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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: 18pt; FONT-FAMILY: Times New Roman"><strong>UNITED
      STATES</strong></font></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: 18pt; FONT-FAMILY: Times New Roman"><strong>SECURITIES
      AND EXCHANGE COMMISSION</strong></font></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">WASHINGTON,
      D.C. 20549</font></div>
    <div>&#160;</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: 18pt; FONT-FAMILY: Times New Roman"><strong>FORM
      8-K</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
      <div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></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: 12pt; FONT-FAMILY: Times New Roman"><strong>CURRENT
      REPORT</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></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>PURSUANT
      TO SECTION 13 OR 15(D) OF THE </strong></font></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>SECURITIES
      EXCHANGE ACT OF 1934</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div>&#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">Date
      of
      Report (Date of earliest event reported): </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>December
      30, 2005</strong></font></div>
    <div>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#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: 24pt; FONT-FAMILY: Times New Roman"><strong>INSITE
      VISION INCORPORATED</strong></font></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">(Exact
      name of registrant as specified in its charter)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td valign="top" width="27%" style="border-bottom: black thin solid;">
              <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>Delaware</strong></font></div>
            </td>
            <td valign="top" width="27%" style="border-bottom: black thin solid;">
              <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>000-22332</strong></font></div>
            </td>
            <td valign="top" width="27%" style="border-bottom: black thin solid;">
              <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>94-3015807</strong></font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="27%">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(State
                or other jurisdiction </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">of
                incorporation)</font></div>
            </td>
            <td valign="top" width="27%">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Commission
                File No.)</font></div>
            </td>
            <td valign="top" width="27%">
              <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">(I.R.S.
                Employer </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Identification
                Number)</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></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>
    <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>965
      Atlantic Avenue</strong></font></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>Alameda,
      California 94501 </strong></font>
      <div>
        <hr style="COLOR: black" align="left" noshade size="2" width="100%">
      </div>
    </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">(Address
      of principal executive offices)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></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">Registrant&#8217;s
      telephone number, including area code: </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(510)
      865-8800</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></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>Not
      Applicable </strong></font>
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      </div>
    </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">(Former
      name or former address, if changed since last report.)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></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="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Check
      the
      appropriate box below if the Form 8-K filing is intended to simultaneously
      satisfy the filing obligation of the registrant under any of the following
      provisions:</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="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">o</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Written
      communications pursuant to Rule 425 under the Securities Act (17 CFR
      230.425)</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="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">o</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
      240.14a-12)</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="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">o</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
      Act
      (17 CFR 240.14d-2(b))</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="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">o</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
      Act
      (17 CFR 240.13e-4(c))</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      1.01.&#160; Entry into a Material Definitive Agreement</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      2.03 Creation of a Direct Financial Obligation</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      3.02. Unregistered Sales of Securities</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      8.01. Other Events</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Private
      Placement of Senior Secured Promissory Notes and Warrants</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      December 30, 2005, InSite Vision Incorporated (the &#8220;Company&#8221;) entered into
      definitive subscription agreements (the &#8220;Subscription Agreements&#8221;) with various
      institutional and individual accredited investors (the &#8220;Investors&#8221;) for the sale
      of $6.0 million in aggregate principal amount of 10% Senior Secured Promissory
      Notes of the Company (the &#8220;Notes&#8221;) and warrants (the &#8220;Warrants&#8221;) to purchase 1.2
      million shares of Common Stock of the Company (the &#8220;Offering&#8221;). </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company received $4.3 million from the sale of the Notes and Warrants in the
      initial closing held on December 30, 2005, and expects to close on the remaining
