<PAGE>   1
                                                                   EXHIBIT 10.18



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                           ISTA PHARMACEUTICALS, INC.

                  SERIES D PREFERRED STOCK PURCHASE AGREEMENT


                              Dated March 29, 2000








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<PAGE>   2


                                TABLE OF CONTENTS



<TABLE>
<CAPTION>
                                                                                                                 PAGE
                                                                                                                 ----
<S>            <C>                                                                                               <C>
1.             Purchase and Sale of Stock..........................................................................1

               1.1           Sale and Issuance of Series D Preferred Stock.........................................1
               1.2           Closing Date; Delivery................................................................1

2.             Representations and Warranties of the Company.......................................................1

               2.1           Organization, Good Standing and Qualification.........................................2
               2.2           Capitalization........................................................................2
               2.3           Subsidiaries..........................................................................2
               2.4           Authorization.........................................................................3
               2.5           Valid Issuance of Preferred and Common Stock..........................................3
               2.6           Governmental Consents.................................................................3
               2.7           Litigation............................................................................3
               2.8           Confidential Disclosure Agreement.....................................................4
               2.9           Patents and Trademarks................................................................4
               2.10          Compliance with Other Instruments.....................................................4
               2.11          Agreements; Action....................................................................5
               2.12          Financial Statements..................................................................6
               2.13          Disclosure............................................................................6
               2.14          Registration Rights...................................................................6
               2.15          Corporate Documents...................................................................6
               2.16          Title to Property and Assets..........................................................6
               2.17          Employee Benefit Plans................................................................6
               2.18          Tax Returns, Payments and Elections...................................................7
               2.19          Labor Agreements and Actions..........................................................7
               2.20          Environmental and Safety Laws.........................................................7
               2.21          Real Property Holding Corporation.....................................................7
               2.22          Insurance.............................................................................7
               2.23          Year 2000.............................................................................7

3.             Representations and Warranties of the Investor......................................................8

               3.1           Authorization.........................................................................8
               3.2           Purchase Entirely for Own Account.....................................................8
               3.3           Disclosure of Information.............................................................8
               3.4           Investment Experience.................................................................8
               3.5           Restricted Securities.................................................................8
               3.6           Further Limitations on Disposition....................................................9
               3.7           Legends...............................................................................9

4.             California Commissioner of Corporations.............................................................9
</TABLE>



                                      -i-

<PAGE>   3

                                TABLE OF CONTENTS
                                   (CONTINUED)


<TABLE>
<S>            <C>                                                                                               <C>
5.             Conditions to Investors' Obligations at Closing....................................................10

               5.1           Representations and Warranties.......................................................10
               5.2           Performance..........................................................................10
               5.3           Compliance Certificate...............................................................10
               5.4           Qualifications.......................................................................10
               5.5           Opinion of Company Counsel...........................................................10
               5.6           Investors Rights Agreement...........................................................10
               5.7           Election of Director.................................................................10

6.             Conditions of the Company's Obligations at Closing.................................................10

               6.1           Representations and Warranties.......................................................11
               6.2           Payment of Purchase Price............................................................11
               6.3           California Qualification.............................................................11
               6.4           Articles.............................................................................11
               6.5           Investors Rights Agreement...........................................................11

7.             Covenants..........................................................................................11

               7.1           First Refusal and Co-Sale Agreement..................................................11
               7.2           Board of Directors...................................................................11

8.             Miscellaneous......................................................................................11

               8.1           Survival of Warranties...............................................................11
               8.2           Successors and Assigns...............................................................11
               8.3           Governing Law........................................................................12
               8.4           Counterparts.........................................................................12
               8.5           Titles and Subtitles.................................................................12
               8.6           Notices..............................................................................12
               8.7           Finder's Fee.........................................................................12
               8.8           Expenses.............................................................................12
               8.9           Amendments and Waivers...............................................................12
               8.10          Severability.........................................................................13
</TABLE>


EXHIBITS

A              Schedule of Investors
B              Amended and Restated Articles of Incorporation
C              Schedule of Exceptions
D              Amended and Restated Investors Rights Agreement
E              Wilson Sonsini Goodrich & Rosati Legal Opinion
F              First Refusal and Co-Sale Agreement




                                      -ii-

<PAGE>   4

                   SERIES D PREFERRED STOCK PURCHASE AGREEMENT



        THIS SERIES D PREFERRED STOCK PURCHASE AGREEMENT is made as of the 29th
day of March, by and between Ista Pharmaceuticals, Inc., a California
corporation located at 15279 Alton Parkway, Suite 100, Irvine, California 92618
(the "Company"), and the investors listed on Exhibit A hereto, each of which is
herein referred to as an "Investor."

        THE PARTIES HEREBY AGREE AS FOLLOWS:

        1. Purchase and Sale of Stock.

           1.1 Sale and Issuance of Series D Preferred Stock.

               (a) The Company has authorized the sale and issuance of up to
1,776,199 shares of its Series D Preferred Stock (the "Shares") having the
rights, privileges and preferences as set forth in the Company's Amended and
Restated Articles of Incorporation (the "Articles") in the form attached to this
Agreement as Exhibit B.

