Exhibit 10.1

 

ALTON PLAZA

FOURTH AMENDMENT TO LEASE

(Expansion of Premises)

 

THIS FOURTH AMENDMENT TO LEASE (this “Amendment”) dated for reference purposes
only as of August 31, 2005, is entered into by and between ALTON PLAZA PROPERTY,
INC., a Delaware corporation (“Lessor” or “Landlord”), and ISTA PHARMACEUTICALS,
INC., a Delaware corporation (“Lessee” or “Tenant”).

 

RECITALS

 

A. Lessor’s predecessor in interest, Aetna Life Insurance Company, and Lessee
entered into that certain Lease Agreement dated September 13, 1996 (the
“Original Lease”) for certain premises located at 15279 Alton Parkway, Suite
100, Irvine, California 92618 (the “Existing Premises”), which are located in
the industrial complex commonly known as Alton Plaza Industrial Park
(hereinafter, the “Park” or the “Complex”). The Existing Premises contain
approximately 13,448 square feet. Landlord and Tenant entered into that certain
First Amendment to Lease dated as of June 27, 2001 (the “First Amendment”), that
certain Second Amendment to Lease dated as of February 13, 2002 (the “Second
Amendment”), that certain Third Amendment to Lease dated as of August 12, 2004
(the “Third Amendment”) and that certain Addendum to Third Amendment to Lease
dated as of September 15, 2004 (the “Third Addendum”). Pursuant to the Third
Amendment, the New Premises (located in the building commonly known as 15295
Alton Parkway, as more specifically described in the Third Amendment) were added
to the Existing Premises. The Existing Premises and the New Premises are
hereinafter referred to collectively as the “Original Premises”. The Original
Lease as amended by the First Amendment, the Second Amendment, the Third
Amendment and the Third Addendum is hereinafter referred to as the “Lease”. The
New Expiration Date for the Original Premises is October 31, 2009.

 

B. Landlord and Tenant presently desire to amend the Lease to, provide for the
addition of certain additional premises to the Lease.

 

NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:

 

1. Definitions. Unless otherwise specifically set forth herein, all capitalized
terms used herein shall have the same meanings as set forth in the Lease.

 

2. Addition of the 15273 Premises. The increment of space located at 15273 Alton
Parkway, commonly known as Suites 100 and 200 and labeled “15273 Premises” on
the attached Exhibit A-4 shall be added to the Premises covered by the Lease as
provided herein. Landlord and Tenant agree that initially for the purpose of the
Lease and this Amendment, Suite 100 of the 15273 Premises shall be deemed to
contain approximately 5,157 square feet of space (hereinafter, the “Suite 100
Premises”) and Suite 200 of the 15273 Premises shall be deemed to contain
approximately 4,705 square feet of space (hereinafter, the “Suite 200
Premises”). The parties hereto acknowledge that the Suite 100 Premises are
currently occupied by a third party and that the lease with respect to the Suite
100 Premises is scheduled to expire on October 31, 2005. Landlord agrees to use
diligent and commercial reasonable efforts to cause the current occupant of the
Suite 100 Premises to vacate its premises on or before October 31, 2005.
Landlord shall tender possession of

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the Suite 100 Premises promptly following the vacation of same by the current
occupant thereof. If Landlord has been unable to deliver possession of the Suite
100 Premises on or before January 1, 2006, Tenant shall have the right to
terminate the Lease as to the Suite 100 Premises by delivery of written notice
to Landlord at any time after January 1, 2006 and prior to delivery of the Suite
100 Premises to Tenant. The term of the Lease with respect to the Suite 200
Premises shall commence on the Suite 200 Commencement Date (as defined below)
and the term of the Lease with respect to the Suite 100 Premises shall commence
on the Suite 100 Commencement Date (as defined below). As used herein, the date
on which Landlord has Substantially Completed the Suite 200 Work (as defined
below) shall be the “Suite 200 Commencement Date” and the date on which Landlord
has delivered possession of the Suite 100 Premises to Tenant as required herein
(as defined below) shall be the “Suite 100 Commencement Date”. The Suite 200
Premises shall become part of the “Premises” on the Suite 200 Commencement Date
and shall remain a portion of the “Premises” (as defined below) throughout the
15273 Premises Term (as defined below). As of the Suite 200 Commencement Date,
the Basic Lease Information Page of the Lease shall be modified to provide that
the “Premises” consists of approximately 39,582 square feet (the combined Suite
200 Premises and the Original Premises). The Suite 100 Premises shall become
part of the “Premises” on the Suite 100 Commencement Date and shall remain a
portion of the “Premises” throughout the remainder of the 15273 Premises Term.
As of the Suite 100 Commencement Date, the Basic Lease Information Page of the
Lease shall be modified to provide that the “Premises” consists of approximately
44,739 square feet (the combined 15273 Premises and the Original Premises). The
Suite 200 Commencement Date shall be confirmed in writing by the parties
following Substantial Completion of the Suite 200 Work and the Suite 100
Commencement Date shall be confirmed in writing by the parties following
delivery of possession of the Suite 100 Premises to Tenant.

 

3. Planning and Phasing of Work.

 

3.1 Phasing of Work. The parties hereto acknowledge that the Work (as used
herein, the “Work” shall refer to the Suite 100 Work and the Suite 200 Work,
each as defined below) shall be performed in two stages as more specifically
provided in this Section 3.

 

3.2 Architect. The architect for the Work shall be H. Hendy Associates (the
“Architect”). The parties acknowledge that Tenant has already engaged Architect
to perform certain preliminary design work in connection with the proposed Work,
the cost of which shall be included in Total Construction Costs (as defined
below). Within three (3) business days of the date hereof, Tenant shall meet
with the Architect to discuss its program and facility requirements (“Program”)
for the Suite 200 Premises and the nature and extent of all improvements that
Tenant proposes to install in the Suite 200 Premises and at such meeting, shall
provide the Architect with all necessary data and information requested by the
Architect to prepare initial Program documents and then space plans therefor as
required by this Section 3.

 

A. SUITE 200: IMPROVEMENTS IN SUITE 200 PREMISES

 

3.3 Preparation and Delivery of Suite 200 Space Plan. Within twelve (12)
business days of the date hereof, with respect to the Suite 200 Premises, Tenant
shall deliver to Landlord a pricing plan prepared by the Architect depicting
improvements to be installed in the Suite 200 Premises sufficient for
preliminary pricing (the “Suite 200 Space Plan”). On or before the expiration of
ten (10) business days from its receipt of the Suite 200 Space Plan, Landlord
shall deliver to Tenant (i) a preliminary cost estimate to complete the work
depicted in the Suite 200 Space Plan (“Suite 200 Budget”), (ii) a preliminary
project schedule (“Suite 200 Project Schedule”), and

