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                                                                   EXHIBIT 10.38


                       BAUSCH & LOMB PHARMACEUTICALS, INC.
                     CONTRACT MANUFACTURING SUPPLY AGREEMENT

      THIS CONTRACT MANUFACTURING SUPPLY AGREEMENT (the "Agreement"), made this
November 25, 2002, (the "Effective Date") by and between BAUSCH & LOMB
PHARMACEUTICALS, INC., a Delaware corporation, having its principal office
located at 8500 Hidden River Parkway, Tampa, Florida 33637 ("BLP"), and ISTA
PHARMACEUTICALS, INC., having its principal office located at 15279 Alton
Parkway, Suite 100 Irvine, CA 92618 ("ISTA").

      WHEREAS, ISTA desires that BLP be appointed the contract manufacturer for
certain Product (as defined herein);

      WHEREAS, BLP is willing to manufacture and supply to ISTA such Product (as
defined herein) under the terms and conditions of this Agreement;

      NOW, THEREFORE, the parties hereby agree as follows:

                                    AGREEMENT

ISTA and BLP, therefore agree the terms defined in this section shall have the
meanings stated as follows:

1.    Definitions.

      A.    "ACT" means the United States Federal Food, Drug and Cosmetic Act,
            as amended, and the regulations promulgated thereunder.

      B.    "API" means bromfenac sodium in active pharmaceutical ingredient
            form as more fully described in the Specifications.

      C.    "Applicable Laws" means all laws, ordinances, rules and regulations
            within the United States applicable to the manufacturing of Product
            and the obligations of BLP or ISTA, as the context requires, under
            this Agreement, and includes, without limitation, (i) all applicable
            federal, state and local laws, rules, ordinances and regulations,
            (ii) the ACT, and (iii) the cGMPs.

      D.    "cGMP" means current good manufacturing practices, as defined in the
            ACT.

      E.    "Commercial Year" means each consecutive twelve (12) month period
            commencing on the date that ISTA receives written FDA approval of
            the Product.

      F.    "Confidential Information" means any information disclosed by either
            party to the other party hereunder which is designated in writing as
            "confidential". ISTA Confidential Information shall include without
            limitation: (i) all information relating to the Product and API, and
            all licenses, technology, processes and business plans

-------------------------
[*] Confidential portions omitted and filed separately with the Securities and
Exchange Commission.
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            relating to the Product and (ii) all notes, analyses, studies or
            other documents which contain or are based on the information or
            material described in (i). BLP Confidential Information shall
            include without limitation: (x) all information owned by BLP and
            pertaining to BLP's manufacture of the Product, including all plans,
            programs, processes, equipment, apparatuses, and all licenses and
            technology owned by BLP and pertaining to the manufacture of the
            Product and (y) all notes, analyses, studies or other documents
            owned by BLP that contain or are based on the information or
            material described in (x), and in all events excluding subject
            matter owned by ISTA pursuant to Article 18.

      G.    "Technology Transfer Activities" means the technology transfer
            activities set forth in Appendix C.

      H.    "FDA" means the United States Food and Drug Administration or any
            successor entity thereto.

      I.    "Firm Order" shall have the meaning set forth in Section 9.B.

      J.    "Labeling" means all labels and other written, printed or graphic
            matter upon (i) the Product or any container or wrapper utilized
            with the Product or (ii) any written material accompanying the
            Product, including without limitation, package inserts.

      K.    "Master Batch Record" shall mean the master production and control
            records required by the FDA to be kept for the Product pursuant to
            21 CFR Section 211.186.

      L.    "Pharmaceutical Price Index" means that particular index within the
            U.S. Department of Labor's Producer Price Index - Commodities, which
            is categorized under the Group, "Chemicals and Allied Products,"
            item "Pharmaceutical preparations" and having the Series ID of
            WPU0638.

      M.    "Raw Materials" means bottles, tips, caps, Labeling, chemicals other
            than API, and other components needed to manufacture the Product in
            accordance with the Specifications.

      N.    "Specifications" means the product requirements set forth in the
            Master Batch Record for the Product and Appendix D, as amended by
            the parties hereto during the Term of this Agreement, which may
            include but not be limited to, the specifications for Labeling,
            storage, chemical composition, physical characteristics, biological
            characteristics and quality control procedures for the Product.

      O.    "Validation Activities" means the validation activities set forth in
            Appendix C.

2.    Product. The term "Product" shall mean the product listed on Appendix A.

3.    Term. Subject to Article 19, this Agreement shall become effective on the
      Effective Date and shall expire on the [*] of ISTA's receipt of written
      FDA approval of the NDA for the Product (the "Expiration Date"), provided
      that BLP notifies ISTA in writing that it does not intend to renew this
      Agreement at least [*] prior to the Expiration Date or ISTA notifies BLP

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      in writing it does not intend to renew this Agreement at least [*] prior
      to the Expiration Date (the "Term"). In the absence of any such notice,
      this Agreement shall automatically renew for additional successive [*]
      renewal periods (each a "Renewal Period") unless BLP notifies ISTA in
      writing that it does not intend to renew this Agreement at least [*] prior
      to the end of any Renewal Period or if ISTA notifies BLP in writing that
      it does not intend to renew this Agreement at least [*] prior to the end
      of any Renewal Period, subject to Article 19. For purposes of this
      Agreement, references to Term shall include any Renewal Periods hereunder.