               (b) Subject to the terms and conditions of this Agreement, the
Company will severally issue and sell to each of the Investors, and the
Investors will severally buy from the Company the total number of Shares set
forth opposite such Investor's name on Exhibit A for the purchase price equal to
$5.63 times the number of Shares being purchased. The Company's agreements with
each Investor are separate agreements, and the sale to each Investor is a
separate sale.

           1.2 Closing Date; Delivery.

               (a) Closing. The closing of the purchase and sale of the Shares
under this Agreement to the Investors shall be held at 10:00 a.m. on March 29,
at the offices of Wilson Sonsini Goodrich & Rosati, 650 Page Mill Road, Palo
Alto, California 94304-1050 or at such other time and place as the Company and
the Investors may agree (the "Closing"). The date of such closing is hereinafter
referred to as the "Closing Date."

               (b) At the Closing (as defined below) the Company shall deliver
to each Investor a certificate, registered in such Investor's name, representing
the number of Shares to be purchased by such Investor at the Closing as
specified in Exhibit A, against payment of the purchase price therefor by check
payable to the Company or by wire transfer in accordance with the Company's
wiring instructions.

        2. Representations and Warranties of the Company. The Company hereby
represents and warrants to each Investor that, except as set forth on a Schedule
of Exceptions attached hereto as


<PAGE>   5

Exhibit C, which exceptions shall be deemed to be representations and warranties
as if made hereunder:

           2.1 Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California and has all requisite corporate power and authority
to execute and deliver this Agreement, and the agreements set forth as Exhibits
hereto (collectively, the "Agreements"), to issue, transfer, and sell the Shares
hereunder, to issue the Common Stock issuable upon conversion of the Shares, and
to carry out and perform its obligations under the terms of the Agreements. The
Company is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure so to qualify would have a material adverse
effect on its business or properties.

           2.2 Capitalization. The authorized capital of the Company consists,
or will consist prior to the Closing, of:

               (a) 26,933,878 shares of Preferred Stock (the "Preferred Stock"),
of which 1,951,753 shares have been designated Series A Preferred Stock,
1,951,753 shares have been designated Series A-1 Preferred Stock, 1,955,555
shares have been designated Series B Preferred Stock, 1,955,555 shares have been
designated Series B-1 Preferred Stock, 6,600,000 shares have been designated
Series C Preferred Stock, 6,600,000 shares have been designated Series C-1
Preferred Stock, 2,959,631 shares have been designated Series D Preferred Stock
and 2,959,631 shares have been designated Series D-1 Preferred Stock. Prior to
the Closing, 1,951,753 shares of Series A Preferred Stock are outstanding,
1,955,555 shares of Series B Preferred Stock are outstanding and 6,568,269
shares of Series C Preferred Stock are outstanding, and up to 1,776,199
additional shares of Series D Preferred Stock will be sold pursuant to this
Agreement. The rights, privileges and preferences of the Shares will be as
stated in the Articles attached hereto as Exhibit B.

               (b) 40,000,000 shares of Common Stock (the "Common Stock"), of
which 2,438,927 shares are issued and outstanding.

               (c) Except as set forth in the Schedule of Exceptions, there are
no outstanding options, warrants, rights (including conversion or preemptive
rights) or agreements for the purchase or acquisition from the Company of any
shares of its capital stock.

               (d) Except as hereinabove described, (i) the Company has no
shares reserved for issuance, and (ii) all of the outstanding shares have been
duly authorized and are validly issued, fully-paid and nonassessable.

               (e) The Company does not have outstanding any bonds, debentures,
notes or other obligations the holders of which have the right to vote (or
convertible into or exercisable for securities having the right to vote) with
the stockholders of the Company on any matter.

           2.3 Subsidiaries. The Company does not presently own or control,
directly or indirectly, any interest in any other corporation, association, or
other business entity.



                                      -2-
<PAGE>   6

           2.4 Authorization. The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under this Agreement.
All corporate action on the part of the Company, its officers, directors and
shareholders necessary for the authorization, execution and delivery of the
Agreements, the performance of all obligations of the Company hereunder and the
authorization, issuance and delivery of the Shares being sold and transferred
hereunder and the Common Stock issuable upon conversion of the Shares have been
taken or will be taken prior to the Closing, and the Agreements constitute valid
and legally binding obligations of the Company, enforceable in accordance with
their terms.

           2.5 Valid Issuance of Preferred and Common Stock.

               (a) The Shares which are being transferred to the Investors
hereunder, when issued, sold and delivered in accordance with the terms hereof
for the consideration expressed herein, will be duly and validly issued, fully
paid and nonassessable and, based in part upon the representations of the
Investors in this Agreement, will be issued in compliance with all applicable
federal and state securities laws. The Common Stock issuable upon conversion of
the Shares have been duly and validly reserved for issuance and, upon issuance
in accordance with the provisions of this Agreement, shall be duly and validly
issued, fully paid and nonassessable, free of any liens or encumbrances, and
issued in compliance with all applicable federal and state securities law. The
transfer of the Shares offered hereby and the subsequent conversion of the
Shares into Common Stock are not and will not be subject to any preemptive
rights or rights of first refusal that have not been properly waived or complied
with.

