Document:

AMENDED
      AND RESTATED SECURITY AGREEMENT

     

    This
      AMENDED
      AND RESTATED SECURITY AGREEMENT
      (this
“Agreement”), dated as of December 30, 2005, is made by and among InSite Vision
      Incorporated, a Delaware corporation (the “Company”), S. Kumar Chandrasekaran,
      Ph.D. (the “Original Holder”) and (i) THE
      BANK OF NEW YORK,
      a
      company organized under the laws of the State of New York, as agent for and
      representative of the Original Holder and the other holders from time to time
      of
      the 2003 Senior Notes (as defined below) (each, together with its successors
      and
      assigns, a “2003 Holder” and collectively the “2003 Holders”) and (ii)
THE
      BANK OF NEW YORK,
      a
      company organized under the laws of the State of New York, as agent for and
      representative of the holders from time to time of the 2005 Senior Notes (as
      defined below) (each, together with its successors and assigns, a “2005 Holder”
and collectively the “2005 Holders” and, together with the 2003 Holders, the
“Holders”). The Bank of New York, in its capacity as agent for the 2003 Holders
      and in its capacity as agent for the 2005 Holders, is referred to herein as
      “Collateral Agent.”

     

    RECITALS

     

    WHEREAS,
      the
      Company has issued to each 2003 Holder a promissory note (each such note, as
      amended, restated, supplemented or modified from time to time, a “2003 Senior
      Note” and collectively, the “2003 Senior Notes”);

     

    WHEREAS,
      the
      2003
      Senior Note is secured by a security interest granted by the Company pursuant
      to
      a Security Agreement, dated as of July 15, 2003, by and between the Company
      and
      the Original Holder (the “Original Security Agreement”);

     

    WHEREAS,
      the
      Company has issued to each 2005 Holder a promissory note due June 30, 2006,
      as
      such date may be extended at the Company’s election in accordance with the terms
      of such promissory notes (each such note, as amended, restated, supplemented
      or
      modified from time to time, a “2005 Senior Note,” collectively, the “2005 Senior
      Notes” and, collectively with the 2003 Senior Notes, the “Senior Notes”);

     

    WHEREAS,
      it is a
      condition precedent to the purchase of the 2005 Senior Notes by the 2005 Holders
      that the Company shall have granted the security interests contemplated by
      this
      agreement; 

     

    WHEREAS,
      the
      Collateral Agent has been appointed as agent for and representative of the
      2003
      Holders and as agent for and representative of the 2005 Holders pursuant to
      the
      terms of a Collateral Agency and Intercreditor Agreement dated as of December
      30, 2005 by and among the 2003 Holders, the 2005 Holders and the Collateral
      Agent (the “Collateral Agency and Intercreditor Agreement”); and

     

    WHEREAS,
      the
      Company and the Original Holder desire to amend and restate the Original
      Agreement as set forth in this Agreement.

     

    NOW,
      THEREFORE,
      in
      consideration of the premises and the agreements, provisions, and covenants
      herein contained and in order to induce the 2005 Holders to purchase the 2005
      Senior Notes, the Company, the Original Holder and the Collateral Agent agree
      for the direct and enforceable benefit of Collateral Agent, on behalf of itself
      and the 2003 Holders and the 2005 Holders, that the Original Security Agreement
      is hereby amended and restated to read in its entirety as follows:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SECTION
      1. DEFINITIONS;
      INTERPRETATION.

     

    (a) CERTAIN
      DEFINED TERMS. As used in this Agreement, the following terms shall have the
      following meanings:

     

    “2003
      SENIOR NOTE” has the meaning set forth in the Recitals to this
      Agreement.

     

    “2003
      SENIOR NOTE SECURED OBLIGATIONS” means the indebtedness, liabilities and other
      obligations of the Company to each of the 2003 Holders evidenced by the 2003
      Senior Notes (together with all extensions or renewals thereof), including
      all
      unpaid principal thereunder, all interest accrued thereon (including without
      limitation interest that, but for the filing of a petition in bankruptcy with
      respect to the Company, would accrue on such obligations, whether or not a
      claim
      is allowed against the Company for such interest in the related bankruptcy
      proceeding), and all other amounts payable by the Company to each 2003 Holder
      thereunder or in connection therewith, whether now existing or hereafter
      arising, and whether due or to become due, absolute or contingent, liquidated
      or
      unliquidated, determined or undetermined, and all obligations of every nature
      of
      the Company now or hereafter existing under this Agreement.

     

    “2005
      SENIOR NOTE” has the meaning set forth in the Recitals to this
      Agreement.

     

    “2005
      SENIOR NOTE SECURED OBLIGATIONS” means the indebtedness, liabilities and other
      obligations of the Company to each of the 2005 Holders evidenced by the 2005
      Senior Notes (together with all extensions or renewals thereof), including
      all
      unpaid principal thereunder, all interest accrued thereon (including without
      limitation interest that, but for the filing of a petition in bankruptcy with
      respect to the Company, would accrue on such obligations, whether or not a
      claim
      is allowed against the Company for such interest in the related bankruptcy
      proceeding), and all other amounts payable by the Company to each 2005 Holder
      thereunder or in connection therewith, whether now existing or hereafter
      arising, and whether due or to become due, absolute or contingent, liquidated
      or
      unliquidated, determined or undetermined, and all obligations of every nature
      of
      the Company now or hereafter existing under this Agreement.

     

    “ACCOUNT
      CONTROL AGREEMENT” means any account control agreement or other agreement with
      any securities intermediary or other Person granting control with respect to
      any
      Investment Property or Deposit Account.

     

    “ACCOUNTS”
      means any and all accounts of the Company, whether now existing or hereafter
      acquired or arising, and in any event includes all accounts receivable, contract
      rights and rights to payment of monetary obligations owed to the Company arising
      out of or in connection with the sale or lease of merchandise, goods or
      commodities or the rendering of services or arising from any other transaction,
      however evidenced, and whether or not earned by performance, all guaranties,
      indemnities and security with respect to the foregoing, and all letters of
      credit relating thereto, in each case whether now existing or hereafter acquired
      or arising.

     

    
      
        
        

      

      
        -B-

        
          

        

      

      
        
        

      

    

     

    “BOOKS”
      means all books, records and other written, electronic or other documentation
      in
      whatever form maintained now or hereafter by or for the Company in connection
      with the ownership of its assets or the conduct of its business or evidencing
      or
      containing information relating to the Collateral, including: (i) ledgers;
      (ii)
      records indicating, summarizing, or evidencing the Company’s assets (including
      Inventory and Rights to Payment), business operations or financial condition;
      (iii) computer programs and software; (iv) computer discs, tapes, files,
      manuals, spreadsheets; (v) computer printouts and output of whatever kind;
      (vi)
      any other computer prepared or electronically stored, collected or reported
      information and equipment of any kind; and (vii) any and all other rights now
      or
      hereafter arising out of any contract or agreement between the Company and
      any
      service bureau, computer or data processing company or other Person charged
      with
      preparing or maintaining any of the Company’s books or records or with credit
      reporting, including with regard to the Company’s Accounts.

     

    “CHATTEL
      PAPER” means all writings of whatever sort which evidence a monetary obligation
      and a security interest in or lease of specific goods, whether now existing
      or
      hereafter arising.

     

    “COLLATERAL”
      has the meaning set forth in Section 2.

     

    “DEPOSIT
      ACCOUNT” means any demand, time, savings, passbook or like account now or
      hereafter maintained by or for the benefit of the Company with a bank, savings
      and loan association, credit union or like organization, and all funds and
      amounts therein, whether or not restricted or designated for a particular
      purpose.

     

    “DOCUMENTS”
      means any and all documents of title, bills of lading, dock warrants, dock
      receipts, warehouse receipts and other documents of the Company, whether or
      not
      negotiable, and includes all other documents which purport to be issued by
      a
      bailee or agent and purport to cover goods in any bailee’s or agent’s possession
      which are either identified or are fungible portions of an identified mass,
      including such documents of title made available to the Company for the purpose
      of ultimate sale or exchange of goods or for the purpose of loading, unloading,
      storing, shipping, transshipping, manufacturing, processing or otherwise dealing
      with goods in a manner preliminary to their sale or exchange, in each case
      whether now existing or hereafter acquired or arising.

     

    “EQUIPMENT”
      means all now existing or hereafter acquired equipment of the Company in all
      of
      its forms, wherever located, and in any event includes any and all machinery,
      furniture, equipment, furnishings and fixtures in which the Company now or
      hereafter acquires any right, and all other goods and tangible personal property
      (other than Inventory), including tools, parts and supplies, automobiles,
      trucks, tractors and other vehicles, computer and other electronic data
      processing equipment and other office equipment, computer programs and related
      data processing software, and all additions, substitutions, replacements, parts,
      accessories, and accessions to and for the foregoing, now owned or hereafter
      acquired, and including any of the foregoing which are or are to become fixtures
      on real property.

     

    “EVENT
      OF
      DEFAULT” has the meaning set forth in Section 10(a).

     

    
      
        
        

      

      
        -C-

        
          

        

      

      
        
        

      

    

     

    “FINANCING
      STATEMENTS” has the meaning set forth in Section 3.

     

    “GENERAL
      INTANGIBLES” means all general intangibles of the Company, now existing or
      hereafter acquired or arising, and in any event includes: (i) all tax and other
      refunds, rebates or credits of every kind and nature to which the Company is
      now
      or hereafter may become entitled; (ii) all good will, choses in action and
      causes of action, whether legal or equitable, whether in contract or tort and
      however arising; (iii) all Intellectual Property Collateral; (iv) all interests
      in limited and general partnerships and limited liability companies; (v) all
      rights of stoppage in transit, replevin and reclamation; (vi) all licenses,
      permits, consents, indulgences and rights of whatever kind issued in favor
      of or
      otherwise recognized as belonging to the Company by any governmental authority;
      and (vii) all indemnity agreements, guaranties, insurance policies and other
      contractual, equitable and legal rights of whatever kind or nature; in each
      case
      whether now existing or hereafter acquired or arising.

     

    “GRANT”
      means a Grant of Trademark Security Interest, substantially in the form of
      Exhibit A annexed hereto, and a Grant of Patent Security Interest, substantially
      in the form of Exhibit B annexed hereto, and a Grant of Copyright Security
      Interest, substantially in the form of Exhibit C annexed hereto.

     

    “INSTRUMENTS”
      means any and all negotiable instruments and every other writing which evidences
      a right to the payment of money, wherever located and whether now existing
      or
      hereafter acquired, except: (i) investment property, (ii) letters of credit
      and
      (iii) writings that evidence a right to payment arising out of the use of a
      credit or charge card or information contained on or for use with the
      card.

