INSITE VISION INC
<DOCUMENT>
<TYPE>EX-10.52
<SEQUENCE>6
<FILENAME>v038911_ex10-52.htm
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>THIS
      SECURED PROMISSORY NOTE (THE &#8220;NOTE&#8221;) HAS NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE &#8220;SECURITIES ACT&#8221;), OR UNDER THE
      SECURITIES LAWS OF ANY STATE. THIS NOTE IS SUBJECT TO RESTRICTIONS ON
      TRANSFERABILITY AND RESALE AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN
      THE
      ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
      SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL
      IN
      FORM, SUBSTANCE AND SCOPE REASONABLY SATISFACTORY TO THE MAKER, THAT
      REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT AND APPLICABLE STATE
      SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER THE SECURITIES
      ACT.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>INSITE
      VISION INCORPORATED</strong></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SENIOR
      SECURED NOTE</strong></font></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>$[&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
                ]</strong></font></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>January
                11, 2006</strong></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>FOR
      VALUE RECEIVED,</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      InSite
      Vision Incorporated, a Delaware corporation ( &#8220;Maker&#8221;), promises to pay to the
      order of </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>_______________________</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      (&#8220;Holder&#8221;), at ______________________________________, the principal sum of
      _____________ ($_________), together with all accrued interest thereon, upon
      the
      terms and conditions specified below. This Note is secured by that certain
      Amended and Restated Security Agreement dated as of December 30, 2005, as the
      same may be amended from time to time (the &#8220;Security Agreement&#8221;). </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>1.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Loan
      Proceeds</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.
      </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      proceeds of this Note shall be used for general corporate purposes of Maker.
      </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>2.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Due
      Date</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      Unless
      earlier accelerated pursuant to the terms hereof, this Note shall mature and
      the
      outstanding principal balance of this Note together with all accrued and unpaid
      interest hereunder shall become due and payable in a lump sum on July 11, 2006
      (the &#8220;Maturity Date&#8221;); provided, however, that if Maker delivers written notice
      to Holder at any time not less than fifteen (15) days prior to the Maturity
      Date
      stating that Maker has elected to extend the term of this Note effective as
      of
      the Maturity Date, this Note shall instead mature and the outstanding principal
      balance of this Note together with all accrued and unpaid interest hereunder
      shall become due and payable in a lump sum on January 11, 2007 (the &#8220;Extended
      Maturity Date&#8221;).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>3.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Interest</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Interest
      shall accrue on the unpaid balance outstanding from time to time under this
      Note
      at the rate of ten percent (10%) per annum until the Maturity Date; provided,
      however, that: (i) if the term of this Note is extended by Maker pursuant to
      Section 2 hereof, then from and after the original Maturity Date to and
      including the Extended Maturity Date, interest shall accrue on the unpaid
      balance outstanding from time to time under this Note at the rate of twelve
      percent (12%) per annum, and (ii) any principal amount not paid when due and,
      to
      the extent permitted by applicable law, any interest not paid when due, in
      each
      case whether at stated maturity, by required prepayment, declaration,
      acceleration, demand or otherwise (both before as well as after judgment),
      shall
      bear interest payable upon demand at a rate that is five percent (5%) per annum
      in excess of the rate of interest otherwise payable under this Note. All
      computations of interest shall be made on the basis of a year of 365 days for
      the actual number of days (including the first day but excluding the last day)
      occurring in the period for which such interest is payable.</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Accrued
      and unpaid interest shall become due and payable at the maturity of this Note.
      In no event shall the interest rate payable on this Note exceed the maximum
      rate
      of interest permitted to be charged under applicable law. If the rate of
      interest payable under this Note is ever reduced as a result of the preceding
      sentence and at any time thereafter the maximum rate permitted by applicable
      law
      shall exceed such reduced rate of interest then provided for hereunder, then
      the
      rate provided for hereunder shall be increased to a rate not to exceed the
      maximum rate permitted by applicable law at such time, such that the total
      amount of interest received by the Holder is equal to or as nearly equal to
      the
      amount provided for in the first sentence of this paragraph as applicable law
      permits.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>4.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Payment</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Payment
      shall be made in lawful tender of the United States and shall be applied first
      to the payment of all accrued and unpaid interest and then to the payment of
      principal. Subject to Sections 9 and 10 of this Note, prepayment of the
      principal balance of this Note, together with all accrued and unpaid interest
      on
      the portion of principal so prepaid, may be made in whole or in part at any
      time
      without penalty.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>5.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Reference
      Agreements</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      This
      Note is issued pursuant to the terms of that certain Subscription Agreement
      dated December 30, 2005 (the &#8220;Subscription Agreement&#8221;) by and between Maker and
      the Subscribers, as defined therein. The Subscription Agreement and the Security
      Agreement are collectively referred to herein as the &#8220;Reference
      Agreements&#8221;.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>6.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Covenants</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Maker
      covenants and agrees that until this Note is paid in full it will, </font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A.
