subscriber receives the request therefore from the Company, with such
        additional information concerning the Subscriber as the Company reasonably
        deems
        necessary or advisable.

      

      2.11 The
        Subscriber hereby represents that the address of the Subscriber furnished
        by
        Subscriber on the signature page hereof is the Subscriber’s principal residence
        if Subscriber is an individual or its principal business address if it is
        a
        corporation or other entity.

      

      2.12 The
        Subscriber represents that (i) the Subscriber has full right, power, authority
        and capacity (corporate, personal, statutory and otherwise) to execute, deliver,
        and perform this Agreement and to purchase the Securities and has taken all
        action necessary to authorize the execution, delivery and performance of
        this
        Agreement; and (ii) this Agreement constitutes the legal, valid and binding
        obligation of the Subscriber, enforce-able against the Subscriber in accordance
        with its terms.

      

      2.13 If
        the
        Subscriber is a corporation, partnership, limited liability company, trust,
        employee benefit plan, individual retirement account, Keogh Plan, or other
        entity (a) it is authorized and qualified to become a Subscriber in the Company
        and the person signing this Agreement on behalf of such entity has been duly
        authorized by such entity to do so and (b) it is duly organized, validly
        existing and in good standing under the laws of the jurisdiction of its
        organization.

      

      2.14 The
        Subscriber acknowledges that if he or she is a Registered Representa-tive
        of an
        NASD member firm, he or she must give such firm the notice required by the
        NASD
        Rules of Fair Practice, receipt of which must be acknowl-edged in accordance
        with such rules.

      

      2.15 The
        Subscriber acknowledges and agrees that it shall not be entitled to seek
        any
        remedies with respect to the Offering from any party other than the
        Company.

      

      2.16
         The
        Subscriber understands, acknowledges and agrees with the Company that this
        Subscription may be rejected, in whole or in part, by the Company or the
        Placement Agent, in each of their sole and absolute discretion, at any time
        before the Closing Date notwithstanding prior receipt by the Subscriber of
        notice of acceptance of the Subscriber’s Subscription. Subscriptions accepted at
        the Closing Date shall be binding on the Company.

       

      2.17
         The
        Subscriber understands, acknowledges and agrees with the Company that, except
        as
        otherwise set forth herein, the Subscription hereunder is irrevocable by
        the
        Subscriber, that, except as required by law, the Subscriber is not entitled
        to
        cancel, terminate or revoke this Agreement or any agreements of the Subscriber
        hereunder and that this Agreement and such other agreements shall survive
        the
        death or disability of the Subscriber and shall be binding upon and inure
        to the
        benefit of the parties and their heirs, executors, administrators, successors,
        legal representatives and permitted assigns. If the Subscriber is more than
        one
        person, the obligations of the Subscriber hereunder shall be joint and several
        and the agreements, representations, warranties and acknowledgments herein
        contained shall be deemed to be made by and be binding upon each such person
        and
        his/her heirs, executors, administrators, successors, legal representatives
        and
        permitted assigns.

      

      
        
          
          

        

        
          B-7

          
            

          

        

        
          
          

        

      

       

      2.18 The
        Subscriber understands, acknowledges and agrees with the Company that the
        Offering is intended to be exempt from registration under the Securities
        Act by
        virtue of Section 4(2) of the Securities Act and the provisions of Regulation
        D
        thereunder, which is in part dependent upon the truth, completeness and accuracy
        of the statements made by the Subscriber.

      

      2.19 The
        Subscriber understands, acknowledges and agrees with the Company that, there
        can
        be no assurance that the Subscriber will be able to sell or dispose of the
        Securities. It is understood that in order not to jeopardize the Offering’s
        exempt status under Section 4(2) of the Securities Act and Regulation D,
        in
        addition to any other restrictions on transfer set forth herein or in the
        Warrants, the Company may, at a minimum, require any transferee to fulfill
        the
        Subscriber suitability requirements thereunder and make the representations,
        warranties and covenants of Subscriber hereunder. 

      

      2.20 The
        Subscriber agrees that during the period from the date that Subscriber was
        first
        contacted with respect to the Offering (the “First
        Date”)
        through the last date upon which Subscriber holds any Units, the Subscriber
        will
        not directly or indirectly, through related parties, affiliates or otherwise
        sell "short" or "short against the box" (as those terms are generally
        understood) any equity security of the Company or take any action with respect
        to any equity security of the Company which would violate the Securities
        Act or
        the rules and regulations promulgated thereunder and from the First Date
        through
        the Closing Date has not and will not take any action the intent or reasonably
        foreseeable effect of which is to reduce the trading price of the Common
        Stock.

      

      2.21 The
        Subscriber acknowledges and agrees that the information contained in this
        Agreement, the Memorandum or otherwise made available to the Subscriber by
        the
        Company (collectively, the “Confidential
        Information”)
        is to
        be used solely for the purpose of evaluating a possible investment in the
        Units
        and is confidential and non-public and agrees that all such Confidential
        Information shall be kept in confidence by the Subscriber and neither used
        by
        the Subscriber for the Subscriber’s personal benefit (other than in connection
        with evaluating a possible investment in the Units) nor disclosed to any
        third
        party for any reason and in any manner, notwithstanding that a Subscriber’s
        subscription may not be accepted by the Company; provided, however, that
        this
        obligation shall not apply to any such Confidential Information that (i)
        is part
        of the public knowledge or literature and readily accessible at the date
        hereof
        (except as a result of a breach of this provision by any party), or (ii)
        becomes
        part of the public knowledge or literature and readily accessible by publication
        (except as a result of a breach of this provision by any party). 

      

      2.22 If
        the
        Subscriber is purchasing the Units in a fiduciary capacity for another person
        or
        entity, including without limitation a corporation, partnership, trust or
        any
        other entity, the Subscriber has been duly authorized and empowered to execute
        this Agreement and all other subscription documents, and such other person
        or
        entity fulfills all the requirements for purchase of the shares as such
        requirements are set forth herein, concurs in the purchase of the Securities
        and
        agrees to be bound by the obligations, representations, warranties and covenants
        contained herein. Upon request of the Company, the Subscriber will provide
        true,
        complete and current copies of all relevant documents creating the Subscriber,
        authorizing its investment in the Company and/or evidencing the satisfaction
        of
        the foregoing.

      

      
        
          
          

        

        
          B-8

          
            

          

        

        
          
          

        

      

       

      2.23 No
        authorization, approval, consent or license of any person is required to
        be
        obtained for the purchase of the Units
        by the
        Subscriber, other than as have been obtained and are in full force and effect.
        The execution and delivery of this Agreement does not, and the consummation
        of
        the transactions contemplated hereby will not, result in any violation of
        or
        constitute a default under any material agreement or other instrument to
        which
        the Subscriber is a party or by which the Subscriber or any of its properties
        are bound, or to the best of the Subscriber’s knowledge, any permit, franchise,
        judgment, order, decree, statute, rule or regulation to which the Subscriber
        or
        any of its businesses or properties is subject.

      

      2.24 The
        representations, warranties and agreements of the Subscriber contained herein,
        in the Confidential Subscriber Questionnaire and in any other writing delivered
        in connection with the transactions contemplated hereby shall be true and
        correct in all respects on and as of the Closing Date as if made on and as
        of
        such date and shall survive the execution and delivery of this Agreement
        and the
        purchase of the Securities. Subscriber agrees to notify the Company as promptly
        as possible of any change in any of the foregoing information until such
        time as
        the Subscriber has sold all of its Securities.

      

      2.25 The
        Subscriber hereby covenants with the Company not to make any sale of the
        Securities under the Registration Statement without effectively causing the
        prospectus delivery requirement under the Securities Act to be satisfied,
        and
        further agrees to comply with reasonable requests of the Company or its transfer
        agent to provide additional information and representations concerning such
        sale. 

      

      2.26 Subscriber
        acknowledges the following disclosure, which is set forth herein as required
        pursuant to Section 25102(a) of the California Corporate Securities Law of
        1968:

       

      “THE
        SALE
        OF THE SECURITIES THAT ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED
        WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE
        ISSUANCE OF THE SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE
        CONSIDERATION THEREFOR PRIOR TO THE QUALIFICATION IS UNLAWFUL, UNLESS THE
        SALE
        OF SECURITIES IS EXEMPT FROM THE QUALIFICATION BY SECTION 25100, 25102, OR
        25105
        OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT
        ARE EXPRESSLY CONDITIONED UPON THE QUALIFICATION BEING OBTAINED, UNLESS THE
        SALE
        IS SO EXEMPT.”

      

      2.27 Subscriber
        acknowledges the following disclosure, which is set forth herein pursuant
        to the
        Illinois Securities Act:

       

      
        
          
          

        

        
          B-9

          
            

          

        

        
          
          

        

      

       

      “THE
        UNDERSIGNED ACKNOWLEDGES THAT THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER
        THE ILLINOIS SECURITIES ACT AND ARE BEING OFFERED AND SOLD PURSUANT TO AN
        EXEMPTION THEREFROM. THE SECURITIES CANNOT BE SOLD OR TRANSFERRED UNLESS
        THEY
        ARE REGISTERED UNDER THE ILLINOIS SECURITIES ACT OR UNLESS AN EXEMPTION FROM
        REGISTRATION IS AVAILABLE.”

      

      2.28 Subscriber
        acknowledges the following disclosures, which are set forth herein pursuant
        to
        the Florida Securities Act:

       

      “THE
        SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE FLORIDA SECURITIES
        ACT AND ARE BEING SOLD IN RELIANCE UPON AN EXEMPTION PROVIDED BY SECTION
        517.061
        THEREOF. UNLESS THE SECURITIES ARE REGISTERED, THEY MAY NOT BE REOFFERED
        FOR
        SALE OR RESOLD IN THE STATE OF FLORIDA EXCEPT AS AN EXEMPT SECURITY OR IN
        AN
        EXEMPT TRANSACTION UNDER SAID ACT.”