     

    “INTELLECTUAL
      PROPERTY COLLATERAL” means the following properties and assets owned or held by
      the Company or in which the Company otherwise has any interest, now existing
      or
      hereafter acquired or arising:

     

    (i) all
      patents and patent applications, domestic or foreign, all licenses relating
      to
      any of the foregoing and all income and royalties with respect to any licenses,
      all rights to sue for past, present or future infringement thereof, all rights
      arising therefrom and pertaining thereto and all reissues, divisions,
      continuations, renewals, extensions and continuations-in-part thereof, and
      all
      regulatory filings related thereto;

     

    (ii) all
      copyrights and applications for copyright, domestic or foreign, together with
      the underlying works of authorship (including titles), whether or not the
      underlying works of authorship have been published and whether said copyrights
      are statutory or arise under the common law, and all other rights and works
      of
      authorship, all rights, claims and demands in any way relating to any such
      copyrights or works, including royalties and rights to sue for past, present
      or
      future infringement, all rights of renewal and extension of copyright, and
      all
      licenses relating to any of the foregoing and all income and royalties with
      respect to any licenses, and all regulatory filings related
      thereto;

     

    (iii) all
      state
      (including common law), federal and foreign trademarks, service marks and trade
      names, and applications for registration of such trademarks, service marks
      and
      trade names, all licenses relating to any of the foregoing and all income and
      royalties with respect to any licenses, whether registered or unregistered
      and
      wherever registered, all rights to sue for past, present or future infringement
      or unconsented use thereof, all rights arising therefrom and pertaining thereto
      and all reissues, extensions and renewals thereof, and all regulatory filings
      related thereto;

     

    
      
        
        

      

      
        -D-

        
          

        

      

      
        
        

      

    

     

    (iv) all
      trade
      secrets, trade dress, trade styles, logos, other source of business identifiers,
      mask-works, mask-work registrations, mask-work applications, software,
      confidential information, customer lists, license rights, advertising materials,
      operating manuals, methods, processes, know-how, algorithms, formulae,
      databases, quality control procedures, product, service and technical
      specifications, operating, production and quality control manuals, sales
      literature, drawings, specifications, blue prints, descriptions, inventions,
      name plates and catalogs, and all licenses relating to any of the foregoing
      and
      all income and royalties with respect to any licenses, and all regulatory
      filings related thereto; and

     

    (v) the
      entire goodwill of or associated with the businesses now or hereafter conducted
      by the Company connected with and symbolized by any of the aforementioned
      properties and assets.

     

    “INVENTORY”
      means any and all of the Company’s inventory in all of its forms, wherever
      located, whether now owned or hereafter acquired, and in any event includes
      all
      goods (including goods in transit) which are held for sale, lease or other
      disposition, including those held for display or demonstration or out on lease
      or consignment or to be furnished under contract of service, or which are raw
      materials, work in process, finished goods or materials used or consumed in
      the
      Company’s business, and the resulting product or mass, and all repossessed,
      returned, rejected, reclaimed and replevied goods, together with all parts,
      components, supplies, packing and other materials used or usable in connection
      with the manufacture, production, packing, shipping, advertising, selling or
      furnishing of such goods; and all other items hereafter acquired by the Company
      by way of substitution, replacement, return, repossession or otherwise, and
      all
      additions and accessions thereto, and any Document representing or relating
      to
      any of the foregoing at any time.

     

    “INVESTMENT
      PROPERTY” means any and all investment property of the Company, including all
      securities, whether certificated or uncertificated, security entitlements,
      securities accounts, commodity contracts and commodity accounts, and all
      financial assets held in any securities account or otherwise, wherever located,
      and whether now existing or hereafter acquired or arising.

     

    “LETTER
      OF CREDIT PROCEEDS” means any and all proceeds of written letters of
      credit.

     

    “LIEN”
      means any mortgage, pledge, security interest, assignment, deposit arrangement,
      charge or encumbrance, lien or other type of preferential arrangement (other
      than a financing statement filed by a lessor in respect of an operating lease
      not intended as security).

     

    “PERMITTED
      LIENS” means: (i) Liens in favor of the Collateral Agent; (ii) existing Liens
      (including without limitation leases and subleases) existing as of the date
      hereof and listed on Schedule III hereto, and Liens incurred in connection
      with
      the extension, renewal or refinancing of the indebtedness or other obligations
      secured by such existing Liens; (iii) Liens for taxes, fees, assessments or
      other governmental charges or levies, either not delinquent or being contested
      in good faith by appropriate proceedings and which are adequately reserved
      for
      in accordance with generally accepted accounting principles, provided the same
      does not have priority over any of the Collateral Agent’s Liens; (iv) Liens of
      materialmen, mechanics, warehousemen, carriers or employees or other similar
      Liens provided for by mandatory provisions of law and securing obligations
      either not delinquent or being contested in good faith by appropriate
      proceedings and which do not in the aggregate materially impair the use or
      value
      of the property or risk the loss or forfeiture thereof; (v) Liens consisting
      of
      deposits or pledges to secure the performance of bids, trade contracts, leases,
      public or statutory obligations, or other obligations of a like nature incurred
      in the ordinary course of business; (vi) Liens upon or in any property or assets
      and the Proceeds thereof acquired or held by the Company to secure the purchase
      price of such property or assets, or indebtedness or other obligations incurred
      solely for the purpose of financing or refinancing the acquisition thereof;
      and
      (vii) other Liens approved in writing by the Collateral Agent, acting at the
      direction of the Holders pursuant to the terms of the Collateral Agency and
      Intercreditor Agreement.

     

    
      
        
        

      

      
        -E-

        
          

        

      

      
        
        

      

    

     

    “PERSON”
      means an individual, corporation, partnership, limited liability company, joint
      venture, trust, unincorporated organization or any other entity of whatever
      nature or any governmental agency or authority.

     

    “PROCEEDS”
      means whatever is acquired from or upon the sale, lease, license, collection,
      use, exchange or other disposition, whether voluntary or involuntary, of any
      Collateral or other assets of the Company, including “proceeds” as defined in
      the UCC, any and all proceeds of any insurance, indemnity, warranty or guaranty
      payable to or for the account of the Company from time to time with respect
      to
      any of the Collateral, any and all payments (in any form whatsoever) made or
      due
      and payable to the Company from time to time in connection with any requisition,
      confiscation, condemnation, seizure or forfeiture of all or any part of the
      Collateral by any governmental authority (or any Person acting under color
      of
      governmental authority), any and all other amounts from time to time paid or
      payable under or in connection with any of the Collateral or for or on account
      of any damage or injury to or conversion of any Collateral by any Person, any
      and all other tangible or intangible property received upon the sale or
      disposition of Collateral, and all proceeds of proceeds.

     

    “RIGHTS
      TO PAYMENT” means all Accounts, and any and all rights and claims to the payment
      or receipt of money or other forms of consideration of any kind in, to and
      under
      all Chattel Paper, Documents, General Intangibles, Instruments, Investment
      Property and Proceeds.

     

    “SENIOR
      NOTE SECURED OBLIGATIONS” means the 2003 Senior Note Secured Obligations
      together with the 2005 Senior Note Secured Obligations.

     

    “UCC”
      means the Uniform Commercial Code as the same may, from time to time, be in
      effect in the State of New York; provided, however, in the event that, by reason
      of mandatory provisions of law, any or all of the attachment, perfection or
      priority of the security interest in any Collateral is governed by the Uniform
      Commercial Code as in effect in a jurisdiction other than the State of New
      York,
      the term “UCC” shall mean the Uniform Commercial Code as in effect in such other
      jurisdiction for purposes of the provisions hereof relating to such attachment,
      perfection or priority and for purposes of definitions related to such
      provisions.

     

    
      
        
        

      

      
        -F-

        
          

        

      

      
        
        

      

    

     

    (b) TERMS
      DEFINED IN UCC. Where applicable and except as otherwise defined herein, terms
      used in this Agreement shall have the meanings assigned to them in the
      UCC.

     

    SECTION
      2. SECURITY
      INTEREST.

     

    (a) GRANT
      OF
      SECURITY INTEREST. As security for the payment and performance of the Senior
      Note Secured Obligations, the Company hereby pledges, assigns, transfers,
      hypothecates and sets over to the Collateral Agent, and hereby grants to the
      Collateral Agent, as agent for and representative of the 2003 Holders and as
      agent for and representative of the 2005 Holders, a security interest in all
      of
      the Company’s right, title and interest in, to and under the following property,
      wherever located and whether now existing or owned or hereafter acquired or
      arising (collectively, the “Collateral”): (i) all Accounts; (ii) all Rights to
      Payment; (iii) all Chattel Paper; (iv) all Deposit Accounts; (v) all Documents;
      (vi) all Equipment; (vii) all General Intangibles; (viii) all Instruments;
      (ix)
      all Inventory; (x) all Investment Property; (xi) all Books; (xii) all Letter
      of
      Credit Proceeds; and (xiii) all products and Proceeds of any and all of the
      foregoing.

     

    (b) Notwithstanding
      anything herein to the contrary, in no event shall the Collateral include,
      and
      the Company shall not be deemed to have granted a security interest in, (i)
      any
      of the Company’s rights or interests in any license, contract or agreement to
      which the Company is a party or any of its rights or interests thereunder to
      the
      extent, but only to the extent, that such a grant would, under the terms of
      such
      license, contract or agreement or otherwise, result in a breach of the terms
      of,
      or constitute a default under any license, contract or agreement to which the
      Company is a party (other than to the extent that any such term would be
      rendered ineffective pursuant to the UCC or any other applicable law (including
      the Bankruptcy Code, 11 U.S.C. Sec. 362(a) (the “Bankruptcy Code”)) or
      principles of equity); provided, that immediately upon the ineffectiveness,
      lapse or termination of any such provision, the Collateral shall include, and
      the Company shall be deemed to have granted a security interest in, all such
      rights and interests as if such provision had never been in effect, or (ii)
      any
      real property leasehold or fee, unless the Company has executed a mortgage
      or
      deed of trust covering such real property leasehold or fee. The Company hereby
      represents and warrants to the Collateral Agent and the Holders that each
      license, contract or agreement to which the Company is a party relating to
      Azasite is included in the Collateral and is not excluded as a result of this
      Section 2(b).

     

    (c) COMPANY
      REMAINS LIABLE. Anything herein to the contrary notwithstanding, (i) the Company
      shall remain liable under any contracts, agreements and other documents included
      in the Collateral, to the extent set forth therein, to perform all of its duties
      and obligations thereunder to the same extent as if this Agreement had not
      been
      executed, (ii) the exercise by the Collateral Agent of any of the rights
      hereunder shall not release the Company from any of its duties or obligations
      under such contracts, agreements and other documents included in the Collateral
      and (iii) the Collateral Agent shall not have any obligation or liability under
      any contracts, agreements and other documents included in the Collateral by
      reason of this Agreement, nor shall the Collateral Agent be obligated to perform
      any of the obligations or duties of the Company thereunder or to take any action
      to collect or enforce any such contract, agreement or other document included
      in
      the Collateral hereunder.

     

    
      
        
        

      

      
        -G-

        
          

        

      

      
        
        

      

    

     

    (d) CONTINUING
      SECURITY INTEREST. The Company agrees that this Agreement shall create a
      continuing security interest in the Collateral which shall remain in effect
      until terminated in accordance with Section 21.

     

    (f) INTERCREDITOR
      PROVISIONS. The security interests and liens granted to the Collateral Agent
      under Section 2(a) of this Agreement with respect to the 2003 Senior Note
      Secured Obligations and the 2005 Senior Note Secured Obligations shall have
      equal priority and are otherwise subject to the terms of the Collateral Agency
      and Intercreditor Agreement.

     

    SECTION
      3. PERFECTION
      PROCEDURES.

     

    (a) FINANCING
      STATEMENTS, ETC. 

