Document:

Unassociated Document

    FIRST
      AMENDMENT 

     

    TO
      SUBSCRIPTION AGREEMENT

     

    This
      first amendment (the “Amendment”)
      to
      Subscription Agreement, dated as of August 2, 2006 (the “Agreement”),
      by
      and among InSite Vision Incorporated, a Delaware corporation (the “Company”),
      and
      each of the subscribers (collectively, the “Subscribers”)
      set
      forth on Schedule 1 thereto is hereby made as of August 8, 2006, by and among
      the Company and each of the Subscribers. All capitalized terms not defined
      herein shall have the meanings ascribed to them in the Agreement (as amended
      hereby).

     

    RECITALS

     

    WHEREAS,
      the
      Company and each of the Subscribers to the Agreement wish to amend the Agreement
      to provide for additional warrant coverage to the Subscribers under certain
      conditions and the Agreement may be amended by agreement of the Company and
      each
      of the Subscribers;

     

    NOW,
      THEREFORE,
      in
      consideration of the foregoing and of the covenants and agreements contained
      herein, and for other good and valuable consideration, the receipt and
      sufficiency of which are hereby acknowledged, the parties hereto hereby agree
      to
      amend the Agreement in the following respects:

     

    1. Amendment
      of Section 1.1.
      Section
      1.1 of the Agreement is hereby amended to add a new subsection (c) to read
      in
      its entirety as follows:

     

    “(c) In
      the
      event that the U.S. Food and Drug Administration (the “FDA”)
      refuses to file the AzaSite New Drug Application that was submitted to the
      FDA
      by the Company on June 28, 2006, the Company will issue to each Subscriber
      an
      additional warrant (each, an “FDA
      Warrant”
and
      collectively, the “FDA
      Warrants”)
      to
      purchase a number of shares of Common Stock equal to 20% of the Common Stock
      purchased by each such Subscriber pursuant to Section 1.1(a) of the Agreement,
      which warrant shall have a term of 5 years from the date of issuance described
      below and shall be exercisable for cash at a per share exercise price equal
      to
      115% of the weighted average closing sale price of the Company’s Common Stock
      for the 5 trading days immediately succeeding the date on which the Company
      receives written notification from the FDA of such refusal.”

    

    2. Amendment
      of Section 6.1.
      Subsection (e) of Section 6.1 of the Agreement is hereby deleted and replaced
      in
      its entirety as follows:

     

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

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    

    3. Survival.
      Except
      as modified hereby, the Agreement continues in full force and effect, unmodified
      in any way.

     

    4. Counterparts.
      This
      Amendment may be executed in two or more counterparts, each of which shall
      be
      deemed an original, but all of which together shall constitute one and the
      same
      amendment. 

     

    5. Effectiveness.
      This
      Amendment shall be effective when executed by the Company and each of the
      Subscribers set forth on Schedule A of the Agreement. 

     

    6. Governing
      Law.
      This
      Amendment shall be governed by and construed under the laws of the State of
      New
      York, without regard to the conflict of laws provisions thereof.

     

    

     

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      of page intentionally left blank]

    

    
      
         

      

      
         

        
          

        

      

      
         

        
        

      

    

    IN
      WITNESS WHEREOF, the parties have executed this First Amendment to Subscription
      Agreement as of the date first above written.

     

    

     

    
      	 	
              INSITE
                VISION INCORPORATED

            
	 	 
	 	
              By:
                ___________________________________

            
	 	
              Name:
                S. Kumar Chandrasekaran, Ph. D.

            
	 	
              Title:
                President and Chief Executive Officer

            
	 	 
	 	 
	 	
              SUBSCRIBER

            
	 	 
	 	 
	 	 
	 	
              By:
                ___________________________________

            
	 	 
	 	
              Name:
                ___________________________________

            
	 	 
	 	
              Title:
                ___________________________________Unassociated Document

    THIS
      WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN ACQUIRED
      FOR
      INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
      AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAW. THIS WARRANT AND SUCH
      SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE PLEDGED, TRANSFERRED OR
      HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR DELIVERY OF AN OPINION
      OF
      COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
      OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE WITH THE
      ACT
      OR UNLESS SOLD IN FULL COMPLIANCE WITH RULE 144 UNDER THE ACT.