      

      “THE
        UNDERSIGNED ACKNOWLEDGES THAT THE FLORIDA SECURITIES ACT REQUIRES AND THE
        ISSUER
        HEREBY AGREES THAT THE UNDERSIGNED SHALL HAVE THE RIGHT TO WITHDRAW HIS
        ACCEPTANCE OF AN OFFER TO ACQUIRE THESE SECURITIES FOR A PERIOD OF THREE
        (3)
        BUSINESS DAYS FOLLOWING HIS EXECUTION OF AN AGREEMENT RELATING TO THE
        ACQUISITION OF SUCH SECURITIES AND PAYMENT THEREFOR. IF THE UNDERSIGNED SHOULD
        DETERMINE TO WITHDRAW HIS ACCEPTANCE OF THE OFFER TO INVEST IN THE ISSUER,
        HE
        MAY DO SO WITHOUT ANY LIABILITY WHATSOEVER. TO ACCOMPLISH THIS WITHDRAWAL,
        THE
        UNDERSIGNED NEED ONLY SEND A LETTER OR TELEGRAM TO THE ISSUER INDICATING
        HIS
        INTENTION TO WITHDRAW. SUCH LETTER OR TELEGRAM SHOULD BE SENT AND POSTMARKED
        PRIOR TO THE END OF THE AFOREMENTIONED THIRD BUSINESS DAY. IF THE UNDERSIGNED
        SENDS A LETTER, IT IS PRUDENT TO SEND IT BY CERTIFIED MAIL, RETURN RECEIPT
        REQUESTED, TO ENSURE THAT IT IS RECEIVED AND TO EVIDENCE THE TIME WHEN IT
        WAS
        MAILED. SHOULD THE REQUEST BE MADE ORALLY, WRITTEN CONFIRMATION THAT THE
        REQUEST
        HAS BEEN RECEIVED SHOULD BE REQUESTED.”

      

      2.29 The
        Subscriber is not an adverse party to the Company in any lawsuit involving
        the
        Company.

      

      III. REPRESENTATIONS,
        WARRANTIES AND COVENANTS BY AND OF THE COMPANY

      

      
        
          
          

        

        
          B-10

          
            

          

        

        
          
          

        

      

       

      The
        Company hereby represents and warrants to the Subscriber that (for purposes
        of
        this Article III, references to “Memorandum” shall mean the Memorandum,
        including without limitation, the SEC Filings set forth or incorporated by
        reference therein: 

      

      3.1 Organization,
        Good Standing and Qualification.
        As of
        the Closing, the Company is a corporation duly incorporated, validly existing
        and in good standing under the laws of the State of Delaware and has full
        corporate power and authority to conduct its business as currently conducted.
        The Company is duly qualified as a foreign corporation to do business and
        is in
        good standing in every jurisdiction in which the property owned or leased
        by it
        or the nature of the business conducted by it makes such qualification
        necessary, except to the extent that the failure to be so qualified or in
        good
        standing would not reasonably be expected to have, individually or in the
        aggregate, a material adverse effect on the business, operations, condition
        (financial or otherwise), assets, or results of operations of the Company
        and
        its Subsidiaries (as defined below) as a whole (a “Material
        Adverse Effect”).

       

      3.2 Capitalization.
        (a) The
        authorized capital stock of the Company as of March 31, 2005 is as set forth
        in
        the Memorandum, under the heading “Capitalization”. All of the securities issued
        by the Company have been issued in accordance with all applicable federal
        and
        state securities laws. Other than as disclosed or contemplated in the Memorandum
        under the heading “Capitalization”, there are no other options, warrants, calls,
        rights, commitments or agreements of any character to which the Company is
        a
        party or by which either the Company is bound or obligating the Company to
        issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered,
        sold, repurchased or redeemed, any shares of the capital stock of the Company
        or
        obligating the Company to grant, extend or enter into any such option, warrant,
        call, right, commitment or agreement. Other than as disclosed in the Memorandum
        under the heading “Capitalization” there are no preemptive rights or rights of
        first refusal or similar rights which are binding on the Company permitting
        any
        person to subscribe for or purchase from the Company shares of its capital
        stock
        pursuant to any provision of law, the Company’s Certificate of Incorporation as
        in effect on the date hereof (the “Certificate
        of Incorporation”)
        or the
        Company’s By-laws, as in effect on the date hereof (the “By-laws”)
        or by
        agreement or otherwise. Other than as disclosed in the Memorandum under the
        heading “Capitalization”, there are no securities or instruments (including,
        without limitation, any warrants or convertible debentures) containing
        anti-dilution or similar provisions that will be triggered by the issuance
        of
        the Securities as described in this Agreement. The Company has made available
        to
        the Placement Agent true and correct copies of the Company’s Certificate of
        Incorporation and the Company’s By-laws. 

       

      (b)
        The
        Common Stock and Warrants to be issued at the Closing, and the Common Stock
        issuable upon exercise of the Warrants issued at the Closing have been duly
        authorized and, when issued, delivered and paid for in the manner set forth
        in
        this Agreement and the Warrants, will be duly authorized, validly issued,
        fully
        paid and non-assessable. Other than as disclosed in the Memorandum under
        the
        heading “Capitalization”, there is no stockholder of the Company that has any
        right to request or require the Company to register the sale of any shares
        owned
        by such stockholder under the Securities Act. No further approval or authority
        of the stockholders or the board of directors of the Company (the “Board
        of Directors”)
        will
        be required for the issuance and sale of the Securities to be sold by the
        Company as contemplated herein.

      

      
        
          
          

        

        
          B-11

          
            

          

        

        
          
          

        

      

       

      3.3 Authorization;
        Enforceability.
        The
        Company has all requisite corporate right, power and authority to enter into
        this Agreement and to consummate the transactions contemplated hereby. All
        corporate action on the part of the Company, its directors and stockholders
        necessary for the authorization, execution, delivery and performance of this
        Agreement by the Company, the authorization, sale, issuance and delivery
        of the
        Securities contemplated herein and the performance of the Company’s obligations
        hereunder has been taken (other than filings as may be required to be made
        with
        the Commission, the NASD and AMEX and with any state or foreign blue sky
        or
        securities regulatory authority, which filings will be made on or prior to
        the
        Closing or, for those filings which by their terms are to be made post-Closing,
        such filings will be made post-Closing within the time period prescribed
        for
        such filings). This Agreement has been duly executed and delivered by the
        Company and constitutes a legal, valid and binding obligation of the Company,
        enforceable against the Company in accordance with its terms, except as
        enforceability may be limited by applicable bankruptcy, insolvency,
        reorganization, moratorium or similar laws affecting creditors’ and contracting
        parties’ rights generally and except as enforceability may be subject to
        limitations of public policy, general principals of equity (regardless of
        whether such enforceability is considered at law or equity) and except as
        the
        indemnification agreements of the Company in Section 6.7 hereof may be legally
        unenforceable. Other than as disclosed in the Memorandum under the heading
        “Capitalization”, the issuance
        and sale of the Securities contemplated hereby will not give rise to any
        preemptive rights or rights of first refusal on behalf of any person pursuant
        to
        any agreement to which the Company is a party.

      

      3.4 No
        Conflict; Governmental and Other Consents. 

      

      (a) The
        execution and delivery by the Company of this Agreement and the consumma-tion
        of
        the transactions contemplated hereby will not result in the violation of
        any
        law, statute, rule, regulation, order, writ, injunction, judgment or decree
        of
        any court or governmental authority to or by which the Company or any subsidiary
        is bound, or of any provision of the Certificate of Incorporation or By-laws
        of
        the Company or any subsidiary, and will not conflict with, or result in a
        breach
        or violation of, any of the terms or provisions of, or constitute (with due
        notice or lapse of time or both) a default under, any lease, loan agreement,
        mortgage, security agreement, trust indenture or other agreement or instrument
        to which the Company or any subsidiary is a party or by which it is bound
        or to
        which any of its properties or assets is subject, nor result in the creation
        or
        imposition of any lien upon any of the properties or assets of the Company
        or
        any subsidiary where such violation, breach, default or imposition is reasonably
        likely to result in a Material Adverse Effect.

      

      (b) Except
        as
        disclosed in the Memorandum, no consent, approval, authorization or other
        order
        of any governmental authority or other third-party is required to be obtained
        by
        the Company or any subsidiary in connection with the authorization, execution
        and delivery of this Agreement or with the authorization, issue and sale
        of the
        Securities, except such filings as may be required to be made with the
        Commission, the NASD and AMEX and with any state or foreign blue sky or
        securities regulatory authority, which filings will be made on or prior to
        the
        Closing or, for those filings which by their terms are to be made post-Closing,
        such filings will be made post-Closing within the time period prescribed
        for
        such filings.

      

      
        
          
          

        

        
          B-12

          
            

          

        

        
          
          

        

      

       

      3.5 Litigation.
        Other
        than as disclosed in the 2004 10-K or the Memorandum, there is no pending
        or, to
        the actual knowledge of the Company, threatened legal or governmental
        proceedings to which the Company is a party which is reasonably expected
        to
        result in a Material Adverse Effect or which would or might reasonably be
        expected to materially adversely affect the Company’s ability to perform its
        obligations under this Agreement.

      

      3.6 Accuracy
        of Offering Documents.
        The
        Company’s annual report on SEC Form 10-K for the year ended December 31, 2004
        (the “2004
        10-K”),
        and
        all reports required to be filed by the Company within one year prior to
        the
        date of this Agreement under the Securities Exchange Act, have been duly
        filed
        with the Commission, complied at the time of filing in all material respects
        with the requirements of their respective forms and the rules and regulations
        thereunder, except to the extent updated or superseded by any subsequently
        filed
        report, were complete and correct in all material respects as of the dates
        at
        which the information was furnished, and such reports did not contain (as
        of
        their respective dates) any untrue statements of a material fact nor omitted
        to
        state any material fact necessary in order to make the statements contained
        therein, in light of the circumstances under which they were made, not
        misleading, or, if amended, as so amended.

      

      3.7 Investment
        Company.
        The
        Company is not an “investment company” within the meaning of such term under the
        Investment Company Act of 1940, as amended, and the rules and regulations
        of the
        Commission thereunder.

      

      3.8
         Use
        of
        Proceeds.
        The
        Company intends to use the net proceeds of the Offering as described under
        the
        heading “Use of Proceeds” in the Memorandum. 