     

    (i) The
      Company hereby authorizes the Collateral Agent to file one or more financing
      or
      continuation statements, and amendments thereto, relative to all or any part
      of
      the Collateral without the signature of the Company. The Company agrees that
      a
      photographic or other reproduction of this Agreement or of a financing statement
      signed by the Company shall be sufficient as a financing statement and may
      be
      filed as a financing statement in any and all jurisdictions. Without limiting
      the foregoing, upon the request of the Collateral Agent, the Company shall
      execute and deliver to the Collateral Agent concurrently with the execution
      of
      this Agreement, and at any time and from time to time thereafter, all financing
      statements, continuation financing statements, termination statements, security
      agreements, chattel mortgages, assignments, patent, copyright and trademark
      collateral assignments, fixture filings, warehouse receipts, documents of title,
      affidavits, reports, notices, schedules of account, letters of authority and
      all
      other documents and instruments, in a form reasonably satisfactory to the
      Collateral Agent (the “Financing Statements”), and take all other action, as the
      Collateral Agent may request, to perfect and continue perfected, maintain the
      priority of or provide notice of, the Collateral Agent’s security interest in
      the Collateral and to accomplish the purposes of this Agreement.

     

    (ii) Within
      30
      days of the date hereof, the Company shall record Grants with the applicable
      intellectual property filing offices evidencing the Collateral Agent’s security
      interest in the Intellectual Property Collateral.

     

    (b) CERTAIN
      AGENTS. Any third person at any time and from time to time holding all or any
      portion of the Collateral shall be deemed to, and shall, hold the Collateral
      as
      the agent of, and as pledge holder for, the Collateral Agent. At any time and
      from time to time, the Collateral Agent may give notice to any third person
      holding all or any portion of the Collateral that such third person is holding
      the Collateral as the agent of, and as pledge holder for, the Collateral
      Agent.

     

    SECTION
      4. REPRESENTATIONS
      AND WARRANTIES. In addition to the representations and warranties of the Company
      to the Holders set forth in the Senior Notes issued to the Holders, the Company
      represents and warrants that: 

     

    
      
        
        

      

      
        -H-

        
          

        

      

      
        
        

      

    

     

    (a) JURISDICTION
      OF ORGANIZATION. The Company’s name as it appears in official filings in the
      state of its organization, type of organization (i.e. corporation, limited
      partnership, etc.), jurisdiction of organization and organization number
      provided by the applicable government authority of the jurisdiction of
      organization are set forth on Schedule I annexed hereto.

     

    (b) NAMES.
      The Company (or predecessor by merger or otherwise of the Company) has not,
      within the five year period preceding the date hereof had a different name
      from
      the name of the Company listed on the signature page hereof, except as set
      forth
      in Schedule II annexed hereto.

     

    (c)
       SECURITY
      INTERESTS. 

     

    (i)
       This
      Agreement creates a security interest against the Collateral in which the
      Company now has rights and will create a security interest which is enforceable
      against the Collateral in which the Company hereafter acquires rights at the
      time the Company acquires any such rights; and 

     

    (ii)
       The
      Collateral Agent has a security interest in the Collateral in which the Company
      now has rights, and will have a security interest in the Collateral in which
      the
      Company hereafter acquires rights at the time the Company acquires any such
      rights, in each case securing the payment and performance of the Senior Note
      Secured Obligations except for and subject to Permitted Liens.

     

    (iii) The
      Company owns its interest in the Collateral, free and clear of any Liens other
      than Permitted Liens.

     

    SECTION
      5. COVENANTS.
      For so long as any of the Senior Note Secured Obligations remain unsatisfied,
      the Company agrees that:

     

    (a) DEFENSE
      OF COLLATERAL. The Company will appear in and defend any action, suit or
      proceeding which may affect to a material extent its title to, or right or
      interest in, or the Collateral Agent’s right or interest in, the
      Collateral.

     

    (b) PRESERVATION
      OF COLLATERAL. The Company will do and perform all reasonable acts that may
      be
      necessary and appropriate to maintain, preserve and protect the Collateral
      in
      all material respects.

     

    (c) EXPENSES.
      The Company will pay all expenses of protecting, storing, warehousing, insuring,
      handling and shipping the Collateral.

     

    (d) NAME;
      JURISDICTION. Without the written consent of the Collateral Agent, the Company
      will not change (i) its name from the name of the Company listed on the
      signature page hereof and the Company’s name as it appears in official filings
      in the state of its organization, unless, in each case, it provides the
      Collateral Agent with thirty (30) days’ advance written notice thereof, (ii) its
      type of organization (i.e. corporation, limited partnership, etc.), or (iii)
      its
      jurisdiction of organization.

     

    
      
        
        

      

      
        -I-

        
          

        

      

      
        
        

      

    

     

    (e) MAINTENANCE
      OF INTELLECTUAL PROPERTY. The Company shall diligently prosecute and maintain
      all material Intellectual Property Collateral, at its sole cost and expense,
      including, but not limited to, the filing of patent and trademark applications
      with respect to any material Intellectual Property Collateral that the Company
      determines in its commercially reasonable judgment should be made, and
      the defense of any infringement of, and/or challenge to, any material
      portion of the Intellectual Property Collateral.

     

    (f) NOTICE
      OF
      CHANGE. The Company shall provide the Collateral Agent with written notice
      should there be any claims of infringement with respect to any material portion
      of the Intellectual Property Collateral.

     

    (g) ADDITIONAL
      LIENS. The Company shall not grant any Liens on its Collateral other than those
      granted under this Agreement and Permitted Liens.

     

    SECTION
      6. RIGHTS
      TO
      PAYMENT.

     

    (a) COLLECTION
      OF RIGHTS TO PAYMENT. At the written request of the Collateral Agent, upon
      and
      after the occurrence and during the continuance of any Event of Default, all
      remittances received by the Company shall be, in accordance with the Collateral
      Agent’s instructions, remitted to the Collateral Agent or its designee or
      deposited to an account with the Collateral Agent or its designee in the form
      received (with any necessary endorsements or instruments of assignment or
      transfer).

     

    (b) INVESTMENT
      PROPERTY AND INSTRUMENTS. At the written request of the Collateral Agent, upon
      and after the occurrence and during the continuance of any Event of Default,
      the
      Collateral Agent or its designee shall be entitled to receive all distributions
      and payments of any nature with respect to any Investment Property or
      Instruments, and all such distributions or payments received by the Company
      shall be held in trust for the Collateral Agent or its designee to the extent
      permitted by applicable law and, in accordance with the Collateral Agent’s
      instructions, remitted to the Collateral Agent or its designee or deposited
      to
      an account with the Collateral Agent or its designee in the form received (with
      any necessary endorsements or instruments of assignment or transfer). Following
      the occurrence and during the continuance of an Event of Default, at the written
      request of the Collateral Agent, any such distributions and payments with
      respect to any Investment Property held in any securities account shall be
      held
      and retained in such securities account, in each case as part of the Collateral
      hereunder. Additionally, the Collateral Agent, as agent for and representative
      of the Holders, shall have the right, upon the occurrence and during the
      continuance of an Event of Default, following prior written notice to the
      Company, to vote and to give consents, ratifications and waivers with respect
      to
      any Investment Property and Instruments, and to exercise all rights of
      conversion, exchange, subscription or any other rights, privileges or options
      pertaining thereto to the extent permitted by applicable law as if the
      Collateral Agent were the absolute owner thereof; PROVIDED, that the Collateral
      Agent shall have no duty to exercise any of the foregoing rights afforded to
      it
      and shall not be responsible to the Company or any other Person for any failure
      to do so or delay in doing so to the extent permitted by applicable
      law.

     

    SECTION
      7. AUTHORIZATION;
      COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT. The Collateral Agent shall have
      the
      right to, in the name of the Company, without notice to or assent by the
      Company, and the Company hereby constitutes and appoints the Collateral Agent
      (and any of the Collateral Agent’s agents) as the Company’s true and lawful
      attorney-in-fact, with full power and authority to:

     

    
      
        
        

      

      
        -J-

        
          

        

      

      
        
        

      

    

     

    (i) sign
      any
      of the Financing Statements which must be executed or filed to perfect or
      continue perfected, maintain the priority of or provide notice of, the
      Collateral Agent’s security interest in the Collateral;

     

    (ii) upon
      the
      occurrence and during the continuance of an Event of Default:

     

    (A) take
      possession of and endorse any notes, acceptances, checks, drafts, money orders
      or other forms of payment or security and collect any Proceeds of any
      Collateral;

     

    (B) sign
      and
      endorse any invoice or bill of lading relating to any of the Collateral,
      warehouse or storage receipts, drafts against customers or other obligors,
      assignments, notices of assignment, verifications and notices to customers
      or
      other obligors (with respect to the Collateral);

     

    (C) send
      requests for verification of Rights to Payment to the customers or other
      obligors of the Company (with respect to the Collateral);

     

    (D) contact,
      or direct the Company to contact, all account debtors and other obligors on
      the
      Rights to Payment and instruct such account debtors and other obligors to make
      all payments directly to the Collateral Agent or its designee;

     

    (E) assert,
      adjust, sue for, compromise or release any claims under any policies of
      insurance;

     

    (F) exercise
      dominion and control over, and refuse to permit further withdrawals from,
      Deposit Accounts maintained with any financial institution or other
      Person;

     

    (G) notify
      each Person maintaining lockbox or similar arrangements for the payment of
      the
      Rights to Payment to remit all amounts representing collections on the Rights
      to
      Payment directly to the Collateral Agent or its designee;

     

    (H) ask,
      demand, collect, receive and give acquittances and receipts for any and all
      Rights to Payment, enforce payment or any other rights in respect of the Rights
      to Payment and all other Collateral, grant consents, agree to any amendments,
      modifications or waivers of the agreements and documents governing the Rights
      to
      Payment and all other Collateral, and otherwise file any claims, take any action
      or institute, defend, settle or adjust any actions, suits or proceedings with
      respect to the Collateral, as the Collateral Agent may deem necessary or
      desirable to maintain, preserve and protect the Collateral, to collect the
      Collateral or to enforce the rights of the Collateral Agent with respect to
      the
      Collateral;

     

    (I) execute
      any and all applications, documents, papers and instruments necessary for the
      Collateral Agent to use the Intellectual Property Collateral and grant or issue
      any exclusive or non-exclusive license or sublicense with respect to any
      Intellectual Property Collateral;

     

    
      
        
        

      

      
        -K-

        
          

        

      

      
        
        

      

    

     

    (J) execute
      any and all endorsements, assignments or other documents and instruments
      necessary to sell, lease, assign, convey or otherwise transfer title in or
      dispose of the Collateral;

     

    (K) execute
      and deliver to any securities intermediary or other Person any entitlement
      order, Account Control Agreement or other notice, document or instrument which
      the Collateral Agent may deem necessary or advisable to maintain, protect,
      realize upon and preserve the Investment Property and the Collateral Agent’s
      security interest therein; 

     

    (L) execute
      any and all such other documents and instruments, and do any and all acts and
      things for and on behalf of the Company, which the Collateral Agent may deem
      necessary or advisable to maintain, protect, realize upon and preserve the
      Collateral and the Collateral Agent’s security interest therein and to
      accomplish the purposes of this Agreement; and

     

    (M) execute
      any and all action necessary to prosecute, maintain or defend the Intellectual
      Property Collateral, except to the extent that the claims asserted against
      the
      Intellectual Property Collateral in question, if successful, are not likely
      to
      have a material adverse affect on the assets, liabilities, business or
      operations of the Company.

     

    The
      foregoing power of attorney is coupled with an interest and irrevocable so
      long
      as the Senior Note Secured Obligations have not been paid and performed in
      full.
      The Company hereby ratifies, to the extent permitted by law, all that the
      Collateral Agent shall lawfully and in good faith do or cause to be done by
      virtue of and in compliance with this Section 7.