4.    Price.

      A.    Product Prices. The purchase price per unit of Product to be paid by
            ISTA to BLP shall be in accordance with the terms of the price
            schedule set forth in Appendix A, which is attached hereto and
            incorporated herein by reference, as adjusted pursuant to Section
            4.B. below. Prices for Product sold to ISTA during the Term are
            F.O.B. BLP's shipping point located in Tampa, Florida.

      B.    Price Increase. The purchase price per unit of Product shall remain
            fixed until the [*] of ISTA's receipt of written FDA approval for
            the Product. Thereafter, but no more than [*] during any Commercial
            Year, BLP may increase the prices for the Product, upon [*] written
            notice to ISTA, by an amount which is in proportion to, and not to
            exceed, [*] period preceding the effective date of such price
            increase.

      C.    Order Payment. BLP will invoice ISTA for each order of Product upon
            shipment of the Product. Invoices shall be due and payable within
            forty-five (45) days of the date of BLP's invoice. In the event that
            any undisputed invoice is not paid when due, ISTA agrees to pay a
            "late charge" on the unpaid delinquent balance at an interest rate
            of [*], but in no event more than the maximum rate permitted by law.

      D.    Project Prices. ISTA will pay for Technology Transfer Activities and
            Validation Activities in accordance with the terms set forth in this
            Agreement and in Appendix C attached hereto. It is understood and
            agreed that the prices set forth in Appendix C with respect to
            Technology Transfer Activities or Validation Activities are
            contingent on the successful manufacture of Product Validation
            Batches (as defined in Section 5.C. below) and Submission Batches
            (as defined in Appendix C) in accordance with the Specifications as
            part of the Technology Transfer Activities or Validation Activities.

      E.    Project Payment. BLP will invoice ISTA for each project, as follows:

            (1)   For BLP's performance of the Technology Transfer Activities,
                  BLP shall invoice ISTA for (i) [*] of the fee for such
                  activities upon the commencement of the Technology Transfer
                  Activities, (ii) [*] of the fee for such activities upon
                  ISTA's acceptance of the last Submission Batch, and (iii) [*]
                  ISTA's acceptance of the completed report of the stability
                  study for NDA submission.

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            (2)   For BLP's performance of the Validation Activities, BLP shall
                  invoice ISTA for [*] of the fee for such activities upon the
                  commencement of the Validation Activities and [*] upon ISTA's
                  acceptance of the process validation report.

      F.    Additional Project Work. BLP will invoice ISTA for any additional
            work requested by ISTA which is not defined in the original project
            scope specified on Appendix C hereto, provided that ISTA agrees, in
            advance in writing, to the additional work, and such invoice shall
            be due and payable within [*] after ISTA's receipt of the invoice.

5.    Product Technical Transfer.

      A.    Technology Transfer and Validation Activities. BLP agrees to perform
            the Technology Transfer Activities and Validation Activities set
            forth in Appendix C. The parties shall cooperate with one another to
            transfer the Specifications, supplies and test methods for the
            Product in a manner that meets the mutually agreed upon project
            requirements. ISTA will be responsible for providing to BLP all
            information (i.e., Specifications, MSDS, methods, process & Product
            development, validation, and regulatory correspondence with the FDA)
            necessary to manufacture the Product as part of the technology
            transfer assessment process. BLP will be responsible for evaluating
            the Product information from ISTA to confirm that it meets BLP
            policies and cGMP requirements. BLP will be responsible for weekly
            communications with ISTA, via conference call, relating to the
            progress of the project and on a monthly basis, providing to ISTA a
            project status report once the project is initiated until the
            termination of the project technical transfer process.

      B.    Submission Batches. ISTA shall pay to BLP the fee set forth in
            Appendix C for BLP's performance of the Technology Transfer
            Activities; provided that if any such batch does not meet the
            Specifications due to BLP's negligence, the failure of BLP's
            Processing equipment, or BLP's failure to adhere to the batch
            records, BLP shall, at its own expense, manufacture additional
            batches of Product until the successful completion of a total of [*]
            and [*] which meet the Specifications. BLP shall not be responsible
            for any batch failures directly caused by Product formulation,
            container compatibility and testing methods developed or provided by
            ISTA to BLP hereunder. ISTA may, at its own expense, request BLP to
            manufacture additional batches of Product attributed to such
            failures.

      C.    Validation Batches. Each batch of Product manufactured as part of
            the Validation Activities will be considered to be an "Experimental
            Batch" until BLP has manufactured [*] that meets the Specifications
            applicable to such Product upon which such consecutive batches shall
            be considered "Validation Batches." ISTA shall pay to BLP the
            Product price set forth in Appendix A for each Experimental Batch
            manufactured as part of the Validation Activities; provided that if
            any such Experimental Batch does not meet the Specifications due to
            BLP's negligence, the failure of BLP's Processing equipment, or
            BLP's failure to adhere to the batch records, validation protocols
            or other similar documentation, BLP shall, at its own expense,
            manufacture additional Experimental Batches of Product until the
            successful completion of a total of [*] which meet the
            Specifications. BLP shall not be

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            responsible for any batch failures directly caused by Product
            formulation, container compatibility and testing methods developed
            or provided by ISTA to BLP hereunder. ISTA may, at its own expense,
            request BLP to manufacture additional batches of Product attributed
            to such failures. BLP and ISTA shall cooperate in good faith to
            resolve any problems causing any out-of-Specification batch. It is
            understood and agreed that the Validation Batches will, upon ISTA's
            receipt of written FDA approval of the Product, be sold as
            commercial Product.