      

      3.9 Intellectual
        Property.
        Except
        as disclosed in the Memorandum, the Company and/or its subsidiaries owns
        or
        possesses adequate and, to its knowledge, enforceable rights to use all material
        patents, patent applications, trademarks, service marks, trade names, logos,
        corporate names, copyrights, trade secrets, processes, mask works, licenses,
        inventions, formulations, technology and know-how and other intangible property
        currently used in the conduct of its business as described in the Memorandum
        (the "Proprietary
        Rights").
        Except as disclosed in the Memorandum, the Company and/or its Subsidiaries
        have
        taken commercially reasonable measures to protect all of the Company’s and such
        Subsidiary’s Proprietary Rights. Except as set forth in the Memorandum, neither
        the Company nor any of its Subsidiaries has received any notice of, and there
        are not any facts known to the Company or any Subsidiary which indicate the
        existence of (i) any infringement or misappropriation by any third party
        of any
        of the Proprietary Rights, which infringement or misappropriation would
        reasonably be expected to have a Material Adverse Effect, (ii) any claim
        by a
        third party contesting the validity of any of the Proprietary Rights, other
        than
        claims that would not reasonably be expected to have a Material Adverse Effect
        or (iii) any infringement, misappropriation or violation by the Company or
        any
        subsidiary or, to 

       

      
        
          
          

        

        
          B-13

          
            

          

        

        
          
          

        

      

       

      the
        Company’s knowledge, any of their employees, of any Proprietary Rights of third
        parties that would be reasonably expected to have a Material Adverse Effect.
        Except as disclosed in the Memorandum and the 2004 10-K under the headings
        under
        the headings “Risk
        Factors -- Our business depends upon our proprietary rights, and we may not
        be
        able to protect, enforce or secure our intellectual property rights
        adequately,”“We
        may require additional licenses or be subject to expensive and uncertain
        patent
        litigation in order to sell AzaSite in the U.S. and/or Europe; We are aware
        that
        Pfizer has recently received patents in the U.S. and Europe which cover the
        use
        of azithromycin in a topical formulation to treat bacterial infections in
        the
        eye” and
        “Business
        - Patents and Proprietary Rights,”
        to the
        Company's knowledge, no infringement, illicit copying, misappropriation or
        violation of any intellectual property rights of any third party has occurred
        by
        the Company or any of its Subsidiaries with respect to any products currently
        being sold by the Company or any Subsidiary or with respect to any products
        currently under development by the Company or any Subsidiary or with respect
        to
        the conduct of the business of the Company or any Subsidiary as currently
        conducted. Except as disclosed in the Memorandum and the 2004 10-K under
        the
        headings “Risk
        Factors -- Our business depends upon our proprietary rights, and we may not
        be
        able to protect, enforce or secure our intellectual property rights
        adequately,”“We
        may require additional licenses or be subject to expensive and uncertain
        patent
        litigation in order to sell AzaSite in the U.S. and/or Europe; We are aware
        that
        Pfizer has recently received patents in the U.S. and Europe which cover the
        use
        of azithromycin in a topical formulation to treat bacterial infections in
        the
        eye” and
        “Business
        - Patents and Proprietary Rights,”
        to the
        Company's knowledge, no infringement, illicit copying, misappropriation or
        violation of any intellectual property rights of any third party will occur
        by
        the Company or any of its subsidiaries as a result of the sale by the Company
        or
        any subsidiary of any products currently under development by the Company
        should
        such products receive the applicable regulatory approval for commercial sale.
        Except as set forth in the Memorandum, the Company is not aware that any
        of its
        employees, including the employees of its subsidiaries, are obligated under
        any
        contract (including licenses, covenants or commitments of any nature) or
        other
        agreement, or subject to any judgment, decree or order of any court or
        administrative agency, that the Company believes would materially interfere
        with
        the use of the employee's best efforts to promote the interests of the Company
        and/or its subsidiaries or that would conflict with the business of the Company
        and/or its subsidiaries as currently conducted. To the Company's knowledge,
        neither the execution and delivery of this Agreement, nor the carrying on
        of the
        business of the Company and its subsidiaries by the employees of the Company
        and
        its subsidiaries, nor the conduct of the business of the Company and its
        subsidiaries, as currently conducted, will conflict with or result in a breach
        of the terms, conditions or provisions of, or constitute a default under,
        any
        contract, covenant or instrument under which any such employee is now
        obligated.

       

      3.10 Private
        Offering.
        No form
        of general solicitation or general advertising was used by the Company in
        connection with the Offering. Subject in part to the accuracy and completeness
        of the Subscribers' representations in Article II and Article VIII of this
        Agreement, no registration of the Units or the Securities pursuant to the
        provisions of the Securities Act will be required by the offer, sale, or
        issuance of the Units and the Securities pursuant to this
        Agreement.

      

      
        
          
          

        

        
          B-14

          
            

          

        

        
          
          

        

      

       

      3.11
        Additional
        Company Covenants.
        Until
        the earlier to occur of the Closing Date and the Offering Termination Date,
        the
        Company will not issue or sell any securities to any party, other than (i)
        the
        issuances and sales contemplated by this Agreement, (ii) pursuant to the
        terms
        of previously granted employee stock options and previously issued outstanding
        warrants, options, and convertible securities and, (iii) the issuance of
        up to
        1,000,000 shares of Common Stock (or options exercisable for such shares)
        pursuant to currently authorized shares under its stock option plan and employee
        stock purchase plan and pursuant to the conversion into Common Stock of amounts
        due under currently outstanding promissory notes that are not held by officers,
        directors or senior members of the Company’s management. The Company will use
        its best efforts to ensure that its officers and directors will not transfer
        or
        sell any of the Company’s securities to any party, other than to a spouse,
        child, grandchild, parent, brother or sister, to a trust established for
        the
        benefit of the same, or to the estate of any of the same by gift, will or
        intestate succession, or pursuant to the terms of previously granted employee
        stock options and previously granted outstanding warrants, options, and
        convertible securities, until the earlier to occur of the Closing Date and
        the
        Offering Termination Date. 

      

      IV. TERMS
        OF SUBSCRIPTION; CONDITIONS TO OBLIGATIONS OF THE COMPANY

      

      4.1 The
        Company reserves the right to reject the subscription made hereby in its
        sole
        discretion. Unless terminated earlier in the Placement Agent’s or the Company’s
        sole discretion, the Offering will expire on the Offering Termination
        Date.

      

      4.2 Pending
        the sale of the Securities pursuant to the subscribed Units, all funds paid
        hereunder shall be deposited by each such Subscriber in escrow with the Escrow
        Agent prior to the Closing, consistent with the terms of this Agreement.
        

      

      4.3 The
        Subscriber hereby authorizes and directs the Company, upon the Closing, to
        deliver the Securities issuable pursuant to the Units to be issued to the
        Subscriber pursuant to this Agreement at such Closing to the residential
        or
        business address indicated on the signature page hereto.

       

      4.4 The
        Subscriber hereby authorizes and directs the Company to return, without
        interest, any funds for unaccepted subscriptions to the same account from
        which
        the funds were drawn, including any customer account maintained with the
        Placement Agent.

      

      4.5 The
        Company’s agreement with each Subscriber is a separate agreement and each sale
        of the Securities included in the Units to each Subscriber is a separate
        sale.

      

      4.6 In
        addition to the other requirements set forth herein, the Company’s obligation to
        complete the sale and issuance of the Securities and deliver the Units to
        the
        Subscriber at the Closing shall be subject to the following conditions, any
        one
        or more of which may be waived in writing by the Company: (a) receipt
        by
        the Company of the full amount of the purchase price for the Units being
        purchased hereunder at the Closing; (b) the representations, warranties,
        and acknowledgements made by the Subscribers in this Agreement shall be true
        and
        correct when made and shall be true and correct on and as of the Closing,
        and
        all undertakings, agreements and covenants of the Subscribers required to
        be
        fulfilled prior to the Closing shall have been performed or complied with;
        (c) the Subscriber shall have completed, 

       

      
        
          
          

        

        
          B-15

          
            

          

        

        
          
          

        

      

       

      executed
        and delivered to the Company the Confidential Subscriber Questionnaire set
        forth
        in Article VIII of this Agreement, which Questionnaire shall be true and
        correct
        as of the Closing and shall be satisfactory to the Placement Agent and the
        Company, each in their sole discretion; (d) there shall not then be
        in
        effect any legal or other order enjoining or restraining the transactions
        contemplated by this Agreement; (e) the sale of the Units shall not
        be
        prohibited by any applicable law, regulation or governmental order; and (f)
        the
        Company shall have received AMEX approval to sell the number of Units in
        the
        Offering. In the event the Company obtains approval from AMEX for a number
        of
        Units that is less than the number of Units set forth in Section 1.1, subject
        to
        Section 4.1, the Company shall consummate the Closing with the Subscribers
        for a
        proportionate amount of the number of Units that each such Subscriber has
        otherwise agreed to purchase, up to the number of Units for which the Company
        has obtained AMEX approval.

      

      V. CONDITIONS
        TO OBLIGATIONS OF THE SUBSCRIBERS

      

      5.1 Each
        Subscriber’s obligations to purchase the Units at the Closing is subject to the
        fulfillment on or prior to the Closing of the following conditions, which
        conditions may be waived at the option of each Subscriber to the extent
        permitted by law:

      

      (a) Representations
        and Warranties Correct; Survival.
        The
        representations and warranties made by the Company in Article III hereof
        shall
        be true and correct in all material respects when made (except for any
        representation or warranty that speaks as of a specific date, which shall
        be
        true and correct in all material respects as of such date), and shall be
        true
        and correct in all material respects on the Closing Date with the same force
        and
        effect as if they had been made on and as of said date (except for any
        representation or warranty that speaks as of a specific date, which shall
        be
        true and correct in all material respects as of such date). The representations
        and warranties made by the Company in Article III hereof shall survive until
        the
        first anniversary of the Closing Date.

       

      (b) Covenants.
        All
        covenants, agreements and conditions contained in this Agreement to be performed
        by the Company on or prior to the Closing shall have been performed or complied
        with in all material respects.

      

      (c) No
        Legal Order Pending.
        There
        shall not then be in effect any legal or other order enjoining or restraining
        the transactions contemplated by this Agreement.

      

      (d) No
        Law
        Prohibiting or Restricting Such Sale.
        There
        shall not be in effect any law, rule or regulation prohibiting or restricting
        such sale or requiring any consent or approval of any person which shall
        not
        have been obtained to issue the Units or the Securities (except as otherwise
        provided in this Agreement). The Company shall have received AMEX approval
        to
        sell the number of Units in the Offering.

      

      
        
          
          

        

        
          B-16

          
            

          

        

        
          
          

        

      

       

      VI.        
         REGISTRATION
        RIGHTS

      

      6.1 As
        used
        in this Agreement, the following terms shall have the following
        meanings:

      

      (a) “Affiliate”
        shall
        mean, with respect to any Person (as defined below), any other Person
        controlling, controlled by or under direct or indirect common control with
        such
        Person (for the purposes of this definition “control,” when used with respect to
        any specified Person, shall mean the power to direct the management and policies
        of such person, directly or indirectly, whether through ownership of voting
        securities, by contract or otherwise; and the terms “controlling” and
“controlled” shall have meanings correlative to the foregoing).

      

      (b) “Business
        Day”
        shall
        mean a day Monday through Friday on which banks are generally open for business
        in New York, New York.

      

      (c) “Holders”
        shall
        mean the Subscribers and any person holding Registrable Securities or any
        person
        to whom the rights under Article VI have been transferred in accordance with
        Section 6.10 hereof.