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(iii) the contractors’ general conditions and fee bid as described in Section
4.1 below. Tenant shall notify Landlord whether it approves of the scope of the
Suite 200 work outlined in the submitted Suite 200 Budget and Project Schedule
and Landlord and Tenant shall select the general contractor for the Suite 200
Work within three (3) business days after Landlord’s submission thereof or such
longer period as reasonably necessary. If Tenant disapproves of the scope of the
Suite 200 work outlined in the submitted Suite 200 Budget and/or Project
Schedule within such three (3) business day period, then Tenant shall notify
Landlord thereof specifying in reasonable detail the reasons for such
disapproval, in which case Landlord shall within three (3) business days after
such notice or such longer period as reasonably necessary to revise the scope of
work, revise such Suite 200 Budget and/or Project Schedule, as the case may be,
in accordance with Tenant’s objections and submit the revised Suite 200 Budget
and/or Project Schedule, as the case may be, to Tenant for its review and
approval. Tenant shall notify Landlord in writing whether it approves of the
scope of the Suite 200 work outlined in the resubmitted Suite 200 Budget and/or
Project Schedule, as the case may be, within two (2) business days after its
receipt thereof. This process shall be repeated until the Suite 200 Budget and
Project Schedule have been finally approved by Tenant and Landlord. If Tenant
fails to notify Landlord that it disapproves of the initial Suite 200 Budget
and/or Project Schedule within three (3) business days (or, in the case of a
resubmitted Suite 200 Budget and/or Project Schedule within two (2) business
days after the submission thereof), then Tenant shall be deemed to have approved
the Suite 200 Budget and/or Project Schedule in question. Notwithstanding such
approval, the parties hereto acknowledge that the Suite 200 Budget and Suite 200
Project Schedule may be subject to revision pending approval of the Suite 200
Working Drawings as described in Section 3.9 below.

 

3.4 Suite 100 Budget. On or before May 1, 2006, with respect to the Suite 100
Premises, Tenant shall deliver to Landlord a pricing plan prepared by the
Architect depicting improvements to be installed in the Suite 100 Premises
sufficient for preliminary pricing (the “Suite 100 Space Plan”) On or before
June 1, 2006, Landlord shall prepare a preliminary budget and project schedule
for the Suite 100 Work (as defined below) (the “Preliminary Suite 100 Budget &
Schedule”) and the contractors’ general conditions and fee bid as described in
Section 4.1. Tenant shall notify Landlord whether it approves of the scope of
the Suite 100 work outlined in the submitted Preliminary Suite 100 Budget &
Schedule and Landlord and Tenant shall select the general contractor for the
Suite 100 Work within three (3) business days after Landlord’s submission
thereof or such longer period as reasonably necessary. If Tenant disapproves of
the scope of the Suite 100 work outlined in the submitted Preliminary Suite 100
Budget & Schedule within such three (3) business day period, then Tenant shall
notify Landlord thereof specifying in reasonable detail the reasons for such
disapproval, in which case Landlord shall within three (3) business days after
such notice or such longer period as reasonably necessary to revise the scope of
work, revise such Preliminary Suite 100 Budget & Schedule in accordance with
Tenant’s objections and submit the revised Preliminary Suite 100 Budget &
Schedule to Tenant for its review and approval. Tenant shall notify Landlord in
writing whether it approves of the scope of the Suite 100 work outlined in the
resubmitted Preliminary Suite 100 Budget & Schedule within two (2) business days
after its receipt thereof. This process shall be repeated until the Preliminary
Suite 100 Budget & Schedule have been finally approved by Tenant and Landlord.
If Tenant fails to notify Landlord that it disapproves of the initial
Preliminary Suite 100 Budget & Schedule within three (3) business days (or, in
the case of a resubmitted Preliminary Suite 100 Budget & Schedule within two (2)
business days after the submission thereof), then Tenant shall be deemed to have
approved the Preliminary Suite 100 Budget & Schedule in question.
Notwithstanding such approval, the parties hereto acknowledge that the
Preliminary Suite 100 Budget & Schedule may be subject to revision pending
approval of the Suite 100 Working Drawings as described in Section 3.9 below.

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3.5 Suite 200 Working Drawings. Within twenty (20) business days of the approval
of the Suite 200 Budget, Suite 200 Project Schedule and selection of the
Contractor for the Suite 200 Work, Landlord shall cause Architect to prepare
final working drawings of all improvements to be installed in the Suite 200
Premises based on the approved Suite 200 Space Plan and deliver the same to
Tenant for its review and approval (which approval shall not be unreasonably
withheld, delayed or conditioned); such 20-business day period shall be extended
due to any delays in Architect’s preparation of same which is outside of
Landlord’s control. Such Suite 200 working drawings shall be prepared by the
Architect (and if necessary, engineers) (whose fees shall be included in the
Total Construction Costs (as defined below)). Tenant shall notify Landlord
whether it approves of the submitted Suite 200 working drawings within two (2)
business days after Landlord’s submission thereof. If Tenant disapproves of such
Suite 200 working drawings, then Tenant shall notify Landlord thereof specifying
in reasonable detail the reasons for such disapproval, in which case Landlord
shall, within three (3) business days after such notice or such longer period as
reasonably necessary, revise such Suite 200 working drawings in accordance with
Tenant’s objections and submit the revised Suite 200 working drawings to Tenant
for its review and approval. Tenant shall notify Landlord in writing whether it
approves of the resubmitted Suite 200 working drawings within one (1) business
day after its receipt thereof. This process shall be repeated until the working
drawings have been finally approved by Landlord and Tenant. If Tenant fails to
notify Landlord that it disapproves of the initial Suite 200 working drawings
within three (3) business days (or, in the case of resubmitted working drawings,
within one (1) business day) after the submission thereof, then Tenant shall be
deemed to have approved the working drawings in question. Any delay caused by
Tenant’s failure to respond within the time periods set forth in this Section
3.5 as to such Suite 200 working drawings shall constitute a Tenant Delay
(defined below). As used herein, “Suite 200 Working Drawings” shall mean the
final Suite 200 working drawings approved by Landlord and Tenant, as amended
from time to time by any approved changes thereto approved by Landlord and
Tenant, and “Suite 200 Work” shall mean all improvements to be constructed in
the Suite 200 Premises in accordance with and as indicated on the Suite 200
Working Drawings. Landlord’s approval of the Suite 200 Working Drawings shall
not be a representation or warranty of Landlord that such drawings are adequate
for any use or comply with any law, but shall merely be the consent of Landlord
thereto. Tenant shall, at Landlord’s request, sign the Suite 200 Working
Drawings to evidence its review and approval thereof. After the Suite 200
Working Drawings have been approved, Landlord shall cause the Suite 200 Work to
be performed in accordance with the Suite 200 Working Drawings. Landlord shall
cause the Contractor to construct the Suite 200 Work to comply with the Suite
200 Working Drawings and Legal Requirements.

 

3.6 Suite 200 Budget. Upon approval of the Suite 200 Working Drawings by Tenant
and Landlord, and subject to the provisions of Section 3.5 above, Landlord shall
cause the Suite 200 Contractor (as defined below) to submit the Suite 200 Work
for bid by all necessary subcontractors in accordance with the provisions of
Section 4.3. Upon selection of the subcontractors, Landlord shall provide to
Tenant, prior to commencement of construction of the Suite 200 Work, a complete
budget (“Suite 200 Final Budget”) showing all line items of the Suite 200 Work
and the schedule of distribution of the Construction Allowance (as defined
below) with respect to the Suite 200 Work. Tenant shall approve or disapprove
the Suite 200 Final Budget within five (5) business days of receipt, such
approval not to be unreasonably conditioned or withheld. If Tenant fails to
notify Landlord that it disapproves of the Suite 200 Final Budget within such
five (5) business day period, then Tenant shall be deemed to have approved the
Suite 200 Final Budget.