      $1.7 million in principal amount of Notes and corresponding Warrants within
      the
      next week. The Company intends to use the proceeds from this financing for
      working capital and for general corporate purposes. The Notes and Warrants
      were
      issued pursuant to an exemption from registration under the Securities Act
      of
      1933, as amended, in reliance on Section 4(2) thereof and Rule 506 of Regulation
      D thereunder.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Subscription Agreements for the purchase and sale of the Notes and the Warrants
      contained customary representations, warranties and covenants of the Company
      and
      the Investors. Pursuant to the Subscription Agreements, the Company also granted
      certain registration rights to the Investors with respect to the shares of
      Common Stock issuable upon the exercise of the Warrants. These registration
      rights require the Company to file a registration statement on Form S-3 with
      the
      Securities and Exchange Commission (&#8220;SEC&#8221;) with respect to the resale of the
      shares of Common Stock issuable upon exercise of the Warrants (including the
      Warrant issued to the Placement Agent described below) within 30 days following
      the final closing and to use its best efforts to have such registration
      statement declared effective by the SEC within 120 days of the final
      closing.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      December 30, 2005, the Company issued a press release describing the terms
      of
      the Offering. A copy of the press release is attached hereto as Exhibit 99.1
      and
      is incorporated herein by this reference.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Terms
      of the Notes</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Notes
      are senior secured obligations of the Company and are secured by all of the
      assets of the Company, including its intellectual property, pursuant to the
      terms of an Amended and Restated Security Agreement, dated as of December 30,
      2005 (the &#8220;Security Agreement&#8221;). The holders of the Notes rank pari passu with
      that certain Amended and Restated Secured Promissory Note issued to the
      Company&#8217;s Chief Executive Officer (the &#8220;CEO Note&#8221;). The outstanding principal
      balance on the CEO Note is $231,000. The Investors, the Company, the Company&#8217;s
      CEO and The Bank of New York, as collateral agent, entered into an Intercreditor
      and Collateral Agency Agreement, dated as of December 30, 2005, with respect
      to
      the relationship among the senior secured creditors and matters relating to
      the
      collateral agent.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">-2-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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      <div id="HDR">
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Notes
      issued at the initial closing have an initial maturity date of June 30, 2006,
      which may be extended at the option of the Company until December 30, 2006.
      The
      Notes bear interest at a rate of 10% per annum. In the event that the Company
      extends the maturity date under these Notes until December 30, 2006, the
      interest rate increases to 12% per annum for such additional 6 month period.
      Payments of principal and interest under the Notes are due in one lump sum
      upon
      the earlier of the applicable maturity date and an &#8220;Event of Acceleration&#8221; under
      the Notes.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following events, among others, constitute an &#8220;Event of Acceleration&#8221; under the
      Notes: (i) the Company fails to make a payment under the Notes when due; (ii)
      the Company fails to perform, in any material respect, any term or provision
      of
      the Notes; (iii) the Company fails to perform in any material respect, any
      material agreement or covenant in the Subscription Agreement or the Security
      Agreement (collectively, the &#8220;Reference Agreements&#8221;); (iv) any of the
      representations and warranties in the Reference Agreements are untrue and the
      effect of which has a material adverse effect on the business or operations
      of
      the Company or the ability of the Company to repay the Notes; (v) the Company
      enters into bankruptcy or receivership proceedings or otherwise admits in
      writing its inability to pay its debts as they become due; or (vi) an order
      or
      judgment in excess of $500,000 is entered into against the Company.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Notes
      also contain a mandatory redemption provision which requires the Company to
      redeem the Notes in full (including a &#8220;make-whole&#8221; premium of all interest due
      to the end of the relevant maturity date) within 10 days following the
      consummation of a (i) Sale of the Company, (ii) Qualified Financing or (iii)
      Corporate Collaboration.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
      purposes of the Notes, (i) &#8220;Qualified Financing&#8221; shall mean the closing of an
      equity financing or series of equity financings by the Company resulting in
      aggregate gross cash proceeds (before commissions or other expenses) to the
      Company of at least $12,500,000; (ii) &#8220;Sale of the Company&#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 the Company possessing the voting power to elect a majority of the
      board of directors of the Company (whether by merger, consolidation, sale or
      transfer of the Company&#8217;s capital stock or otherwise); or (B) all or
      substantially all of the Company&#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 the Company&#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 the
      Company 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 the Company; and (iii) &#8220;Corporate Collaboration&#8221; shall mean the closing
      by the Company of a transaction in which any rights to
      AzaSite<sup>TM</sup>&#160;are licensed to a third party.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Notes
      also contain certain negative covenants that restrict or prohibit the Company
      from incurring additional indebtedness in excess of $100,000; creating or
      granting liens on its assets; engaging in certain transactions with officers,
      directors or 5% or greater stockholders; repurchasing equity securities or
      declaring dividends on its capital stock; or changing its primary line of