      

      (d) “Person”
        shall
        mean any person, individual, corporation, limited liability company,
        partnership, trust or other nongovernmental entity or any governmental agency,
        court, authority or other body (whether foreign, federal, state, local or
        otherwise).

      

      (e) The
        terms
“register,”“registered”
        and
“registration”
        refer
        to the registration effected by preparing and filing a registration statement
        in
        compliance with the Securities Act, and the declaration or ordering of the
        effectiveness of such registration statement.

      

      (f) “Registrable
        Securities”
        shall
        mean the Common Stock included in the Units, the Common Stock issuable upon
        exercise of the Warrants included in the Units, and the Common Stock issuable
        upon exercise of any warrants issued to the Placement Agent; provided,
        however,
        that
        securities shall only be treated as Registrable Securities if and only for
        so
        long as they (A) have not been disposed of pursuant to a registration statement
        declared effective by the Commission; (B) have not been sold in a transaction
        exempt from the registration and prospectus delivery requirements of the
        Securities Act so that all transfer restrictions and restrictive legends
        with
        respect thereto are removed upon the consummation of such sale; (C) are held
        by
        a Holder or a permitted transferee pursuant to Section 6.10; or (D)
        have
        not become eligible for sale pursuant to Rule 144(k) (or any successor thereto)
        under the Securities Act. 

      

      (g) “Registration
        Expenses”
        shall
        mean all expenses incurred by the Company in complying with Section 6.2
        hereof, including, without limitation, all registration, qualification and
        filing fees, printing expenses, escrow fees, fees and expenses of counsel
        for
        the Company, blue sky fees and expenses and the expense of any special audits
        incident to or required by any such registration, and the reasonable fees
        and
        expenses of one legal counsel for all Holders in connection with the
        Registration Statement, not to exceed $3,000.

      

      
        
          
          

        

        
          B-17

          
            

          

        

        
          
          

        

      

       

      (h) “Selling
        Expenses”
        shall
        mean all underwriting discounts and selling commissions applicable to the
        sale
        of Registrable Securities and all fees and expenses of legal counsel and
        other
        advisors for any Holder, except for the fees and expenses of the such counsel
        of
        the Holders as is set forth in the definition of “Registration Expenses”
        above.

      

      6.2 Subject
        to the terms herein, the Company will, as soon as practicable following the
        Closing Date but not later than 30 days following the Closing Date (the
“Filing
        Date”),
        (a)
        subject to receipt of necessary information from, and reasonable cooperation
        by,
        the Holders, file a registration statement with the SEC (the “Registration
        Statement”)
        on the
        appropriate form to allow the resale of the Registrable Securities, and use
        its
        best efforts, subject to receipt of necessary information from, and reasonable
        cooperation by, the Holders, to have such Registration Statement declared
        effective by the SEC prior to the date which is 90 days after the Filing
        Date;
        and (b) subject to Section 6.8 hereof, cause such Registration Statement
        to
        remain effective (the “Registration
        Period”)
        until
        the earlier of (i) such date as the holders of the Registrable Securities
        have
        completed the distribution described in the Registration Statement and (ii)
        at
        such time that such Registrable Securities have become eligible for sale
        pursuant to Rule 144(k) (or any successor thereto) under the Securities Act.
        Thereafter, the Company shall be entitled to withdraw the Registration Statement
        and the Holders shall have no further right to offer or sell any of the
        Securities pursuant to the Registration Statement. To the extent permissible,
        such Registration Statement also shall cover, to the extent allowable under
        the
        Securities Act and the rules promulgated thereunder (including Rule 416 under
        the Securities Act), such indeterminate number of additional shares of Common
        Stock resulting from stock splits, stock dividends or similar transactions
        with
        respect to the Registrable Securities. 

      

      6.3 Should
        (a) the Company fail to file the Registration Statement by the Filing Date
        for
        any reason, (b) the Registration Statement not be declared effective by the
        SEC
        within 90 days after the Filing Date for any reason, or (c) the Registration
        Statement be filed and declared effective, but the effectiveness of such
        Registration Statement be suspended for any reason for more than an aggregate
        of
        90 days (whether consecutive or non-consecutive) in the aggregate during
        any
        12-month period during the Registration Period (each a “Registration
        Default”),
        then
        the Company will issue each Subscriber (on a pro-rata basis), as liquidated
        damages and not as a penalty, additional Warrants to purchase a number of
        shares
        of Common Stock equal to 1% of the shares of Common Stock, on a fully diluted
        basis, issued to Subscribers in the Offering for each 15 day period during
        which
        a Registration Default continues beyond
        the aforementioned periods up to a maximum in liquidated damages of no more
        than
        5% of such shares of Common Stock issued to Subscribers in the Offering,
        and no
        further liquidated or other damages will be owed pursuant to this provision;
        provided, however, that for purposes of this Section 6.3, no day shall be
        counted for purposes of this Section 6.3 on which performance of the Company
        is
        prevented by reason of closure or other unavailability of the SEC or U.S.
        federal government due to weather, attack, war or other act of G-d.

      

      6.4 All
        Registration Expenses incurred in connection with any registration,
        qualification, exemption or compliance pursuant to Section 6.2 shall be borne
        by
        the Company. All Selling Expenses relating to the sale of securities registered
        by or on behalf of Holders shall be borne by such Holders.

      

      
        
          
          

        

        
          B-18

          
            

          

        

        
          
          

        

      

       

      6.5 In
        the
        case of the registration, qualification, exemption or compliance effected
        by the
        Company pursuant to this Agreement, the Company shall, upon reasonable request,
        inform each Holder as to the status of such registration, qualification,
        exemption and compliance. At its expense the Company shall: 

      

      (a) subject
        to Section 6.8 hereof, use its best efforts to keep such registration, and
        any
        qualification, exemption or compliance under state or federal securities
        laws
        which the Company determines to obtain, continuously effective until the
        termination of the Registration Period; and 

      

      (b) advise
        the Holders as soon as practicable:

      

      (i) when
        the
        Registration Statement or any amendment thereto has been filed with the
        Commission and when the Registration Statement or any post-effective amendment
        thereto has become effective;

      

      (ii) of
        any
        request by the Commission for amendments or supplements to the Registration
        Statement or the prospectus included therein or for additional
        information;

      

      (iii) of
        the
        issuance by the Commission of any stop order suspending the effectiveness
        of the
        Registration Statement or the initiation of any proceedings for such
        purpose;

      

      (iv) of
        the
        receipt by the Company of any notification with respect to the suspension
        of the
        qualification of the Registrable Securities included therein for sale in
        any
        jurisdiction or the initiation or threatening of any proceeding for such
        purpose; and

      

      (v) of
        the
        happening of any event that requires the making of any changes in the
        Registration Statement or the prospectus so that, as of such date, the
        statements therein are not misleading and do not omit to state a material
        fact
        required to be stated therein or necessary to make the statements therein
        (in
        the case of the prospectus, in the light of the circumstances under which
        they
        were made) not misleading;

      

      (c) make
        every reasonable effort to obtain the withdrawal of any order suspending
        the
        effectiveness of any Registration Statement at the earliest possible
        time;

      

      (d) at
        each
        Holder’s written request, furnish to each Holder, without charge, at least one
        copy of such Registration Statement and any post-effective amendment thereto,
        including financial statements and schedules, and, if the Holder so requests
        in
        writing, all exhibits (including those incorporated by reference) in the
        form
        filed with the Commission;

      

      
        
          
          

        

        
          B-19

          
            

          

        

        
          
          

        

      

       

      (e) during
        the Registration Period, deliver to each Holder, without charge, as many
        copies
        of the prospectus included in such Registration Statement and any amendment
        or
        supplement thereto as such Holder may reasonably request in writing in order
        to
        facilitate the public sale or other disposition of all or any of the Securities
        by Holder; and the Company consents to the use, consistent with the provisions
        hereof and applicable laws, rules or regulations, of the prospectus or any
        amendment or supplement thereto by each of the selling Holders of Registrable
        Securities in connection with the offering and sale of the Registrable
        Securities covered by the prospectus or any amendment or supplement thereto.
        In
        addition, upon the reasonable request of the Holder and subject in all cases
        to
        confidentiality protections reasonably acceptable to the Company, the Company
        will meet with a Holder or a representative thereof at the Company’s
        headquarters to discuss all information relevant for disclosure in the
        Registration Statement covering the Registrable Securities, and will otherwise
        cooperate with any Holder conducting an investigation for the purpose of
        reducing or eliminating such Holder’s exposure to liability under the Securities
        Act, including the reasonable production of information at the Company’s
        headquarters;

      

      (f) prior
        to
        any public offering of Registrable Securities pursuant to any registration
        statement, register or qualify or obtain an exemption for offer and sale
        under
        the securities or blue sky laws of such jurisdictions as any such Holders
        reasonably request in writing and do any and all other reasonable acts or
        things
        reasonably necessary or advisable to enable the offer and sale in such
        jurisdictions of the Registrable Securities covered by such Registration
        Statement, provided,
        however, that
        the
        Company shall not for any such purpose be required to (i) qualify to transact
        business as a foreign corporation in any jurisdiction where it is not so
        qualified; (ii) consent to general service of process in any such jurisdiction;
        (iii) subject itself to taxation in any such jurisdiction; (iv) provide any
        undertakings that cause material expense or burden to the Company; or (v)
        make
        any change to its organizational documents which the Board of Directors of
        the
        Company determines to be contrary to the best interests of the Company and
        its
        stockholders;

      

      (g) cooperate
        with the Holders to facilitate the timely preparation and delivery of
        certificates representing Registrable Securities to be sold pursuant to any
        Registration Statement free of any restrictive legends to the extent not
        required at such time and in such denominations and registered in such names
        as
        Holders may request at least five (5) business days prior to sales of
        Registrable Securities pursuant to such Registration Statement, subject to
        the
        submission by Holder to the Company’s transfer agent of the original
        certificate(s) representing the Registrable Securities to be sold and a separate
        Subscriber’s Certificate of Subsequent Sale duly executed by Subscriber and all
        other documentation reasonably required by the Company and the Company’s
        transfer agent; 

      

      
        
          
          

        

        
          B-20

          
            

          

        

        
          
          

        

      

       

      (h) subject
        to Section 6.8 hereof, upon the occurrence of any event contemplated by Section
        6.5(b)(v) above, the Company shall promptly prepare a post-effective amendment
        to the Registration Statement or a supplement to the related prospectus,
        or file
        any other required document so that, as thereafter promptly delivered to
        purchasers of the Registrable Securities included therein, the prospectus
        will
        not include any untrue statement of a material fact or omit to state any
        material fact necessary to make the statements therein, in the light of the
        circumstances under which they were made, not misleading; and

      

      (i) use
        its
        reasonable best efforts to comply with all applicable rules and regulations
        of
        the Commission, and use its reasonable best efforts to make generally available
        to the Holders (which may be satisfied upon filing via EDGAR) not later than
        45
        days (or 90 days if the fiscal quarter is the fourth fiscal quarter) after
        the
        end of its fiscal quarter in which the first anniversary date of the effective
        date of the Registration Statement occurs, an earnings statement satisfying
        the
        provisions of Section 11(a) of the Securities Act.