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B. SUITE 100: IMPROVEMENTS IN SUITE 100 PREMISES

 

3.7 Preparation and Delivery of Suite 100 Space Plan. On or before June 1, 2006,
with respect to Suite 100, Tenant shall deliver to Landlord: (a) a Program
document indicating the square footage requirements for each department, and (b)
a space plan prepared by the Architect depicting improvements to be installed in
the Suite 100 Premises (the “Suite 100 Space Plan”).

 

3.8 Suite 100 Working Drawings. Within ten (10) business days after Landlord and
Tenant’s approval of the Suite 100 Space Plan and selection of the Contractor
for the Suite 100 Work, Landlord shall cause Architect to prepare final working
drawings of all improvements to be installed in Suite 100 based on the approved
Suite 100 Space Plan and deliver the same to Tenant for its review and approval,
which approval shall not be unreasonably withheld, delayed or conditioned; such
10-business day period shall be extended due to any delays in Architect’s
preparation of same which is outside of Landlord’s control. Such working
drawings shall be prepared by the Architect, and if necessary, engineers (whose
fees shall be included in the Total Construction Costs). Tenant shall notify
Landlord whether it approves of the submitted Suite 100 working drawings within
two (2) business days after Landlord’s submission thereof. If Tenant disapproves
of such Suite 100 working drawings, then Tenant shall notify Landlord thereof
specifying in reasonable detail the reasons for such disapproval, in which case
Landlord shall, within three (3) business days after such notice or such longer
period as reasonably necessary, revise such Suite 100 working drawings in
accordance with Tenant’s objections and submit the revised working drawings to
Tenant for its review and approval. Tenant shall notify Landlord in writing
whether it approves of the resubmitted Suite 100 working drawings within one (1)
business day after its receipt thereof. This process shall be repeated until the
working drawings have been finally approved by Landlord and Tenant. If Tenant
fails to notify Landlord that it disapproves of the initial Suite 100 working
drawings within three (3) business days (or, in the case of resubmitted working
drawings, within one (1) business day) after the submission thereof, then Tenant
shall be deemed to have approved the working drawings in question. Any delay
caused by Tenant’s failure to respond within the time periods set forth in this
Section 3.8 as to such Suite 100 working drawings shall constitute a Tenant
Delay (defined below). As used herein, “Suite 100 Working Drawings” shall mean
the final Suite 100 working drawings approved by Landlord and Tenant, as amended
from time to time by any approved changes thereto approved by Landlord and
Tenant, and “Suite 100 Work” shall mean all improvements to be constructed in
the Suite 100 Premises in accordance with and as indicated on the Suite 100
Working Drawings. Landlord’s approval of the Suite 100 Working Drawings shall
not be a representation or warranty of Landlord that such drawings are adequate
for any use or comply with any law, but shall merely be the consent of Landlord
thereto. Tenant shall, at Landlord’s request, sign the Suite 100 Working
Drawings to evidence its review and approval thereof. After the Suite 100
Working Drawings have been approved, Landlord shall cause the Suite 100 Work to
be performed in accordance with the Suite 100 Working Drawings. Landlord shall
cause the Suite 100 Contractor (as defined below) to construct the Suite 100
Work to comply with the Suite 100 Working Drawings and Legal Requirements. As
used herein, “Legal Requirements” shall mean all applicable laws, statutes,
codes, governmental regulations and private restrictions then in effect as of
the date of Substantial Completion of the respective premises. As used herein,
“Working Drawings” shall mean the Suite 100 Working Drawings and the Suite 200
Working Drawings.

 

3.9 Suite 100 Budget. Upon approval of the Suite 100 Working Drawings by Tenant
and Landlord, and subject to the provision of Section 3.8 above, Landlord shall
cause the Suite 100 Contractor to submit the Suite 100 Work for bid by all
necessary subcontractors in accordance with the provisions of Section 4.3. Upon
selection of the subcontractors, Landlord shall provide to Tenant, prior to
commencement of construction of the Suite 100 Work, a revised draft of the
Preliminary Suite 100 Budget & Schedule (“Suite 100 Final Budget”) showing all
line items of

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the Suite 100 Work and the schedule of distribution of the Construction
Allowance with respect to the Suite 100 Work. Tenant shall approve or disapprove
the Suite 100 Final Budget within five (5) business days of receipt, such
approval not to be unreasonably conditioned or withheld. If Tenant fails to
notify Landlord that it disapproves of the Suite 100 Final Budget within such
five (5) business day period, then Tenant shall be deemed to have approved the
Suite 100 Final Budget.

 

4. Selection of General Contractor/Subcontractors.

 

4.1 Suite 200 Work. Within ten (10) business days of receipt of the Suite 200
Space Plan, Landlord shall seek competitive bids from DPR Construction, Howard
Building Corporation, ROEL Construction and Caliber Construction, or such other
qualified contractor as mutually agreed to by Landlord and Tenant for the
general conditions and fees each would charge for the cost of constructing the
Suite 200 Work (to be completed on or before the expiration of ten (10) weeks
from commencement of such work. At the completion of the bidding process,
Landlord shall submit to Tenant copies of all bids received. Landlord and Tenant
shall select the general contractor to perform the Suite 200 Work. Landlord and
Tenant shall make such selection based on the following criteria: (i) lowest
qualified general conditions and fee to complete the Suite 200 Work, (ii)
completion schedule, (iii) the reputation and experience of the contractor’s
specific team assembled for this project, and in constructing the type of
improvements which Tenant contemplates installing in the Premises, (iv) Tenant’s
prior experience with such general contractor and providing first-class
materials and experience in connection with the installation of prefabricated
pharmaceutical manufacturing environments, and (v) Landlord’s prior experience
with such general contractor in providing first class materials and/or service
to the Complex. The contractor selected is hereinafter referred to as the “Suite
200 Contractor”.

 

4.2 Suite 100 Work. As soon as reasonably practicable following Landlord and
Tenant’s approval of the Suite 100 Working Drawings but in any event no later
than the date which is five (5) business days following such approval, Landlord
shall seek competitive bids from DPR Construction, Howard Building Corporation,
ROEL Construction and Caliber Construction or such other qualified contractor as
mutually agreed to by Landlord and Tenant for the general conditions and fee
each would charge for the cost of constructing the Suite 100 Work (to be
completed on or before December 31, 2006). At the completion of the bidding
process, Landlord shall submit to Tenant copies of all bids received. Landlord
and Tenant shall select the general contractor to perform the Suite 100 Work.
Landlord and Tenant shall make such selection based on the following criteria:
(i) lowest qualified general conditions and fee to complete the Suite 100 Work,
(ii) completion schedule, (iii) the reputation and experience of the
contractor’s specific team assembled for this project, and in constructing the
type of improvements which Tenant contemplates installing in the Premises, (iv)
Tenant’s prior experience with such general contractor and providing first class
materials and experience in connection with the installation of prefabricated
pharmaceutical manufacturing environments, and (v) Landlord’s prior experience
with such general contractor in providing first class materials and/or service
to the Complex. The contractor selected is hereinafter referred to as the “Suite
100 Contractor”.