      D.    Designated Product Contact. BLP and ISTA will each designate a
            specific contact for communications relating to supply of Product by
            BLP pursuant to this Agreement ("Product Contact"). The Product
            Contact will be the primary contact for discussions relating to the
            Product or its manufacture.

      E.    Analytical Methods and Data Transfer. Upon ISTA's request, BLP will
            (i) assist ISTA in the transfer of all analytical methods related to
            the Product or its manufacture to another manufacturing site and
            (ii) transfer to ISTA all data reasonably requested by ISTA for use
            in the preparation of FDA filings for the Product; provided that
            ISTA shall bear any costs of such transfers pre-approved in writing
            by ISTA.

6.    Product Manufacture and Supply.

      A.    Manufacture and Supply. BLP agrees to manufacture at its facility
            located at 8500 Hidden River Parkway, Tampa, Florida, the Product,
            in accordance with Applicable Laws, the Specifications, and BLP
            policies and procedures to the extent that such policies and
            procedures do not conflict with any terms or conditions of this
            Agreement or with Applicable Laws. During the Term of this Agreement
            and [*] thereafter, BLP agrees that it shall not manufacture or
            supply to any third party any ophthalmic product containing
            bromfenac.

      B.    Ingredients, Supplies and Packaging Materials. BLP agrees to supply
            at its expense all of the Raw Materials (excluding the active
            Bromfenac, which will be supplied by ISTA) in accordance with the
            Specifications for the Product that are necessary to manufacture and
            supply the finished, packaged Product.

      C.    Testing and Inspection of Materials. BLP shall analyze and evaluate
            all Product materials to confirm that they satisfy the
            Specifications. The cost of all such analyses and evaluations shall
            be borne by [*].

      D.    Testing and Inspection of Product. BLP shall conduct all quality
            control and other tests required to ensure that the Product as
            manufactured meets the Specifications. The cost of all such analyses
            and evaluations shall be borne by BLP. During the commercial phase
            of the project, BLP shall conduct stability testing on [*] for each
            fill size of the Product annually, and shall provide ISTA with
            on-going stability reports. BLP will place each of the Validation
            Batches into on-going stability studies and will provide interim
            stability reports to ISTA, as required by cGMP regulations. BLP will
            perform annual product reviews of the Product and will promptly
            provide ISTA with the information from the annual product reviews as
            required by the FDA,

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            for ISTA's inclusion in annual reports to the FDA. BLP shall provide
            ISTA, [*], with all regulatory support and documentation required by
            the FDA to support the NDA for the Product.

      E.    BLP Obligation to Supply. BLP shall supply ISTA such quantities of
            Product ordered by ISTA pursuant to any Firm Order. Furthermore, BLP
            agrees to reserve manufacturing capacity sufficient to supply ISTA
            with at least such quantities of Product that ISTA is required to
            purchase as an Annual Minimum pursuant to Section 9.A.

7.    Product Changes.

      A.    Changes by ISTA. During the Term of this Agreement, BLP agrees to
            manufacture and package the Product in accordance with the
            Specifications, Applicable Laws, and using approved or mutually
            agreed upon material suppliers. If ISTA at any time requests a
            change to a Product, including without limitation, any changes to
            the Raw Materials, provided that such change does not impose a
            material adverse impact on BLP's manufacture of the Product, (i)
            such change shall be incorporated into the Specifications, (ii) BLP
            shall adjust, with ISTA's prior approval, the price of the Product
            set forth in Appendix A, if necessary, to reflect increased costs of
            such change, (iii) BLP shall implement such change at the earliest
            opportunity and (iv) subject to ISTA's prior approval, ISTA shall
            pay BLP the costs associated with such change, including, for any
            additional development work, a reasonable mutually agreed upon
            charge based upon BLP's then-prevailing research and development
            rates. ISTA shall reimburse BLP for BLP's actual cost of procurement
            of Raw Materials rendered obsolete solely due to the implementation
            of such change up to certain inventory levels for each Raw Material
            to be mutually determined by the parties prior to the commercial
            launch of the Product; provided that ISTA's liability under this
            Section 7.A. shall only apply to the extent such materials cannot
            reasonably be allocated to manufacturing other products.

      B.    Changes by BLP. BLP agrees that any changes developed by BLP that
            may be incorporated into the manufacture of a Product shall require
            the written approval of ISTA prior to such incorporation. At the
            time of such incorporation and FDA approval, if required, such
            changes shall become part of the Specifications.

      C.    Changes by Regulatory Authorities. If BLP is required by a
            regulatory authority to perform validation studies for purposes of
            validating new manufacturing procedures, new Raw Material or
            finished Product assay procedures with respect to a Product, in each
            case which are unique to the manufacture of the Product, in order to
            continue to engage in the manufacture of the Product for ISTA, BLP
            shall promptly provide ISTA with notice that such validation studies
            are required, such notice to include an estimate of all related
            validation study expenses. ISTA shall notify BLP whether it desires
            BLP to continue manufacturing the Product, and all direct expenses
            borne by BLP and pre-approved by ISTA in writing in the conduct of
            any such validation study shall be reimbursed to BLP by ISTA as
            incurred.

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      D.    Regulatory Responsibility. ISTA will be responsible for all
            regulatory submissions and correspondence with the FDA related to
            the Product. BLP will be responsible for providing ISTA, as needed,
            with documentation typically included in the CMC section of
            regulatory submissions, for the preparation of regulatory
            submissions.