      

      Notwithstanding
        the foregoing, it shall be a condition precedent to the obligations of the
        Company to take any action pursuant to paragraphs (a) through (i) of this
        Section 6.5, that the Subscriber shall furnish to the Company such
        information regarding itself, the Securities to be sold by the Subscriber,
        and
        the intended method of disposition of such Securities as shall be required
        to
        effect the registration of the Securities, all of which information shall
        be
        furnished to the Company in writing specifically for use in the Registration
        Statement.

      

      6.6 The
        Holders shall have no right to take any action to restrain, enjoin or otherwise
        delay any registration pursuant to Section 6.2 hereof as a result of any
        controversy that may arise with respect to the interpretation or implementation
        of this Agreement. 

       

      6.7 (a) To
        the
        extent permitted by law, the Company shall indemnify each Holder and Affiliate
        of each Holder, with respect to which any registration, qualification or
        compliance has been effected pursuant to this Agreement, against all claims,
        losses, damages and liabilities (or action in respect thereof), including
        any of
        the foregoing incurred in settlement of any litigation, commenced or threatened
        (subject to Section 6.7(c) below), arising out of or based on any untrue
        statement (or alleged untrue statement) of a material fact contained in the
        Registration Statement, or any amendment or supplement thereof, incident
        to any
        such registration, qualification or compliance, or based on any omission
        (or
        alleged omission) to state therein a material fact required to be stated
        therein
        or necessary to make the statements therein not misleading, in light of the
        circumstances in which they were made, and will reimburse each Holder and
        each
        person controlling such Holder, for reasonable legal and other expenses
        reasonably incurred by such Holder or person controlling such Holder in
        connection with investigating or defending any such claim, loss, damage,
        liability or action as incurred; provided that the Company will not be liable
        in
        any such case to the extent that any such claim, loss, damage, liability
        or
        action arises out of, relates to or is based upon (i) an untrue statement
        or
        omission made in reliance upon and in conformity with written information
        furnished to the Company by or on behalf of such Holder or person controlling
        such Holder and stated to be specifically for use in preparation of such
        registration statement, prospectus or any supplement or amendment thereto,
        or
        (ii) the failure of the Holder to comply with the covenants and agreements
        contained in this Agreement respecting sales of Registrable
        Securities.

      

      
        
          
          

        

        
          B-21

          
            

          

        

        
          
          

        

      

       

      (b) Each
        Holder will severally, if Registrable Securities held by such Holder are
        included in the securities as to which such registration, qualification or
        compliance is being effected, indemnify the Company, each of its directors
        and
        officers, and each Affiliate of the foregoing, against all claims, losses,
        damages, liabilities and expenses (or actions in respect thereof), including
        any
        of the foregoing incurred in settlement of any litigation, commenced or
        threatened (subject to Section 6.7(c) below), arising out of or based on
        any
        untrue statement of a material fact contained in any registration statement,
        prospectus, or any amendment or supplement thereof, incident to any such
        registration, qualification or compliance, or based on any omission to state
        therein a material fact required to be stated therein or necessary to make
        the
        statements therein not misleading, in light of the circumstances in which
        they
        were made, in each case to the extent, but only to the extent, that such
        untrue
        statement or omission thereof is made in reliance upon and in conformity
        with
        written information furnished to the Company by or on behalf of the Holder
        and
        stated to be specifically for use in preparation of such registration statement,
        prospectus or any amendment or supplement thereto, and the Holder will reimburse
        the Company, its directors and officers, and each person controlling the
        Company
        for reasonable legal and any other expenses reasonably incurred in connection
        with investigating, defending, settling, compromising or paying any such
        claim,
        loss, damage, liability, expense or action as incurred. Notwithstanding the
        foregoing, in no event shall a Holder be liable for any such claims, losses,
        damages or liabilities in excess of the net proceeds received by such Holder
        in
        the Offering, except in the event of fraud or intentional misrepresentation
        by
        such Holder.

      

      (c) Each
        party entitled to indemnification under this Section 6.7 (the “Indemnified
        Party”)
        shall
        give notice to the party required to provide indemnification (the “Indemnifying
        Party”)
        promptly after such Indemnified Party has actual knowledge of any claim as
        to
        which indemnity may be sought, provided that the failure of any Indemnified
        Party to give notice as provided herein shall not relieve the Indemnifying
        Party
        of its obligations under this Agreement, unless such failure is materially
        prejudicial to the Indemnifying Party in defending such claim or litigation.
        Subject to provisions hereinafter stated, in case any such action is brought
        against any Indemnified Party and such Indemnified Party seeks or intends
        to
        seek indemnity from an Indemnifying Party, the Indemnifying Party will be
        entitled to participate in, and, to the extent that it may wish, jointly
        with
        all other indemnifying parties similarly notified, to assume the defense
        thereof
        with counsel reasonably satisfactory to such Indemnified Party; provided,
        however,
        if the
        defendants in any such action include both the Indemnified Party and the
        Indemnifying Party, and the Indemnifying Party and the Indemnified Party,
        based
        upon the advice of such Indemnified Party’s counsel, shall have reasonably
        concluded that there may be a conflict of interest between the positions
        of the
        Indemnifying Party and the Indemnified Party in conducting the defense of
        any
        such action or that there may be legal defenses available to it and/or other
        indemnified parties which are different from or additional to those available
        to
        the Indemnifying Party, the Indemnified Party or parties shall have the right
        to
        select separate counsel to assume such legal defenses and to otherwise
        participate in the defense of such action on behalf of such Indemnified Party
        or
        parties. Upon receipt of notice from the Indemnifying Party to such Indemnified
        Party of its election so to assume the defense of such action and approval
        by
        the Indemnified Party of counsel, the Indemnifying Party will not be liable
        to
        such Indemnified Party under this Section 6.7 for any legal or other expenses
        subsequently incurred by such Indemnified Party in connection with the defense
        thereof unless (i) the Indemnified 

       

      
        
          
          

        

        
          B-22

          
            

          

        

        
          
          

        

      

       

      Party
        shall have employed such counsel in connection with the assumption of legal
        defenses in accordance with the proviso to the preceding sentence (it being
        understood, however, that the Indemnifying Party shall not be liable for
        the
        expenses of more than one separate counsel, approved by such Indemnifying
        Party
        representing the Indemnified Parties who are parties to such action, or
        (ii) the Indemnifying Party shall not have employed counsel reasonably
        satisfactory to the Indemnified Party to represent the Indemnified Party
        within
        a reasonable time after notice of commencement of action, in each of which
        cases
        the reasonable fees and expenses of counsel shall be at the expense of the
        Indemnifying Party. In no event shall any Indemnifying Party be liable in
        respect of any amounts paid in settlement of any action unless the Indemnifying
        Party shall have approved the terms of such settlement; provided
        that such
        approval shall not be unreasonably withheld. 

      

      (d) If
        the
        indemnification provided for in this Section 6.7 is held by a court of competent
        jurisdiction to be unavailable to an Indemnified Party with respect to any
        loss,
        liability, claim, damage or expense referred to therein, then the Indemnifying
        Party, in lieu of indemnifying such Indemnified Party thereunder, shall
        contribute to the amount paid or payable by such Indemnified Party as a result
        of such loss, liability, claim, damage or expense in such proportion as is
        appropriate to reflect the relative fault of the Indemnifying Party on the
        one
        hand and of the Indemnified Party on the other in connection with the statements
        or omissions or inaccuracies in the representations and warranties in this
        Agreement which resulted in such loss, liability, claim, damage or expense
        as
        well as any other relevant equitable considerations. The relative fault of
        the
        Indemnifying Party and of the Indemnified Party shall be determined by reference
        to, among other things, whether the untrue or alleged untrue statement of
        a
        material fact or the omission to state a material fact or the inaccurate
        representation and/or warranty relates to information supplied by the
        Indemnifying Party or by the Indemnified Party and the parties’ relative intent,
        knowledge, access to information and opportunity to correct or prevent such
        statement or omission. Notwithstanding the foregoing, in no event shall a
        Holder
        be liable for any such claims, losses, damages or liabilities pursuant to
        this
        paragraph 6.7(b) in excess of the net proceeds received by such Holder in
        the
        Offering, except in the event of fraud or intentional misrepresentation by
        such
        Holder.

      

      6.8 (a) Notwithstanding
        any other provision of this Agreement, each Holder agrees that, upon receipt
        of
        any notice from the Company of the happening of any event requiring the
        preparation of a supplement or amendment to a prospectus relating to Registrable
        Securities or the filing of an appropriate report with the SEC pursuant to
        the
        Exchange Act, so that, as thereafter delivered to the Holders, such prospectus
        shall not contain an 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, each Holder will forthwith discontinue disposition
        of
        Registrable Securities pursuant to the registration statement contemplated
        by
        Section 6.2 until its receipt of copies of the supplemented or amended
        prospectus from the Company or confirmation of the filing of such report
        with
        the SEC by the Company, any such prospectus to be forwarded promptly to the
        Subscriber by the Company, and, if so directed by the Company, each Holder
        shall
        deliver to the Company all copies, other than permanent file copies then
        in such
        Holder’s possession, of the prospectus covering such Registrable Securities
        current at the time of receipt of such notice.

      

      
        
          
          

        

        
          B-23

          
            

          

        

        
          
          

        

      

       

      (b) Notwithstanding
        any other provision of this Agreement, each Holder shall suspend, upon request
        of the Company, any disposition of Registrable Securities pursuant to the
        Registration Statement and prospectus contemplated by Section 6.2
        during
        any periods not to exceed 90 days in the aggregate within any one 12-month
        period when the Company reasonably determines in good faith that offers and
        sales pursuant thereto should not be made by reason of the presence of material
        undisclosed circumstances or developments with respect to which the disclosure
        that would be required in such a prospectus is premature, would have an adverse
        effect on the Company or is otherwise inadvisable.