    

    

    

    INSITE
      VISION INCORPORATED

    

    

    Warrant
      for the Purchase of Shares of 

    Common
      Stock

    

    Date:
      August 15,
      2006

    

    
      	
              No.
                [·]

            	 	
              [·]
                Shares

            

    

    

    

    FOR
      VALUE
      RECEIVED, INSITE VISION INCORPORATED, a Delaware corporation (the “Company”),
      hereby certifies that [·],
      its
      designee or its permitted assigns is entitled to purchase from the Company,
      at
      any time or from time to time, commencing on August 15, 2006 and prior to 5:00
      P.M., New York City time, on August 15, 2011, [·]
      fully
      paid and non-assessable shares of common stock, $0.01 par value per share,
      of
      the Company for an aggregate purchase price of $[·].
      (Hereinafter, (i) said common stock, $0.01 par value per share, of the Company,
      is referred to as the “Common
      Stock”;
      (ii)
      the shares of the Common Stock purchasable hereunder or under any other Warrant
      (as hereinafter defined) are referred to as the “Warrant
      Shares”;
      (iii)
      the aggregate purchase price payable for the Warrant Shares purchasable
      hereunder is referred to as the “Aggregate
      Warrant Price”;
      (iv)
      the price payable (initially $1.51 per share subject to adjustment) for each
      of
      the Warrant Shares hereunder is referred to as the “Per
      Share Warrant Price”;
      (v)
      this Warrant, all similar Warrants issued on the date hereof in connection
      with
      the Subscription Agreement (as defined below) and all warrants hereafter issued
      in exchange or substitution for this Warrant or such similar Warrants are
      referred to as the “Warrants”;
      (vi)
      the holder of this Warrant is referred to as the “Holder”
and
      the
      holder of this Warrant and all other Warrants and Warrant Shares are referred
      to
      as the “Holders”
and
      Holders of more than fifty percent (50%) of the outstanding Warrants and Warrant
      Shares are referred to as the “Majority
      of the Holders”);
      and
      (vii) the then current market price per share of the Common Stock (the
“Current
      Market Price”)
      shall
      be deemed to be the last reported trade of the Common Stock on the trading
      day
      prior to such date or, in case no such reported sales take place on such day,
      the average of the last reported bid and asked prices of the Common Stock on
      such day, in either case on the principal national securi--ties exchange on
      which the Common Stock is admitted to trading or listed, or if not listed or
      admitted to trading on any such exchange, the representative closing sale price
      of the Common Stock as reported by the National Association of Securities
      Dealers, Inc. Automated Quota-tions System (“NASDAQ”),
      or
      other similar organization if NASDAQ is no longer reporting such information,
      or, if the Common Stock is not reported on NASDAQ, the high per share sale
      price
      for the Common Stock in the over-the-counter market as reported by the National
      Quotation Bureau or similar organization, or if not so available, the fair
      market value of the Common Stock as determined in good faith by the Company’s
      board of directors (the “Board
      of Directors”).
      The
      Aggregate Warrant Price is not subject to adjustment. The Per Share Warrant
      Price is subject to adjustment as hereinafter provided; in the event of any
      such
      adjustment, the number of Warrant Shares deliverable upon exercise of this
      Warrant shall be adjusted by dividing the Aggregate Warrant Price by the Per
      Share Warrant Price in effect immediately after such adjustment. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    This
      Warrant is issued pursuant to a Subscription Agreement (the “Subscription
      Agreement”)
      between the Company and the investor named therein in connection with a private
      placement by the Company of its securities. By acceptance of this Warrant,
      the
      Holder agrees to comply with all applicable provisions of the Subscription
      Agreement.

     

    1.  Exercise
      of Warrant.

     

    (a)  This
      Warrant may be exercised in whole at any time, or in part from time to time,
      commencing on August 15, 2006 and prior to 5:00 P.M., New York City time, on
      August 15, 2011 by the Holder by the surrender of this Warrant (with the
      subscription form at the end hereof duly executed) at the address set forth
      in
      Section 9(a) hereof, together with the cash payment of the Aggregate Warrant
      Price, or the proportionate part thereof if this Warrant is exer-cised in part,
      with payment for the Warrant Shares made by certified or official bank check
      payable to the order of the Company.