     

    SECTION
      8. COLLATERAL
      AGENT PERFORMANCE OF COMPANY OBLIGATIONS. Upon the occurrence and during the
      continuance of any Event of Default, the Collateral Agent may perform or pay
      any
      obligation which the Company has agreed to perform or pay under or in connection
      with this Agreement, and the Company shall reimburse the Collateral Agent on
      demand for any reasonable amounts paid by the Collateral Agent pursuant to
      this
      Section 8 to the extent permitted by applicable law.

     

    SECTION
      9. COLLATERAL
      AGENT’S DUTIES. Notwithstanding any provision contained in this Agreement, the
      Collateral Agent shall have no duty to exercise any of the rights, privileges
      or
      powers afforded to it and shall not be responsible to the Company or any other
      Person for any failure to do so or delay in doing so. Beyond the exercise of
      reasonable care to assure the safe custody of Collateral in the Collateral
      Agent’s possession and the accounting for moneys actually received by the
      Collateral Agent hereunder, the Collateral Agent shall have no duty or liability
      to exercise or preserve any rights, privileges or powers pertaining to the
      Collateral to the extent permitted by applicable law. Notwithstanding
      any provision contained herein, the Collateral Agent’s liability for the
      performance of any duties hereunder shall be limited by the Collateral Agency
      and Intercreditor Agreement, including but not limited to Sections 4.01 through
      4.06 and 4.09 of such agreement.

     

    SECTION
      10. REMEDIES.

     

    (a) REMEDIES.
      Upon the occurrence and during the continuance of any Event of Acceleration
      (as
      defined in the 2003 Senior Notes or the 2005 Senior Notes) or any failure to
      pay
      any Senior Note at maturity (any such event, an “Event of Default”), the
      Collateral Agent shall have, in addition to all other rights and remedies
      granted to it in this Agreement, all rights and remedies of a secured party
      under the UCC and other applicable laws and, without limiting the generality
      of
      the foregoing, the Company agrees that to the extent permitted by applicable
      law:

     

    
      
        
        

      

      
        -L-

        
          

        

      

      
        
        

      

    

     

    (i) The
      Collateral Agent may peaceably and without notice enter any premises of the
      Company, take possession of any of the Collateral, remove or dispose of all
      or
      part of the Collateral on any premises of the Company or elsewhere, and
      otherwise collect, receive, appropriate and realize upon all or any part of
      the
      Collateral, and demand, give receipt for, settle, renew, extend, exchange,
      compromise, adjust, or sue for all or any part of the Collateral, as the
      Collateral Agent may determine.

     

    (ii) The
      Collateral Agent may require the Company to assemble all or any part of the
      Collateral and make it available to the Collateral Agent at any place and time
      designated by the Collateral Agent.

     

    (iii) To
      the
      extent permitted by an applicable license, the Collateral Agent may use or
      transfer any of the Company’s rights and interests in any Intellectual Property
      Collateral, by license, by sublicense or otherwise, on such conditions and
      in
      such manner as the Collateral Agent may determine.

     

    (iv) The
      Collateral Agent may secure the appointment of a receiver of the Collateral
      or
      any part there of (to the extent and in the manner provided by applicable
      law).

     

    (v) The
      Collateral Agent may withdraw (or cause to be withdrawn) any and all funds
      from
      any Deposit Accounts or securities accounts.

     

    (vi) The
      Collateral Agent may sell, resell, lease, use, assign, transfer or otherwise
      dispose of any or all of the Collateral in its then condition or following
      any
      commercially reasonable preparation or processing (utilizing in connection
      therewith any of the Company’s assets, without charge or liability to the
      Collateral Agent therefor) at public or private sale, by one or more contracts,
      in one or more parcels, at the same or different times, for cash or credit,
      or
      for future delivery without assumption of any credit risk, all as the Collateral
      Agent deems advisable; provided, however, that the Company shall be credited
      with the net proceeds of sale only when such proceeds are finally collected
      by
      the Collateral Agent. The Collateral Agent shall have the right, as agent for
      and representative of the Holders, upon any such public sale, and, to the extent
      permitted by law, upon any such private sale, to purchase the whole or any
      part
      of the Collateral so sold, free of any right or equity of redemption, which
      right or equity of redemption the Company hereby releases, to the extent
      permitted by law. The Company hereby agrees that the sending of notice by
      ordinary mail, postage prepaid, to the address of the Company set forth in
      Section 12 hereof, of the place and time of any public sale or of the time
      after
      which any private sale or other intended disposition is to be made, shall be
      deemed reasonable notice thereof if such notice is sent ten days prior to the
      date of such sale or other disposition or the date on or after which such sale
      or other disposition may occur. The Company recognizes that the Collateral
      Agent
      may be unable to make a public sale of any or all of the Investment Property,
      by
      reason of prohibitions contained in applicable securities laws or otherwise,
      and
      expressly agrees that a private sale to a restricted group of purchasers for
      investment and not with a view to any distribution thereof shall be considered
      a
      commercially reasonable sale.

     

    (b) LICENSE.
      Effective upon the occurrence and during the continuance of an Event of Default,
      for the purpose of enabling the Collateral Agent to exercise its rights and
      remedies under this Section 10 or otherwise in connection with this Agreement,
      the Company hereby grants to the Collateral Agent an irrevocable, non-exclusive
      and assignable license (exercisable without payment or royalty or other
      compensation to the Company) to use, license or sublicense any Intellectual
      Property Collateral, except to the extent a grant of such license would violate
      the terms of an existing agreement to which the Company is a party.

     

    
      
        
        

      

      
        -M-

        
          

        

      

      
        
        

      

    

     

    (c) APPLICATION
      OF PROCEEDS. The cash proceeds actually received from the sale or other
      disposition or collection of Collateral, and any other amounts received in
      respect of the Collateral the application of which is not otherwise provided
      for
      herein, shall be applied (pro rata,
      as
      applicable) (i) first,
      to any
      fees, costs, expenses and other amounts due to the Collateral Agent; (ii)
second,
      to any
      fees, costs, expenses and other amounts (other than principal and interest
      under
      the 2003 Senior Notes) due to the 2003 Holders under the 2003 Senior Notes
      and
      to any fees, costs, expense and other amounts (other than principal and interest
      under the 2005 Senior Notes) due to the 2005 Holders under the 2005 Senior
      Notes, on a pro rata
      basis;
      (iii) third,
      to
      accrued and unpaid interest due to the 2003 Holders under the 2003 Senior Notes
      and to accrued and unpaid interest due to the 2005 Holders under the 2005 Senior
      Notes, on a pro rata
      basis;
      and (iv) fourth,
      to
      principal due to the 2003 Holders under the 2003 Senior Notes and to principal
      due to the 2005 Holders under the 2005 Senior Notes, on a pro rata
      basis.
      Any surplus thereof which exists after payment and performance in full of the
      Secured Obligations shall be promptly paid over to the Company or otherwise
      disposed of as required by the UCC or other applicable law. The Company shall
      remain liable to each of the Holders for any deficiency which exists after
      any
      sale or other disposition or collection of Collateral to the extent permitted
      by
      applicable law. The
      Company shall maintain an updated registry which shall contain the names of
      each
      Holder and the Collateral Agent and the amounts due to each Holder and the
      Collateral Agent under this Section 10(c). The Company shall furnish the
      Collateral Agent with such registry, as the Collateral Agent shall from time
      to
      time request.

     

    SECTION
      11. CERTAIN
      WAIVERS. The Company waives, to the fullest extent permitted by law, (i) any
      right of redemption with respect to the Collateral, whether before or after
      sale
      hereunder, and all rights, if any, of marshalling of the Collateral or other
      collateral or security for the Senior Note Secured Obligations; (ii) any right
      to require the Collateral Agent or the Holders (A) to proceed against any
      Person, (B) to exhaust any other collateral or security for any of the Secured
      Obligations, (C) to pursue any remedy in the Collateral Agent’s or Holders’
power, or (D) to make or give any presentments, demands for performance, notices
      of nonperformance, protests, notices of protests or notices of dishonor in
      connection with any of the Collateral; and (iii) all claims, damages, and
      demands against the Collateral Agent or the Holders arising out of the
      repossession, retention, sale or application of the proceeds of any sale of
      the
      Collateral.

     

    SECTION
      12. NOTICES.
      Except as otherwise provided herein, any notice or demand which, by the
      provisions hereof, is required or which may be given to or served upon the
      parties hereto shall be in writing and, if by telegram, telecopy or telex,
      shall
      be deemed to have been validly served, given or delivered when delivery is
      confirmed electronically, if by personal delivery, shall be deemed to have
      been
      validly served, given or delivered upon actual delivery and, if mailed, shall
      be
      deemed to have been validly served, given or delivered three (3) business days
      after deposit in the United States mail, as registered or certified mail, with
      proper postage prepaid and addressed to the party or parties to be notified,
      at
      the following addresses (or such other address(es)) as a party may designate
      for
      itself by like notice:

     

    
      
        
        

      

      
        -N-

        
          

        

      

      
        
        

      

    

     

    
      
        	
                If
                  to Collateral Agent:

              	
                To
                  the address set forth for the Collateral Agent on the signatures
                  pages
                  attached hereto 

              
	 	 
	With a copy
                to:	McGuire,
                Craddock &
                Strother, P.C. 
	 	500 North
                Akard, Suite
                3550 
	 	Dallas,
                Texas 75201
                
	 	Facsimile:
                (214)
                954-6868 
	 	Attention:
                Jonathan
                Thalheimer, Esq. 
	 	 
	
                If
                  to the Original Holder:

              	
                S.
                  Kumar Chandrasekaran, Ph.D.

              
	 	
                14
                  Magee Court

              
	 	
                Moraga,
                  California 94556

              
	 	 
	
                If
                  to the Company:

              	
                InSite
                  Vision Incorporated

              
	 	
                965
                  Atlantic Avenue

              
	 	
                Alameda,
                  California 94501

              
	 	
                Facsimile:
                  (510) 747-1382

              
	 	
                Attention:
                  Sandi Heine (or if Sandi Heine is no longer an authorized officer
                  of the
                  Company, any other authorized officer)

              
	 	 
	
                With
                  a copy to:

              	
                O’Melveny
                  & Myers LLP

              
	 	
                2765
                  Sand Hill Road

              
	 	
                Menlo
                  Park, California 94025

              
	 	
                Facsimile:
                  (650) 473-2601

              
	 	
                Attention:
                  Timothy R. Curry, Esq.

              

      

    

     

    SECTION
      13. NO
      WAIVER; CUMULATIVE REMEDIES. No failure on the part of the Collateral Agent
      to
      exercise, and no delay in exercising, any right, remedy, power or privilege
      hereunder shall operate as a waiver thereof, nor shall any single or partial
      exercise of any such right, remedy, power or privilege preclude any other or
      further exercise thereof or the exercise of any other right, remedy, power
      or
      privilege. The rights and remedies under this Agreement are cumulative and
      not
      exclusive of any rights, remedies, powers and privileges that may otherwise
      be
      available to the Collateral Agent.

     

    SECTION
      14. 
      (a)
      COSTS AND EXPENSES. The Company agrees to pay on demand all reasonable costs
      and
      expenses to the Collateral Agent, and the reasonable fees and disbursements
      of
      the Collateral Agent’s counsel, in connection with the enforcement or attempted
      enforcement of, and preservation of any rights or interests under, this
      Agreement, including the protection, sale or collection of, or other realization
      upon, any of the Collateral, including all expenses of taking, collecting,
      holding, sorting, handling, preparing for sale, selling, or the like, and other
      such expenses of sales and collections of Collateral.