      

      (c) As
        a
        condition to the inclusion of its Registrable Securities, each Holder shall
        furnish to the Company such information regarding such Holder and the
        distribution proposed by such Holder as the Company may reasonably request
        in
        writing or as shall be required in connection with any registration,
        qualification or compliance referred to in this Article VI.

      

      (d) Each
        Holder hereby covenants with the Company not to make any sale of the Registrable
        Securities without effectively causing the prospectus delivery requirements
        under the Securities Act to be satisfied.

      

      (e) Each
        Holder acknowledges and agrees that the Registrable Securities sold pursuant
        to
        the Registration Statement described in this Section are not transferable
        on the
        books of the Company unless the stock certificate submitted to the transfer
        agent evidencing such Registrable Securities is accompanied by a certificate
        reasonably satisfactory to the Company to the effect that (i) the
        Registrable Securities have been sold in accordance with such Registration
        Statement and (ii) the requirement of delivering a current prospectus
        has
        been satisfied.

      

      (f) Each
        Holder agrees not to take any action with respect to any distribution deemed
        to
        be made pursuant to such registration statement which would constitute a
        violation of Regulation M under the Exchange Act or any other applicable
        rule,
        regulation or law.

      

      (g) At
        the
        end of the period during which the Company is obligated to keep the Registration
        Statement current and effective as described above, the Holders of Registrable
        Securities included in the Registration Statement shall discontinue sales
        of
        shares pursuant to such Registration Statement upon receipt of notice from
        the
        Company of its intention to remove from registration the shares covered by
        such
        Registration Statement which remain unsold, and such Holders shall notify
        the
        Company of the number of shares registered which remain unsold immediately
        upon
        receipt of such notice from the Company.

      

      6.9 With
        a
        view to making available to the Holders the benefits of certain rules and
        regulations of the Commission which at any time permit the sale of the
        Registrable Securities to the public without registration, the Company shall
        use
        its reasonable best efforts to:

      

      
        
          
          

        

        
          B-24

          
            

          

        

        
          
          

        

      

       

      (a) make
        and
        keep public information available, as those terms are understood and defined
        in
        Rule 144 under the Securities Act, at all times;

      

      (b) file
        with
        the Commission in a timely manner all reports and other documents required
        of
        the Company under the Exchange Act; and 

      

      (c) so
        long
        as a Holder owns any unregistered Registrable Securities, furnish to such
        Holder, upon any reasonable written request, a written statement by the Company
        as to its compliance with Rule 144 under the Securities Act, and of
        the
        Exchange Act, a copy of the most recent annual or quarterly report of the
        Company, and such other reports and documents of the Company as such Holder
        may
        reasonably request in availing itself of any rule or regulation of the
        Commission allowing a Holder to sell any such securities without
        registration.

       

      6.10 The
        rights to cause the Company to register Registrable Securities granted to
        the
        Holders by the Company under Section 6.2 may be assigned in full by
        a
        Holder in connection with a transfer by such Holder of its Registrable
        Securities, but only if: (i) such transfer may otherwise be effected
        in
        accordance with applicable securities laws; (ii) such Holder gives
        prior
        written notice of the proposed transfer to the Company including the name
        and
        address of such transferee and a copy of the transfer documents and agreements;
        (iii) such transferee agrees in writing with the Company to be bound by and
        to
        comply with the terms and provisions of this Agreement; (iv) the transferee
        is
        an “accredited investor” as that term is defined in Rule 501 of Regulation D;
        and (v) such transfer is otherwise in compliance with this Agreement. Except
        as
        specifically permitted by this Section 6.10, the rights of a Holder
        with
        respect to Registrable Securities as set forth herein shall not be transferable
        to any other person, the Company may impose stop transfer orders with respect
        to
        any such transfer or attempted transfer, and any such transfer or attempted
        transfer shall be null and void.

       

      6.11 The
        Company shall use best efforts to cause all Registrable Securities covered
        by a
        Registration Statement to be listed on each securities exchange, interdealer
        quotation system or other market on which similar securities issued by the
        Company are then listed.

       

      6.12 With
        the
        written consent of the Company and the Holders holding at least a majority
        of
        the Registrable Securities that are then outstanding, any provision of this
        Article VI may be waived (either generally or in a particular instance, either
        retroactively or prospectively and either for a specified period of time
        or
        indefinitely) or amended and shall be effective against all Holders. Upon
        the
        effectuation of each such waiver or amendment, the Company shall promptly
        give
        written notice thereof to the Holders, if any, who have not previously received
        notice thereof or consented thereto in writing.

      

      
        
          
          

        

        
          B-25

          
            

          

        

        
          
          

        

      

       

      VII.       
         MISCELLANEOUS

      

      7.1 Any
        notice or other communication given hereunder shall be deemed sufficient
        if in
        writing and sent by facsimile, with confirmation, by registered or certified
        mail, return receipt requested, or delivered by hand against written receipt
        therefore or sent by nationally recognized overnight express courier postage
        prepaid, if to the Company: addressed to InSite Vision Incorporated, 965
        Atlantic Avenue, Alameda, California 94501, Attn: Chief Financial Officer,
        Fax:
        (510) 865-5700 and if to the Subscriber, at the Subscriber’s address or
        facsimile number indicated on the signature page of this Agree-ment. Notices
        shall be deemed to have been given or delivered in the case of facsimile,
        upon
        receipt of confirmation of transmission by the sender, registered or certified
        mail, three days after so mailed, in the case of hand delivery, when so
        delivered against written receipt therefore, and in the case of overnight
        express courier, the day after mailing, except notices of change of address,
        which shall be deemed to have been given or delivered when
        received.

      

      7.2 Except
        as
        otherwise provided above, this Agreement shall not be changed, modified or
        amended except by a writing signed by the parties to be charged, and this
        Agreement may not be discharged except by per-formance in accordance with
        its
        terms or by a writing signed by the party to be charged.

      

      7.3 This
        Agreement shall be binding upon and inure to the benefit of the parties hereto
        and to their respective heirs, legal representatives, successors and assigns.
        This Agreement sets forth the entire agreement and understanding between
        the
        parties as to the subject matter hereof and merges and supersedes all prior
        discussions, agreements and understandings of any and every nature among
        them.

      

      7.4 Upon
        the
        execution and delivery of this Agreement by the Subscriber, this Agreement
        shall
        become a binding obligation of the Subscriber with respect to the purchase
        of
        the Units as herein provided; subject, however, to the right hereby reserved
        to
        the Company to revoke this subscription in accordance with Section 4.1, enter
        into the same agreements with other subscribers and to add and/or delete
        other
        persons as subscribers. 

      

      7.5 NOTWITHSTANDING
        THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY OF THE PARTIES HERETO,
        THE
        PARTIES EXPRESSLY AGREE THAT ALL THE TERMS AND PROVISIONS HEREOF SHALL BE
        CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW
        YORK
        WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. IN THE EVENT THAT A JUDICIAL
        PROCEEDING IS NECESSARY, THE EXCLUSIVE FORUMS FOR RESOLVING DISPUTES ARISING
        OUT
        OF OR RELATING TO THIS AGREEMENT ARE EITHER THE SUPREME COURT OF THE STATE
        OF
        NEW YORK IN AND FOR THE COUNTY OF NEW YORK OR THE FEDERAL COURTS FOR SUCH
        STATE
        AND COUNTY, AND ALL RELATED APPELLATE COURTS, THE PARTIES HEREBY IRREVOCABLY
        CONSENT TO THE JURISDICTION OF SUCH COURTS AND AGREE TO SAID VENUE.

       

      
        
          
          

        

        
          B-26

          
            

          

        

        
          
          

        

         

      

      7.6 The
        holding of any provision of this Agreement to be invalid or unenforceable
        by a
        court of competent jurisdiction shall not affect any other provision of this
        Agreement, which shall remain in full force and effect. If any provision
        of this
        Agreement shall be declared by a court of competent jurisdiction to be invalid,
        illegal or incapable of being enforced in whole or in part, such provision
        shall
        be interpreted so as to remain enforceable to the maximum extent permissible
        consistent with applicable law and the remaining condi-tions and provisions
        or
        portions thereof shall nevertheless remain in full force and effect and
        enforceable to the extent they are valid, legal and en-forceable, and no
        provisions shall be deemed dependent upon any other covenant or provision
        unless
        so expressed herein.

      

      7.7 It
        is
        agreed that a waiver by either party of a breach of any provision of this
        Agreement shall not operate, or be construed, as a waiver of any subsequent
        breach by that same party.

      

      7.8 The
        parties agree to execute and deliver all such further documents, agreements
        and
        instruments and take such other and further action as may be neces-sary or
        appropriate to carry out the purposes and intent of this Agreement.

      

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

      

      7.10 (a) The
        Subscribers severally agree not to issue any public statement with respect
        to
        the Subscribers’ investment or proposed investment in the Company or the terms
        of any agreement or covenant between them and the Company without the Company’s
        prior written consent, except such disclosures as may be required under
        applicable law or under any applicable order, rule or regulation.

      

      (b) The
        Company agrees not to disclose the names, addresses or any other information
        about the Subscribers, except as required by law and to satisfy its obligations
        under Article VI.

      

      7.11 The
        Subscriber represents and warrants that it has not engaged, consented to
        nor
        authorized any broker, finder or intermediary to act on its behalf, directly
        or
        indirectly, as a broker, finder or intermediary in connection with the
        transactions contemplated by this Agreement. Subscriber hereby severally
        agrees
        to indemnify and hold harmless the Company from and against all fees,
        commissions or other payments owing to any such person or firm acting on
        behalf
        of such Subscriber hereunder.

       

      7.12 Nothing
        in this Agreement shall create or be deemed to create any rights in any person
        or entity not a party to this Agreement, except for the holders of Registrable
        Securities.

      

      7.13 The
        Company acknowledges and agrees that irreparable damage would occur in the
        event
        that any of the provisions of Article VI of this Agreement were not performed
        in
        accordance with its specific terms or were otherwise breached and that such
        damage would not be compensable in money damages and that it would be extremely
        difficult or impracticable to measure the resultant damages. 

       

       

      
        
          
          

        

        
          B-27

          
            

          

        

        
          
          

        

      

       

      Accordingly,
        except as otherwise specifically set forth herein, any Subscriber shall be
        entitled to an injunction or injunctions with respect to the provisions of
        this
        Agreement and to enforce specifically the terms and provisions hereof, in
        addition to any other remedy to which it may be entitled at law or in equity,
        and the Company expressly waives any defense that a remedy in damages would
        be
        adequate and expressly waives any requirement in an action for specific
        performance for the posting of a bond by the Subscriber bringing such
        action.