      promptly after the occurrence of an Event of Acceleration or an event, act
      or
      condition that, with notice or lapse of time or both, would constitute an Event
      of Acceleration, provide Holder with a certificate of the chief executive
      officer or chief financial officer of Maker specifying the nature of such event,
      act or condition and Maker&#8217;s proposed cure thereto;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">B.
      not,
      without the written consent of the Holders of a majority of the then outstanding
      principal of all 2005 Senior Notes (the &#8220;Requisite Holders&#8221;) (i) incur any
      indebtedness for money borrowed, other than indebtedness (x) in an aggregate
      amount not to exceed $100,000 or (y) owing to a seller incurred solely for
      the
      purpose of financing the purchase price of an asset of a type customarily
      purchased by Maker acquired from such seller or (ii) grant, or permit to be
      created, any lien other than the security interests created under the Security
      Agreement, any security interest which would constitute a Permitted Lien (as
      defined in the Security Agreement) and purchase money security
      interests;</font></div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">C.
      not,
      without the prior written consent of the Requisite Holders, enter into directly
      or indirectly any transaction (including without limitation the purchase, lease,
      sale or exchange of properties of any kind or the rendering of any service)
      with
      any officer, director, employee, or stockholder holding greater than 5% of
      the
      outstanding voting securities of Maker or any affiliate or family member of
      any
      officer, director, employee or stockholder (including any amendment,
      modification, waiver or prepayment of a 2003 Senior Note (as defined in the
      Security Agreement) or any other promissory note or evidence of indebtedness),
      other than (i) transactions or incurrence of obligations involving payments
      of
      less than $60,000 in the aggregate, (ii) payment of salary, director&#8217;s fees,
      consulting fees for services rendered, bonuses or other similar compensation
      related to employment or consulting arrangements or service as a member of
      the
      board of directors, or any committee of the board of directors, of Maker, as
      reflected in the Company&#8217;s 2006 budget, a copy of which has been provided to
      Paramount BioCapital, Inc. (iii) reimbursement of expenses incurred on behalf
      of
      the Company, subject to satisfactory documentation, (iv) employee benefits,
      including stock option agreements under any stock option plan of Maker, and
      (v)
      subject to Section 6(D) below, payments with respect to Maker&#8217;s capital stock
      made to all holders thereof on a pro rata basis;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">D.
      not,
      without the prior written consent of the Requisite Holders, directly or
      indirectly (i) purchase, redeem, retire or otherwise acquire for value any
      of
      its capital stock or other securities now or hereafter outstanding, return
      any
      capital to its stockholders (other than the repurchase at cost of shares of
      unvested or restricted stock as permitted under the Company&#8217;s stock option or
      stock purchase plan upon termination of employment or service), or distribute
      any of its assets to its stockholders or (ii) make any payment or declare any
      dividend on any of its capital stock or other securities; or</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">E.