 

4.3 Subcontractor Bids. Upon approval of the applicable Working Drawings,
Landlord shall cause the applicable Contractor to submit the applicable Working
Drawings for competitive bidding to qualified subcontractors approved by
Landlord, Tenant and Contractor based on the reputation and experience of each
subcontractor in constructing the type of improvements which Tenant contemplates
installing in the Premises, Tenant’s, Landlord’s and the Contractor’s prior
experience with such subcontractor(s) in providing first class materials and its
experience in

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connection with the installation of the specified items. At the completion of
the bidding process, the Contractor shall submit to Landlord and Tenant copies
of all subcontractors’ bids received and a trade by trade comparison analysis of
each bidder’s proposal. Contractor, Landlord and Tenant shall then make the
final selection based upon the lowest qualified cost to complete the portion of
the work covered by such subcontractor’s bid, the completion schedule and the
above mentioned criteria.

 

5. Construction Warranties. Each of the Suite 100 Contractor and the Suite 200
Contractor shall guarantee that the Work it performs shall be free from any
defects in workmanship and materials for a period of not less than one (1) year
from the date of completion thereof. Each such Contractor shall be responsible
for the replacement or repair, without additional charge, of all work done or
furnished in accordance with its contract which shall become defective within
one (1) year after completion of the Work it performs. The correction of such
Work shall include, without additional charge, all additional expenses and
damages (excluding consequential and punitive damages) in connection with such
removal or replacement of all or any part of the Work, and/or the building
and/or common areas of work which may be damaged or disturbed thereby. All such
warranties or guarantees as to materials or workmanship of or with respect to
the Work shall be contained in the contract with the Contractor which shall be
so written that such guarantees or warranties shall inure to the benefit of both
Landlord and Tenant, as their respective interests may appear, and can be
directly enforced by either.

 

6. Construction. Landlord shall cause each of the Suite 100 Contractor and the
Suite 200 Contractor to perform construction of the respective Work in
accordance with the Suite 200 Working Drawings and the Suite 100 Work in
accordance with the Suite 100 Working Drawings, each in a good and workmanlike
manner. Subject to Tenant’s payment of the Excess Costs (as defined in Section
11 below), Landlord will bear all costs and expenses to perform the Work shown
on the Working Drawings, including the cost of all permits and other
governmental approvals, except as otherwise expressly provided herein.
“Substantial Completion” of the Suite 200 Work or Suite 100 Work, as applicable,
shall be deemed to have occurred on the date on which (i) the Architect
certifies that the Suite 100 Work or Suite 200 Work, as applicable, has been
completed pursuant to the applicable Working Drawings, subject only to the
completion or correction of the Punch List Items (as defined below); (ii) a
certificate of occupancy or temporary certificate of occupancy (or its
equivalent) for the Suite 200 Premises or the Suite 100 Premises, as applicable,
has been issued by the governmental agency responsible for issuing such
certificate in Orange County; and (iii) Landlord has delivered possession of the
Suite 200 Premises or the Suite 100 Premises, as applicable, to Tenant in the
condition required under this Amendment. Landlord or its affiliate or agent
shall supervise the Work, make disbursements required to be made to the
Contractor(s) and other vendors as required to complete the Work, and act as a
liaison between the Contractor(s) and Tenant’s Representative and coordinate the
relationship between the Work, the Building and the Complex. Kathy McGinley
shall be designated as “Tenant’s Representative” in connection with the Work. In
the event Tenant disputes whether or not Substantial Completion has occurred,
Tenant shall notify Landlord within five (5) business days after receipt of the
Completion Notice. Such dispute shall be mutually resolved by Landlord and
Tenant, each using its good faith commercially reasonable business judgment. Any
change orders shall require the approval of Landlord and Tenant’s
Representative. In consideration for Landlord’s construction supervision
services, Tenant shall pay to Landlord a construction supervision fee equal to
five percent (5%) of the Construction Allowance (excluding the construction
supervision fee).

 

7. Limited Warranty. Landlord warrants that for thirty (30) days following: (i)
the Suite 200 Commencement Date and (ii) the Suite 100 Commencement Date,
respectively, the existing

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heat, air conditioning and ventilating (“HVAC”) equipment, and the existing
electrical, lighting and plumbing and loading doors serving each of the Suite
200 Premises and the Suite 100 Premises, respectively, are in good working
order. Landlord shall repair any defective or malfunctioning component of such
systems of which Landlord has received written notice from Tenant describing the
failure or malfunction within thirty (30) days of the Suite 200 Commencement
Date with respect to the Suite 200 Premises and within thirty (30) days of the
Suite 100 Commencement Date with respect to the Suite 100 Premises. The cost of
repairing such failure or malfunction shall not be charged to Tenant as an
operating expense, repair cost or maintenance cost. In addition, Landlord shall
deliver the 15273 Premises in broom-clean condition.

 

8. Punch List. “Punch List Items” shall mean minor items of incomplete or
defective work or materials in the improvements called for in the Working
Drawings, which do not materially impair Tenant’s use of the 15273 Premises for
the conduct of Tenant’s business therein. When Landlord considers: (A) the Suite
200 Work to be Substantially Completed and (B) the Suite 100 Work to be
Substantially Completed, Landlord will notify Tenant and within three (3)
business days thereafter in each case, Landlord’s representative and Tenant’s
Representative shall conduct a walk-through of the Premises and identify any
Punch List Items with respect to the Suite 200 Work or the Suite 100 Work, as
the case may be. Neither Landlord’s representative nor Tenant’s Representative
shall unreasonably withhold his or her agreement on Punch List Items. Landlord
shall use diligent and reasonable efforts to cause the Contractor to complete
all Punch List Items within thirty (30) days after agreement thereon.

 

9. Definition of Total Construction Costs. The entire cost of performing the
Work including design of the Work and preparation of the Tenant’s Program
documents and test fits, the Suite 200 Space Plan, the Suite 100 Space Plan and
the Working Drawings, including revisions, costs of construction labor and
materials, generator, dumb waiter, plan check and permit fees, electrical usage
during construction and additional janitorial services, which costs shall be
included in Contractor’s general conditions, general tenant signage, related
taxes, insurance costs, costs to repair and reuse or install new telephone and
data equipment and cabling, and the construction supervision fee referenced in
Section 5 of this Amendment, are herein collectively called the “Total
Construction Costs”. The Total Construction Costs in excess of the Construction
Allowance (hereinafter defined) shall be paid by Tenant. Upon approval of the
Suite 200 Working Drawings and selection of the Contractor, Tenant shall
promptly (a) execute a work order agreement prepared by Landlord which
identifies such drawings and itemizes the Total Construction Costs and sets
forth the Construction Allowance, and (b) pay to Landlord the amount by which
the Total Construction Costs is expected to exceed the Construction Allowance
(such prepaid amount is hereinafter referred to as the “Pre-Paid Amount”) on a
pro rata basis monthly (based on percentage of completion) as construction of
the Work progresses. No changes in the Total Construction Costs, change order
approvals or additions to any contracts shall be made by Landlord after the
approval of the Suite 200 Final Budget by Tenant with respect to the Suite 200
Work and approval of the Suite 100 Final Budget by Tenant with respect to the
Suite 100 Work, in either case without Tenant’s written approval, which approval
shall not be unreasonably withheld, conditioned or delayed.

 

10. Construction Allowance. Landlord shall provide to Tenant a construction
allowance not to exceed $78,896.00 (the “Construction Allowance”) to be applied
toward the Total Construction Costs, as adjusted for any changes to the Work
approved by Landlord and Tenant. The Construction Allowance shall not be
disbursed to Tenant in cash, but shall be applied by Landlord to the payment of
the Total Construction Costs, if, as, and when the cost of the Work is actually
incurred and paid by Landlord. The Construction Allowance must be used no later
than

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December 31, 2006 or shall be deemed forfeited with no further obligation by
Landlord with respect thereto. The foregoing limitation shall be extended one
day for each day of Landlord Delay (as defined in Section 13 below).