     

    (b) INDEMNIFICATION.
      The Company hereby agrees to indemnify the Collateral Agent, its agents, counsel
      and other advisors (each an “Indemnified Person”) against, and hold each of them
      harmless from, any and all liabilities, obligations, losses, claims, damages,
      penalties, actions, judgments, suits, costs, expenses or disbursements of any
      kind or nature whatsoever, including the reasonable fees and disbursements
      of
      counsel to an Indemnified Person, which may be imposed on, incurred by, or
      asserted against any Indemnified Person, in any way relating to or arising
      out
      of this Agreement or the transactions contemplated hereby or any action taken
      or
      omitted to be taken by it hereunder (the “Indemnified Liabilities”); PROVIDED,
      that the Company shall not be liable to any Indemnified Person for any portion
      of such Indemnified Liabilities to the extent they are found by a final decision
      of a court of competent jurisdiction to have resulted from such Indemnified
      Person’s gross negligence or willful misconduct. If and to the extent that the
      foregoing indemnification is for any reason held unenforceable, the Company
      agrees to make the maximum contribution to the payment and satisfaction of
      each
      of the Indemnified Liabilities which is permissible under applicable
      law.

     

    
      
        
        

      

      
        -O-

        
          

        

      

      
        
        

      

    

     

    (c) OTHER
      CHARGES. The Company agrees to indemnify the Collateral Agent against and hold
      it harmless from any and all present and future stamp, transfer, documentary
      and
      other such taxes, levies, fees, assessments and other charges made by any
      jurisdiction by reason of the execution, delivery, performance and enforcement
      of this Agreement.

     

    SECTION
      15. GENDER
      AND NUMBER. In this Agreement the masculine shall include the feminine and
      the
      singular shall include the plural and vice versa.

     

    SECTION
      16. GOVERNING
      LAW AND RELATED MATTERS. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
      IN
      ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK (INCLUDING, WITHOUT
      LIMITATION, SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
      YORK), WITHOUT RESORT TO THAT STATE’S CONFLICT-OF-LAW RULES, EXCEPT AS REQUIRED
      BY MANDATORY PROVISIONS OF LAW AND TO THE EXTENT THE VALIDITY OR PERFECTION
      OF
      THE SECURITY INTERESTS HEREUNDER, OR THE REMEDIES HEREUNDER, IN RESPECT OF
      ANY
      COLLATERAL ARE GOVERNED BY THE LAW OF A JURISDICTION OTHER THAN NEW
      YORK.

     

    ALL
      JUDICIAL PROCEEDINGS BROUGHT AGAINST THE COMPANY ARISING OUT OF OR RELATING
      TO
      THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
      JURISDICTION IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS
      AGREEMENT THE COMPANY ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
      GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID
      COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES
      TO
      BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
      AGREEMENT.
      The
      Company hereby agrees that service of all process in any such proceeding in
      any
      such court may be made by registered or certified mail, return receipt
      requested, to the Company at its address set forth in Section 12 hereof, such
      service being hereby acknowledged by the Company to be sufficient for personal
      jurisdiction in any action against the Company in any such court and to be
      otherwise effective and binding service in every respect. Nothing herein shall
      affect the right to serve process in any other manner permitted by law or shall
      limit the right of the Collateral Agent to bring proceedings against the Company
      in the courts of any other jurisdiction.

     

    THE
      COMPANY AND THE COLLATERAL
      AGENT
      HEREBY IRREVOCABLY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF
      ANY
      CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY
      DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND
      THE
      RELATIONSHIP THAT IS BEING ESTABLISHED.
      The
      scope of this waiver is intended to be all-encompassing of any and all disputes
      that may be filed in any court and that relate to the subject matter of this
      transaction, including without limitation contract claims, tort claims, breach
      of duty claims and all other common law and statutory claims. The Company and
      the Collateral Agent (i) acknowledge that this waiver is a material
      inducement to enter into a business relationship, that each has already relied
      on this waiver in entering into this relationship, and that each will continue
      to rely on this waiver in their related future dealings and (ii) further
      warrants and represents that each has reviewed this waiver with its legal
      counsel and that each knowingly and voluntarily waives its jury trial rights
      following consultation with legal counsel. THIS
      WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR
      IN
      WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
      SUPPLEMENTS OR MODIFICATIONS OF THIS AGREEMENT.
      In the
      event of litigation, this provision may be filed as a written consent to a
      trial
      by the court.

     

    
      
        
        

      

      
        -P-

        
          

        

      

      
        
        

      

    

     

    SECTION
      17. ENTIRE
      AGREEMENT; AMENDMENT. This Agreement contains the entire agreement of the
      parties with respect to the subject matter hereof and shall not be amended
      except by the written agreement of the Company and the Collateral
      Agent.

     

    SECTION
      18. SEVERABILITY.
      Whenever possible, each provision of this Agreement shall be interpreted in
      such
      manner as to be effective and valid under all applicable laws and regulations.
      If, however, any provision of this Agreement shall be prohibited by or invalid
      under any such law or regulation in any jurisdiction, it shall, as to such
      jurisdiction, be deemed modified to conform to the minimum requirements of
      such
      law or regulation, or, if for any reason it is not deemed so modified, it shall
      be ineffective and invalid only to the extent of such prohibition or invalidity
      without affecting the remaining provisions of this Agreement, or the validity
      or
      effectiveness of such provision in any other jurisdiction.

     

    SECTION
      19. COUNTERPARTS.
      This Agreement may be executed in any number of counterparts and by different
      parties hereto in separate counterparts, each of which when so executed shall
      be
      deemed to be an original and all of which taken together shall constitute but
      one and the same agreement.

     

    SECTION
      20. CONTINUING
      SECURITY INTEREST; TRANSFER OF NOTES. This Agreement shall create a continuing
      security interest in the Collateral and shall (i) remain in full force and
      effect until the payment in full of all of the Senior Note Secured Obligations,
      (ii) be binding on the Company and its successors and assigns, and (iii) inure
      together with the rights of Collateral Agent hereunder, to the benefit of
      Collateral Agent and its successors, transferees and assigns, as agent for
      and
      representative of the Holders. Without limiting the generality of the foregoing
      clause (iii), any Holder may assign or otherwise transfer any Senior Notes
      held
      by it to any other Person, and such other Person shall thereupon become vested
      with all the benefits in respect thereof granted to such Holder. 

     

    SECTION
      21. TERMINATION.
      Upon payment in full of all Senior Note Secured Obligations (i) this Agreement
      and any and all security interests, liens and/or other encumbrances granted
      by
      the Company to the Collateral Agent, as agent for and representative of the
      2003
      Holders and the 2005 Holders, shall, without any further action by the Company
      or the Collateral Agent, automatically terminate and be released and be of
      no
      further force and effect, (ii) the Collateral Agent shall promptly execute
      and
      deliver to the Company such agreements, releases, satisfactions, documents
      and
      instruments reasonably requested by the Company as shall be necessary to
      evidence termination of all security interests given by the Company to the
      Collateral Agent hereunder, and (iii) the Collateral Agent hereby authorizes
      the
      Company to file, record and/or deliver all reasonably requested agreements,
      releases, satisfactions, instruments, or documents evidencing the terminations
      and releases provided for herein and to file termination statements under the
      UCC with respect to the Collateral. Upon the receipt from the Company of written
      notice of a binding agreement with respect to a bona fide sale, collaboration,
      partnering transaction or similar transaction between the Company and a third
      party involving the sale or licensing of one or more Company assets which (x)
      will result in all Senior Note Secured Obligations being paid in full and (y)
      is
      anticipated to close within the ten (10) day period subsequent to the date
      of
      delivery of such written notice, all documents and instruments to be delivered
      pursuant to clause (ii) above shall be delivered by the Collateral Agent to
      counsel to the Company within five (5) business days of such written notice
      from
      the Company so as to enable such counsel to the Company to hold, in escrow,
      such
      documents and instruments in its possession pending the closing of such
      transaction and payment in full of all Senior Note Secured
      Obligations.

     

    
      
        
        

      

      
        -Q-

        
          

        

      

      
        
        

      

    

     

     

    [remainder
      of page left intentionally blank]

     

     

    
      
        
        

      

      
        -R-

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties hereto have duly executed this Agreement, as of
      the
      date first above written. 

     

    
      	“COMPANY” 	 	 	“COLLATERAL AGENT” 
	 	 	 	 
	INSITE VISION INCORPORATED, a Delaware
              corporation 	 	 	THE BANK OF NEW YORK 
	 	 	 	 
	By: _________________________	 	 	By: _________________________
	
              Name:

            	 	 	
              Name:

            
	
              Title:

            	 	 	
              Title:

            
	 	 	 	 
	 	 	 	Notice Address:  600
              E. Las Colinas Blvd.  Suite
              #1300 Irving,
              Texas 75039   
	 	 	 	
              Attn:
                Stephen
                Jerard           
                

            

    

     

    “ORIGINAL
      HOLDER”

    
S.
      KUMAR CHANDRASEKARAN, PH.D.

     

    ____________________________

     

    
 

    

    
      
        
          
          

        

        
          -S-COLLATERAL
      AGENCY AND INTERCREDITOR AGREEMENT

    

    This
      COLLATERAL
      AGENCY AND INTERCREDITOR AGREEMENT (this
      “Agreement”)
      dated
      as of December 30, 2005 is entered into among THE
      BANK OF NEW YORK,
      a
      company organized under the laws of the State of New York, as collateral agent
      (“Collateral
      Agent”)
      and
      (i) the undersigned holders from time to time of the 2003 Senior Notes (as
      defined below) (each, together with its successors and assigns, a “2003
      Holder”
and
      collectively the “2003
      Holders”)
      and
      (ii) the undersigned holders from time to time of the 2005 Senior Notes (as
      defined below) (each, together with its successors and assigns, a “2005
      Holder,”
      collectively the “2005
      Holders”
and,
      together with the 2003 Holders, each a “Holder,”
and
      collectively, the “Holders”),
      and,
      for purposes of Section 4.03 hereof only, InSite Vision Incorporated, a Delaware
      corporation (the “Company”).

     

    R
      E C I T A L S

     

    A. The
      Company has issued to each 2003 Holder a promissory note, the form of which
      is
      attached hereto as Exhibit B (each such note, as amended, restated, supplemented
      or modified from time to time, a “2003
      Senior Note”
and
      collectively, the “2003
      Senior Notes”)
      and
      has issued to each 2005 Holder a promissory note due June 30, 2006, as such
      date
      may be extended at the Company’s election in accordance with the terms of such
      promissory note, the form of which attached hereto as Exhibit C (each such
      note,
      as amended, restated, supplemented or modified from time to time, the form
      of
      which a “2005
      Senior Note,”
      collectively, the “2005
      Senior Notes”
and,
      collectively with the 2003 Senior Notes, the “Senior
      Notes”).

     

    B. The
      Company and the Collateral Agent, in its capacity as collateral agent and
      representative for the 2003 Holders and in its capacity as collateral agent
      and
      representative for the 2005 Holders, have entered into that certain Amended
      and
      Restated Security Agreement dated as of December 30, 2005 (as the same may
      be
      amended, restated, supplemented or otherwise modified from time to time, the
      “Security
      Agreement”)
      pursuant to which the Company has secured the obligations of the Company to
      the
      Holders under the Senior Notes (the “Obligations”).