               (b) The outstanding shares of Common Stock and Preferred Stock
are all duly and validly authorized and issued, fully paid and nonassessable,
and were issued in compliance with all applicable federal and state securities
laws and all preemptive rights and rights of first refusal.

           2.6 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state, local or provincial governmental authority on
the part of the Company is required in connection with the consummation of the
transactions contemplated by this Agreement, except for the filing pursuant to
Section 25102(f) of the California Corporate Securities Law of 1968, as amended,
and the rules thereunder, which filing will be effected within 15 days of the
transfer of the Shares, and any other filing required by applicable state
securities or blue sky laws, which will be filed in a timely manner.

           2.7 Litigation. There is no action, suit, proceeding or investigation
pending or, to the knowledge of the Company, currently threatened against the
Company which questions the validity of this Agreement or the right of the
Company to enter into it, or to consummate the transactions contemplated hereby,
or which might result, either individually or in the aggregate, in any material
adverse changes in the assets, condition, affairs or prospects of the Company,
financially or otherwise, or any change in the current equity ownership of the
Company, nor is the Company aware that there is any basis for the foregoing. The
foregoing includes, without limitation, actions pending or threatened (or any
basis therefor known to the Company) involving the prior employment of any of
the Company's employees, their use in connection with the Company's business of
any information or techniques allegedly proprietary to any of their former
employers, or their obligations



                                      -3-
<PAGE>   7

under any agreements with prior employers. The Company is not a party or subject
to the provisions of any order, writ, injunction, judgment or decree of any
court or government agency or instrumentality. There is no action, suit,
proceeding or investigation by the Company currently pending or which the
Company intends to initiate.

           2.8 Confidential Disclosure Agreement. Each employee, consultant and
officer of the Company has executed a Confidential Disclosure Agreement similar
to the form attached hereto as Exhibit D and no exceptions have been taken by
any such employee, consultant or officer to the terms of such agreement. The
Company, after reasonable investigation, is not aware that any of its employees
or consultants are in violation thereof, and the Company will use its best
efforts to prevent any such violation.

           2.9 Patents and Trademarks. The Company has sufficient title and
ownership of all patents, trademarks, service marks, trade names, copyrights,
trade secrets, knowhow information, proprietary rights and processes necessary
for its business as now conducted and as proposed to be conducted and to the
best of its knowledge without any conflict with or infringement of the rights of
others. There are no outstanding options, licenses, or agreements of any kind
relating to the foregoing, nor is the Company bound by or a party to any
options, licenses or agreements of any kind with respect to the patents,
trademarks, service marks, trade names, copyrights, trade secrets, licenses,
information, proprietary rights and processes of any other person or entity. The
Company has not received any communications alleging that the Company has
violated or, by conducting its business as proposed, would violate any of the
patents, trademarks, service marks, trade names, copyrights or trade secrets or
other proprietary rights of any other person or entity. The Company is not aware
of any reasonable basis for the denial of any pending patent application
(including divisions, continuations, continuations in part and renewal
applications) relating to the Company's intellectual property rights. The
Company is not aware that any of its employees, consultants and officers is
obligated under any contract (including licenses, covenants or commitments of
any nature) or other agreement, or subject to any judgment, decree or order of
any court or administrative agency, that would interfere with the use of his
best efforts to promote the interests of the Company or that would conflict with
the Company's business as proposed to be conducted. Neither the execution,
delivery nor performance of this Agreement, nor the carrying on of the Company's
business by the employees, consultants or officers of the Company, nor the
conduct of the Company's business as proposed, will, to the Company's knowledge,
conflict with or result in a breach of the terms, conditions or provisions of,
or constitute a default under, any contract, covenant or instrument under which
any of such employees, consultants or officers is now obligated.

           2.10 Compliance with Other Instruments.

               (a) The Company is not in violation or default of any provisions
of its Articles or Bylaws or of any instrument, judgment, order, writ, decree or
contract to which it is a party or by which it is bound or, to its knowledge, of
any provision of federal or state statute, rule or regulation applicable to the
Company. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not result in any such
violation or be in conflict with or constitute, with or without the passage of
time and giving of notice, either a default



                                      -4-
<PAGE>   8

under any such provision, instrument, judgment, order, writ, decree or contract
or an event which results in the creation of any lien, charge or encumbrance
upon any assets of the Company. The business of the Company is not being,
conducted in violation of any federal, state, local or foreign law, statute,
ordinance, rule, regulation, judgment, order, injunction, decree, arbitration
awarded, agency requirements, license or permit of any governmental entity
(collectively "Laws"). No investigation or review by any governmental entity
with respect to the Company is pending or, to the knowledge of the Company,
threatened, nor has any governmental entity indicated an intention to conduct
the same. To the knowledge of the Company, no material change is required in the
Company's processes, properties or procedures in connection with any such Laws
and the Company has not received any notice or communication of any material
noncompliance with any such Laws that has not been cured as of the date hereof.
The Company has all permits, licenses, franchises, variances, exemption, orders
and other governmental authorizations, consent and approvals necessary to
conduct its business as presently conducted except those the absence of which
are not, individually or in the aggregate, reasonably likely to have a material
adverse effect or prevent or materially burden or materially impair the ability
of the Company to operate its business.