8.    Inspections and Manufacturing Compliance.

      A.    Inspections by ISTA. Representatives from ISTA shall be permitted
            access, at reasonable times during BLP's normal business hours and
            upon reasonable advance notice to BLP, to visit, in the company of a
            BLP representative, the manufacturing and/or packaging facility
            where ISTA's Product will be or is being manufactured and/or
            packaged for the purposes of auditing BLP's processes to ensure that
            ISTA's Product is being manufactured, packaged, stored and handled
            in accordance with the Specifications and all Applicable Laws.

      B.    Inspection by Regulatory Agencies. Each party shall promptly notify
            the other party upon being contacted by the FDA for any purpose or
            reason directly relating to the manufacture of the Product,
            including without limitation, any announced or unannounced FDA
            inspection. At BLP's request, ISTA will provide BLP with copies of
            all correspondence and documentation provided to the FDA which
            relate to BLP's scale-up manufacturing activities. At ISTA's
            request, BLP will provide ISTA with copies of all correspondence and
            documentation provided to the FDA which relate to the Product or the
            manufacture of the Product. BLP shall permit an ISTA representative
            to be present at BLP's facilities during any such inspection
            directly relating to manufacture of the Product. Duly authorized
            representative(s) from the FDA or other applicable regulatory
            agencies shall be permitted access, at reasonable times during BLP's
            normal business hours, to visit, in the company of a BLP
            representative, the manufacturing and/or packaging facility or
            facilities where the Product will be or is being manufactured and/or
            packaged for the purposes of auditing BLP's processes to ensure that
            the Product is being manufactured, packaged, stored and handled in
            accordance with the Specifications, Applicable Laws, and BLP
            policies and procedures to the extent that such policies and
            procedures do not conflict with any terms or conditions of this
            Agreement or with Applicable Laws.. BLP shall, at its own expense,
            promptly respond to all inquiries and questions resulting from such
            visits and inspections and, at its own expense, promptly correct any
            deficiencies reported as a result of such inspections. BLP shall
            immediately notify ISTA if an authorized agent of the FDA or other
            governmental agency visits BLP's manufacturing facility for the
            purposes of inspecting the manufacturing and testing of the
            Products.

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9.    Ordering and Rolling Forecasts.

      A.    Annual Minimum. Beginning on [*], ISTA shall purchase from BLP a
            minimum annual amount of Product as set forth in Appendix B attached
            hereto (the "Annual Minimum"). If ISTA does not purchase such Annual
            Minimum during any calendar year thereafter, ISTA shall pay to BLP
            [*] of the difference between (i) the total amount ISTA would have
            paid to BLP if the Annual Minimum had been fulfilled and (ii) the
            total amount actually paid to BLP during the applicable calendar
            year. After ISTA's obligation to purchase the Annual Minimum
            commences pursuant to this Section 9.A., the parties shall meet at
            least once annually to discuss in good faith reasonable adjustments
            to the Annual Minimum taking into consideration the market
            conditions for the Product. Any such adjustment to the Annual
            Minimum shall be mutually agreed upon in writing and shall be
            subject to this Agreement.

      B.    Monthly Forecast. Beginning not less than [*] after ISTA submits the
            NDA for the Product to the FDA, and thereafter on the first day of
            each month, ISTA will deliver to BLP a rolling forecast of its
            estimated need for Product for the following [*] period (each, a
            "Rolling Forecast"). The quantities of Product to be delivered in
            the first [*] of each Rolling Forecast shall be a binding, firm
            order for Product ("Firm Order") and the remainder of the Rolling
            Forecast shall be for advisory purposes only and non-binding.

      C.    Purchase Orders. ISTA will initiate an order for Product by sending
            to BLP a purchase order for Product at least [*] prior to the
            requested delivery date for the Product covered by the purchase
            order ("Purchase Order"). If there is a conflict between the terms
            of this Agreement and any Purchase Order, the terms of this
            Agreement will control. Purchase Orders should be submitted for
            ordered quantities of Product in full batch size; provided that BLP
            agrees that such batch size shall include, but not be limited to, a
            [*] batch size. ISTA may submit Purchase Orders for Product in
            excess of the quantities specified in the rolling forecasts. BLP
            shall use its commercially reasonable efforts to accept and fill
            such orders consistent with efforts used by BLP to fill excess
            orders for other customers of contract manufactured Product. BLP
            will deliver to ISTA a written order acknowledgment form within [*]
            of BLP's receipt of each rolling forecast, confirming the quantities
            of which BLP shall exercise commercially reasonable efforts its
            ability to fill. Only those amounts of such orders in excess of the
            quantities of ISTA's Firm Order, confirmed by BLP in its written
            order acknowledgment, shall be binding on BLP.

      D.    Failure to Supply. Notwithstanding any other provision in this
            Agreement, if BLP fails to supply to ISTA at least [*] of the
            quantity of Product ordered pursuant to a Firm Order during any [*],
            ISTA's obligations to meet the Purchase Requirement and Annual
            Minimum shall terminate and ISTA shall be entitled to purchase any
            quantity of Product from any third party.

10.   Inventory & Delivery. Unless otherwise agreed in writing by the parties,
      BLP will ship the Product F.O.B. BLP's loading dock at its facility in
      Tampa, Florida (the "F.O.B. Point"), to arrive at ISTA's designated
      destination point within [*] of the date a Purchase Order is

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      received by BLP. At the request and expense of ISTA, BLP shall ship the
      Product ordered by ISTA by such carrier or carriers as ISTA may designate.
      Such shipping instructions shall be submitted by ISTA to BLP. Unless
      otherwise agreed by the parties hereto, all risk of loss or damage to the
      Product from any cause whatsoever shall be borne by ISTA after delivery to
      ISTA or ISTA's carrier at the F.O.B. Point. BLP shall not be obligated to
      maintain an inventory of the Product.