     

    C. The
      Security Agreement, among other things, grants to the Collateral Agent, on
      behalf of the Holders, security interests in, and liens on, certain property
      of
      the Company and proceeds thereof as set forth in such agreement and may in
      the
      future grant to the Collateral Agent security interests in, and/or liens on,
      additional property of the Company (hereinafter all of such collateral shall
      be
      referred to collectively as the “Collateral”).

     

    D. The
      Collateral Agent and the Holders wish to enter into this Agreement to, among
      other things, set forth their understandings and agreements regarding the
      Holders’ and the Collateral Agent’s respective rights, obligations and
      priorities with respect to the Collateral and all proceeds thereof.

     

    NOW,
      THEREFORE,
      for
      good and valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged and the mutual covenants and promises set forth herein, each of
      the
      parties to this Agreement agrees as follows: 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SECTION
      I. DEFINITIONS;
      INTERPRETATION.

     

    1.01 Definitions.
      Unless
      otherwise indicated in this Agreement each term set forth in Exhibit
      A
      when
      used in this Agreement shall have the respective meaning given to that term
      in
Exhibit
      A.
      Initially capitalized terms used in this Agreement without definition are
      defined in the Security Agreement or the Senior Notes unless the context
      requires otherwise.

     

    1.02 Headings.
      Headings
      in this Agreement are for convenience of reference only and are not part of
      the
      substance hereof or thereof.

     

    1.03 Plural
      Terms.
      All
      terms defined in this Agreement in the singular form shall have comparable
      meanings when used in the plural form and vice versa.

     

    1.04 Time.
      All
      references in this Agreement to a time of day mean New York time, unless
      otherwise indicated.

     

    1.05 Construction.
      This
      Agreement is the result of negotiations among, and has been reviewed by the
      Holders, the Collateral Agent and their respective counsel. Accordingly, this
      Agreement shall be deemed to be the product of all parties hereto and no
      ambiguity shall be construed in favor of or against any Holder or the Collateral
      Agent.

     

    1.06 Conflicts.
      In the
      event of a conflict between the terms of this Agreement and the terms of the
      Security Agreement or any of the Senior Notes with respect to the matters
      related to the Collateral contained herein, as among the Collateral Agent and
      the Holders the terms of this Agreement shall control.

     

    1.07 Other
      Interpretive Provisions.
      References in this Agreement to “Recitals,” “Sections,” “Exhibits” and
“Schedules” are to recitals, sections, exhibits and schedules herein and hereto
      unless otherwise indicated. References in this Agreement to any document,
      instrument or agreement shall (a) include all exhibits, schedules and other
      attachments thereto, (b) include all documents, instruments or agreements issued
      or executed in replacement thereof, and (c) mean such document, instrument
      or
      agreement, or replacement or predecessor thereto, as amended, modified and
      supplemented from time to time and in effect at any given time. The words
“hereof,” “herein” and “hereunder” and words of similar import when used in this
      Agreement shall refer to this Agreement as a whole and not to any particular
      provision of this Agreement. The words “include” and “including” and words of
      similar import when used in this Agreement shall not be construed to be limiting
      or exclusive.

     

    SECTION
      II. COLLATERAL
      AND REMEDIES.
      

     

    2.01 Priority
      of Liens.
      The
      Collateral Agent, the 2003 Holders and the 2005 Holders hereby agree that the
      security interests and liens granted to the Collateral Agent under the Security
      Agreement shall be treated, as among the 2003 Holders and the 2005 Holders,
      as
      having equal priority and shall, except to the extent otherwise provided in
      Section 3.02,
      at all
      times be shared by the 2003 Holders and the 2005 Holders as provided herein
      regardless of any claim or defense (including any claims under the fraudulent
      transfer, preference or similar avoidance provisions of applicable bankruptcy,
      insolvency or other applicable Governmental Rules affecting the rights of
      creditors generally) to which the Collateral Agent or any Holder may be entitled
      or subject, and notwithstanding the relative timing of the filing of any
      financing statements by any party hereto with respect to the Collateral.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    2.02 Custody
      of Collateral.
      From
      and after the occurrence and during the continuance of an Event of Default,
      if
      any Holder acquires custody, control or possession of any Collateral other
      than
      any proceeds thereof distributed to such Holder pursuant to the terms of the
      Security Agreement or this Agreement, then such Holder shall promptly cause
      such
      Collateral to be delivered to, or put in the custody, possession or control
      of,
      the Collateral Agent for disposition or distribution in accordance with the
      provisions of this Agreement. From and after the occurrence and during the
      continuance of an Event of Default and until such time as the provisions of
      the
      immediately preceding sentence have been complied with, such Holder shall be
      deemed to hold such Collateral in trust for the parties entitled thereto under
      this Agreement. 

     

    2.03 Additional
      Collateral or Guaranties.
      None of
      the Holders shall accept a security interest in, or a Lien on, any collateral
      for the Obligations other than such Holder’s beneficial interest in the security
      interest in, and Lien on, the Collateral granted to the Collateral Agent under
      the Security Agreement; provided, however, that nothing contained in the
      foregoing shall be construed as prohibiting the opening and maintenance of
      deposit accounts for the account of the Company or its subsidiaries in the
      ordinary course of business. No Holder shall accept any guaranty of its
      Obligations from any Person unless such Person has previously or simultaneously
      guaranteed the Obligations held by each of the other Holders.

     

    2.04 Enforcement
      of Remedies.
      Upon the
      occurrence and during the continuance of any Event of Default, the Collateral
      Agent shall, subject to the other provisions of this Agreement, take such action
      with respect to such Event of Default as shall be reasonably directed by the
      Required Holders (a “Direction
      Notice”);
      provided,
      however,
      that,
      in the absence of a Direction Notice, the Collateral Agent may (but shall not
      be
      obligated to) take such action, or refrain from taking such action, with respect
      to such Event of Default as it shall deem advisable in the best interests of
      the
      Holders (other than the exercise of foreclosure remedies). Upon receipt by
      the
      Collateral Agent of a Direction Notice, the Collateral Agent shall seek to
      enforce the Security Agreement and to realize upon the Collateral in accordance
      with such Direction Notice; provided,
      however,
      that
      the Collateral Agent shall not be obligated to follow any Direction Notice
      if
      the Collateral Agent reasonably determines that such Direction Notice is in
      conflict with any provisions of any applicable Governmental Rule, this Agreement
      or the Security Agreement, or would in its reasonable determination otherwise
      subject it to liability and the Collateral Agent shall not, under any
      circumstances, be liable to any Holder, the Company or any other Person for
      following a Direction Notice. 

     

    2.05 Remedies
      of the Holders.
      Unless
      otherwise consented to in writing by the Required Holders,
      no
      Holder, individually or together with any other Holder, shall have the right
      to,
      nor shall it, exercise or enforce any of the rights, powers or remedies which
      the Collateral Agent is authorized to exercise or enforce under this Agreement
      or the Security Agreement.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    2.06 Holder
      Information.
      If
      the
      Collateral Agent proceeds to foreclose upon, collect, sell or otherwise dispose
      of or take any other action with respect to any or all of the Collateral or
      to
      enforce any provisions of the Security Agreement or takes any other action
      pursuant to this Agreement or any provision of the Security Agreement or
      requests directions from the Holders as provided herein, upon the request of
      the
      Collateral Agent, each of the Holders (or any agent of or representative for
      such Holder) shall promptly deliver a written notice to the Collateral Agent
      and
      each of the other Holders setting forth (a) the aggregate amount of principal,
      interest, fees, and other Obligations owing to such Holder under the applicable
      Senior Notes as of the date specified by the Collateral Agent in such request
      and (b) such other information as the Collateral Agent may reasonably
      request.

     

    SECTION
      III. DISTRIBUTION
      OF PROCEEDS.

     

    3.01 Other
      Collateral Proceeds Account.
      

     

    (a) The
      Collateral Agent shall establish a collateral proceeds account subject to the
      Lien created by the Security Agreement in the name of the Collateral Agent
      into
      which the Proceeds (as defined below) shall be deposited and from which only
      the
      Collateral Agent may effect withdrawals (the “Other
      Collateral Proceeds Account”).
      Such
      amounts shall be held by the Collateral Agent in the Other Collateral Proceeds
      Account and shall be distributed from time to time by the Collateral Agent
      in
      accordance with Section 3.02.
      

     

    (b) Following
      the occurrence and during the continuance of an Event of Default, the following
      proceeds, payments and amounts (collectively, the “Proceeds”)
      shall
      be deposited and held by the Collateral Agent in the Other Collateral Proceeds
      Account and shall be distributed from time to time by the Collateral Agent
      to
      the Holders in accordance with Section 3.02:

     

    (i) any
      proceeds of any collection, recovery, receipt, appropriation, realization or
      sale of any or all of the Collateral through the enforcement of the Security
      Agreement received by the Collateral Agent or any Holder (the “Other
      Collateral Proceeds”);
      and

     

    (ii) any
      amounts held in the Other Collateral Proceeds Account at the time an Event
      of
      Default occurs.

     

    Each
      Holder agrees to deliver any Proceeds to the Collateral Agent within three
      (3)
      Business Days after receipt of such Proceeds, or if later (in the case of clause
      (ii)), within three (3) Business Days of being advised of the occurrence of
      an
      Event of Default. Until such time as the provisions of the immediately preceding
      sentence have been complied with, such Holder shall be deemed to hold such
      Proceeds in trust for the parties entitled thereto under this Agreement.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    3.02 Distribution
      of Proceeds.
      The
      Collateral Agent shall immediately and from time-to-time distribute the Proceeds
      which are held in the Other Collateral Proceeds Account in accordance with
      Section 10(c) of the Security Agreement, it being understood, however, that
      the
Collateral
      Agent may deduct from any distribution the amount of all Collateral Agent’s fees
      and expenses that have not been paid by the Company or the Holders pursuant
      to
      Section 4.03 or otherwise. The Collateral Agent shall make such distributions
      as
      promptly as reasonably practicable after the deposit of any Proceeds into the
      Other Collateral Proceeds Account. 

     

    3.03 Distributions
      Recovered.
      Notwithstanding
      anything to the contrary contained in this Agreement, in each case in which
      any
      proceeds (or the value thereof) or payments are recovered as a preferential
      or
      otherwise voidable payment (whether by a trustee in bankruptcy or otherwise)
      from the party which distributed those proceeds to another party or parties
      under this Agreement (the “Distributor”),
      each
      party to whom any of those proceeds were ultimately distributed (a “Distributee”)
      shall,
      upon the Distributor’s notice of the recovery to the Distributee, return to the
      Distributor an amount equal to the Distributee’s ratable share of the amount
      recovered, together with a ratable share of interest thereon to the extent
      the
      Distributor is required to pay interest thereon computed on the amount to be
      returned from the date of the recovery. For purposes of this Agreement,
“proceeds”
      means
      any payment (whether made voluntarily or involuntary) from any source, including
      any offset of any deposit or other indebtedness, any security (including any
      guaranty or any collateral) or otherwise.

     

    SECTION
      IV. THE
      COLLATERAL AGENT AND RELATIONS AMONG SECURED CREDITORS.