               (b) The Company has avoided every condition, and has not
performed any act, the occurrence of which would result in the Company's loss of
any right granted under any license, distribution or other agreement.

           2.11 Agreements; Action.

                (a) Except for agreements explicitly contemplated hereby, there
are no agreements, understandings or proposed transactions between the Company
and any of its officers, directors, affiliates, or any affiliate thereof.

                (b) There are no agreements, understandings, instruments,
contracts or proposed transactions to which the Company is a party or by which
it is bound which involve (i) obligations of, or payments to the Company in
excess of $15,000, or (ii) the license of any patent, copyright, trade secret or
other proprietary right to or from the Company.

                (c) The Company has not (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or Series
of its capital stock, (ii) incurred any indebtedness for money borrowed or
incurred any other liabilities individually in excess of $15,000 or in excess of
$25,000 in the aggregate, (iii) made any loans or advances to any person, other
than ordinary advances for travel expenses, or (iv) sold, exchanged or otherwise
disposed of any of its assets or rights, other than in the ordinary course of
business.

                (d) The Company is not a party to and is not bound by any
contract, agreement or instrument, or subject to any restriction under its
Articles or Bylaws, which materially adversely affects its business as now
conducted and as proposed to be conducted.

                (e) The Company has not engaged in the past twelve (12) months
in any discussion (i) with any representative of any corporation or corporations
regarding the consolidation or merger of the Company with or into any such
corporation or corporations, (ii) with any



                                      -5-
<PAGE>   9

corporation, partnership, association or other business entity or any individual
regarding the sale, conveyance or disposition of all or substantially all of the
assets of the Company or a transaction or Series of related transactions in
which more than fifty percent (50%) of the voting power of the Company is
disposed of, or (iii) regarding any other form of acquisition, liquidation,
dissolution or winding up of the Company.

           2.12 Financial Statements. The Company has furnished to each Investor
its unaudited balance sheet as of December 31, 1999 (the "Balance Sheet") and
income statement for the period ended December 31, 1999 (collectively, the
"Financial Statements"). The Financial Statements, together with the notes
thereto, (i) are complete and correct in all material respects, (ii) are in
accordance with the Company's books and records, (iii) present fairly its
financial position as of that date and the results of its operations for the
period indicated, and (iv) have been prepared in conformity with generally
accepted accounting principles consistently applied throughout the periods
indicated, subject in the case of interim statements to year end adjustments and
the absence of footnotes. Since December 31, 1999 (i) there has been no material
adverse change in the financial condition, results of operations, business,
properties or prospects of the Company, and (ii) the Company has conducted its
business only in, and has not engaged in any material transaction other than
according to, the ordinary and usual course of its business.

           2.13 Disclosure. The Company has fully provided each Investor with
all the information which such Investor has requested for deciding whether to
purchase the Shares and all information which the Company believes is reasonably
necessary to enable such Investor to make such decision. Neither the Agreements
nor any other statements or certificates made or delivered in connection
herewith contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements herein or therein not misleading.

           2.14 Registration Rights. Except as provided in the Investors Rights
Agreement attached hereto as Exhibit E of this Agreement, the Company has not
granted or agreed to grant any registration rights, including piggyback rights,
to any person or entity.

           2.15 Corporate Documents. Except for amendments necessary to satisfy
representations and warranties or conditions contained herein (the form of which
amendments has been approved by the Investors), the Articles and Bylaws of the
Company are in the form previously provided to the Investors.

           2.16 Title to Property and Assets. The Company owns its property and
assets free and clear of all mortgages, liens, loans and encumbrances, except
such encumbrances and liens which arise in the ordinary course of business and
do not materially impair the Company's ownership or use of such property or
assets. With respect to the property and assets it leases, the Company is in
compliance with such leases and, to its knowledge, holds a valid leasehold
interest free of any liens, claims or encumbrances.

           2.17 Employee Benefit Plans. The Company does not have any Employee
Benefit Plan as defined in the Employee Retirement Income Security Act of 1974.



                                      -6-
<PAGE>   10

           2.18 Tax Returns, Payments and Elections. The Company has filed all
tax returns and reports as required by law. These returns and reports are true
and correct in all material respects. The Company has paid all taxes and other
assessments due, except those contested by it in good faith which are listed in
the Schedule of Exceptions. As of the date hereof, there are not pending or, to
the knowledge of the Company threatened in writing, any audits, examinations,
investigations or other proceedings against the Company in respect to taxes or
tax matters. There are not any unresolved questions or claims concerning the
Company's tax liability that may have a material adverse effect on the Company.
The provision for taxes of the Company as shown in the Balance Sheet is adequate
for taxes due or accrued as of the date thereof. The Company has not elected
pursuant to the Internal Revenue Code of 1986, as amended (the "Code"), to be
treated as a Subchapter S corporation or a collapsible corporation pursuant to
Section 341(f) or Section 1362(a) of the Code, nor has it made any other
elections pursuant to the Code (other than elections which relate solely to
methods of accounting, depreciation or amortization) which would have a material
adverse effect on the financial condition, results of operations, business,
properties or prospects at the Company.