      not,
      without the prior written consent of the Requisite Holders, change its primary
      line of business from that conducted by it as of the date hereof. </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>7.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Events
      of Acceleration</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      The
      entire unpaid principal balance of this Note, together with all accrued and
      unpaid interest, shall become immediately due and payable prior to the specified
      due date of this Note upon the occurrence of one or more of the following events
      (each an &#8220;Event of Acceleration&#8221;): </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Maker
      shall fail to make any payment of principal or interest due under this Note;
      provided that such occurrence shall not be deemed an &#8220;Event of Acceleration&#8221;
unless such condition remains uncured at the end of the third (3</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><sup>rd</sup></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)
      day
      after such payment is due, other than payments due upon maturity which shall
      be
      deemed an &#8220;Event of Acceleration&#8221; immediately upon such failure; </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">B.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Maker
      shall fail to observe or perform, in any material respects, any term or
      provision of this Note; </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>provided
      </em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">that
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">such
      occurrence&#160;shall not be deemed an "Event of Acceleration" unless such
      condition remains uncured at the end of the&#160;fifth (5th) day after&#160;the
      earlier of (x) written notice from any Holder (or the Collateral Agent) of
      the
      occurrence of such default or (y) Holder&#8217;s receipt of written notice from Maker
      of the occurence of such event in accordance with Section 7(J)
      below;</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">C.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Maker
      shall fail to observe or perform, in any material respect, any material
      agreement or covenant in any Reference Agreement; provided that the agreements
      and covenants set forth in Sections 6.2 and 6.8 of the Subscription Agreement
      shall constitute material agreements and covenants for purposes of this clause
      (C); </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">D.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Any
      representations or warranties of Maker in any of the Reference Agreements shall
      be found to be untrue or incorrect and the effect of which has a material
      adverse effect on the business or operations of Maker or impairs, in any
      material respect, the ability of Maker to repay this Note on the Maturity
      Date;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">E.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to or within the meaning of the United States Bankruptcy Code or any other
      federal or state law relating to insolvency or relief of debtors (a &#8220;Bankruptcy
      Law&#8221;), Maker shall (i) commence a voluntary case or proceeding; (ii) consent to
      the entry of an order for relief against it in an involuntary case; (iii)
      consent to the appointment of a trustee, receiver, assignee, liquidator or
      similar official; (iv) make an assignment for the benefit of its creditors;
      or
      (v) admit in writing its inability to pay its debts as they become due;
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A
      court
      of competent jurisdiction enters an order or decree under any Bankruptcy Law
      that (i) is for relief against Maker in an involuntary case; (ii) appoints
      a
      trustee, receiver, assignee, liquidator or similar official for Maker or
      substantially all of Maker's properties; or (iii) orders the liquidation of
      Maker, and in each case the order or decree is not dismissed or stayed within
      30
      days;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">G.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      occurrence of any event of default under the Security Agreement securing this
      Note or any obligation secured thereby; </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">H.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      occurrence of any &#8220;Event of Acceleration&#8221; under any promissory note issued by
      Maker and defined as a &#8220;2003 Senior Note&#8221; or a &#8220;2005 Senior Note&#8221; in the
      Security Agreement or the occurrence of any event of default under any other
      note issued or obligation for borrowed money with a principal amount in excess
      of $100,000 owed by Maker; </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">I.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Any
      order, judgment or decree shall be entered against Maker decreeing the
      dissolution or split-up of Maker or any money judgment in excess of $500,000
      (exclusive of amounts covered by insurance or subject to indemnification by
      a
      person capable of fulfilling its indemnification obligations, for which the
      insurer or person providing indemnity has acknowledged responsibility), and,
      in
      each case, the order, judgment or decree is not paid, dismissed or stayed within
      30 days; or</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">&#160;</div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">&#160;</div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">J.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Maker
      shall fail to provide written notice to Holders of the occurrence of any event
      set forth in this Section 7 within 10 days of an officer of Maker having
      knowledge of the occurrence of such event.</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>provided</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      that
      if&#160;it is possible for Maker to cure an &#8220;Event of</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Acceleration</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;
that
      has occurred under clauses (C), (D), (G), or (H) of this Section 7, such
      occurrence&#160;shall not be deemed an "Event of Acceleration" unless such
      condition remains uncured as of the&#160;tenth (10th) day after&#160;the earlier
      of (x) written notice from any Holder (or the Collateral Agent) of the
      occurrence of such event or (y) Holder&#8217;s receipt of written notice from Maker of
      the occurence of such event in accordance with Section 7(J) above.</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      Upon the expiration of such ten (10) day period, the event that was the subject
      of the notice sent by any Holder (or the Collateral Agent) or pursuant to
      Section 7(J) shall constitute an "Event of Acceleration" without any action,
      demand or notice&#160;of the Holder.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 99pt">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>8.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Security</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      Payment
      of this Note shall be secured by a lien on substantially all of Maker&#8217;s assets
      in accordance with the Security Agreement executed as of the date hereof by
      Maker in favor of the Collateral Agent (as defined therein) for the benefit
      of
      the Holder and others as described therein. Maker, however, shall remain liable
      for payment of this Note, and assets of Maker, in addition to the collateral
      under the Security Agreement, may be applied to the satisfaction of Maker&#8217;s
      obligations hereunder. In the case of any Event of Acceleration, Holder, or
      the
      Collateral Agent on behalf of Holder, as applicable, shall have the rights
      set
      forth herein and as set forth in the Security Agreement, subject in all cases
      to
      the terms and provisions of the Collateral Agency and Intercreditor Agreement
      dated as of the date hereof by and among the Collateral Agent, Holder, and
      the
      other persons party thereto (the &#8220;Collateral Agency and Intercreditor
      Agreement&#8221;).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>9.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Optional
      Redemption</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.