     

    4.01 Appointment,
      Powers and Immunities.
      Each
      Holder has appointed and authorized the Collateral Agent to act as its agent
      hereunder and under the Security Agreement with such powers as are expressly
      delegated to the Collateral Agent by the terms of the Security Agreement and
      this Agreement, together with such other powers as are reasonably incidental
      thereto. The Collateral Agent shall not have any duties or responsibilities
      except those expressly set forth in the Security Agreement or this Agreement.
      The Collateral Agent shall not have any fiduciary relationship with the Holders
      or any Holder, and no implied covenants, functions, responsibilities, duties,
      obligations or liabilities shall be read into this Agreement or the Security
      Agreement or otherwise exists against Collateral Agent. Notwithstanding anything
      to the contrary contained herein, the Collateral Agent shall not be required
      to
      take any action which is contrary to this Agreement, the Security Agreement
      or
      any applicable Governmental Rule. The Collateral Agent may employ agents and
      attorneys-in-fact and shall not be responsible to the Holders or any Holder
      for
      the negligence or misconduct of any such agents or attorneys-in-fact selected
      by
      it with reasonable care. 

     

    4.02 Reliance
      by the Collateral Agent. 

     

    The
      Collateral Agent shall be fully justified in failing or refusing to take any
      action under this Agreement or the Security Agreement as it deems appropriate
      or
      it shall first be indemnified to its satisfaction by the Holders against any
      and
      all liability and expense that may be incurred by it by reason of taking or
      continuing to take any such action. The Collateral Agent shall in all cases
      be
      fully protected by the Holders in acting, or in refraining from acting,
      hereunder or under the Security Agreement in accordance with instructions (or
      pending receipt of instructions) of the Required Holders, or any other
      instructing group of holders specified hereunder or under the Security Agreement
      or the Senior Notes, and such instructions of the Required Holders and any
      action taken or failure to act pursuant thereto shall be binding on all of
      the
      Holders and all future holders of the Senior Notes.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    4.03 Collateral
      Agent Fees; Expenses. 

     

    (a) The
      Company, by its execution of the signature page of this Agreement, hereby agrees
      to pay to the Collateral Agent, for its own account, a collateral agent fee
      in
      the amount and on the dates of payment set forth in the Collateral Agent Fee
      Letter (the “Collateral
      Agency Fee”).
      In
      addition, the Company hereby agrees to pay promptly on demand all costs and
      expenses required to be paid by the Company pursuant to the Collateral Agent
      Fee
      Letter. If
      any
      amounts required to be paid by the Company under this Agreement, the Security
      Agreement or the Senior Notes remain unpaid after such amounts are due, the
      Company shall pay interest on the aggregate, outstanding balance of such amounts
      from the date due until those amounts are paid in full at a per annum rate
      in
      accordance with the default interest rate provided therein. Interest shall
      be
      calculated on the basis of a 360-day year of twelve 30-day months.

     

    (b) The
      Collateral Agent shall not be obliged to expend its own funds in performing
      its
      obligations under this Agreement or the Security Agreement. 

    

    4.04 Resignation
      or Removal of the Collateral Agent.
      Subject
      to the appointment and acceptance of a successor Collateral Agent in this
      Section 4.04, the Collateral Agent may resign as collateral agent by delivering
      not less than thirty (30) days prior written notice to the Holders and the
      Collateral Agent may be removed at any time with or without cause by the
      Required Holders. Upon any such resignation or removal, the Required Holders
      shall have the right to appoint a successor Collateral Agent. If no successor
      Collateral Agent shall have been appointed by the Required Holders and shall
      have accepted such appointment within thirty (30) days after the retiring
      Collateral Agent’s giving of notice of resignation or the Required Holders’
removal of the retiring Collateral Agent, then the retiring Collateral Agent’s
      resignation shall nevertheless thereupon become effective and the Holders shall
      assume and perform all of the duties of the Collateral Agent under the Security
      Agreement until such time, if any, as the Required Holders appoint a successor
      agent. Upon the acceptance of any appointment as Collateral Agent hereunder
      by a
      successor Collateral Agent, such successor Collateral Agent shall thereupon
      succeed to and become vested with all the rights, powers, privileges and duties
      of the retiring Collateral Agent, and the retiring Collateral Agent shall be
      discharged from its duties and obligations hereunder. After any retiring
      Collateral Agent’s resignation or removal hereunder as Collateral Agent, the
      provisions of this Section 4 shall continue in effect for its benefit in respect
      of any actions taken or omitted to be taken by it while it was acting as
      Collateral Agent. 

     

    4.05 Appointment
      of Co-Collateral Agent.
      The
      Collateral Agent may and, upon the request of the Required Holders, shall by
      an
      instrument in writing delivered to the Company and Purchasers, appoint a bank
      or
      trust company or an individual to act as separate Collateral Agent or
      co-Collateral Agent in a jurisdiction where the Collateral Agent is disqualified
      from acting or for any other purpose deemed by the Collateral Agent or the
      Required Holders to be advantageous to their respective interests, such separate
      Collateral Agent or co-Collateral Agent to exercise only such rights and to
      have
      only such duties as shall be specified in the instrument of appointment. The
      Company will pay the reasonable compensation and expenses of any such separate
      Collateral Agent or co-Collateral Agent and, if requested by the Collateral
      Agent, such separate Collateral Agent or co-Collateral Agent or the Required
      Holders, the Company will enter into an amendment to this Agreement,
      satisfactory in substance and form to the Collateral Agent, the Required
      Holders, such separate Collateral Agent or co-Collateral Agent and the Company,
      confirming the rights and duties of such separate Collateral Agent or
      co-Collateral Agent.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    4.06 Authorization;
      Liability of Collateral Agent and Reliance. 

     

    (a) Each
      Holder hereby authorizes the Collateral Agent to (i) execute, deliver and
      perform the Security Agreement to which the Collateral Agent is or is intended
      to be a party, (ii) subject to the other terms and provisions hereof, exercise
      and enforce any or all rights, powers and remedies provided to the Collateral
      Agent by the Security Agreement, this Agreement, any applicable Governmental
      Rule or any other document, instrument or agreement, whether before or after
      the
      occurrence of an Event of Default, and (iii) subject to the other terms and
      provisions hereof, take any other action under the Security Agreement which
      it
      shall deem advisable in the best interests of the Holders. Each Holder shall
      be
      bound by all of the agreements of the Collateral Agent contained in this
      Agreement and the Security Agreement and by all other actions taken by the
      Collateral Agent pursuant to this Agreement and the Security
      Agreement.

     

    (b) Collateral
      Agent shall not (i) be liable for any action taken or omitted to be taken by
      it
      under or in connection with the Security Agreement or the transactions
      contemplated hereby, except to the extent that any of the damages or losses
      resulting from the foregoing are found by a final and nonappealable decision
      of
      a court of competent jurisdiction to have directly and primarily resulted from
      its or such person’s own gross negligence or willful misconduct in connection
      with its duties expressly set forth herein, (ii) be liable for any apportionment
      or distribution of payments made by it in good faith and if any such
      apportionment or distribution is subsequently determined to have been made
      in
      error, other than an error resulting from its own gross negligence or willful
      misconduct, the sole recourse of any Holder to whom payment was due but not
      made
      shall be to recover from other Holders any payment in excess of the amount
      to
      which they are determined to be entitled (and such other Holders hereby agree
      to
      return to such Holder any such erroneous payments received by them) , or (iii)
      be responsible in any manner to any Holder or its transferees for any recital,
      statement, representation or warranty made by the Company or any officer
      thereof, contained herein, in the Senior Notes or in the Security Agreement,
      or
      in any certificate, report, statement or other document referred to or provided
      for in, or received by the Collateral Agent under or in connection with, the
      Security Agreement or the Senior Notes, or the validity, effectiveness,
      genuineness, enforceability or sufficiency of the Security Agreement or the
      Senior Notes (including the attachment or perfection of liens by reason of
      the
      Security Agreement or otherwise), or for any failure of the Company or any
      other
      party to any Senior Note to perform its obligations hereunder or thereunder.
      In
      no event shall the Collateral Agent be liable for punitive, special,
      consequential, incidental, exemplary or other similar damages. The Collateral
      Agent shall be under no obligation to any Holder or transferee to ascertain
      or
      to inquire as to the observance or performance of any of the agreements
      contained in, or conditions of, the Security Agreement or the Senior Notes
      or
      the existence or possible existence of any Default or Event of Default, or
      to
      inspect the properties, books or records of the Company or any Affiliate
      thereof. The Collateral Agent shall not be deemed to have knowledge or notice
      of
      the occurrence of any Event of Default unless it has received notice from a
      Holder or the Company referring to this Agreement, describing such Event of
      Default and stating that such notice is a “notice of default.”

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (c) The
      Collateral Agent shall be entitled to rely, and shall be fully protected in
      relying, upon any writing, communication, signature, resolution, representation,
      notice, consent, certificate, affidavit, letter, telegram, facsimile, telex
      or
      telephone message, statement or other document or conversation believed by
      it in
      good faith to be genuine and correct and to have been signed, sent or made
      by
      the proper Person or Persons, and upon advice and statements of legal counsel,
      independent accountants and other experts selected by the Collateral Agent.
      The
      Collateral Agent shall be entitled to rely upon the advice of legal counsel,
      independent accountants, and other experts selected by such Person in its sole
      discretion. The Collateral Agent shall have no obligation to take any action
      if
      it believes, in good faith, that such action is deemed to be illegal or exposes
      the Collateral Agent to any liability for which the Collateral Agent has not
      received satisfactory indemnification.

     

    4.07 Free
      Exercise of Rights.
      Except
      as specifically provided herein and in the Security Agreement, (a) each Holder
      may exercise its rights and remedies under this Agreement, the Security
      Agreement, its Senior Note(s) and all related documents, instruments and
      agreements for its sole benefit and (b) no Holder shall have any obligation
      or
      duty to exercise any such rights or duties for the benefit of any other
      Holder.

     

    4.08 Indemnification
      by the Holders With Respect to Section 2.05.
      Without
      limiting the obligations of the Company hereunder, each Holder hereby agrees
      to
      indemnify each other Holder (any such Holder, a “Harmed
      Holder”)
      for
      any and all liabilities, obligations, losses, damages, penalties, actions,
      judgments, suits, costs, expenses or disbursements of any kind or nature
      whatsoever which may at any time be imposed on, incurred by or asserted against
      any Harmed Holder in any way relating to or arising out of an action that would
      cause a breach by such Holder of Section 2.05 of this Agreement. The provisions
      of this Section 4.08 shall survive the payment in full of all the Obligations
      and the termination of this Agreement, the Security Agreement and the Senior
      Notes, and shall continue to apply to any Holder which ceases to be a Holder
      hereunder.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    4.09 Indemnification
      of Collateral Agent by the Holders.
      Each
      Holder hereby agrees to indemnify the Collateral Agent in its capacity as such
      (in each case to the extent not reimbursed by the Company and without limiting
      the obligation of the Company to do so), ratably according to the respective
      percentage that the principal amount of its Senior Note or Senior Notes bear
      to
      the principal of all outstanding Senior Notes in effect on the date on which
      indemnification is sought under this Section (or, if indemnification is sought
      after the date upon which the Senior Notes shall have been paid in full, ratably
      in accordance with such percentages immediately prior to such date) from and
      against any and all liabilities, obligations, losses, damages, penalties,
      actions judgments, suits, costs, expenses or disbursements of any kind
      whatsoever that may at any time (whether before or after the payment of the
      Senior Notes) be imposed on, incurred by or asserted against Collateral Agent
      in
      any way relating to or arising out of, this Agreement, the Security Agreement
      or
      the Senior Notes or any documents contemplated by or referred to herein or
      therein or the transactions contemplated hereby or thereby or any action taken
      or omitted by such Collateral Agent under or in connection with any of the
      foregoing (including any indemnities, expenses or other amounts paid or payable
      by the Collateral Agent pursuant to indemnification or reimbursement provisions
      contained in the Security Agreement); provided that no Holder shall be liable
      for the payment of any portion of such liabilities, obligations, losses,
      damages, penalties, actions, judgments, suits, costs, expenses or disbursements
      that are found by a final and nonappealable decision of a court of competent
      jurisdiction to have resulted from the Collateral Agent’s gross negligence or
      willful misconduct. The agreements in this Section shall survive the payment
      of
      the Senior Notes and all other amounts payable under the Security Agreement
      and
      the Senior Notes. 