           2.19 Labor Agreements and Actions. The Company is not bound by or
subject to (and none of its assets or properties is bound by or subject to) any
written or oral, express or implied, contract, commitment or arrangement with
any labor union, and no labor union has requested or, to the knowledge of the
Company, has sought to represent any of the employees, representatives or agents
of the Company. There is no strike or other labor dispute involving the Company
pending, or to the knowledge of the Company threatened, which could have a
material adverse effect on the financial condition, results of operations,
business properties or prospects of the Company, nor is the Company aware of any
labor organization activity involving its employees. The Company is not aware
that any officer or key employee, or that any group of key employees, intends to
terminate their employment with the Company, nor does the Company have a present
intention to terminate the employment of any of the foregoing. The employment of
each officer and employee of the Company is terminable at the will of the
Company.

           2.20 Environmental and Safety Laws. To its knowledge, the Company is
not in violation of any applicable statute, law or regulation relating to the
environment or occupational health and safety, and to its knowledge, no material
expenditures are or will be required in order to comply with any such existing
statute, law or regulation.

           2.21 Real Property Holding Corporation. The Company is not a real
property holding corporation within the meaning of Internal Revenue Code Section
897(c)(2) and any regulations promulgated thereunder.

           2.22 Insurance. All material property, clinical trials liability and
general liability insurance policies maintained by the Company are with
reputable insurance carriers, provide adequate coverage for all normal risks
incident to the business of the Company and its properties and assets.

           2.23 Year 2000. The Company has reviewed its operations those of any
third party with which the Company has a material relationship to evaluate the
extent to which the business or operations of the Company will be affected by
the Year 2000 Problem, as defined below. The Year



                                      -7-
<PAGE>   11
2000 Problem is not reasonably likely to have a material adverse effect on the
general affairs, management, the current or future consolidated financial
position, business prospects, stockholders' equity or results of operations of
the Company or result in any material loss or interference with the Company's
business or operations. The "Year 2000 Problem" as used herein, means any
significant risk that the computer hardware or software used in the receipt,
transmission, processing, manipulation, storage, retrieval, retransmission or
other utilization of data or in the operation of mechanical or electrical
systems of any kind will not, in the case of dates or time periods occurring
after December 31, 1999, function at least as effectively as in the case of
dates or time periods occurring prior to January 1, 2000

        3. Representations and Warranties of the Investor. Each Investor hereby
represents and warrants, severally and not jointly, that:

           3.1 Authorization. This Agreement constitutes its valid and legally
binding obligation, enforceable in accordance with its terms.

           3.2 Purchase Entirely for Own Account. This Agreement is made with
each Investor in reliance upon such Investor's representation to the Company,
which by such Investor's execution of this Agreement such Investor hereby
confirms, that the Shares and the Common Stock issuable upon conversion of the
Shares (collectively, the "Securities") will be acquired for investment for such
Investor's own account, not as a nominee or agent (other than those Investors
set forth on the signature page set forth hereto who are acquiring such shares
as custodian or trustee), and not with a view to the resale or distribution of
any part thereof, and that such Investor has no present intention of selling,
granting any participation in, or otherwise distributing the same. By executing
this Agreement, each Investor further represents that such Investor does not
have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participation to such person or to any third person,
with respect to any of the Securities. Each Investor represents that it has full
power and authority to enter into this Agreement.

           3.3 Disclosure of Information. It believes it has received all the
information it considers necessary or appropriate for deciding whether to
purchase the Securities. Each Investor further represents that it has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the offering of the Securities. The foregoing, however,
does not limit or modify the representations and warranties of the Company in
Section 2 of this Agreement or the right of the Investors to rely thereon.

           3.4 Investment Experience. Each Investor is an investor in securities
of companies in the development stage and acknowledges that it is able to fend
for itself, and bear the economic risk of its investment and has such knowledge
and experience in financial or business matters that it is capable of evaluating
the merits and risks of the investment in the Securities. If other than an
individual, Investor also represents it has not been organized for the purpose
of acquiring the Securities.

           3.5 Restricted Securities. It understands that the Securities are
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the



                                      -8-
<PAGE>   12

Company in a transaction not involving a public offering and that under such
laws and applicable regulations such securities may be resold without
registration under the Securities Act of 1933, as amended (the "Act") only in
certain limited circumstances. In this connection, each Investor represents that
it is familiar with Rule 144, as presently in effect, and understands the resale
limitations imposed thereby and by the Act.

           3.6 Further Limitations on Disposition. Without in any way limiting
the representations set forth above, each Investor further agrees not to make
any disposition of all or any portion of the Securities unless and until:

               (a) There is then in effect a registration statement under the
Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or

               (b) (i) Such Investor shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (ii) if
reasonably requested by the Company, such Investor shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of such shares under the Act. It
is agreed that the Company will not require opinions of counsel for transactions
made pursuant to Rule 144 except in unusual circumstances.

               (c) Notwithstanding the provisions of paragraphs (a) and (b)
above, no such registration statement or opinion of counsel shall be necessary
for a transfer by an Investor which is a partnership to a partner of such
partnership or a retired partner of such partnership who retires after the date
hereof, or to the estate of any such partner or retired partner or the transfer
by gift, will or intestate succession of any partner to his spouse or lineal
descendants or ancestors, if the transferee agrees in writing to be subject to
the terms hereof to the same extent as if he were an original Investor
hereunder.