 

11. Excess Costs. As of the date of this Amendment, the parties anticipate that
the Total Construction Costs will exceed the amount of the Construction
Allowance. During the course of construction, once the cost of constructing the
Work has exceeded the amount of the Construction Allowance plus the Pre-Paid
Amount, Landlord shall provide written notice thereof to Tenant. Following
Landlord’s delivery of such notice to Tenant, Tenant shall be obligated to pay
for all billings from Landlord for the cost of the Work in excess of the
Construction Allowance and the Pre-Paid Amount (collectively, the
“Above-Allowance Amounts”). The payment of the Above-Allowance Amounts shall be
accomplished by increasing Tenant’s share of monthly disbursements provided in
Section 9 above. Under no circumstances shall Landlord be required to pay for
the Above-Allowance Amounts. Following Substantial Completion of the Work, if
the amount of the Total Construction Costs exceeds the sum of (i) the
Construction Allowance, (ii) the Pre-Paid Amount, and (iii) the Above-Allowance
Amounts, then Tenant shall be responsible for such excess costs (collectively,
the “Excess Costs”). Under no circumstances (except if to correct deficiencies
in the Work which are brought to Landlord’s attention within the Warranty
Period) shall Landlord be required to pay for any Excess Costs. Landlord will
invoice Tenant for such Excess Costs; such invoice shall include adequate
supporting documentation for the Excess Costs. Tenant shall pay Landlord the
amount of the Excess Costs within twenty (20) days of receipt of such invoice,
provided that Tenant approves the amount of the Excess Costs, such approval not
to be unreasonably withheld, conditioned or delayed.

 

12. Payment of Costs. Except as otherwise set forth herein, Tenant shall pay
Landlord for amounts due under this Amendment within twenty (20) days of
billing. Any unpaid portions, whether undisputed or disputed on which Landlord
ultimately prevails, shall bear interest from the due date at the annual rate of
two percent (2%) above the prime interest rate then being charged by Bank of
America, N.T. & S.A., Los Angeles Main Office, but not to exceed the maximum
legal rate permitted to be charged on the date such interest shall commence to
accrue.

 

13. Delays. Tenant shall be responsible for, and shall pay to Landlord any and
all costs and expenses incurred by Landlord in connection with any delay in
Substantial Completion caused by Tenant and any increase in the cost of Work
caused by (i) any changes requested by Tenant in the Work shown on the Working
Drawings (including any cost or delay resulting from proposed changes that are
not ultimately made), (ii) any failure by Tenant to timely pay any amounts due
from Tenant hereunder, including any additional costs resulting from any change
(it being acknowledged that if Tenant fails to make or otherwise delays making
such payments, Landlord may stop work on the Work rather than incur costs which
Tenant is obligated to fund but has not yet done so and any delay from such a
work stoppage will be a Tenant Delay), (iii) the inclusion in the Work of any
so-called “long lead” materials (such as fabrics, panellings, carpeting or other
items that must be imported or are of unusual character or limited availability)
which Landlord has informed Tenant, at the time Tenant selects such item(s), are
long-lead items, (iv) any failure by Tenant to respond to inquiries within the
time provided in this Amendment or, if not specified, within commercially
reasonable time periods, regarding the construction of the Work or in granting
Tenant’s approval of materials or finishes for the Work, or (v) any other delay
requested or proximately caused solely by Tenant. Each of the foregoing is
referred to herein as a “Tenant Delay”. Tenant Delays do not include delays in
governmental processing or delays caused by Landlord’s failure to perform its
obligations hereunder (including preparing items and/or responding within the
time periods set forth herein). Landlord

--------------------------------------------------------------------------------

shall provide Tenant written notice promptly following the occurrence of any
Tenant Delay specifying Landlord’s good faith estimate of the duration thereof.
If Substantial Completion of the Suite 200 Work or the Suite 100 Work, as the
case may be, is delayed as a result of a Tenant Delay, then the Suite 200
Commencement Date or the Suite 100 Commencement Date, as the case may be, shall
be deemed to be the date that Substantial Completion of the Suite 200 Work or
the Suite 100 Work, as the case may be, would have occurred but for any Tenant
Delay. In addition, if Tenant requests any changes to the Work described in the
Space Plan or the Working Drawings, then the net increased costs and any
additional design costs incurred in connection therewith as the result of any
such change shall be added to the Total Construction Costs. In addition, Tenant
shall indemnify, protect, defend and hold Landlord harmless from all claims
arising from or in connection with all damages sustained by Landlord as a result
of any Tenant Delay. As used herein, a “Landlord Delay” shall mean any delay in
the Substantial Completion of the Work that occurs due to Landlord’s failure to
complete any action item on or before the due date required hereunder. In
calculating the date of Substantial Completion of the Work, one day shall be
deducted from the aggregate of Tenant Delay days for each day of Landlord Delay.

 

14. Term. Upon the Suite 200 Commencement Date, the term of the Lease for the
15273 Premises shall be extended (the “15273 Premises Term”) so that the
expiration date of the Lease shall be the last day of the one hundred and
twentieth (120th) full calendar month following the Suite 200 Commencement Date
(such date is hereinafter referred to as the “15273 Premises Expiration Date”).
The 15273 Premises Expiration Date shall be confirmed in writing by the parties
following the occurrence of the Suite 100 Commencement Date. The 15273 Premises
Term may be extended, at Tenant’s election, in accordance with the provisions of
Exhibit K attached hereto. The New Extended Term for the Original Premises and
the 15273 Premises Term are not intended to be coterminous.

 

15. Base Rent. To reflect the addition of the 15273 Premises to the Lease,
effective as of the Suite 200 Commencement Date with respect to the Suite 200
Premises and as of the Suite 100 Commencement Date with respect to the Suite 100
Premises, and continuing thereafter throughout the 15273 Premises Term, Tenant
shall pay to Landlord Base Rent in advance on or before the first day of each
calendar month, for the entirety of the 15273 Premises, as follows:

 

  Lease

 Months

--------------------------------------------------------------------------------

  

Monthly Base Rent

per square foot

--------------------------------------------------------------------------------

  

Monthly

Base Rent

--------------------------------------------------------------------------------

     

      ***

   $ 1.11    $ 5,222.55

        1

   $ 1.11    $ 10,946.82

    2 – 3

   $ 0.00    $ 0.00

    4 – 12

   $ 1.11    $ 10,946.82

  13 – 24

   $ 1.16    $ 11,439.92

  25 – 36

   $ 1.21    $ 11,933.02

  37 – 48

   $ 1.26    $ 12,426.12

  49 – 60

   $ 1.31    $ 12,919.22

  61 – 72

   $ 1.36    $ 13,412.32

  73 – 84

   $ 1.41    $ 13,905.42

  85 – 96

   $ 1.46    $ 14,398.52

  97 – 102

   $ 1.51    $ 14,891.62

103 – 120

   $ 1.56    $ 15,384.72

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***During the period from the Suite 200 Commencement Date through the date
immediately preceding the Suite 100 Commencement Date (the “Interim Period”),
Tenant shall pay Base Rent with respect to the Suite 200 Premises at the rate of
$1.11 per square foot or $5,222.55 per month. The first “Lease Month” of the
15273 Premises Term shall be the period commencing on the Suite 100 Commencement
Date (as such date may be accelerated pursuant to Section 13) and ending on the
last day of the first (1st) full calendar month thereafter. The first (1st)
monthly installment of Base Rent with respect to the entirety of the 15273
Premises in the amount of $10,946.82 shall be payable contemporaneously with the
execution of this Amendment by Tenant; payment for a partial month following the
Suite 100 Commencement Date shall be payable within five (5) days of the Suite
100 Commencement Date.