      business without the written consent of the holders of a majority of the
      aggregate principal amount of the Company&#8217;s senior secured notes (this
      calculation is determined based on the aggregate principal amount of senior
      secured notes then outstanding held by the Investors and by the Company&#8217;s
      CEO).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#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">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">-3-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="3">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Terms
      of the Warrants</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Investors
      in the Notes received Warrants exercisable for 20,000 shares of Common Stock
      for
      every $100,000 in principal amount of Notes purchased. The Warrants have a
      term
      of five years. The exercise price under the Warrants is equal to the volume
      weighted average price of the Company&#8217;s Common Stock as reported on the American
      Stock Exchange for the five trading days immediately prior to the initial
      closing date, which was $0.82. The Warrants may be exercised by payment of
      the
      per share exercise price either in cash or by a cashless or net exercise of
      the
      Warrants. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Certain
      Fees Paid in the Offering</strong></font></div>
    <div>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Paramount
      BioCapital, Inc. (the &#8220;Placement Agent&#8221;) acted as the placement agent for the
      Offering and, at the initial closing, received a cash commission equal to 7%
      of
      the gross proceeds from the sale of the Notes and Warrants. The Placement Agent
      is also entitled to 7% of the gross proceeds from the sale of the Notes and
      Warrants if and when the Company closes on the final $1.7 million in principal
      amount of Notes. In addition, the Placement Agent received a warrant exercisable
      for 200,000 shares of Common Stock of the Company (the &#8220;Placement Warrant&#8221;). The
      Placement Agent will not be entitled to any additional warrants if and when
      the
      Company closes on the remainder of the Notes. The terms of the Placement
      Warrant, including duration and exercise price, are the same as the Warrants
      issued to the Investors.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Notes
      held by Certain Executive Officers and Directors</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      connection with the Offering, the Company amended and restated the July 15,
      2003
      CEO Note as well as the September 3 and November 5, 2003 unsecured Promissory
      Notes in favor of the Company&#8217;s Vice President of Finance and Administration
      (the &#8220;Amended Unsecured Promissory Note&#8221;). The CEO Note contains acceleration
      provisions identical to the Notes issued to the Investors. The Amended Unsecured
      Promissory Note has an outstanding balance of $35,000. The CEO Note and the
      Amended Unsecured Note are due on the earlier to occur of March 31, 2007 and
      within ten (10) days after an event that triggers a Mandatory Redemption of
      the
      Notes issued in the Offering.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Prior
      to
      the initial closing of the Offering, using proceeds from various warrant
      exercises, the Company repaid an aggregate of $55,000 in outstanding principal
      amount of unsecured promissory notes that had matured and were due to an officer
      and two directors of the Company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      foregoing description of the various agreements and securities entered into
      and
      issued in connection with the Offering is only a summary and is qualified in
      its
      entirety by the definitive terms of the such agreements and
      securities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      9.01 Financial Statements and Exhibits</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(d)
      EXHIBITS</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="11%" style="border-bottom: black thin solid;">
              <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">Exhibit
                No.</font></div>
            </td>
            <td width="2%">&#160;</td>
            <td align="left" valign="top" width="86%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Description</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="11%">&#160;</td>
            <td width="2%">&#160;</td>
            <td align="left" valign="top" width="86%">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="11%">
              <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"><a href="v032836_ex99-1.htm">99.1</a></font></div>
            </td>
            <td width="2%">&#160;</td>
            <td align="left" valign="top" width="86%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a href="v032836_ex99-1.htm">InSite
                Vision Incorporated Press Release dated
                December 30, 2005.</a></font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">-4-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="3">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <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>SIGNATURES</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: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to the requirements of the Securities Exchange Act of 1934, as amended, the
      Registrant has duly caused this report to be signed on its behalf by the
      undersigned hereunto duly authorized.</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="left">
      <table align="center" bgcolor="#ffffff" border="0" cellpadding="0" cellspacing="0" width="100%">

          <tr valign="top" bgcolor="#ffffff">
            <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>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
            <td colspan="2">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: "><strong>INSITE
                VISION INCORPORATED</strong></font></div>
              <div><strong><font size="2">(Registrant)</font></strong></div>
            </td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <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>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">Date:&#160;
              January 6, 2006</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">By:&#160;&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">/s/&#160;S.