           3.7 Legends. It is understood that the certificates evidencing the
Securities may bear one or all of the following legends:

               (a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT
TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE
144 OF SUCH ACT."

               (b) Any legend required by the laws of the State of California or
any other applicable state, including any legend required by the California
Department of Corporations and Sections 417 and 418 of the California
Corporations Code.

        4. California Commissioner of Corporations. THE SALE OF THE SECURITIES
THAT IS THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE


                                      -9-
<PAGE>   13

COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, AND THE ISSUANCE OF
SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION
THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL UNLESS THE SALE OF THE
SECURITIES IS EXEMPT FROM QUALIFICATION BY 25100, 25102 OR 25105 OF THE
CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE
EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED UNLESS THE SALE IS
SO EXEMPT.

        5. Conditions to Investors' Obligations at Closing. The obligations of
each Investor under subsection 1.1(b) of this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions, the
waiver of which shall not be effective against any Investor who does not consent
in writing thereto:

           5.1 Representations and Warranties. The representations and
warranties of the Company contained in Section 2 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the date of such Closing

           5.2 Performance. The Company shall have performed and complied with
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.

           5.3 Compliance Certificate. The vice president of the Company shall
deliver to each Investor at the Closing a certificate certifying that the
conditions specified in Sections 5.1 and 5.2 have been fulfilled and stating
that there shall have been no adverse change in the business, affairs,
prospects, operations, properties, assets or condition of the Company since
October 31, 1999.

           5.4 Qualifications. The Commissioner of Corporations of the State of
California shall have issued a permit qualifying the offer and sale of the
Securities to the Investors pursuant to this Agreement, or such offer and sale
shall be exempt from such qualification under the California Corporate
Securities Law of 1968, as amended.

           5.5 Opinion of Company Counsel. Each Investor shall have received
from Wilson Sonsini Goodrich & Rosati, counsel for the Company, an opinion,
dated as of the Closing Date, in the form attached as Exhibit F.

           5.6 Investors Rights Agreement. The Company shall have entered into
the Investors Rights Agreement in the form attached hereto as Exhibit E.

           5.7 Election of Director. Effective upon the Closing, a designee of
Allergan Pharmaceuticals (Ireland) Ltd., Inc., or its affiliate ("Allergan"),
shall be elected to the Company's Board of Directors.

        6. Conditions of the Company's Obligations at Closing. The obligations
of the Company to each Investor under this Agreement are subject to the
fulfillment on or before the Closing of each of



                                      -10-
<PAGE>   14

the following conditions, the waiver of which shall not be effective unless
consented to in writing by the Company:

           6.1 Representations and Warranties. The representations and
warranties of each Investor contained in Section 3 shall be true on and as of
the Closing with the same effect as though such representations and warranties
had been made on and as of the Closing Date.

           6.2 Payment of Purchase Price. The Investors shall have delivered the
purchase price for the Shares.

           6.3 California Qualification. The Commissioner of Corporations of the
State of California shall have issued a permit qualifying the offer and sale to
the Investors of the Securities or such offer and sale shall be exempt from such
qualification under the California Corporate Securities Law of 1968, as amended.

           6.4 Articles. The Articles attached hereto as Exhibit B shall have
been accepted for filing by the California Secretary of State.

           6.5 Investors Rights Agreement. Each Investor shall have entered into
the Investors Rights Agreement in the form attached hereto as Exhibit E.

        7. Covenants.

           7.1 First Refusal and Co-Sale Agreement. The Company will use
commercial best efforts to add each Investor as a party to the First Refusal and
Co-Sale Agreement, in the form attached hereto as Exhibit G.

           7.2 Board of Directors. So long as Allergan owns at least 750,000
Shares or Common Stock of the Company (subject to adjustment for stock splits,
dividends or the like), the Company agrees (i) to nominate a representative of
Allergan to the Company's Board of Directors or (ii) if a nominee of Allergan is
not represented on the Company's Board of Directors, the Company shall invite a
representative of Allergan to attend all meeting of its Board of Directors,
including committee meetings, in a nonvoting observer capacity and, in this
respect, shall give such representative timely copies of all notices, minutes,
consents, and other material that the Company provides to its directors.

        8. Miscellaneous.

           8.1 Survival of Warranties. The warranties, representations and
covenants of the Company and Investors contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of the Investors or the Company.

           8.2 Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in



                                      -11-
<PAGE>   15

this Agreement, express or implied, is intended to confer upon any party other
than the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.

           8.3 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.

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

           8.5 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

           8.6 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given (i) upon personal delivery; (ii) upon
transmission by facsimile (receipt verified); (iii) upon the fifth day following
deposit by registered or certified mail (return receipt requested), postage
prepaid, and , if delivered to a party overseas, by air mail; or (iv) upon the
second day following dispatch by express courier service (receipt verified), to
the party to be notified at the address indicated for such party in Exhibit A or
in the case of the Company on the first page of this Agreement, or at such other
address for a party as shall be specified by like notice; provided, that notices
of a change of address shall be effective only upon receipt thereof.