 

16. Modification of Tenant’s Share. To reflect the addition of the Suite 200
Premises to the Lease during the Interim Period, the provisions of Article 6 of
the Lease shall apply to the Suite 200 Premises and Tenant’s Share shall be
2.19% with respect to the Suite 200 Premises. To reflect the addition of the
Suite 100 Premises to the Lease, effective as of the Suite 100 Commencement
Date, the provisions of Article 6 of the Lease shall apply to the entirety of
the 15273 Premises and Tenant’s Share shall be 4.58% with respect to the
entirety of the 15273 Premises. The first (1st) monthly installment of Operating
Expenses, Tax Expenses and Common Area Utility Costs in the amount of $2,524.67
for the entirety of the 15273 Premises shall be payable contemporaneously with
the execution of this Amendment by Tenant; thereafter, the estimated amount of
Tenant’s Share of the foregoing costs shall be payable on the first (1st) day of
each month beginning on the first (1st) day of the second (2nd) full calendar
month of the 15273 Premises Term and otherwise in accordance with the terms of
the Lease, as amended hereby; provided, however, during the Interim Period,
Tenant shall pay Operating Expenses, Tax Expenses and Common Area Utility Costs
in the amount of $1,204.48 per month for the Suite 200 Premises.

 

17. Real Estate Brokers. Tenant represents and warrants that it has negotiated
this Amendment directly with Studley, Inc. (“Tenant’s Broker”) and CB Richard
Ellis (“Landlord’s Broker”) and has not authorized or employed, or acted by
implication to authorize or to employ, any other real estate broker or salesman
to act for Tenant in connection with this Amendment. Tenant shall indemnify,
defend and hold Landlord harmless from and against any and all claims by any
other real estate broker or salesman claiming to represent Tenant and claiming
entitlement to a commission, finder’s fee or other compensation as a result of
Tenant’s entering into this Amendment. Landlord shall pay a commission to
Landlord’s Broker and Tenant’s Broker pursuant to separate agreements.
Notwithstanding the foregoing, in no event shall Landlord be required to pay
Tenant’s Broker any construction management, space planning or project
management fees in connection with this Amendment.

 

18. Parking. During the Interim Period, Tenant shall have use of sixteen (16)
nonexclusive and undesignated parking spaces, subject to the terms of the Lease.
Commencing on the Suite 100 Commencement Date and throughout the remainder of
the 15273 Premises Term, Tenant shall have use of thirty-three (33) nonexclusive
and undesignated parking spaces (for the combined 15273 Premises), subject to
the terms of the Lease.

 

19. Signage. Subject to (i) compliance with Landlord’s signage criteria, (ii)
compliance with all applicable rules, regulations and laws, and (iii) the
approval of any governmental authority with jurisdiction over the Complex,
Tenant shall have the right, at Tenant’s sole cost and expense, to install
building-side signage similar to that on the Original Premises and building door
signage with respect to the 15273 Premises.

--------------------------------------------------------------------------------

20. Additional Security Deposit. Landlord is currently holding a security
deposit in the amount of $47,082.75 with respect to the Original Premises (the
“Original Deposit”). Effective as of the execution of this Amendment by Tenant,
the Security Deposit referenced in the Lease shall be increased to $77,852.19.
Accordingly, upon Tenant’s execution of this Amendment, Tenant shall deposit
with Landlord the sum of $30,769.44. Upon the expiration of the term of the
Lease with respect to the Original Premises (as such term may be extended),
provided that Tenant has not been in default under the Lease beyond applicable
notice and/or cure periods more than once in any twelve (12) month period during
the remainder of the term of the Lease with respect to the Original Premises (as
such term may be extended), Landlord shall refund the remaining portion of the
Original Security Deposit to Tenant in accordance with the terms of the Lease,
as amended hereby.

 

21. Authority. Each party hereto hereby covenants and warrants on its own behalf
that (a) it is in good standing under the laws of the States of California and
Delaware, (b) it has full corporate power and authority to enter into this
Amendment and to perform all its obligations under the Lease, as amended by this
Amendment, and (c) each person (and all of the persons if more than one signs)
signing this Amendment on behalf of such party is duly and validly authorized to
do so.

 

22. No Offer. Submission of this instrument for examination and signature by
Tenant does not constitute an offer to lease or a reservation of or option for
lease, and this instrument is not effective as a lease amendment or otherwise
until executed and delivered by both Landlord and Tenant.

 

23. Exhibits. Exhibits A-4, J-1 and K attached hereto shall be incorporated into
the Lease, as amended hereby.

 

24. Entire Agreement. This Amendment, together with the Lease, constitutes the
entire agreement between Landlord and Tenant regarding the Lease and the subject
matter contained herein and supersedes any and all prior and/or contemporaneous
oral or written negotiations, agreement or understandings.

 

25. Incorporation. The Lease, as modified herein, remains in full force and
effect, and the parties hereby ratify the same. This Amendment shall be binding
upon the parties and their respective successors and assigns.

 

26. SNDA. Concurrently with the execution of this Amendment, Landlord shall use
commercially reasonable efforts to provide Tenant with a commercially reasonable
nondisturbance agreement for Tenant’s benefit (on its Lender’s standard form
which is attached hereto as Exhibit J-1 (the “SNDA”) from the beneficiary of
that certain Deed of Trust Security Agreement, Fixture Filing and Financing
Statement dated January 27, 2000 naming The Prudential Insurance Company of
America (“Lender”) as the beneficiary and covering the Complex which was
recorded on January 27, 2000, as Document No. 20000047965, in the Official
Records of Orange County, California (the “Mortgage”). Notwithstanding the
foregoing, Landlord’s failure to obtain such agreement shall not constitute a
default by Landlord hereunder provided Landlord has employed diligent
commercially reasonable efforts to obtain same from Lender. If Lender notifies
Tenant that either (a) Lender is exercising its rights under the Mortgage
following a default under the Mortgage, or (b) of Lender’s succeeding to the
Landlord’s interest under the Lease, and in either event, Tenant pays rents due
under the Lease directly to Lender, then Landlord waives any and all claims
against Tenant if Tenant responds to any such requests by Lender and such
payment to Lender shall be deemed a payment to Landlord for the purposes of the
Lease. Tenant shall reimburse Landlord

--------------------------------------------------------------------------------

within ten (10) days of demand therefor for all costs charged by Lender in
connection with Lender’s review and execution of the SNDA.

 

27. Use. Landlord hereby acknowledges and consents to the use of the 15273
Premises for the manufacture of pharmaceutical products which include Dangerous
Drugs and Devices as defined in the Third Addendum.