              KUMAR
              CHANDRASEKARAN</font></td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td colspan="2"><font style="FONT-FAMILY: " size="1">&#160;</font></td>
            <td align="left">
              <hr style="COLOR: black" align="left" noshade size="2" width="80%">
            </td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td colspan="2"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
            <td>
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">Name:&#160;&#160;
                S. Kumar Chandrasekaran, Ph. D. </font></div>
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">Title:&#160;&#160;&#160;&#160;
                Chief Executive Officer</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>&#160;</div>
    <div>&#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">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">-5-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="3">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div>&#160;</div>
    <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>EXHIBIT
        INDEX</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">

              <tr>
                <td align="left" valign="top" width="11%">&#160;</td>
                <td width="2%">&#160;</td>
                <td align="left" valign="top" width="86%">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="top" width="11%">&#160;</td>
                <td width="2%">&#160;</td>
                <td align="left" valign="top" width="86%">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="top" width="11%" style="border-bottom: black thin solid;">
                  <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">Exhibit
                    No.</font></div>
                </td>
                <td width="2%">&#160;</td>
                <td align="left" valign="top" width="86%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Description</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="top" width="11%">&#160;</td>
                <td width="2%">&#160;</td>
                <td align="left" valign="top" width="86%">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="top" width="11%">
                  <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"><a href="v032836_ex99-1.htm">99.1</a></font></div>
                </td>
                <td width="2%">&#160;</td>
                <td align="left" valign="top" width="86%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a href="v032836_ex99-1.htm">InSite
                    Vision Incorporated Press Release dated
                    December 30, 2005.</a></font></div>
                </td>
              </tr>

          </table>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br>&#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">
            </div>
          </div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">-6-</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="3">
          </div>
        </div>
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{"company-data": {"conformed-name": "INSITE VISION INC", "cik": "0000802724", "assigned-sic": "2834", "irs-number": "943015807", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-14207", "film-number": "06516531"}, "business-address": {"street1": "965 ATLANTIC AVE", "street2": "--", "city": "ALAMEDA", "state": "CA", "zip": "94501", "phone": "5108658800"}, "mail-address": {"street1": "965 ATLANTIC AVE", "street2": "---", "city": "ALAMEDA", "state": "CA", "zip": "94501"}}
Unassociated Document
UNITED
      STATES
SECURITIES
      AND EXCHANGE COMMISSION
WASHINGTON,
      D.C. 20549
FORM
      8-K
CURRENT
      REPORT
PURSUANT
      TO SECTION 13 OR 15(D) OF THE
SECURITIES
      EXCHANGE ACT OF 1934
Date
      of
      Report (Date of earliest event reported):
December
      30, 2005
INSITE
      VISION INCORPORATED
(Exact
      name of registrant as specified in its charter)
Delaware
000-22332
94-3015807
(State
                or other jurisdiction
of
                incorporation)
(Commission
                File No.)
(I.R.S.
                Employer
Identification
                Number)
InSite
      Vision Incorporated
965
      Atlantic Avenue
Alameda,
      California 94501
(Address
      of principal executive offices)
Registrant's
      telephone number, including area code:
(510)
      865-8800
Not
      Applicable
(Former
      name or former address, if changed since last report.)
Check
      the
      appropriate box below if the Form 8-K filing is intended to simultaneously
      satisfy the filing obligation of the registrant under any of the following
      provisions:
o
Written
      communications pursuant to Rule 425 under the Securities Act (17 CFR
      230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
      240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
      Act
      (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
      Act
      (17 CFR 240.13e-4(c))
Item
      1.01.  Entry into a Material Definitive Agreement
Item
      2.03 Creation of a Direct Financial Obligation
Item
      3.02. Unregistered Sales of Securities
Item
      8.01. Other Events
Private
      Placement of Senior Secured Promissory Notes and Warrants
On
      December 30, 2005, InSite Vision Incorporated (the "Company") entered into
      definitive subscription agreements (the "Subscription Agreements") with various
      institutional and individual accredited investors (the "Investors") for the sale
      of $6.0 million in aggregate principal amount of 10% Senior Secured Promissory
      Notes of the Company (the "Notes") and warrants (the "Warrants") to purchase 1.2
      million shares of Common Stock of the Company (the "Offering").