           8.7 Finder's Fee. Each Investor, severally and not jointly, agrees to
indemnify and to hold harmless the Company from any liability for any commission
or compensation in the nature of a finders' fee (and the costs and expenses of
defending against such liability or asserted liability) for which the Investor
or any of its officers, partners, employees, or representatives is responsible.
The Company agrees to indemnify and hold harmless each Investor from any
liability for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.

           8.8 Expenses. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement or the Articles, the prevailing
party shall be entitled to reasonable attorney's fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.

           8.9 Amendments and Waivers. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company and the holders of a majority of the
Common Stock issued or issuable upon conversion of the Shares, and with the same
consent the Company may enter into a supplemental agreement for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement. Any amendment or waiver effected in accordance
with this Section 8.9 shall be binding



                                      -12-
<PAGE>   16

upon each holder of any securities purchased under this Agreement at the time
outstanding (including securities into which such securities are convertible),
each future holder of all such securities, and the Company.

           8.10 Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.



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                                      -13-
<PAGE>   17

        IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.



                                           ISTA PHARMACEUTICALS, INC.

                                           By: /s/ EDWARD H. DANSE
                                              ---------------------------------

                                           Title: Chief Executive Officer
                                                 ------------------------------



<PAGE>   18




                                  INVESTORS:

                                  Allergan Pharmaceuticals (Ireland) Ltd., Inc.



                                  By: /s/ FRANCIS R. TUNNEY, JR.
                                     ------------------------------------------


                                  Its: Secretary
                                      -----------------------------------------



<PAGE>   19

                                    EXHIBIT A

                              SCHEDULE OF INVESTORS



<TABLE>
<CAPTION>
                                                            Series D
                                                            Preferred                    Purchase
           Names and Addresses                               Stock                        Price
---------------------------------------------               ---------               -----------------
<S>                                                         <C>                     <C>
Allergan Pharmaceuticals (Ireland) Ltd., Inc.               1,776,199               $   10,000,000.37
2525 Dupont Drive
Irvine, California 92612
</TABLE>






<PAGE>   20

                                    EXHIBIT C

                             SCHEDULE OF EXCEPTIONS


        This Schedule of Exceptions, dated as of March 29, 2000, is made and
given pursuant to paragraph 2 of the Series D Preferred Stock Purchase Agreement
dated March 29, 2000 (the "Agreement") of Ista Pharmaceuticals, Inc. (the
"Company"). The paragraph numbers in this Schedule of Exceptions correspond to
the paragraph numbers in the Agreement; however, any information disclosed
herein under any paragraph number shall be deemed to be disclosed and
incorporated into any other paragraph number under the Agreement where such
disclosure would be appropriate. Any terms defined in the Agreement shall have
the same meaning when used in this Schedule of Exceptions as when used in the
Agreement unless the context otherwise requires.

        2.2 Capitalization.

            (c) The Company has adopted a stock option plan under which
4,750,000 shares of Common Stock have been reserved for issuance. Prior to the
Closing, options to purchase 3,341,050 shares of the Company's Common Stock are
currently outstanding and 728,367 shares of the Company's Common Stock have been
reserved for future grants.

            The Company has entered into an Investors Rights Agreement, dated as
of the date hereto, pursuant to which the holders of at least 100,000 shares of
Preferred Stock have been granted a right of first offer to purchase certain
securities offered by the Company.

            The Company has issued Warrants for the purchase of up to 1,153,777
shares of Common Stock. The Warrants entitle the holder to purchase Common Stock
at a purchase price of $0.56 per share. The Warrants expire at the earlier of a
firmly underwritten public offering of the Company's common stock or five years
from date of issuance.

            The Company and certain shareholders have entered into a First
Refusal and Co-Sale Agreement, dated as of the date hereof.

        2.3 Subsidiaries. The Company owns 100% of the capital stock of Visionex
Pte. Ltd ("Visionex"), a company organized under the laws of Singapore.


        2.5 Valid Issuance of Preferred and Common Stock.

            See Section 2.2 above.

            Investors' subsequent transfers of the Shares may be subject to the
First Refusal and Co-Sale Agreement.

        2.8 Confidential Disclosure Agreement.

            Each of our scientific advisors has signed a non-disclosure
agreement.



<PAGE>   21

        2.9 Patents and Trademarks.

            The Company has entered into a field-limited exclusive license
agreement with a certain third-party pursuant to which the Company may develop
and commercialize certain ophthalmic products utilizing the enzyme
hyaluronidase.

            The Company has entered into a Trademark License Agreement with
Sophia S.A. granting certain rights to Sophia for the use of the Company's
Vitrase mark in Mexico.

            The Company intends to enter into an agreement with Keratoform and
its founders to acquire the rights to certain U.S. and foreign patent
applications.

            The Company intends to enter into an agreement with Allergan Sales,
Inc. and Allergan Sales, Ltd. whereby Allergan Sales, Inc. and Allergan Sales,
Ltd. would be granted certain rights for the use of the Company's Vitrase
related patents.

        2.11 Agreements; Action.

             See 2.9 above.

             (a) The Company entered into unsecured loan agreement, dated
May 29, 1997, with Edward Danse, the Company's Chief Executive Officer.