      

      

      [REMAINDER
        OF PAGE INTENTIONALLY LEFT BLANK]

      
 

      
        
          
          

        

        
          B-28

          
            

          

        

        
          
          

        

      

       

      VIII. 
CONFIDENTIAL
        SUBSCRIBER QUESTIONNAIRE

      

      The
        Subscriber represents and warrants that he, she or it comes within one cate-gory
        marked below, and that for any category marked, he, she or it has truthfully
        set
        forth, where applicable, the factual basis or reason the Subscriber comes
        within
        that category. ALL INFORMATION IN RESPONSE TO THIS PARTS I-IV OF THIS
        QUESTIONNARE WILL BE KEPT STRICTLY CONFIDENTIAL except as otherwise required
        by
        law or as necessary for inclusion in the Registration Statement. The undersigned
        agrees to furnish any additional information which the Company deems necessary
        in order to verify the answers set forth below.

      

      
        
          	Category A  ___ 	 	The undersigned is an
                  individual
                  (not a partnership, corporation, etc.) whose individual net worth,
                  or
                  joint net worth with his or her spouse, pres-ently ex-ceeds
                  $1,000,000. 
	 	 	 	
                  Explanation.
                    In calculating net worth you may include equity in personal property
                    and
                    real estate, including your principal residence, cash, short-term
                    in-vestments, stock and securi-ties. Equity in personal property
                    and real
                    estate should be based on the fair market value of such property
                    less debt
                    secured by such property.

                
	 	 	 	 
	Category B  ___ 	 	The undersigned is an
                  individual
                  (not a partnership, corporation, etc.) who had an income in excess
                  of
                  $200,000 in each of the two most recent years, or joint income
                  with his or
                  her spouse in excess of $300,000 in each of those years (in each
                  case
                  including foreign income, tax exempt income and full amount of
                  capital
                  gains and losses but excluding any income of other family members
                  and any
                  unrealized capital appreciation) and has a reasonable expectation
                  of
                  reaching the same income level in the current year.
	 	 	 	 
	Category C  ___ 	 	The undersigned is a
                  director or
                  executive officer of the Company which is issuing and selling the
                  Securities. 
	 	 	 	 
	Category D  ___ 	 	The undersigned is a
                  bank; a
                  savings and loan association; insurance company; registered investment
                  company; registered business development company; licensed small
                  business
                  investment company (“SBIC”);
                  or employee benefit plan within the meaning of Title 1 of ERISA
                  and (a)
                  the investment decision is made by a plan fiduciary which is either
                  a
                  bank, savings and loan association, insurance company or registered
                  investment advisor, or (b) the plan has total assets in excess
                  of
                  $5,000,000 or (c) is a self directed plan with investment decisions
                  made
                  solely by persons that are accredited investors. (describe
                  entity)
	 	 	 	 
	 	 	
                  

                   
	 	 	 

                  

                

        

         

         

         

        
          
            
            

          

          
            B-29

            
              

            

          

          
            
            

          

        

         

         

         

        
          	Category E    
                   	 	The undersigned is a
                  private
                  business development company as defined in section 202(a)(22) of
                  the
                  Investment Advi-sors Act of 1940. (describe
                  entity)  
	 	 	 

                  

                
	 	 	 

                  

                
	 	 	 	 
	Category F     
                    	 	The
                  undersigned is either a corporation, partnership, Massachusetts
                  business
                  trust, or non-profit organization within the meaning of Section
                  501(c)(3)
                  of the Internal Revenue Code, in each case not formed for the specific
                  purpose of acquiring the Units and with total assets in excess
                  of
                  $5,000,000. (describe entity)
	 	 	 

                  

                
	 	 	
                  

                
	 	 	 	 
	Category G     
                    	 	The undersigned is a
                  trust with
                  total assets in excess of $5,000,000, not formed for the specific
                  purpose
                  of acquiring the Units, where the purchase is directed by a "sophisticated
                  Subscriber" as defined in Regulation 506(b)(2-)(ii) under the Securities
                  Act.
	 	 	 	 
	Category H     
                   	 	The undersigned is an
                  entity (other
                  than a trust) in which all of the equity owners are “accredited investors”
                  within one or more of the above categories. If relying upon this
                  category
                  alone, each equity owner must complete a separate copy of this
                  Agreement.
                  (describe entity)
	 	 	 

                  

                
	 	 	 	 
	Category I    
                   	 	The undersigned is not
                  within any
                  of the categories above and is therefore not an accredited
                  investor.

        

      

       

      The
        undersigned agrees that the undersigned will notify the Company at any time
        on
        or prior to the Closing Date in the event that the representations and
        warranties in this Agreement shall cease to be true, accurate and
        complete.

      

      

      Part
        II
 SUITABILITY
        (please
        answer each question)

      

      (a)
        For
        an individual Subscriber, please describe your current employment, including
        the
        company by which you are employed and its principal business:

      _____________________________________________________________________________________________________________________________________________________________

      
         

        
          

        

      
        
          

        

      

      
        
          
          

        

        
          B-30

          
            

          

        

        
          
          

        

      

      

      (b)
        For
        an individual Subscriber, please describe any college or graduate degrees
        held
        by you:

       

      ____________________________________________________________________________________________________________________________________________________________

      

      
        
          
            

          

           

        

      

      
        
          

        

      (c)
        For
        all Subscribers, please state whether you have you participated in other
        private
        placements
        before:

      

      YES_______   NO_______

      

      (d)
        If
        your answer to question (d) above was “YES”, please indicate frequency of such
        prior participation in private
        placements
        of:

       
        
          	
                   

                	 	
                  Public Companies

                	 	
                   Private
                    Companies

                	 	
                  Public
                    or Private

                    Pharmaceutical
                      Companies

                  

                	 
	Frequently 	 	 
	
                    
                    

                	 	  
	
                    
                    

                	 	  
	
                   
                      

                	 
	Occasionally 	 	  
	
                    
                    

                	 	  
	
                    
                    

                	 	    	
                    
                    

                	 
	Never 	 	  
	
                    
                    

                	 	  
	
                    
                    

                	 	 	
                   

                	 

        
   

       

      (e)
        For
        individual Subscribers, do you expect your current level of income to
        significantly decrease in the foreseeable future:

      

      YES_______   NO_______

      

      (f)
        For
        trust, corporate, partnership and other institutional Subscribers, do you
        expect
        your total assets to significantly decrease in the foreseeable future:

      

      YES_______   NO_______

      

      (g)
        For
        all Subscribers, do you have any other investments or contingent liabilities
        which you reasonably anticipate could cause you to need sudden cash requirements
        in excess of cash readily available to you: 

      

      YES_______   NO_______

      

      (h)
        For
        all Subscribers, are you familiar with the risk aspects and the non-liquidity
        of
        investments such as the securities for which you seek to subscribe?

      

      YES_______   NO_______

      

      
        
          
          

        

        
          B-31

          
            

          

        

        
          
          

        

      

      

      (i)
        For
        all Subscribers, do you understand that there is no guarantee of financial
        return on this investment, that an investment in the Securities is highly
        speculative and risky and that you run the risk of losing your entire
        investment?

      

      YES_______   NO_______

      

      (j)
        For
        all Subscribers, will you have sufficient readily available cash to fund
        your
        obligation to purchase Securities at the Closing pursuant to your subscription
        if and when the Closing occurs?

      

      YES_______   NO_______

      

      

      Part
        III  MANNER
        IN WHICH TITLE IS TO BE HELD.
        (circle
        one)

      

      (a) Individual
        Ownership

      (b) Community
        Property

      (c) Joint
        Tenant with Right of  Survivorship
        (both parties must
        sign)

      (d) Partnership*

      (e) Tenants
        in Common

      (f) Company*

      (g) Trust*

      (h) Other

      

      *If
        Securities are being subscribed for by an entity, the attached Certificate
        of
        Signatory must also be completed.

      

      Part
        IV  NASD
        AFFILIATION.

      

      Are
        you
        affiliated or associated with an NASD member firm (please check
        one):

      

      Yes
        _________  No
        __________

      

      If
        Yes,
        please describe:

      _________________________________________________________

      _________________________________________________________

      _________________________________________________________

       

      
        
          
          

        

        
          B-32

          
            

          

        

        
          
          

        

      

      
 

      *If
        Subscriber is a registered representative with an NASD member firm, have
        the
        following acknowledgment signed by the appropriate party:

      

      The
        undersigned NASD member firm acknowledges receipt of the notice required
        by
        Article III, Sections 28(a) and (b) of the Rules of Fair Practice.

      

      _________________________________

      Name
        of
        NASD Member Firm

      

      By:
        ______________________________

      Authorized
        Officer

      

      Date:
        ____________________________

      

      

      Part
        V
REGISTRATION
        QUESTIONNAIRE

      

      The
        following questions in this Part V are specifically intended to provide
        information to the Company for the Company's use in the preparation of the
        Registration Statement contemplated by the Subscription Agreement and for
        specific inclusion in such Registration Statement.

      

      PLEASE
        ANSWER EVERY QUESTION BELOW. If a question is inapplicable to you or your
        answer
        is in the negative, please so state by inserting “N/A.” If you are in doubt
        whether a particular question requires an affirmative response from you,
        please
        furnish full particulars so that those persons responsible for preparing
        the
        Registration Statement contemplated by the Subscription Agreement can determine
        whether any disclosure based on your answer is required. Information requested
        in this questionnaire is as of the date you complete the questionnaire, unless
        otherwise indicated. Your furnishing such information does not necessarily
        mean
        that such information will be disclosed, although it may be disclosed.
You
        are required to promptly provide the Company with any update to the information
        if such information changes after the date hereof.

      

      DEFINITIONS

      

      Your
        answers to this questionnaire should be made upon the basis of the following
        definitions of terms used in this questionnaire:

      

      The
        term
“beneficial
        owner”
        of a
        security includes any person who, directly or indirectly, through any contract,
        arrangement, understanding, relationship or otherwise has or shares
        (1) voting
        power,
        which includes the power to vote, or direct the voting of, such security
        or
        (2) investment
        power,
        which
        includes the power to dispose or direct the disposition of such security.
        A
        person may be regarded as having voting power of a security which is owned
        (i)
        by his spouse or minor children or by any of his relatives or his spouse’s
        relatives who share the same home with him, (ii) a partnership
        of
        which he is a partner or (iii) a corporation of which he is a substantial
        stockholder. A person is also deemed to be the beneficial owner of shares
        which
        that person has the right to acquire within 60 days, including but not limited
        to any right to acquire through the exercise of an option, through conversion
        of
        a security, pursuant to the power to revoke a trust or pursuant to the automatic
        termination of a trust. Please also disclose any other rights which you have
        to
        acquire securities of the Company on or before July 31, 2005.