11.   Warranties; Acceptance and Claims.

      A.    BLP Warranties. BLP represents and warrants to ISTA that (i) at the
            time of delivery, the Product supplied hereunder will conform to the
            Specifications and all Applicable Laws, (ii) all Product supplied by
            BLP under this Agreement shall be merchantable, free from defects
            and shall not be adulterated or misbranded within the meaning of the
            ACT, as amended, (iii) BLP shall manufacture the Product in
            accordance with the Specifications and in a facility that complies
            with all Applicable Laws, and is covered by all necessary
            registrations and licenses, and BLP shall maintain all such
            registrations and licenses during the Term hereof, (iv) when
            applicable to the work performed by BLP, BLP will adhere to
            Applicable Laws, and (v) BLP shall store all API and Product in a
            secure facility and in accordance with the Specifications and all
            Applicable Laws. THE FOREGOING WARRANTY IS EXCLUSIVE AND IN LIEU OF
            ALL OTHER WARRANTIES EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED
            TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
            PARTICULAR PURPOSE. EXCEPT WHERE BLP COMMITS A WILLFUL, INTENTIONAL
            BREACH OF ANY MATERIAL PROVISION UNDER THIS AGREEMENT, BLP SHALL NOT
            BE RESPONSIBLE OR LIABLE UNDER ANY PROVISION OF THIS AGREEMENT OR
            UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR
            EQUITABLE THEORY FOR ANY RESULTANT INDIRECT, INCIDENTAL, OR
            CONSEQUENTIAL DAMAGES INCLUDING, BUT NOT LIMITED TO LOSS OF REVENUES
            AND LOSS OF PROFITS FROM BLP'S FAILURE TO PROVIDE THE PRODUCT TO
            ISTA OR OTHERWISE.

      B.    Notification of Defects. All Products shall be received subject to
            ISTA's inspection and may be rejected if any such Product fails to
            conform to the Specifications. ISTA shall be deemed to have accepted
            each order of Product if BLP does not receive written notice to the
            contrary (i) within [*] after the later of receipt by ISTA or by its
            customers of any non-conforming Product containing obvious defects
            discoverable without affecting the integrity of the Product's
            packaging and (ii) within [*] of ISTA's discovery of any latent
            defects. At BLP's request, ISTA shall promptly supply either a
            sample of the allegedly defective Product, or some other evidence of
            deficiency, which ISTA or BLP shall specify. In the event of any
            dispute between BLP and ISTA as to whether any of the Product
            conforms to the warranties hereunder, a sample of the units in
            dispute shall be sent by ISTA and BLP to an independent third party
            testing laboratory mutually agreed to in writing by BLP and ISTA
            whose findings will be binding on the parties except in cases of
            gross and

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            manifest error. The cost of such testing and Product shall be borne
            by the party against which the determination was made.

      C.    Warranty Limited to ISTA. ISTA shall deliver to its customers its
            own warranty concerning the Product. If permissible under Applicable
            Law, ISTA's warranty to its customers shall state conspicuously that
            the same is the sole and exclusive warranty to customers.

      D.    Returns. The nonconforming shipment of Product, or the nonconforming
            portion thereof, shall be held for BLP's disposition, or shall be
            returned to BLP, at BLP's expense, as directed by BLP. BLP shall
            replace, at BLP's cost, each nonconforming shipment of Product, or
            the nonconforming portion thereof, with conforming Product as soon
            as reasonably practicable after receipt of notice of rejection
            thereof, and in any event shall do so within [*] after receipt of
            notice of rejection thereof.

      E.    Indemnification of ISTA. At ISTA's request, BLP shall indemnify,
            defend, save and hold ISTA and each of its Affiliates, officers,
            directors, employees and agents harmless from and against any and
            all liabilities, damages, costs, or expenses, including without
            limitation reasonable attorney's fees and disbursements ("Loss" or
            "Losses") resulting from, or arising out of: (a) any material breach
            of any warranty hereunder or material non-fulfillment or
            non-performance by BLP of any agreement, covenant or obligation of
            BLP under this Agreement; (b) any actual or alleged defect in any
            Product manufactured and delivered to ISTA hereunder arising out of
            BLP's failure to manufacture Product in accordance with the terms of
            this Agreement; (c) any actual or alleged infringement or violation
            of any patent, trade secret or proprietary rights used by BLP in
            manufacturing Product; (d) FDA enforcement action, inspection or
            Product recalls or market withdrawals resulting from BLP's failure
            to manufacture the Product in accordance with the terms of this
            Agreement; and (e) any personal injury arising out of BLP's failure
            to manufacture Product in accordance with the terms of this
            Agreement.

      F.    Insurance. Each of the parties shall maintain Commercial Liability
            Insurance, during the Term of this Agreement, including contractual
            and product liability, in amounts of not less than [*] per
            occurrence and [*] annual aggregate naming the other party as an
            additional insured. The parties shall exert their best efforts to
            obtain such insurance with respect to contractual liability on a
            date of occurrence basis (not a date of claim basis) and all
            insurance companies providing such insurance shall have an A.M. Best
            rating of A- or better. Upon request, either party shall submit a
            certificate of insurance evidencing such insurance to the other
            party, and providing that it may not be canceled or reduced in
            amount without [*] prior notification to the other party.