     

    (b)  If
      this
      Warrant is exercised in part, this Warrant must be exercised for a number of
      whole shares of the Common Stock and the Holder is entitled to receive a new
      Warrant covering the Warrant Shares that have not been exercised and setting
      forth the proportionate part of the Aggregate Warrant Price applicable to such
      Warrant Shares. Upon surrender of this Warrant, the Company will (i) issue
      a
      certificate or certificates in the name of the Holder for the largest number
      of
      whole shares of the Common Stock to which the Holder shall be entitled and,
      if
      this Warrant is exercised in whole, in lieu of any fractional share of the
      Common Stock to which the Holder shall be entitled, pay to the Holder cash
      in an
      amount equal to the fair value of such fractional share (determined in such
      reasonable manner as the Board of Directors of the Company shall determine),
      and
      (ii) deliver the other securities and properties receivable upon the exercise
      of
      this Warrant, or the proportionate part thereof, if this Warrant is exercised
      in
      part, pursuant to the provisions of this Warrant. 

     

    2.  Reservation
      of Warrant Shares; Listing.
      The
      Company agrees that, prior to the expiration of this Warrant, the Company shall
      at all times (a) have authorized and in reserve, and shall keep available,
      solely for issuance and delivery upon the exercise of this Warrant, the shares
      of the Common Stock and other securities and properties as from time to time
      shall be receivable upon the exercise of this Warrant, free and clear of all
      restrictions on sale or transfer, other than under Federal or state securities
      laws, and free and clear of all preemptive rights and rights of first refusal
      and (b) use its commercially reasonable efforts to have Warrant Shares
      authorized for listing on the American Stock Exchange.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    3.  Certain
      Adjustments.

     

    (a)  If,
      at
      any time or from time to time after the date of this Warrant, the Company shall
      issue or dis-tribute to all holders of shares of Common Stock by reason of
      their
      ownership thereof evidence of its indebtedness, any other securities of the
      Company or any cash, property or other assets (excluding a subdivision,
      combination or reclassification, or dividend or distribution payable in shares
      of Common Stock, referred to in S-ection 3(b), and also excluding cash dividends
      or cash distributions paid out of net profits legally available therefor in
      the
      full amount thereof (any such non-excluded event being herein called a
“Special
      Dividend”)),
      the
      Per Share Warrant Price shall be adjusted by multiplying the Per Share Warrant
      Price then in effect by a fraction, the numerator of which shall be the then
      Current Market Price in effect on the record date of such issuance or
      distribution less the fair market value (as determined in good faith by the
      Company’s Board of Directors) of the evidence of indebtedness, cash, securities
      or property, or other assets issued or distributed in such Special Dividend
      applicable to one share of Common Stock and the denominator of which shall
      be
      the then Current Market Price in effect on the record date of such issuance
      or
      distribution. An adjustment made pursuant to this Subsection 3(a) shall become
      effective immediately after the record date of any such Special
      Dividend.

     

    (b)  In
      case
      the Company shall hereafter (i) pay a dividend or make a distribution on its
      capital stock in shares of Common Stock, (ii) subdivide its outstanding shares
      of Common Stock into a greater number of shares, (iii) combine its outstanding
      shares of Common Stock into a smaller number of shares or (iv) issue by
      reclassification of its Common Stock any shares of capital stock of the Company,
      the Per Share Warrant Price shall be adjusted to be equal to a fraction, the
      numerator of which shall be the Aggregate Warrant Price and the denominator
      of
      which shall be the number of shares of Common Stock or other capital stock
      of
      the Company that the Holder would have owned immediately following such action
      had such Warrant been exercised immediately prior thereto. An adjustment made
      pursuant to this Subsection 3(b) shall become effective immediately after the
      record date in the case of a dividend or distribution, and shall become
      effective immediately after the effective date in the case of a subdivision,
      combination or reclassification.

     

