Exhibit 10.1

LOAN MODIFICATION AGREEMENT

This Loan Modification Agreement is entered into as of March 12, 2007, by and
between ISTA PHARMACEUTICALS, INC., a Delaware corporation (the “Borrower”) and
SILICON VALLEY BANK (“Bank”).

1. DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may be
owing by Borrower to Bank, Borrower is indebted to Bank pursuant to, among other
documents, a Loan and Security Agreement, dated on or about December 16, 2005,
as may be amended from time to time, (the “Loan Agreement”). Defined terms used
but not otherwise defined herein shall have the same meanings as in the Loan
Agreement.

Hereinafter, all indebtedness owing by Borrower to Bank shall be referred to as
the “Indebtedness.”

2. DESCRIPTION OF COLLATERAL. Repayment of the Indebtedness is secured by the
Collateral as described in the Loan Agreement.

Hereinafter, the above-described security documents, together with all other
documents securing repayment of the Indebtedness shall be referred to as the
“Security Documents”. Hereinafter, the Security Documents, together with all
other documents evidencing or securing the Indebtedness shall be referred to as
the “Existing Loan Documents”.

3. DESCRIPTION OF CHANGE IN TERMS.

 

  A. Modification to Loan Agreement.

 

  1. The Loan Agreement is hereby modified such that LIBOR Advances shall no
longer be available and all Advances shall be Prime Rate Advances.

 

  2. Section 2.5(b) is hereby amended and restated in its entirety to read as
follows:

(b) Advances. Each Advance shall bear interest on the outstanding principal
amount thereof from the date when made, continued or converted until paid in
full at a rate per annum equal to the Prime Rate plus the Prime Rate Margin.
Pursuant to the terms hereof, interest on each Advance shall be paid in arrears
on each Interest Payment Date. Interest shall also be paid on the date of any
prepayment of any Advance pursuant to this Agreement for the portion of any
Advance so prepaid and upon payment (including prepayment) in full thereof. All
accrued but unpaid interest on the Advances shall be due and payable on the
Revolving Line Maturity Date.

 

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  3. Section 3.1 is hereby amended such that a condition precedent to the
initial Advance requested on or after June 30, 2007 shall be the completion of
the Bank’s initial field exam collateral audit.

 

  4. Section 6.2 is hereby amended to delete subsection (c) thereto and to add
new subsections (c) and (d) as follows:

(c) At any time Advances are outstanding, within thirty (30) days after the last
day of each month, deliver to Bank a duly completed Borrowing Base Certificate
signed by a Responsible Officer, with aged listings of accounts receivable and
accounts payable (by invoice date).

(d) Allow Bank to audit Borrower’s Collateral at Borrower’s expense. Such audits
shall be conducted no more often than once every six (6) months unless a Default
or an Event of Default has occurred and is continuing.

 

  5. Section 6.6 is hereby amended and restated in its entirety to read as
follows:

6.6 Financial Covenants. Borrower shall maintain, on a consolidated basis with
respect to Borrower and its Subsidiaries a ratio (“Adjusted Quick Ratio”) of
Quick Assets to Current Liabilities minus Deferred Revenue of at least 0.75 to
1.00 as of the last day of each month.

 

  6. Section 13.1 is hereby amended to add thereto the following definitions in
alphabetical order:

“Borrowing Base Certificate” is that certain certificate in the form attached
hereto as Exhibit F.

“Prime Rate Margin” is one-half (0.50) of a percentage point.

 

  7. The definition of “Revolving Line” in Section 13.1 is hereby amended and
restated in its entirety to read as follows:

“Revolving Line” is an Advance or Advances in an aggregate amount outstanding at
any time of up to the lesser of (a) $10,000,000 and (b) the amount calculated as
66.67% of the aggregate amount of Borrower’s unrestricted cash, Cash Equivalents
and net billed accounts receivable.

 

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  8. The definition of “Revolving Line Maturity Date” in Section 13.1 is hereby
amended and restated in its entirety to read as follows:

“Revolving Line Maturity Date” is the earliest of (a) March 31, 2008; or (b) the
date Bank exercises its remedies under Section 9.1(a).

4. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.

5. PAYMENT OF LOAN FEE. Borrower shall pay Lender a fee (the “Loan Fee”) equal
to the amount calculated as (i) $25,000 minus (ii) the portion of the $6,250 fee
(the “Prior Fee”) previously paid by Borrower to Lender for the extension of the
Revolving Line Maturity Date to May 7, 2007 (which amount in this clause
(ii) shall be the pro rated portion of the Prior Fee for the period from
January 30, 2007 through the effective date of this Loan Modification
Agreement), plus all out-of-pocket expenses.

6. NO DEFENSES OF BORROWER. Borrower agrees that, as of the date hereof, it has
no defenses against the obligations to pay any amounts under the Indebtedness.

7. CONTINUING VALIDITY. Borrower understands and agrees that in modifying the
existing Indebtedness, Bank is relying upon Borrower’s representations,
warranties, and agreements, as set forth in the Existing Loan Documents. Except
as expressly modified pursuant to this Loan Modification Agreement, the terms of
the Existing Loan Documents remain unchanged and in full force and effect.
Bank’s agreement to modifications to the existing Indebtedness pursuant to this
Loan Modification Agreement in no way shall obligate Bank to make any future
modifications to the Indebtedness. Nothing in this Loan Modification Agreement
shall constitute a satisfaction of the Indebtedness.

8. CONDITIONS. The effectiveness of this Loan Modification Agreement is
conditioned upon payment of the Loan Fee.

This Loan Modification Agreement is executed as of the date first written above.

 

BORROWER:   BANK: ISTA PHARMACEUTICALS, INC.   SILICON VALLEY BANK By:  

/s/ Lauren Silvernail

  By:  

/s/ Robert Anderson

Name:  

Lauren Silvernail

  Name:  

Robert Anderson

Title:  

Chief Financial Officer and Vice President, Corporate Finance

  Title:  

Senior Relationship Manager

 

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EXHIBIT F

BORROWING BASE CERTIFICATE

Borrower: Ista Pharmaceuticals, Inc.

Lender: Silicon Valley Bank

Commitment Amount: $10,000,000

 

ACCOUNTS RECEIVABLE

  

1. Accounts Receivable Book Value as of             

   $                            

2. Additions (please explain on attached page)

   $                            

3. TOTAL ACCOUNTS RECEIVABLE (#1 plus #2)

   $                            

4. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS (please explain on attached page)

   $                            

5. Net Billed Accounts Receivable (#3 minus #4)

   $                            

6. Unrestricted Cash and Cash Equivalents

   $                            

7. Maximum Loan Amount (lesser of (a) $10 million and (b) 66.67% of #5 plus #6)

   $                            

8. Present balance owing on Line of Credit

   $                            

9. LOAN AVAILABILITY (#7 minus #8)

   $                            

The undersigned represents and warrants that this is true, complete and correct,
and that the information in this Borrowing Base Certificate complies with the
representations and warranties in the Loan and Security Agreement between the
undersigned and Silicon Valley Bank.

 

COMMENTS:   BANK USE ONLY      

Received

 

  by: By:  

 

 

  AUTHORIZED SIGNER   Authorized Signer   Date:  

 

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