      G.    Manufacture. For purposes of this Article 11 above, Section 5.E. and
            Articles 12 and 18 below, "manufacture" shall include without
            limitation the manufacturing process for the product, bulk solution
            manufacturing, filling, filtering, inspection, testing, Labeling and
            packaging of Product.

12.   ISTA's Obligations.

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      A.    Indemnification of BLP. ISTA shall (and BLP shall give ISTA the
            right to) indemnify, defend, save and hold BLP and each of its
            Affiliates, officers, directors, employees and agents harmless from
            and against Loss or Losses resulting from, or arising out of: (a)
            claims brought by third parties alleging any bodily injury arising
            as a result of a negligent act or omission of ISTA; (b) FDA
            enforcement action, inspections or Product recalls or market
            withdrawals except where arising out of or resulting from BLP's acts
            or omissions or BLP's failure to manufacture Product in accordance
            with the terms of this Agreement; (c) ISTA's acts relating to the
            promotion, marketing and/or distribution of Product, except where
            arising out of or resulting from BLP's acts or omissions or BLP's
            failure to manufacture Product in accordance with the terms of this
            Agreement; and (d) any actual or alleged infringement or violation
            of any composition of matter patent, or trade secret in the
            composition of matter of the Product; except, in all cases, to the
            extent such Losses are subject to indemnification by BLP pursuant to
            Section 11.E.

      B.    Registration. Any FDA or governmental approvals necessary for sale
            of the Product shall be the responsibility of ISTA. ISTA shall use
            its commercially reasonable efforts to maintain all necessary FDA or
            governmental approvals for sale of the Product and to ensure that
            the packaging and Labeling of such Product comply with all
            applicable FDA or governmental and rules and regulations.

13.   Indemnification Procedures. Any party seeking indemnification under this
      Agreement shall give prompt written notice to the indemnifying party of
      any third party claim, complaint, suit, proceeding or cause of action
      (collectively and individually referred to as an "Action") providing
      reasonable details of the nature of the event and basis of the Action, and
      the other party's indemnification obligations shall be conditioned upon
      the foregoing if lack of such notice to the indemnifying party is
      prejudicial or otherwise adversely affects the indemnifying party. The
      indemnifying party shall then have the right, at its expense and with
      counsel of its choice, to defend, contest, or otherwise protect against
      any such Action. The indemnified party shall also have the right, but not
      the obligation, to participate at its own expense in the defense thereof
      with counsel of its choice. The indemnified party shall cooperate to the
      extent reasonably necessary to assist the indemnifying party in defending,
      contesting or otherwise protesting against any such Action provided that
      the reasonable cost in doing so shall be paid by the indemnifying party.
      The indemnifying party shall not enter into any settlement without the
      indemnified party's consent if such settlement would be prejudicial to, or
      otherwise constitute any admission of fact or liability by, the
      indemnified party.

14.   Product Recalls. In the event that a Product recall results from the
      breach by BLP of its warranties under this Agreement, defective
      manufacture by BLP or other actions of BLP, BLP shall be responsible for
      the reasonable expenses of the recall. In the event the recall results
      from the actions of ISTA (not including the recall order), ISTA shall be
      responsible for the expenses of the recall and any costs associated with
      the distribution of replacement Product.

                                                                   Page 11 of 22
<PAGE>
15.   Product Complaints. Product complaints shall be received by ISTA and at
      its own expense, ISTA will promptly respond to all reasonable inquires
      from customers pertaining to Product complaints.

16.   Confidentiality. Except as otherwise expressly permitted herein (including
      Article 18), each party hereto agrees to keep all Confidential Information
      of the other party furnished under this Agreement confidential within its
      respective company and agrees not to disclose same to third parties
      without the prior written consent of the other party hereto, except as
      required by law or to the extent such information (i) was already in the
      rightful possession of a party prior to its receipt from the other party
      as evidenced by written records, (ii) becomes generally known to the
      public otherwise than as a result of the breach of this Article 16, (iii)
      is disclosed by a third party having no obligation to keep such
      information confidential, or (iv) was independently developed by such
      party or its agent(s) as evidenced by written records. During the Term of
      this Agreement, both ISTA and BLP agree to keep the subject matter of this
      Agreement confidential and not disclose it to any third party except as
      required by law, in which instance prompt notice shall be given to the
      party not making the disclosure, or except as mutually agreed to. The
      receiving party will, upon the written request of the disclosing party
      after any expiration or termination of this Agreement, promptly destroy or
      return to the disclosing party all Confidential Information (including
      notes, writings and other material developed therefrom) and all copies
      thereof and retain none for its files, except that each party may retain
      one (1) copy for its legal files. The return or retention of such
      information will not relieve the receiving party of its continuing
      obligation of confidentiality hereunder.

17.   Public Announcements. Neither ISTA nor BLP shall use the name of the other
      firm in any publicity or advertising and may not issue a press release,
      public announcement or otherwise publicize or disclose the existence of
      this Agreement, any information related to this Agreement or the terms or
      conditions hereof, without obtaining the other party's prior written
      approval and consent.