      

      
        
          
          

        

        
          B-33

          
            

          

        

        
          
          

        

      

       

      The
        term
“material,”
        when
        used to qualify a requirement for the furnishings of information as to any
        subject, limits the information required to those matters about which the
        average prudent investor should reasonably be informed before buying or selling
        the securities of the Company. If you are in doubt as to the materiality
        of
        certain information, you should relate sufficient facts to enable the Company
        and its advisors to reach a conclusion as to its materiality.

      

      QUESTIONS

      

      QUESTION
        1:

      

      State
        your present position or positions with the Company (if any), including
        membership on any audit, personnel, compensation or similar committee or
        committees; any positions held by you during the previous three years; and
        any
        positions to which you have been elected or appointed but the duties of which
        you have not yet assumed. For each position, list the term or expected term
        of
        office.

      

      ANSWER:

      

      QUESTION
        2:

      

      Other
        than Securities that you will acquire in connection with the
        Offering,
        provide
        below information regarding the equity securities of the Company of which
        you
        are the “beneficial owner.”Please
        refer to the definition of “beneficial owner,” above.
        Under
        the column “Nature of Ownership,” please indicate amounts of securities for
        which you have (a) sole voting power, (b) shared voting power, (c) sole
        investment power, or (d) shared investment power. If your response covers
        any
        securities included because you have the right to acquire them on or before
        July
        31, 2005, please separately indicate the amount of such securities. Also,
        if you
        hold more than 5% of the Company’s securities pursuant to a voting trust or
        similar agreement, please separately state the amount of such securities
        held or
        to be held pursuant to the trust or agreement, the duration of the agreement
        and
        the names and addresses of the voting trustees, outlining briefly their voting
        rights and other powers under the trust or agreement. 

      

      ANSWER
        (attach additional pages if necessary):

       

      
 

      
        	 Number of Securities	
                 Nature
                  of Ownership

              	
                 Title
                  of
                  Securities

              
	 	 	 
	 	 	 

      

           

       

      
        
          
          

        

        
          B-34

          
            

          

        

        
          
          

        

      

      

      QUESTION
        3:

      

      If
        you
        plan to offer your shares of Common Stock through the selling efforts of
        brokers
        or dealers, describe the terms (and attach copies) of any agreement,
        arrangement, or understanding entered into with broker(s) or dealer(s),
        including volume limitations on sales, parties to the agreement and the
        conditions under which the agreement may be terminated. If known, identify
        the
        broker(s) or dealer(s), which will participate in the offering and state
        the
        amount to be offered through each.

      

      ANSWER:

      

      QUESTION
        4:

      

      Describe
        below any information known to you, and if none state “none,” pertaining to
        underwriting compensation and arrangements or any dealings between any
        underwriter or related person, member of the NASD or a person associated
        with a
        member of the NASD, and the Company or any controlling stockholder thereof
        since
        January 1, 2002.

       

      ANSWER:

      

      QUESTION
        5:

      

      State
        below whether you or any of your associates are a member of NASD, a controlling
        stockholder of a member, a person associated or affiliated with a member
        or an
        underwriter or related person with respect to the proposed offering. If you
        responded “yes,” describe such relationship:

      

      ANSWER:

       

       

      QUESTION
        6:

       

      Are
        you a
        broker-dealer?

      

      ANSWER:

      

      Yes
        ______ No______

      

      

      
        
          
          

        

        
          B-35

          
            

          

        

        
          
          

        

      

      QUESTION
        7:

      

      If
        you
        are not a broker-dealer, are you affiliated with a broker-dealer?

      

      ANSWER:

      

      Yes
        ______ No______

      

      QUESTION
        8:

      

      If
        you
        are affiliated with a broker-dealer, did you purchase the securities in the
        ordinary course of business?

      

      ANSWER:

      

      Yes
        ______ No______

      

      

      QUESTION
        9:

      

      If
        you
        are affiliated with a broker-dealer, did you have any agreements or
        understandings, directly or indirectly, with any person to distribute the
        securities at the time that you purchased the securities?

      

      ANSWER:

      

      Yes
        ______ No______

      

      

      Please
        note that the Commission takes the position that if you are a broker-dealer,
        you
        are to be identified in the Registration Statement as an underwriter. In
        the
“Plan of Distribution,” the Registration Statement will provide substantially as
        follows:

      

      “The
        selling stockholders and any broker-dealers, agents or underwriters that
        participate with the selling stockholders in the distribution of the issued
        and
        outstanding shares of common stock or the shares of stock issuable upon exercise
        of warrants may be deemed to be "underwriters" within the meaning of the
        Securities Act, in which event any commissions received by these broker-dealers,
        agents or underwriters and any profits realized by the selling stockholders
        on
        the resales of the securities may be deemed to be underwriting commissions
        or
        discounts under the Securities Act. If the selling stockholders are deemed
        to be
        underwriters, the selling stockholders may be subject to certain statutory
        and
        regulatory liabilities, including liabilities imposed pursuant to Sections
        11,
        12 and 17 of the Securities Act and Rule 10b-5 under the Exchange
        Act.”

      

      
        
          
          

        

        
          B-36

          
            

          

        

        
          
          

        

      

       

      QUESTION
        10:

       

      Are
        their
        specific individuals who have voting or investment control over the
        securities?

       

      ANSWER:

      

      Yes
        ______ No______

      

      If
        you
        answered “yes”, please list the names of such individuals: 

      ____________________________________________________________________________________________________________________________________________________________

      
         

        
          ____________________________________________________________________________________________________________________________________________________________

        

      

      The
        answers to the foregoing questions are true and correct to the best of the
        undersigned’s knowledge, information and belief. The undersigned agrees to
        promptly notify the Company in writing in care of Chief Financial Officer,
        InSite Vision Incorporated, 965 Atlantic Avenue, Alameda, California 94501
        of
        (a) any transfer by you of your Units, (b) sales of common stock of the Company
        (giving the number of shares sold and the name of the broker-dealer used)
        and
        (c) any other changes in the answers to this questionnaire that should be
        made
        as a result of any material development occurring subsequent to the date
        hereof.

      

      Dated:
        ___________, 2005.

      

      

      

      ____________________________________

      Signature

      

      

      The
        undersigned is informed of the significance to the Company of the foregoing
        representations and answers contained in the Confidential Subscriber
        Questionnaire contained in this Article VIII and such answers have been provided
        under the assumption that the Company will rely on them.

      

      

      

      [REMAINDER
        OF PAGE INTENTIONALLY LEFT BLANK]

      [SIGNATURE
        PAGE TO FOLLOW]

      

      

 

      
        
          
          

        

        
          B-37

          
            

          

        

        
          
          

        

      

       

      [Signature
        Page]

      

      

      _____________
        X  $
        ____________  =
         $____________    

      Number
        of
        Units  the
        Unit
        Price                
        Closing
        Amount

      

      

      
        	Signature of
                Subscriber 	 	Signature of Subscriber (if
                purchasing jointly) 
	 	 	 
	                                
                 	 	                                   
	Name Typed or Printed 	 	Name Typed or Printed 
	                                   	 	                                   
	Entity Name 	 	Entity Name 
	                                   	 	                                   
	Title 	 	Title 
	                                   	 	                                   
	Address 	 	Address 
	                                   	 	                                   
	City, State and Zip Code 	 	City, State and Zip Code 
	                                   	 	                                   
	Telephone-Business 	 	Telephone-Business 
	                                   	 	                                  
	Telephone-Residence 	 	Telephone-Residence 
	                                   	 	                                   
	Facsimile-Business 	 	Facsimile-Business 
	                                   	 	                                   
	Facsimile-Residence 	 	Facsimile-Residence 
	                                   	 	                                   
	Tax ID # or Social Security
                #  	 	Tax ID # or Social Security
                #  
	                                   	 	                                   

      

       

      Name
        in
        which securities should be issued:
        _______________________________________      

      

      Dated: 
        _______,
        2005

      

      
        
          
          

        

        
          B-38

          
            

          

        

        
          
          

        

      

      
 

      This
        Subscription Agreement is agreed to and accepted by the Company as of May
        3, 2005.  

      

      

      
        	 	 	INSITE VISION INCORPORATED 	 
	 	 	 	 
	 	 	
                By:
                  /s/
                  S. Kumar Chandrasekaran, Ph. D.

              	 
	 	 	
                Name:
                   S.
                  Kumar Chandrasekaran, Ph. D.

              	 
	 	 	Title: President
                and Chief Executive Officer 	 
	 	 	 	 

      

       

      

      

       

      
 

      
        
          
          

        

        
          B-39

          
            

          

        

        
          
          

        

      

      

      CERTIFICATE
        OF SIGNATORY

      

      (To
        be
        completed if Units are

      being
        subscribed for by an entity)

      

      

      I,____________________________,
        am the____________________________ of __________________________________________
        (the “Entity”).

      

      I
        certify
        that I am empowered and duly authorized by the Entity to execute and carry
        out
        the terms of the Subscription Agreement and to purchase and hold the Units,
        and
        certify further that the Subscription Agreement has been duly and validly
        executed on behalf of the Entity and constitutes a legal and binding obligation
        of the Entity.

      

      IN
        WITNESS WHEREOF, I have set my hand this ______ day of _________________,
        2005.

      

      
        	 	 	 	 
	 	 	                                                     
                 	 
	 	 	(Signature) 	 

      

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        
          
          

        

        
          B-40

          
            

          

        

        
          
          

        

      

       

       

       Exhibit
        A

      
 

      

      Notice
        to Subscriber

      of

      Subscriber
        Amount

      

      

      Dear
        Subscriber:

      

      Pursuant
        to the Section 1.2 of that certain Subscriber Agreement by and between InSite
        Vision Incorporated and certain signatories therein, dated as of _________,
        2005
        (the “Subscription Agreement”), this letter shall serve as notice to provide you
        with information concerning your allocation for the Closing in connection
        with
        the Offering of Units by the Company and the amount you are hereby obligated
        to
        invest at the Closing per the Subscription Agreement (the “Closing Amount” as
        further defined in the Subscription Agreement). 

      

      

      
        	A) Subscriber’s subscription
                amount: 	______________ 	 
	B) Number of Units Available to all
                Subscribers for Closing: 	______________ 	 
	C) Number of Units Allocated to you
                for
                Closing: 	______________ 	 
	D) Closing Amount due at
                Closing: 	______________ 	 

      

       

       

       

       

       

       

       

       

       

       

      
        
          
          

        

        
          B-41

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00086-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00086-of-00352.parquet"}], [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00086-of-00352.parquet"}]]