 

28. Removal of Personal Property, Fixtures and Equipment/Restoration. Landlord
hereby acknowledges that upon the expiration or earlier termination of the
Lease, Tenant shall be entitled to remove its personal property, trade fixtures
and equipment, including without limitation, the pharmaceutical manufacturing
environment or “clean room” to be installed in the 15273 Premises provided
Tenant repairs any and all material damage to the Premises caused by such
removal. Notwithstanding any provision of the Lease to the contrary, upon the
expiration or earlier termination of the Lease, upon removal of Tenant’s
personal property, trade fixtures and equipment, Tenant shall not be required to
remove any leasehold improvements in Suite 100 which were in existence upon
delivery of possession by Landlord, nor any of the improvements constructed in
connection with the Suite 200 Work; provided, however, that Landlord may elect
upon thirty (30) days’ written notice to Tenant to require Tenant to deliver the
15273 Premises to Landlord in a “vanilla shell” condition.

 

[SIGNATURES ON FOLLOWING PAGE]

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment as of the
day and year first written above.

 

LANDLORD:

     

TENANT:

ALTON PLAZA PROPERTY, INC.,
a Delaware corporation       ISTA PHARMACEUTICALS, INC.,
a Delaware corporation

By:

 

/s/ Daniel J. Bradley

     

By:

 

/s/ Vicente Anido, Jr.

Name:

 

Daniel J. Bradley

     

Name:

 

Vicente Anido, Jr.

Title:

 

President

     

Title:

 

President and CEO

       

By:

               

Name:

               

Title:

   

--------------------------------------------------------------------------------

 

EXHIBIT A-4

 

Plan of 15273 Premises

--------------------------------------------------------------------------------

 

EXHIBIT K

 

Renewal Option for 15273 Premises

 

Tenant shall have the right to renew the term of the Lease with respect to the
15273 Premises only (the “15273 Renewal Term”) for one (1) five (5)-year term
upon prior written notice (“Tenant’s Election Notice”) to Landlord given not
sooner than nine (9) months nor later than six (6) months prior to the 15273
Premises Expiration Date; provided that at the time Tenant gives such notice to
Landlord and for the remainder of the 15273 Premises Term (i) the Lease has not
been assigned and Tenant (or its corporate successor) continues to occupy at
least eighty percent (80%) of the 15273 Premises and (ii) Tenant is not in
default under the Lease beyond any applicable cure period. During the 15273
Renewal Term, the provisions of the Lease, as it may be amended in writing prior
to the date of the commencement of the 15273 Renewal Term, shall continue in
full force and effect except that Tenant shall occupy the 15273 Premises in its
then “AS IS” condition and there shall be no abatement of rent, nor shall there
be credit or allowances given to Tenant for improvements to the 15273 Premises,
and the Base Rent will be the then fair market rent determined as provided
herein. On request, Landlord shall give Tenant the rates it is quoting to
prospective tenants for new leases of comparable space in the Complex for a
comparable term (as confirmed by written statement to Tenant by a representative
of Landlord). It is understood and agreed that Tenant’s submittal of Tenant’s
Election Notice shall bind Tenant to a five (5)-year extension of the Lease with
respect to the 15273 Premises. At Landlord’s request, the parties shall promptly
memorialize the Base Rent for the 15273 Renewal Term in a writing to be prepared
by Landlord.

 

The “fair market rent” shall be based on the rental amounts that tenants are
paying in then-current transactions between landlords and non-affiliated parties
for new or renewal, non-expansion (unless the expansion is pursuant to a
comparable definition of fair rent), and non-equity tenants, for comparable
space (in size and height with 60% office and 40% warehouse space), for a
comparable use for a comparable period of time within the City of Irvine (Irvine
Spectrum submarket), California, as of the 15273 Premises Expiration Date
(“Comparable Transactions”). The reference to “60% office and 40% warehouse
space” in the foregoing sentence shall mean that fair market rent shall be
determined on the basis of the 15273 Premises being built out as 60% office and
40% warehouse space, regardless of the manner in which Tenant is using or has
built out the 15273 Premises. In any determination of Comparable Transactions,
appropriate consideration shall be given to the annual rental rates per square
foot (e.g., whether increases in additional rent are determined on a net or
gross basis), parking rights and obligations, signage rights, abatement
provisions reflecting free rent and/or no rent during the period of construction
or subsequent to the commencement date as to the space in question, brokerage
commissions, if any, which would be payable by Landlord in similar transactions,
length of lease term, size and location of premises being leased, building
standard work letter and/or tenant improvement allowances, if any, the condition
of the base building and the landlord’s responsibility with respect thereto, the
value, if any, of the existing tenant improvements (with such value being judged
with respect to the utility of such existing tenant improvements to a general
business tenant and not to a particular tenant) and other generally applicable
conditions of tenancy for such Comparable Transactions.

 

If by the date thirty (30) days following delivery of Tenant’s Election Notice,
Landlord and Tenant have not agreed in writing as to the amount of the Base Rent
for the 15273 Renewal Term, the parties shall determine the fair market rent in
accordance with the following procedure. Landlord and Tenant shall each appoint
one real estate appraiser, and the two so appointed shall select a third. Said
real estate appraisers shall each be licensed in the State of California,
specializing in the field of

--------------------------------------------------------------------------------

commercial real estate in the City of Irvine, California, having no less than
ten (10) years experience in such field, unaffiliated with either Landlord or
Tenant, and recognized as ethical and reputable within their field. Landlord and
Tenant agree to make their appointments promptly within ten (10) days after
expiration of the thirty (30) day negotiation period, or sooner if mutually
agreed upon. The two appraisers selected by Landlord and Tenant shall promptly
select a third appraiser within fifteen (15) days after they both have been
appointed, and each appraiser, within thirty (30) days after the third appraiser
is selected, shall submit his or her determination of the then projected fair
market rent. The Base Rent shall be the mean of the two closest rental
determinations.

--------------------------------------------------------------------------------

 

EXHIBIT J-1

 

Form of SNDA

 

Prudential Loan No. 6103765

 

SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT

 

THIS AGREEMENT (“Agreement”) made as of the              day of
                    , 2005, between THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
(together with its successors or assigns in interest, collectively “Lender”) and
ISTA PHARMACEUTICALS, INC., a Delaware corporation (“Tenant”).

 

RECITALS:

 

A. Lender is the owner and the holder of a loan evidenced by a promissory note
(the “Note”) dated January 27, 2000 in the face amount of $7,500,000.00. The
Note is secured by a Deed of Trust, Security Agreement, Fixture Filing and
Financing Statement (the “Mortgage”) dated the same date as said Note, and
recorded on January 27, 2000 as Document No. 20000047965 in the Real Property
Records of Orange County, California, covering the real property described
therein (the “Mortgaged Premises”).

 

B. Tenant is the tenant under that certain Lease Agreement dated September 13,
1996 (as amended, the “Lease”), between Tenant and ALTON PLAZA PROPERTY, INC., a
Delaware corporation as landlord (said landlord and its successors and assigns
under the Lease hereinafter called “Landlord”), covering all or part of the
Mortgaged Premises as set forth under the Lease (hereinafter called the “Demised
Premises”).