18.   Intellectual Property. BLP acknowledges that ISTA owns or possesses
      certain ISTA Confidential Information, inventions, technologies,
      processes, know-how, trade secrets, improvements, other intellectual
      property and other assets relating to the Product, which have been
      independently developed or licensed by ISTA (collectively "ISTA
      Technology"). ISTA shall own, and BLP hereby assigns and agrees to assign
      to ISTA, all inventions, developments, or improvements to the ISTA
      Technology, whether or not patentable, that arise from, or are based upon
      the Product, its manufacture or ISTA Technology, together with any
      analytical methods for testing the Product, modifications to the Product
      formulation or Product container, methods of mixing the Product solution
      and all data (e.g., label qualification data) incorporated into FDA
      filings (collectively, "ISTA Developments"); provided, however, that BLP
      shall retain a nonexclusive, perpetual, royalty-free, fully paid-up,
      worldwide license, under all inventions, developments, or improvements
      assigned to ISTA except inventions, developments, or improvements relating
      to Product formulation, to make, have made, use, offer for sale, import
      and otherwise exploit any products other than Product. BLP agrees to
      execute all documents necessary to perfect title in the ISTA Developments
      in ISTA.

                                                                   Page 12 of 22
<PAGE>

19.   Termination.

      A.    For Default. Without prejudice to any other legal or equitable
            remedy or remedies either party may have, this Agreement may be
            terminated by either party by written notice for breach of any
            material provision of this Agreement if such breach remains uncured
            after the giving of not less than [*] prior written notice to the
            breaching party of the existence of such breach and intent to
            terminate.

      B.    For Failure to Meet Timelines. Without prejudice to any legal or
            equitable remedy or remedies either party may have, this Agreement
            may be immediately terminated at the option of ISTA, immediately
            upon written notice, in the event of the BLP does not achieve any
            project milestone within [*] after the deadline specified in
            Appendix C.

      C.    For Insolvency. Either party may terminate this Agreement
            immediately in the event of the insolvency of the other party if
            such insolvent party fails to pay any amounts due pursuant to the
            terms of this Agreement within [*] following the date on which such
            amount is due and payable, provided that the terminating party first
            serves written notice of the failure to pay on the insolvent party
            and such default is not cured within [*] after receipt of such
            notice.

      D.    For Failure of Batches. In the event that prior to the approval of
            the Process Validation report specified in Appendix C the parties
            are unable to successfully produce, within [*] after first
            discovering any problems related to any out-of-Specification batches
            attributed to Product formulation, container compatibility and
            testing methods developed by or provided by ISTA to BLP, a Product
            batch within the Specifications, the parties shall [*]. In the event
            [*], this Agreement may be terminated at the option of either party
            upon [*] advance written notice to the other party.

      E.    Effect of Termination. Expiration or termination of this Agreement
            for any reason shall not relieve the parties of any obligation that
            accrued prior to such expiration or termination. Within [*]
            following the effective date of termination of this Agreement, BLP
            will provide ISTA with a detailed accounting of (i) the amount of
            Raw Materials held by BLP for manufacturing into Product under this
            Agreement, (ii) the amount of Product in the process of being
            manufactured by BLP for ISTA under this Agreement and (iii) the
            amount of finished Product then held in inventory by BLP (including
            Product which has not be subjected to BLP's quality assurance
            testing procedures) under this Agreement. Upon ISTA's request, BLP
            shall deliver to ISTA or to such other person or place as ISTA shall
            direct in writing, at ISTA's sole cost and expense (except at BLP's
            sole cost and expense, if ISTA terminated the Agreement pursuant to
            Section 19.A., 19.B. or 19.C.), all Raw Materials and Product
            described above and ISTA shall pay BLP, within [*] after such
            delivery, the Product price owing to BLP for finished Product and
            BLP's verifiable out-of-pocket costs incurred in procuring

                                                                   Page 13 of 22
<PAGE>
            such delivered Raw Materials, unless such termination is initiated
            by ISTA pursuant to Section 19.A., 19.B. or 19.C., in which event
            ISTA shall not be obligated to pay such amounts. No termination of
            this Agreement shall have any effect on, or relieve either party
            from, the obligation to make any payment or perform any act arising
            prior to the effective date of termination. Without limiting the
            foregoing, at ISTA's request, BLP shall also be obligated to provide
            the services described in Section 5.E. above upon expiration or any
            termination of this Agreement; provided that if such termination is
            by ISTA pursuant to Section 19.A., 19.B. or 19.C., BLP shall bear
            the costs incurred in performing under Section 5.E.

      F.    BLP Obligations upon Expiration or Termination. Upon the expiration
            of this Agreement or its earlier termination, BLP will transfer all
            Product-manufacturing technology and information to ISTA's
            designated manufacturer and provide full cooperation and assistance
            to assure smooth transition. ISTA will reimburse BLP for BLP's
            reasonable costs and expenses incurred in providing the foregoing
            services that are pre-approved in writing by ISTA, unless such
            termination is initiated by ISTA pursuant to Section 19.A., 19.B. or
            19.C., in which event all such costs and expenses shall be borne
            solely by BLP.

20.   Jurisdiction and Venue. All actions or proceedings brought by BLP against
      ISTA arising out of or related to this Agreement shall be brought in a
      state or federal court of competent jurisdiction located within Orange
      County, California, and each of the parties to this Agreement consents to
      the exclusive personal jurisdiction and venue of those courts. All actions
      or proceedings brought by ISTA against BLP arising out of or related to
      this Agreement shall be brought in a state or federal court of competent
      jurisdiction located within Hillsborough County, Florida, and each of the
      parties to this Agreement consents to the exclusive personal jurisdiction
      and venue of those courts.