    (c)  In
      case
      of any capital reorganization or reclassification, or any consolidation or
      merger to which the Company is a party other than a merger or consolidation
      in
      which the Company is the continuing corporation, or in case of any sale or
      conveyance to another entity of all or substantially all of the assets of the,
      or in the case of any statutory exchange of securities with another corporation
      (including any exchange effected in connection with a merger of a third
      corporation into the Company, but excluding any exchange of securities or merger
      with another corporation in which the Company is a continuing corporation and
      that does not result in any reclassification of or similar change in the Common
      Stock), the Holder of this Warrant shall have the right thereafter to receive
      on
      the exercise of this Warrant the kind and amount of securities, cash or other
      property which the Holder would have owned or have been entitled to receive
      immediately after such reorganization, reclassification, consolidation, merger,
      statutory exchange, sale or conveyance had this Warrant been exercised
      immediately prior to the effective date of such reorganization,
      reclassification, consolidation, merger, statutory exchange, sale or conveyance
      and in any such case, if necessary, appropriate adjustment shall be made in
      the
      application of the provisions set forth in this Section 3 with respect to the
      rights and interests thereafter of the Holder of this Warrant to the end that
      the provisions set forth in this Section 3 shall thereafter correspondingly
      be
      made applicable, as nearly as may reasonably be, in relation to any shares
      of
      stock or other securities or property thereafter deliverable on the exercise
      of
      this Warrant. The above provisions of this Section 3(c) shall similarly apply
      to
      successive reorganizations, reclassifications, consolidations, mergers,
      statutory exchanges, sales or conveyances. The Company shall require the issuer
      of any shares of stock or other securities or property thereafter deliverable
      on
      the exercise of this Warrant to be responsible for all of the agreements and
      obligations of the Company hereunder. Notice of any such reorganization,
      reclassification, consolidation, merger, statutory exchange, sale or conveyance
      and of said provisions so proposed to be made, shall be mailed to the Holders
      of
      the Warrants not less than 20 days prior to such event. A sale of all or
      substantially all of the assets of the Company for a consideration consisting
      primarily of securities shall be deemed a consolidation or merger for the
      foregoing purposes.

     

    
      
         

      

      
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    (d)  No
      adjustment in the Per Share Warrant Price shall be required unless such
      adjustment would require an increase or decrease of at least $0.01 per share
      of
      Common Stock; provided,
      however,
      that
      any adjustments which by reason of this Subsection 3(d) are not required to
      be
      made shall be carried forward and taken into account in any subsequent
      adjustment; provided,
      further,
      however, that adjustments shall be required and made in accordance with the
      provisions of this Section 3 (other than this Subsection 3(d)) not later than
      such time as may be required in order to preserve the tax-free nature of a
      distribution (if any) to the Holder of this Warrant or Common Stock issuable
      upon the exercise hereof. All calculations under this Section 3 shall be made
      to
      the nearest cent or to the nearest 1/100th of a share, as the case may be.
      Anything in this Section 3 to the contrary notwithstanding, the Company shall
      be
      entitled to make such reductions in the Per Share Warrant Price, in addition
      to
      those required by this Section 3, as it in its discretion shall deem to be
      advisable in order that any stock dividend, subdivision of shares or
      distribution of rights to purchase stock or securities convertible or
      exchangeable for stock hereafter made by the Company to its stockholders shall
      not be taxable.

     

    (e)  Whenever
      the Per Share Warrant Price is adjusted as provided in this Section 3 and upon
      any modifi-cation of the rights of a Holder of Warrants in accordance with
      this
      Section 3, the Company shall promptly prepare a brief statement of the facts
      requiring such adjustment or modification and the manner of computing the same
      and cause copies of such certificate to be mailed to the Holders of the
      Warrants. The Company may, but shall not be obligated to unless requested by
      a
      Majority of the Holders, obtain, at its expense, a certificate of a firm of
      independent public accountants of recognized standing selected by the Board
      of
      Directors (who may be the regular auditors of the Company) setting forth the
      Per
      Share Warrant Price and the number of Warrant Shares in effect after such
      adjustment or the effect of such modification, a brief statement of the facts
      requiring such adjustment or modification and the manner of computing the same
      and cause copies of such certificate to be mailed to the Holders of the
      Warrants.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    (f)  If
      the
      Board of Directors of the Company shall declare any dividend or other
      distribution with respect to the Common Stock other than a cash distribution
      out
      of earned surplus, the Company shall mail notice thereof to the Holders of
      the
      Warrants not less than ten days prior to the record date fixed for determining
      stock-holders entitled to participate in such dividend or other
      distribution.

     

    (g)  If,
      as a
      result of an adjustment made pursuant to this Section 3, the Holder of any
      Warrant thereafter surrendered for exercise shall become entitled to receive
      shares of two or more classes of capital stock or shares of Common Stock and
      other capital stock of the Company, the Board of Directors (whose determination
      shall be conclusive and shall be described in a written notice to the Holder
      of
      any Warrant promptly after such adjustment) shall determine the allocation
      of
      the adjusted Per Share Warrant Price between or among shares or such classes
      of
      capital stock or shares of Common Stock and other capital stock.