 

C. Tenant and Lender desire to confirm their understanding with respect to the
Lease and the Mortgage.

 

THEREFORE, in consideration of the mutual covenants and agreements herein
contained and other good valuable consideration, the receipt and sufficiency of
which are hereby acknowledged by all parties, Lender and Tenant agree as
follows:

 

1. Subordination. The Lease is now, and will at all times and for all purposes
be, subject and subordinate, in every respect, to the Mortgage, with the
provisions of the Mortgage and this Agreement controlling over the provisions of
the Lease. The Lease is subordinate and subject, in each and every respect, to
any and all increases, renewals, modifications, extensions, substitutions,
replacements and/or consolidations of the Mortgage, (collectively a
“Modification”), and all other loan documents securing the Note, provided that
any and all Modifications shall nevertheless be subject to the terms of this
Agreement.

 

2. Non-Disturbance. So long as Tenant complies with all of the terms,
provisions, agreements, covenants, and obligations set forth in the Lease after
the expiration of any applicable cure period, Tenant’s possession of the Demised
Premises under said Lease shall not be disturbed or interfered with by Lender.

--------------------------------------------------------------------------------

3. Attornment. If Lender or any other party succeeds to the interest of Landlord
under the Lease in any manner, including but not limited to foreclosure,
exercise of any power of sale, succession by deed in lieu or other conveyance (a
“Succession”), Tenant will attorn to and be bound to such party (whether Lender
or another party) upon such Succession and will recognize Lender or such other
party as the landlord under the Lease. Such attornment is effective and
self-operative without the execution of any further instrument. Tenant, upon
request, will sign and deliver any instruments reasonably requested to evidence
such attornment. Tenant waives the provisions of any statute or rule of law, now
or hereafter in effect, which may give or purport to give Tenant any right or
election to terminate or otherwise adversely affect the Lease and the
obligations of Tenant thereunder as a result of any such foreclosure or
trustee’s sale.

 

4. Limitation On Lender’s Liability. Upon any Succession, Lender shall not be
(a) liable for any act or omission of the Landlord under said Lease, (b) subject
to any offsets or defenses which Tenant may have against the Landlord arising or
occurring due to an event prior to the Succession, (c) bound by any rent or
additional rent which Tenant may have paid to Landlord for more than the current
month, (d) bound by any amendment or modification of the Lease made without
Lender’s prior written consent, (e) liable for any security deposit paid by
Tenant to Landlord unless such deposit is delivered to Lender, (f) liable for or
obligated to pay for repairs, replacements, damages or allowances not made,
performed or paid by the Landlord if such performance or payment was due prior
to the Succession, or (g) liable for the payment of any leasing commissions, the
triggering event for which arose or occurred prior to the Succession. Any
reference to Landlord includes all prior landlords under the Lease. Neither
Lender nor any party taking under a Succession shall be liable for the
performance of the obligations of the Landlord under the Lease, except for those
obligations which arise during the period of Lender’s or such entity’s or
person’s ownership of the Mortgaged Premises.

 

5. Tenant’s Warranty. Tenant warrants to Lender, as of the date hereof, that (a)
attached is a true, correct and complete copy of the Lease, (b) there are no
known defaults on the part of Landlord, (c) the Lease is a complete statement of
the agreement of the parties with respect to the leasing of the Demised
Premises, (d) the Lease is validly executed by Tenant and in full force and
effect. Tenant acknowledges and warrants to Lender that it has not subordinated
the Lease or any of its rights under the Lease to any lien or mortgage other
than the Mortgage.

 

6. Lender Cure Rights. Thirty (30) days before exercising any of its rights and
remedies under the Lease for a landlord default, Tenant will send written notice
to Lender at Suite 4900E, 2200 Ross Avenue, Dallas, Texas 75201, referencing
Loan Number 6103765 by certified mail, return receipt requested, of the
occurrence of any default by Landlord and will specify with reasonable clarity
the events constituting such default. If the referenced default would entitle
Tenant to cancel the Lease or abate the rent payable thereunder, no such
cancellation or abatement of rent will be effective unless Lender receives
notice in the form and manner required by this Paragraph 6 and fails (a) within
thirty (30) days of the date of the receipt of such notice by Lender to cure or
cause to be cured any default which can be cured by the payment of money and (b)
to cure or caused to be cured within sixty (60) days of the receipt of such
notice any default which cannot be cured by the payment of money (“Non-Monetary
Default”); provided, however, that if the Non-Monetary Default is not capable of
cure within such sixty-day period, no cancellation or abatement by Tenant will
be effective as to Lender unless Lender fails within the original sixty (60) day
period to commence and diligently

--------------------------------------------------------------------------------

prosecute the cure of such default to completion. Tenant will accept cure of any
Landlord default by Lender.

 

7. Rent Payment. Immediately upon written notice to Tenant (a) that Lender is
exercising its rights under the Mortgage or any other loan documents acting to
secure the Note following a default under the Loan, or (b) of Lender’s
succeeding to the Landlord’s interest under the Lease, Tenant agrees to pay all
rents due under the Lease directly to Lender (in accordance with the Lease).

 

8. Complete Agreement. This Agreement supersedes, as between the parties hereto,
all of the terms and provisions of the Lease which are inconsistent herewith.

 

9. No Oral Modification/Binding Effect. This Agreement may not be modified
orally or in any manner other than by an agreement in writing signed by the
parties hereto or their respective successors in interest. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
successors and assigns.

 

10. Laws. This Agreement shall be construed in accordance with the laws of the
State where the Mortgaged Premises are located.

 

11. Automatic Amendment of Lease. Upon a Succession, the Lease is automatically
amended as follows:

 

a. Hazardous Materials. All representations, warranties, indemnities or hold
harmless provisions in favor of Tenant from Landlord dealing with the presence,
use, transportation, disposal, contamination, exposure to or in any way arising
out of hazardous or toxic materials, chemicals or wastes (“Hazardous Materials”)
are deleted as to Lender. Lender, however, as Landlord, covenants and agrees to
(a) comply with all laws governing Hazardous Materials (“Hazardous Materials
Laws”), (b) store, use and dispose of all Hazardous Materials at the Mortgaged
Premises in accordance with all applicable Hazardous Materials Laws, and (c)
remove, remediate and/or clean up, as applicable, in accordance with all
applicable Hazardous Materials Laws, all Hazardous Materials at the Mortgaged
Premises (to the extent not caused by Tenant or its employees, contractors or
agents) impairing Tenant’s use or access to the Demised Premises.

 

b. Insurance. Tenant will at all times carry comprehensive general liability
coverage for its activities and operations at the Demised Premises, listing
Lender and Landlord as additional insureds, in such coverage amounts as are
required by the Lease but in no event less than One Million Dollars. Lender will
have no liability to Tenant for any indemnity or hold harmless provision under
the Lease where Lender is otherwise covered by Tenant’s comprehensive general
liability coverage(s) as carried by Tenant or which Tenant is required to carry
under the Lease. All insurance required to be carried by Landlord under the
Lease may be effected by Lender by self-insurance or by a policy or policies of
blanket insurance covering additional items or locations or assureds and with
such deductibles as Lender may from time to time determine. Tenant has no rights
in any policy or policies maintained by Lender.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed the day and year first above written.

 

       

LENDER:

       

THE PRUDENTIAL INSURANCE COMPANY

OF AMERICA

ATTEST:

                   

By:

   

Assistant Secretary

         

Vice President

           

(Corporate Seal)

       

TENANT:

       

ISTA PHARMACEUTICALS, INC.,

ATTEST:

                   

By:

   

Secretary

         

President

           

(Corporate Seal)