21.   Force Majeure and Allocation. The obligations of either party hereunder
      are contingent upon, and BLP shall not be liable for, acts of God, war,
      terrorist activities, riots, floods, fires, storms, strikes, catastrophes
      or any other acts of force majeure, FDA or governmental restrictions,
      prohibitions, regulations, and requisitions, or other interferences beyond
      the reasonable control of such party (but excluding acts or omissions of
      subcontractors) to the extent that the same prevent or delay the
      performance of the obligations herein contained, always provided that such
      party shall use its best efforts in the event of force majeure to fulfill
      the obligations under this Agreement and provide the other party with
      prompt notice of the occurrence of any such event of force majeure.

22.   Assignment or Transfer of Rights. This Agreement will inure to the benefit
      of and be binding upon each of the parties hereto and their respective
      successors and assigns. Neither this Agreement, nor any of the rights and
      obligations under this Agreement, may be assigned, transferred or
      otherwise disposed of by either party without the prior written consent of
      the other party, unless such assignment, transfer or disposition is to a
      successor to all or substantially all of the businesses and assets of such
      party pertaining to the subject matter hereof. Any assignment made in
      contravention of the foregoing shall be void and of no effect.

                                                                   Page 14 of 22
<PAGE>
23.   Notices. All notices or communications required or permitted hereby shall
      be sent to the respective addresses set forth below by overnight delivery,
      facsimile (which will promptly be confirmed in writing sent by registered
      or certified mail, return receipt requested) or registered or certified
      mail, return receipt requested and shall be effective upon delivery.

      As to BLP:                Bausch & Lomb Pharmaceuticals, Inc.

                                8500 Hidden River Parkway

                                Tampa, Florida 33637

                                Attention: J. Robert Hernandez

                                Director of Plant Operations

                                Contract Manufacturing Facsimile: (813) 975-7788

      With a copy to:           Bausch & Lomb Incorporated

                                One Bausch & Lomb Place

                                Rochester, New York 14604-2701

                                Attention: General Counsel

      As to ISTA:               ISTA Pharmaceuticals, Inc.

                                15279 Alton Parkway, Suite 100

                                Irvine, CA 92618

                                Attention: Kirk McMullin

                                Vice President of Operations

                                Facsimile: (949) 788-6010

The address to which notice to either party shall be sent may be changed by such
party by written notice to the other party.

24.   Relationship of the Parties. The parties are independent contractors.
      Nothing in this Agreement is intended or will be deemed to constitute a
      partnership, agency or employer-employee relationship between the parties.
      Neither party has any authority to assume or create any obligation on
      behalf of the other party.

25.   Order of Preference. All sales by BLP to ISTA of Product shall be subject
      to the provisions of this Agreement and any provision of any Purchase
      Order placed by ISTA or order acknowledgment sent by BLP which is
      inconsistent herewith or in addition hereto shall be

                                                                   Page 15 of 22
<PAGE>
      null and void unless accepted by the receiving party in writing and signed
      by one of its authorized representatives.

26.   Applicable Law. This Agreement shall be governed and construed in
      accordance with the laws of the State of Florida, without reference to its
      conflicts of law principles.

27.   Survival. The obligations in Sections 5.E., 6.A., 11.A., 11.E., 11.G.,
      12.A., 19.E. and 19.F. and Articles 1, 2, 14, 16, 18 and 20-29 shall
      survive the expiration or termination of this Agreement for any reason
      whatsoever.

28.   Entire Agreement. This Agreement and the Appendices contains the entire
      agreement of the parties with respect to the subject matter hereof and
      supersedes any prior agreements made between the parties regarding the
      Product. No prior statement, representation, promise or agreement, written
      or verbal, shall be of any force to vary, expand or diminish the
      provisions hereof. The Agreement may be modified or amended only by an
      instrument in writing, executed by both parties. No waiver or other
      failure to exercise any right under, or default or extension of time for
      performance under, any provision of this Agreement will affect the right
      of any party to exercise any subsequent right under or otherwise enforce
      said provision or any other provision hereof or to exercise any right or
      remedy in the event of any other default, whether or not similar.

29.   Counterparts. This Agreement may be executed in two counterparts, each of
      which shall be deemed an original, and all of which together, shall
      constitute one and the same instrument.

      IN WITNESS WHEREOF, the parties have hereunto set forth their signatures
effective as of the Effective Date.

BAUSCH & LOMB
PHARMACEUTICALS, INC.

By:
   -------------------------------------------------

Title:
      ----------------------------------------------


ISTA PHARMACEUTICALS, INC.

By:

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

Title:
      ----------------------------------------------

                                                                   Page 16 of 22
<PAGE>
                                   APPENDIX A

                                 PRICE SCHEDULE

<TABLE>
<CAPTION>
Bromfenac Ophthalmic Solution               Price

<S>                                         <C>
      1.       [*]                           [*]

      2.       [*]                           [*]
</TABLE>

                                       A-1
<PAGE>
                                   APPENDIX B

                                 ANNUAL MINIMUM

                          BROMFENAC OPHTHALMIC SOLUTION

<TABLE>
<CAPTION>
Production Year Starting:                   Annual Minimum:
------------------------                    --------------
<S>                                         <C>

[*]                                         [*]

[*]                                         [*]

[*]                                         [*]

[*]                                         [*]
</TABLE>

                                       B-1
<PAGE>
                                   APPENDIX C

                               PROJECT MILESTONES

                                       [*]

                                 PROJECT BUDGET

                                       [*]



                                       C-1
<PAGE>
                            APPENDIX D SPECIFICATIONS

                                       [*]

                                       D-1