     

    SECTION
      V. MISCELLANEOUS.

     

    5.01 Third
      Party Beneficiaries.
      Nothing
      expressed in or to be implied from this Agreement is intended to give, or shall
      be construed to give, any Person (including the Company and its Subsidiaries),
      other than the Holders and the Collateral Agent, their permitted successors
      and
      assigns hereunder any benefit or legal or equitable right, remedy or claim
      under
      or by virtue of this Agreement or under or by virtue of any provision herein.
      

     

    5.02 Notices.
      All
      notices and other communications provided for herein, (including any
      modifications of, or waivers or consents under this Agreement) shall be sent
      in
      accordance with Section 13 of the Security Agreement or if to the Collateral
      Agent, to the address provided below,
      or to
      such other address specified in writing by the Collateral Agent and provided
      to
      the Company and Holders:

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    THE
      BANK
      OF NEW YORK

    600
      E.
      Las Colinas Blvd. Ste. #1300

    Irving,
      Texas 75039

    
      Attention:
        Stephen Jerard 

      Telecopy:
        (972) 401-8557 

      Telephone:
        (972) 401-8600

    

    5.03 Amendments;
      Waivers.
      Any
      term, covenant, agreement or condition of this Agreement or the Security
      Agreement may be amended or waived if such amendment or waiver is in writing
      and
      is signed by Required Holders; provided,
      however
      that: 

     

    (a) Any
      amendment or waiver which affects the rights, duties, exculpations or
      indemnities of, or to, the Collateral Agent must be in writing and be signed
      also by the Collateral Agent; 

     

    (b) Any
      amendment or waiver which waives or amends this Section 5.03 must be in writing
      and signed by all Holders; 

     

    (c) Any
      amendment to (i) the Security Agreement, or (ii) to Section 4.03 or Section
      5.03
      of this Agreement which with respect to this subpart (ii) by its terms increases
      the obligations of the Company hereunder, must be in writing and acknowledged
      and agreed to by the Company;
      and

     

    (d) 
      Any
      amendment which affects the holders of the 2003 Senior Notes or the 2005 Senior
      Notes in a manner that is different from the holders of the 2005 Senior Notes
      or
      the holders of the 2003 Senior Notes, respectively, must be in writing and
      signed by the holders of greater than 50% in principal amount, at the time
      outstanding, of the 2003 Senior Notes or the 2005 Senior Notes, as the case
      may
      be, subject to such amendment.

     

    No
      failure or delay by the Collateral Agent or the Holders in exercising any right
      hereunder shall operate as a waiver thereof or of any other right nor shall
      any
      single or partial exercise of any such right preclude any other further exercise
      thereof or of any other right. Unless otherwise specified in such waiver or
      consent, a waiver or consent given hereunder shall be effective only in the
      specific instance and for the specific purpose for which given. Except as set
      forth in clause (c) above, the Company’s consent is not required to amend any
      provision of this Agreement.

     

    5.04 Releases
      of Collateral.
      The
      parties hereto agree that the Collateral Agent shall release (and hereby
      authorize the Collateral Agent to release) all or any portion of the Collateral
      (other than in connection with the exercise of its rights and remedies pursuant
      to Section 2.04) upon the receipt by the Collateral Agent of a written notice
      from the Required Holders stating that the Required Holders have approved the
      release of all of the Collateral or such portion of the Collateral specified
      in
      such notice. Upon receipt of such written notice, the Collateral Agent shall,
      at
      the Company’s expense, execute and deliver such releases of its security
      interest in, or Lien on, such Collateral to be released, and provide a copy
      of
      such releases to the Holders.
      Notwithstanding the foregoing, the parties hereto agree that the Collateral
      Agent shall release all of the Collateral without the written approval of the
      Required Holders in accordance with Sections 20 and 21 of the Security
      Agreement.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    5.05 Successors
      and Assigns.
      This
      Agreement and the Security Agreement shall be binding upon and inure to the
      benefit of the Holders and the Collateral Agent and their respective successors
      and permitted assigns, except that no Person other than a Holder (including
      any
      Person which becomes a holder of Senior Notes after the date hereof) and the
      Collateral Agent (including any Person which becomes a successor Collateral
      Agent pursuant to Section 4.04) shall have any rights and remedies under this
      Agreement or the Security Agreement. Any purported assignment that does not
      comply with the Security Agreement shall be null and void. Subject to the
      foregoing limitations, all references in this Agreement to any Person shall
      be
      deemed to include all successors and permitted assigns of such
      Person.

     

    5.06 Counterparts.
      This
      Agreement may be executed in any number of counterparts, all of which taken
      together will constitute one and the same instrument and any of the parties
      hereto may execute this Agreement by signing any such counterpart.

     

    5.07 GOVERNING
      LAW.
      THIS
      AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF
      THE
      STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THE STATE OF
      NEW
      YORK.

     

    5.08 Merger.
      This
      Agreement, the Security Agreement and the Senior Notes supersede all prior
      agreements, written or oral, among the parties with respect to the subject
      matter of such agreements.

     

    5.09 Partial
      Invalidity.
      If at
      any time any provision of this Agreement is or becomes illegal, invalid or
      unenforceable in any respect under any applicable Governmental Rule of any
      jurisdiction, neither the legality, validity or enforceability of the remaining
      provisions of this Agreement nor the legality, validity or enforceability of
      such provision under the Governmental Rules of any other jurisdiction shall
      in
      any way be affected or impaired thereby.

     

    5.10 Jury
      Trial.
      EACH OF
      THE COLLATERAL AGENT AND THE HOLDERS TO THE FULLEST EXTENT PERMITTED BY
      APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY OF ANY
      CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY THIS AGREEMENT OR
      IN
      ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
      HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT, OR THE TRANSACTIONS
      RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
      WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH OF THE COLLATERAL
      AGENT AND THE HOLDERS HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND,
      ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND
      THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY
      OF
      THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE COLLATERAL
      AGENT AND THE HOLDERS TO THE WAIVER OF THEIR RIGHT TO TRIAL BY
      JURY.

     

    
      5.11 Final
        Agreement.
        The written documents, agreements and instruments referred to above represent
        the final agreements between the parties and may not be contradicted by evidence
        of prior, contemporaneous, or subsequent oral agreements of the parties.
        There
        are no unwritten oral agreements between the parties.

    

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

    

    [Remainder
      of page intentionally left blank]

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      the
      parties hereto have executed this Agreement as of the date first set forth
      above.

     

    
      	 	 	THE
              BANK
              OF NEW YORK,
              as the Collateral Agent
	 	 	 
	 	 	By:	 
	
            	 	Name:
	
            
	 	 	
              Title: 

            	 

    

    
       

      
        	 	 	COMPANY:
	 	 	 
	 	 	INSITE
                VISION INCORPORATED
	 	 	 
	 	 	By:	 
	
              	 	Name:
	
              
	 	 	
                Title: 

              	 

      

       

    

     

    
      
        
        

      

      
        -i-

        
          

        

      

      
        
        

      

    

    THE
      UNDERSIGNED HEREBY ACKNOWLEDGE AND CONSENT TO THE FOREGOING AND EXPRESSLY
      ACKNOWLEDGE AND AGREE THAT PAYMENTS MADE TO ANY SECURED PARTY THAT CONSTITUTE
      COLLATERAL PROCEEDS OR SETOFF PROCEEDS SHALL BE DEEMED TO SATISFY OBLIGATIONS
      OWED TO SUCH SECURED PARTY ONLY TO THE EXTENT APPLIED TO SATISFY SUCH
      OBLIGATIONS IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT:

     

    [HOLDER
      NAME]

     

    By:
      [Holder Name]

     

    

    By:
      ____________________________

    Name:
      [_____________________]

    Title:
      [_____________________]

    

    Notice
      Address:

    

    
      
        
        

      

      
        -ii-

        
          

        

      

      
        
        

      

    

    

    Exhibit
      A

    

    Glossary

    

    

    “Collateral”
has
      the
      meaning given to that term in Recital E of this Agreement.

     

    “Collateral
      Agent”
has
      the
      meaning given to that term in the introductory paragraph of this
      Agreement.

     

    “Collateral
      Agent Fee Letter”
means
      the Fee Schedule dated December 29, 2005 from the Collateral Agent addressed
      to
      the Company with respect to the collateral agent fee to be paid from the Company
      to the Collateral Agent.

     

    “Company”
has
      the
      meaning given to that term in Recital A to this Agreement.

     

    “Direction
      Notice”
has
      the
      meaning given to that term in Section 2.04 of this Agreement.

     

    “Distributee”
has
      the
      meaning given to that term in Section 3.03 of this Agreement.

     

    “Distributor”
has
      the
      meaning given to that term in Section 3.03 of this Agreement.

     

    “Event
      of Default”
means
      any event of default, event of acceleration or other event which upon the
      occurrence thereof the obligations thereunder may be accelerated or become
      payable upon demand, pursuant to the 2003 Senior Notes or the 2005 Senior
      Notes.

     

    “Governmental
      Authorization”
means
      any permit, license, registration, approval, finding of suitability,
      authorization, plan, directive, order, consent, exemption, waiver, consent
      order
      or consent decree of or from, or notice to, action by or filing with, any
      Governmental Authority.

     

    “Governmental
      Rule”
means
      any law, rule, regulation, ordinance, order, code interpretation, judgment,
      decree, directive, Governmental Authorization guidelines, policy or similar
      form
      of decision of any Governmental Authority.

     

    “Holders”
has
      the
      meaning given to that term in the introductory paragraph of this
      Agreement.

     

    “Required
      Holders”
means,
      at any time, the holders of greater than 50% in principal amount of the 2003
      Senior Notes at the time outstanding and the 2005 Senior Notes at the time
      outstanding, collectively.

     

    “Security
      Agreement”
has
      the
      meaning given to that term in Recital A of this Agreement.

     

    “Obligations”
has
      the
      meaning given to that term in Recital B to this Agreement.

     

    
      
        
        

      

      
        -iii-

        
          

        

      

      
        
        

      

    

     

    “Other
      Collateral Proceeds”
has
      the
      meaning given to that term in Section 3.01(b)(i) of this Agreement.

     

    “Other
      Collateral Proceeds Account”
has
      the
      meaning given to that term in Section 3.01(a) of this Agreement.

     

    “Proceeds”
has
      the
      meaning given to that term in Section 3.01(b) of this Agreement.

     

    “Senior
      Notes”
has
      the
      meaning given to that term in Recital A to this Agreement.

     

    

    
      
        
        

      

      
        -iv-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00101-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00101-of-00352.parquet"}]]