      </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
      Note
      may be redeemed by Maker at any time, in whole or in part, prior to the Maturity
      Date or, if Maker has elected to extend the term of this Note pursuant to
      Section 2 hereof, prior to the Extended Maturity Date, at a redemption price
      equal to one hundred percent (100%) of the principal amount of this Note plus
      accrued but unpaid interest thereon (the &#8220;Redemption Price&#8221;) until the Maturity
      Date or, if Maker has elected to extend the term of this Note pursuant to
      Section 2 hereof, the Extended Maturity Date.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>10.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Mandatory
      Redemption</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Maker
      shall be obligated to redeem this Note at the Redemption Price within ten (10)
      days after the consummation of a Qualified Financing, a Sale of Maker or a
      Corporate Collaboration. For purposes hereof, (i) &#8220;Qualified Financing&#8221; shall
      mean the closing of an equity financing or series of equity financings by Maker
      resulting in aggregate gross cash proceeds (before commissions or other
      expenses) to Maker of at least $12,500,000; (ii) &#8220;Sale of Maker&#8221; shall mean a
      transaction (or series of related transactions) between the Company and one
      or
      more non-affiliates, pursuant to which such party or parties acquire (A) capital
      stock of Maker possessing the voting power to elect a majority of the board
      of
      directors of Maker (whether by merger, consolidation, sale or transfer of
      Maker&#8217;s capital stock or otherwise); or (B) all or substantially all of Maker&#8217;s
      assets determined on a consolidated basis; </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>provided</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>however</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
      that a
      transaction (or series of related transactions) pursuant to which the
      then-existing holders of Maker&#8217;s capital stock immediately prior to such
      transaction (or series of related transactions) continue to own, directly or
      indirectly, a majority of the outstanding shares of the capital stock of Maker
      or such other resulting, surviving or combined company resulting from such
      transaction (or series of related transactions) shall not be deemed to be a
      Sale
      of Maker; and (iii) &#8220;Corporate Collaboration&#8221; shall mean the closing by the
      Company of a transaction in which any rights to AzaSite are licensed to a third
      party. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">&#160;</div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">&#160;</div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>11.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Transfer
      Restrictions</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      This
      Note is subject to transfer restrictions as set forth in the Subscription
      Agreement.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>12.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Collection</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.
      </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If
      action
      is instituted to collect this Note, Maker promises to pay all costs and expenses
      (including reasonable attorney fees) incurred in connection with such
      action.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>13.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Amendment;
      Waiver</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Any
      modification, amendment or waiver of any term of this Note must be made in
      writing and signed by the Requisite Holders and Maker; </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>provided</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      that the
      Holders that do not consent to such modification, amendment or waiver shall
      receive treatment equivalent to that of the Requisite Holders; and any such
      modification, amendment or waiver shall be limited to its express
      terms.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 108pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A.
      No
      delay by Holder in acting with respect to the terms of this Note shall
      constitute a waiver of any breach, default, or failure of a condition under
      this
      Note. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 108pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">B.