     

    (h)  Upon
      the
      expiration of any rights, options, warrants or conversion privileges with
      respect to the issuance of which an adjustment to the Per Share Warrant Price
      had been made, if such option, right warrant or conversion shall not have been
      exercised, the number of Warrant Shares purchasable upon exercise of this
      Warrant, to the extent this Warrant has not then been exercised, shall, upon
      such expiration, be readjusted and shall thereafter be such as they would have
      been had they been originally adjusted (or had the original adjustment not
      been
      required, as the case may be) on the basis of (A) the fact that Common Stock,
      if
      any, actually issued or sold upon the exercise of such rights, options, warrants
      or conversion privileges, and (B) the fact that such shares of Common Stock,
      if
      any, were issued or sold for the consideration actually received by the Company
      upon such exercise plus the consideration, if any, actually received by the
      Company for the issuance, sale or grant of all such rights, options, warrants
      or
      conversion privileges whether or not exercised; provided,
      however,
      that no
      such readjustment shall have the effect of decreasing the number of Warrant
      Shares purchasable upon exercise of this Warrant by an amount in excess of
      the
      amount of the adjustment initially made in respect of the issuance, sale or
      grant of such rights, options, warrants or conversion privileges.

     

    (i)  In
      case
      any event shall occur as to which the other provisions of this Section 3 are
      not
      strictly applicable but as to which the failure to make any adjustment would
      not
      fairly protect the purchase rights represented by this Warrant in accordance
      with the essential intent and principles of the adjustments set forth in this
      Section 3, then, in each such case, the Board of Directors of the Company shall
      in good faith determine the adjustment, if any, on a basis consistent with
      the
      essential intent and principles established herein, necessary to preserve the
      purchase rights represented by the Warrants. Upon such determination, the
      Company will promptly mail a copy thereof to the Holder of this Warrant and
      shall make the adjustments described therein.

     

    4.  Fully
      Paid Stock; Taxes.
      The
      shares of the Common Stock represented by each and every certificate for Warrant
      Shares delivered on the exercise of this Warrant shall, subject to the Holder’s
      compliance with the terms hereof, at the time of such delivery, be duly
      authorized, validly issued and outstanding, fully paid and nonassessable, and
      not subject to preemptive rights or rights of first refusal on the part of
      the
      Company, and the Company will take all such actions as may be necessary to
      assure that the par value, if any, per share of the Common Stock is at all
      times
      equal to or less than the then Per Share Warrant Price. The Company shall pay,
      when due and payable, any and all Federal and state stamp, original issue or
      similar taxes which may be payable in respect of the issue of any Warrant Share
      or any certificate thereof to the extent required because of the issuance by
      the
      Company of such security.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    5.  Registration
      Under Securities Act of 1933.

     

    (a)  The
      Holder shall have the right to participate in the registration rights granted
      to
      purchasers of the Securities pursuant to Article VI of the Subscription
      Agreement between such purchasers and the Company that were entered into at
      the
      time of the initial sale of the Securities. By acceptance of this Warrant,
      the
      Holder agrees to comply with the provisions in Article VI of the Subscription
      Agreement to same extent as if it were a party thereto.

     

    (b)  Until
      all
      of the Warrant Shares have been sold under a Registration Statement or pursuant
      to Rule 144(k), the Company shall use its commercially reasonable efforts to
      file with the Securities and Exchange Commission all current reports and the
      information as may be necessary to enable the Holder to effect sales of its
      shares in reliance upon Rule 144(K) promulgated under the Act.

     

    6.  Investment
      Intent; Limited Transferability.

     

    (a)  The
      Holder represents to the Company, by accepting this Warrant, that it understands
      that this Warrant and any securities obtainable upon exercise of this Warrant
      have not been registered for sale under Federal or state securities laws and
      are
      being offered and sold to the Holder pursuant to one or more exemptions from
      the
      registration requirements of such securities laws. In the absence of an
      effective registration of such securities or an exemption therefrom, any
      certificates for such securities shall bear the legend set forth on the first
      page hereof. The Holder understands that it must bear the economic risk of
      its
      investment in this Warrant and any securities obtainable upon exercise of this
      Warrant for an indefinite period of time, as this Warrant and such securities
      have not been registered under Federal or state securities laws and therefore
      cannot be sold unless subsequently registered under such laws, unless an
      exemption from such registration is available. The Holder further represents
      to
      the Company, by accepting this Warrant, that is has full power and authority
      to
      enter into this Warrant and make the representations set forth
      herein.