The
      Company received $4.3 million from the sale of the Notes and Warrants in the
      initial closing held on December 30, 2005, and expects to close on the remaining
      $1.7 million in principal amount of Notes and corresponding Warrants within
      the
      next week. The Company intends to use the proceeds from this financing for
      working capital and for general corporate purposes. The Notes and Warrants
      were
      issued pursuant to an exemption from registration under the Securities Act
      of
      1933, as amended, in reliance on Section 4(2) thereof and Rule 506 of Regulation
      D thereunder.
The
      Subscription Agreements for the purchase and sale of the Notes and the Warrants
      contained customary representations, warranties and covenants of the Company
      and
      the Investors. Pursuant to the Subscription Agreements, the Company also granted
      certain registration rights to the Investors with respect to the shares of
      Common Stock issuable upon the exercise of the Warrants. These registration
      rights require the Company to file a registration statement on Form S-3 with
      the
      Securities and Exchange Commission ("SEC") with respect to the resale of the
      shares of Common Stock issuable upon exercise of the Warrants (including the
      Warrant issued to the Placement Agent described below) within 30 days following
      the final closing and to use its best efforts to have such registration
      statement declared effective by the SEC within 120 days of the final
      closing.
On
      December 30, 2005, the Company issued a press release describing the terms
      of
      the Offering. A copy of the press release is attached hereto as Exhibit 99.1
      and
      is incorporated herein by this reference.
Terms
      of the Notes
The
      Notes
      are senior secured obligations of the Company and are secured by all of the
      assets of the Company, including its intellectual property, pursuant to the
      terms of an Amended and Restated Security Agreement, dated as of December 30,
      2005 (the "Security Agreement"). The holders of the Notes rank pari passu with
      that certain Amended and Restated Secured Promissory Note issued to the
      Company's Chief Executive Officer (the "CEO Note"). The outstanding principal
      balance on the CEO Note is $231,000. The Investors, the Company, the Company's
      CEO and The Bank of New York, as collateral agent, entered into an Intercreditor
      and Collateral Agency Agreement, dated as of December 30, 2005, with respect
      to
      the relationship among the senior secured creditors and matters relating to
      the
      collateral agent.
-2-
The
      Notes
      issued at the initial closing have an initial maturity date of June 30, 2006,
      which may be extended at the option of the Company until December 30, 2006.
      The
      Notes bear interest at a rate of 10% per annum. In the event that the Company
      extends the maturity date under these Notes until December 30, 2006, the
      interest rate increases to 12% per annum for such additional 6 month period.
      Payments of principal and interest under the Notes are due in one lump sum
      upon
      the earlier of the applicable maturity date and an "Event of Acceleration" under
      the Notes.
The
      following events, among others, constitute an "Event of Acceleration" under the
      Notes: (i) the Company fails to make a payment under the Notes when due; (ii)
      the Company fails to perform, in any material respect, any term or provision
      of
      the Notes; (iii) the Company fails to perform in any material respect, any
      material agreement or covenant in the Subscription Agreement or the Security
      Agreement (collectively, the "Reference Agreements"); (iv) any of the
      representations and warranties in the Reference Agreements are untrue and the
      effect of which has a material adverse effect on the business or operations
      of
      the Company or the ability of the Company to repay the Notes; (v) the Company
      enters into bankruptcy or receivership proceedings or otherwise admits in
      writing its inability to pay its debts as they become due; or (vi) an order
      or
      judgment in excess of $500,000 is entered into against the Company.
The
      Notes
      also contain a mandatory redemption provision which requires the Company to
      redeem the Notes in full (including a "make-whole" premium of all interest due
      to the end of the relevant maturity date) within 10 days following the
      consummation of a (i) Sale of the Company, (ii) Qualified Financing or (iii)
      Corporate Collaboration.
For
      purposes of the Notes, (i) "Qualified Financing" shall mean the closing of an
      equity financing or series of equity financings by the Company resulting in
      aggregate gross cash proceeds (before commissions or other expenses) to the
      Company of at least $12,500,000; (ii) "Sale of the Company" 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 the Company possessing the voting power to elect a majority of the
      board of directors of the Company (whether by merger, consolidation, sale or
      transfer of the Company's capital stock or otherwise); or (B) all or
      substantially all of the Company's assets determined on a consolidated basis;
provided
,
however
,
      that a
      transaction (or series of related transactions) pursuant to which the
      then-existing holders of the Company'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 the
      Company 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 the Company; and (iii) "Corporate Collaboration" shall mean the closing
      by the Company of a transaction in which any rights to
      AzaSite
TM
are licensed to a third party.