      Maker
      waives presentment, demand, notice of dishonor, notice of default or
      delinquency, notice of acceleration, notice of protest and nonpayment, notice
      of
      costs, expenses or losses and interest thereon, notice of interest on interest
      and diligence in taking any action to collect any sums owing under this Note
      or
      in proceeding against any of the rights or interests in or to properties
      securing payment of this Note.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>14.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Conflicting
      Agreements</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      In the
      event of any inconsistencies between the terms of this Note and the terms of
      the
      Collateral Agency and Intercreditor Agreement, the Collateral Agency and
      Intercreditor Agreement shall govern solely as to matter specifically addressed
      in the Collateral Agency and Intercreditor Agreement; provided that as to
      prinicipal and interest owing to the Holder and the occurrence of an Event
      of
      Acceleration, the Note shall govern in all events. In the event of any
      inconsistencies between the terms of this Note and the terms of any other
      document related to the loan evidenced by this Note (other than the Collateral
      Agency and Intercreditor Agreement), the terms of this Note shall prevail.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>15.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Construction;
      Section Headings</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      This
      Note is the result of negotiations among, and has been reviewed by Holder,
      Maker
      and their respective counsel. Accordingly, this Note shall be deemed to be
      the
      product of all parties hereto and no ambiguity shall be construed in favor
      of or
      against Holder or Maker. </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      headings of Sections in this Note are provided for convenience only and will
      not
      affect its construction or interpretation. All references to &#8220;Section&#8221; or
&#8220;Sections&#8221; refer to the corresponding Section or Sections of this Note unless
      otherwise specified. All words used in this Note will be construed to be of
      such
      gender or number as the circumstances require. Unless otherwise expressly
      provided, the words &#8220;hereof and &#8220;hereunder&#8221; and similar references refer to this
      Note in its entirety and not to any specific section or subsection hereof,
      the
      words &#8220;including&#8221; or &#8220;includes&#8221; do limit the preceding words or terms and the
      word &#8220;or&#8221; is used in the inclusive sense.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">&#160;</div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6.</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">&#160;</div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>16.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Notices</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      All
      notices and other communications provided for hereunder shall be in writing
      (including telefacsimile communication) and mailed, telecopied, or delivered
      as
      follows: if to Maker, at its address specified opposite its signature below;
      and
      if to Holder, at the address set forth in the first paragraph of this Note;
      or
      in each case at such other address as shall be designated by Holder or Maker.
      All such notices and communications shall, when mailed, telecopied or sent
      by
      overnight courier, be effective when deposited in the mails, delivered to the
      overnight courier, as the case may be, or sent by telecopier. Electronic mail
      may be used to distribute routine communications; provided that no signature
      with respect to any notice, request, agreement, waiver, amendment, or other
      documents may be sent by electronic mail.</font></div>
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      This
      Note shall be construed in accordance with the laws of the State of New York
      (including without limitiation Section 5-1401 of the General Obligations Law
      of
      the State of New York) without resort to that State&#8217;s conflict-of-laws
      rules.</font></div>
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      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If
      any
      provision in this Note is held invalid or unenforceable by any court of
      competent jurisdiction, the other provisions of this Note will remain in full
      force and effect. Any provision of this Note held invalid or unenforceable
      only
      in part or degree will remain in full force and effect to the extent not held
      invalid or unenforceable.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>19.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Replacement
      of Note</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      Upon
      receipt by Maker of evidence satisfactory to it of the loss, theft, destruction
      or mutilation of this Note, and (in case of loss, theft or destruction) of
      indemnity reasonably satisfactory to it, and upon reimbursement to maker of
      all
      reasonable expenses incidental thereto, and (if mutilated) upon surrender and
      cancellation of this Note, Maker shall make and deliver to the Holder a new
      note
      of like tenor in lieu of this Note. Any replacement note made and delivered
      in
      accordance with this Section 19 shall be dated as of the date
      hereof.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>IN
      WITNESS WHEREOF</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
      Maker
      has caused this Note to be executed and delivered by its duly authorized officer
      as of the day and year and at the place first above written.</font></div>
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            <td width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
            <td width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
            <td width="49%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
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            <td colspan="2"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">INSITE
              VISION
              INCORPORATED</font></td>
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            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;<br>&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;<br>&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;<br>&#160;</font></td>
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            </td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">By:&#160;&#160;</font></td>
            <td>
            </td>
          </tr>
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            <td align="left">
              <hr style="COLOR: black" align="left" noshade size="2" width="80%"><font size="2">Name:
              S. Kumar Chandrasekaran, Ph.D.</font></td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td colspan="2"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">Title:
              <font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt" size="3">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Chief
              Executive Officer</font></font></td>
          </tr>

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      <div id="PN">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">7.</font></div>
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