     

    (b)  The
      Holder, by its acceptance of this Warrant, represents to the Company that it
      is
      acquiring this Warrant and will acquire any securities obtainable upon exercise
      of this Warrant for its own account for investment and not with a view to,
      or
      for sale in connection with, any distribution thereof in violation of the Act.
      The Holder, by acceptance of this Warrant, agrees that this Warrant and any
      such
      securities will not be sold or otherwise transferred unless (i) a registration
      statement with respect to such transfer is effective under the Act and any
      applicable state securities laws or (ii) such sale or transfer is made pursuant
      to one or more exemptions from the Act and in accordance with the legend set
      forth on the first page hereof.

     

    (c)  Either
      by
      reason of such Holder’s business or financial experience or the business or
      financial experience of its professional advisors (who are unaffiliated with
      and
      who are not compensated by the Company or any affiliate, finder or selling
      agent
      of the Company, directly or indirectly), such Holder has the capacity to protect
      such Holder’s interests in connection with the transactions contemplated by this
      warrant and the Purchase Agreement. The Holder, by its acceptance of this
      Warrant, represents to the Company that that it is able to fend for itself,
      can
      bear the economic risk of its investment, has such knowledge and experience
      in
      financial or business matters that it is capable of evaluating the merits and
      risks of the investment in this Warrant, has received and reviewed a copy of
      the
      Company’s public filings with the Securities and Exchange Commission and has had
      the opportunity to ask questions and receive answers from the Company regarding
      its business and financial condition. Holder also represents it has not been
      organized for the purpose of acquiring this Warrant.

     

    
      
         

      

      
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    (d)  This
      Warrant may not be sold, transferred, assigned or hypothecated except
      in
      to an “Accredited Investor” as defined in Rule 501(a) of the Securities Act, and
      otherwise
      in
      accordance with the legend on the first page hereof and in compliance with
      the
      provisions of the Securities Act and the applicable state securities “blue sky”
laws, and is so transferable only upon the books of the Company which it shall
      cause to be maintained for such purpose. By acceptance of this Warrant each
      Holder (including any transferee of this Warrant or any portion hereof), makes
      the representations set forth herein. The Company may treat the registered
      Holder of this Warrant as it appears on the Company’s books at any time as the
      Holder for all purposes. The Company shall permit any Holder of a Warrant or
      its
      duly authorized attorney, upon written request during ordinary business hours,
      to inspect and copy or make extracts from its books showing the registered
      Holders of Warrant. All Warrants issued upon the transfer or assignment of
      this
      Warrant will be dated the same date as this Warrant, and all rights and
      obligations of the holder thereof shall be identical to those of the
      Holder.

     

    (e)  The
      Holder has been afforded (i) the opportunity to ask such questions as it has
      deemed necessary of, and to receive answers from, representatives of the Company
      concerning the terms and conditions of the Warrants or the exercise of the
      Warrants; and (ii) the opportunity to request such additional information which
      the Company possesses or can acquire without unreasonable effort or
      expense.

     

    (f)  The
      Holder did not (i) receive or review any advertisement, article, notice or
      other
      communication published in a newspaper or magazine or similar media or broadcast
      over television or radio, whether closed circuit, or generally available; or
      (ii) attend any seminar, meeting or investor or other conference whose attendees
      were, to such Holder’s knowledge, invited by any general solicitation or general
      advertising.

     

    (g)  The
      Holder is an “accredited investor” within the meaning of Regulation D under the
      Act. Such Holder is acquiring the Warrants for its own account and not with
      a
      present view to, or for sale in connection with, any distribution thereof in
      violation of the registration requirements of the Act, without prejudice,
      however, to such Holder’s right, subject to the provisions of the Subscription
      Agreement and this Warrant, at all times to sell or otherwise dispose of all
      or
      any part of such Warrants and Warrant Shares.