The
      Notes
      also contain certain negative covenants that restrict or prohibit the Company
      from incurring additional indebtedness in excess of $100,000; creating or
      granting liens on its assets; engaging in certain transactions with officers,
      directors or 5% or greater stockholders; repurchasing equity securities or
      declaring dividends on its capital stock; or changing its primary line of
      business without the written consent of the holders of a majority of the
      aggregate principal amount of the Company's senior secured notes (this
      calculation is determined based on the aggregate principal amount of senior
      secured notes then outstanding held by the Investors and by the Company's
      CEO).
-3-
Terms
      of the Warrants
Investors
      in the Notes received Warrants exercisable for 20,000 shares of Common Stock
      for
      every $100,000 in principal amount of Notes purchased. The Warrants have a
      term
      of five years. The exercise price under the Warrants is equal to the volume
      weighted average price of the Company's Common Stock as reported on the American
      Stock Exchange for the five trading days immediately prior to the initial
      closing date, which was $0.82. The Warrants may be exercised by payment of
      the
      per share exercise price either in cash or by a cashless or net exercise of
      the
      Warrants.
Certain
      Fees Paid in the Offering
Paramount
      BioCapital, Inc. (the "Placement Agent") acted as the placement agent for the
      Offering and, at the initial closing, received a cash commission equal to 7%
      of
      the gross proceeds from the sale of the Notes and Warrants. The Placement Agent
      is also entitled to 7% of the gross proceeds from the sale of the Notes and
      Warrants if and when the Company closes on the final $1.7 million in principal
      amount of Notes. In addition, the Placement Agent received a warrant exercisable
      for 200,000 shares of Common Stock of the Company (the "Placement Warrant"). The
      Placement Agent will not be entitled to any additional warrants if and when
      the
      Company closes on the remainder of the Notes. The terms of the Placement
      Warrant, including duration and exercise price, are the same as the Warrants
      issued to the Investors.
Notes
      held by Certain Executive Officers and Directors
In
      connection with the Offering, the Company amended and restated the July 15,
      2003
      CEO Note as well as the September 3 and November 5, 2003 unsecured Promissory
      Notes in favor of the Company's Vice President of Finance and Administration
      (the "Amended Unsecured Promissory Note"). The CEO Note contains acceleration
      provisions identical to the Notes issued to the Investors. The Amended Unsecured
      Promissory Note has an outstanding balance of $35,000. The CEO Note and the
      Amended Unsecured Note are due on the earlier to occur of March 31, 2007 and
      within ten (10) days after an event that triggers a Mandatory Redemption of
      the
      Notes issued in the Offering.
Prior
      to
      the initial closing of the Offering, using proceeds from various warrant
      exercises, the Company repaid an aggregate of $55,000 in outstanding principal
      amount of unsecured promissory notes that had matured and were due to an officer
      and two directors of the Company.
The
      foregoing description of the various agreements and securities entered into
      and
      issued in connection with the Offering is only a summary and is qualified in
      its
      entirety by the definitive terms of the such agreements and
      securities.
Item
      9.01 Financial Statements and Exhibits
(d)
      EXHIBITS
Exhibit
                No.
Description
99.1
InSite
                Vision Incorporated Press Release dated
                December 30, 2005.
-4-
SIGNATURES
Pursuant
      to the requirements of the Securities Exchange Act of 1934, as amended, the
      Registrant has duly caused this report to be signed on its behalf by the
      undersigned hereunto duly authorized.
INSITE
                VISION INCORPORATED
(Registrant)
Date: 
              January 6, 2006
By:
/s/ S.
              KUMAR
              CHANDRASEKARAN
Name:  
                S. Kumar Chandrasekaran, Ph. D.
Title:    
                Chief Executive Officer
-5-
EXHIBIT
        INDEX
Exhibit
                    No.
Description
99.1
InSite
                    Vision Incorporated Press Release dated
                    December 30, 2005.
-6-