             (b) The Company has entered into a lease credit line with Lease
Management Services, Inc. pursuant to which the Company granted a security
interest in its fixed assets. Under this agreement, the Company has an
outstanding balance of approximately $300,000 and lease credit line of
$1,100,000.

             The Company has entered into a commercial Lease Agreement, dated
September 13, 1996, for its offices located at 15279 Alton Parkway, Irvine,
California, which provides for monthly lease payments of approximately $12,000
through September 30, 2001.

             The Company has entered into a Commercial Lease agreement, dated
January 1, 1996, for medical offices in Tijuana, Mexico which provides for
monthly lease payments of approximately $3,000 through January, 2003.

             The Company has entered into consulting agreements with the
following individuals; Charles May, O.D. (variable up to $6,000 per month),
Christina Kenney, M.D. Ph.D. ($5,000 per month), David Harper, M.D. ($7,500 per
month), Frank Killey, Ph.D. (approximately $12,000 per month), Edgar Thomas,
M.D. (approximately $7,500 per month), Baruch Kupperman, M.D. Ph.D.
(approximately $7,500 per month), Anthony Nesburn, M.D. ($3,000 per quarter),
Judy Atkins (approximately $10,000 per month) and Syneract, Inc. (approximately
$10,000 per month).



                                      -2-
<PAGE>   22

             The Company intends to enter into an agreement with Staticon, Inc.
which will provide for up to approximately $200,000 in payments for clinical
research services in connection with the Company's Vitrase Phase III Study in
Hungary.

             The Company has entered into a development agreement with ChemSyn
Laboratories which provides for payments of up to $34,500 in connection with the
development of GMP production of a certain raw material used for one of the
Company's products.

             The Company has entered into a Distribution agreement, dated April
23, 1998, with Sophia S.A. which grants Sophia exclusive distribution rights for
the Company's Vitrase product in Mexico.

             The Company has entered into a Distribution Agreement, dated June
27, 1997, with Visionex which grants Visionex exclusive distribution rights for
the Company's Vitrase and Corneaplasty products in certain Asian markets.

             The Company has entered into an agreement with CroMedica Global,
Inc. ("CroMedica"), dated September 8, 1998, which provides for up to $450,000
in payments for clinical research services in connection with the Company's
Vitrase Phase III Study in South Africa.

             The Company has entered into an agreement with Covance dated
November 3, 1998, modified September 10, 1999, which provides for up to
approximately $6 million in payments for clinical research services in
connection with the Company's Vitrase Phase III Studies in the United States,
Canada, Europe and Brazil.

             The Company has entered into an agreement with CroMedica dated May
19, 1999, which provides for payments up to $2.7 million for the performance of
clinical research services in connection with the completion of Company's
Vitrase Phase III Studies in the United States, Canada, South Africa, Australia
and Europe.

             The Company has entered or intends to enter into agreements with
all clinical investigators involved in the Company's Vitrase Phase III clinical
trials, which among other provisions, will provide for payments to the clinical
investigator of up to $3,000 per enrolled patient.

             The Company has entered into a Supply Agreement dated September 23,
1999 with Biozyme Laboratories, Ltd. which, amongst other provisions, will
require the Company to purchase certain capital equipment totaling $140,000,
provide payment to Biozyme of approximately $130,000 upon achievement of certain
events, and require the Company to purchase minimum annual amounts of material
from Biozyme.

             In connection with the terms of the Company's Supply Agreement with
Biozyme Laboratories, Inc., Company is required, beginning in calendar year
1999, to purchase annual minimum amounts of material from Biozyme.



                                      -3-
<PAGE>   23

             On March 9, 2000, the Company borrowed $4,000,000 from Visionex,
its wholly owned subsidiary (the "Note"). The Note, which was provided to
Investor's counsel for review, carries a 7% and is due on January 31, 2001.

        2.16 Title to Property and Assets. The Company has entered into a lease
credit line with Lease Management Services, Inc. pursuant to which the Company
granted a security interest in its fixed assets. Under this agreement, the
Company has an outstanding balance of approximately $300,000 and lease credit
line of $1,100,000.

        2.17 Employee Benefit Plans. The Company has established a
non-contributory 401(k) plan for its employees.

        2.23 Year 2000.

               The Company has completed an assessment of its internal computer
software and hardware systems, and believes that the "Year 2000 Problem" is not
likely to have a material effect on the Company's business or operations
conducted with these systems.

               The Company has reviewed representations of CroMedica and Covance
with regard to its programs regarding the "Year 2000 Problem." CroMedica and
Covance have made representations to the Company that these programs will result
in Year 2000 compliance, however, the Company cannot verify CroMedica's and
Covance's full year 2000 compliance at this time.

               The Company has reviewed the operations of other vendors which
are currently providing services to the Company and does not believe that the
"Year 2000 Problem" will have a material effect on the Company's operations as
it pertains to these vendors.



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                                      -4-
<PAGE>   24

        IN WITNESS WHEREOF, the Company has caused this Schedule of Exceptions
to be executed by its proper and duly authorized officer as of the date and year
first written above.



                                           ISTA PHARMACEUTICALS, INC.


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


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