     

    7.  Loss,
      etc., of Warrant.
      Upon
      receipt of evidence satisfactory to the Company of the loss, theft, destruction
      or mutilation of this Warrant, and of indemnity reasonably satisfactory to
      the
      Company, if lost, stolen or destroyed, and upon surrender and cancellation
      of
      this Warrant, if mutilated, the Company shall execute and deliver to the Holder
      a new Warrant of like date, tenor and denomination.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    8.  Warrant
      Holder Not Stockholder.
      This
      Warrant does not confer upon the Holder any right to vote on or consent to
      or
      receive notice as a stockholder of the Company, as such, in respect of any
      matters whatsoever, nor any other rights or liabilities as a stockholder, prior
      to the exercise hereof; this Warrant does, however, require certain notices
      to
      Holders as set forth herein.

     

    9.  Communication.
      No
      notice
      or other communi-cation under this Warrant shall be effective or deemed to
      have
      been given unless, the same is in writing and is mailed by first-class mail,
      postage prepaid, or via recognized overnight courier with confirmed receipt,
      addressed to:

     

    (a) the
      Company at Insite Vision Incorporated, Chief Financial Officer, 965 Atlantic
      Avenue, Alameda, CA 94501, or other such address as the Company has designated
      in writing to the Holder.

     

    (b) the
      Holder at the address of such Holder as set forth on the signature page to
      the
      Subscription Agreement or other such address as the Holder has designated in
      writing to the Company.

     

    10.  Headings.
      The
      headings of this Warrant have been inserted as a matter of convenience and
      shall
      not affect the construction hereof.

     

    11.  Applicable
      Law.
      This
      Warrant shall be governed by and construed in accordance with the law of the
      State of New York without giving effect to the principles of conflicts of law
      thereof.

     

    12.  Amendment,
      Waiver, etc.
      Except
      as expressly provided herein, neither this Warrant nor any term hereof may
      be
      amended, waived, discharged or terminated other than by a written instrument
      signed by the party against whom enforcement of any such amendment, waiver,
      discharge or termination is sought; provided, however, that any provisions
      hereof may be amended, waived, discharged or terminated upon the written consent
      of the Company and the Majority of the Holders.

    

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    

    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
      President this 15th
      day of
      August, 2006.

     

     

    
      	 	 	INSITE VISION
              INCORPORATED 
	 	 	 
	 	 	By:__________________________ 
	 	 	Name: S. Kumar Chandrasekaran,
              Ph.D. 
	 	 	Title:  Chief
              Executive Officer 

    

    

    

     

    

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    SUBSCRIPTION (cash)

    

    The
      undersigned, ___________________, pursuant to the provisions of the foregoing
      Warrant, hereby agrees to subscribe for and purchase ____________________ shares
      of the Common Stock, par value $0.01 per share, of InSite Vision Incorporated
      covered by said Warrant, and makes payment therefor in full at the price per
      share provided by said Warrant.

     

    

    
      	Dated:_______________ 	 	Signature:____________________ 
	 	 	 
	 	 	Address:______________________ 

    

    

       

    

     

    

    

    

    

    

    

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    

    ASSIGNMENT

    

    FOR
      VALUE
      RECEIVED _______________ hereby sells, assigns and transfers unto
      ____________________ (“Transferee”)
      the
      foregoing Warrant and all rights evidenced thereby, and does irrevocably
      constitute and appoint _____________________, attorney, to transfer said Warrant
      on the books of InSite Vision Incorporated. By acceptance of the foregoing
      Warrant, Transferee shall become a Holder under said Warrant and subject to
      the
      rights, obligations and representations of Holder set forth in said
      Warrant.

    
      

      
        	Dated:_______________ 	 	Signature:____________________ 
	 	 	 
	 	 	Address:______________________ 

      

       

    

    

    PARTIAL
      ASSIGNMENT

    

    FOR
      VALUE
      RECEIVED _______________ hereby assigns and transfers unto ____________________
      the right to purchase _______ shares of Common Stock, par value $0.01 per share,
      of InSite Vision Incorporated covered by the foregoing Warrant, and a
      proportionate part of said Warrant and the rights evidenced thereby, and does
      irrevocably constitute and appoint ____________________, attorney, to transfer
      such part of said Warrant on the books of InSite Vision Incorporated. By
      acceptance of the proportionate part of foregoing Warrant, Transferee shall
      become a Holder under said proportionate part of said Warrant and subject to
      the
      rights, obligations and representations of Holder set forth in said
      Warrant.

     

    
      

      
        	Dated:_______________ 	 	Signature:____________________ 
	 	 	 
	 	 	Address:______________________ 

      

      

         

       

       

       

      
        
           

        

        
          11

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