ISTA PHARMACEUTICALS INC
EXHIBIT 10.31
<DOCUMENT>
<TYPE>EX-10.31
<SEQUENCE>8
<FILENAME>a80129ex10-31.txt
<DESCRIPTION>EXHIBIT 10.31
<TEXT>
<PAGE>
                                                                   Exhibit 10.31


                                  ALTON PLAZA
                            SECOND AMENDMENT TO LEASE
                             (Expansion of Premises)

        THIS SECOND AMENDMENT TO LEASE (this "AMENDMENT") dated for reference
purposes only as of February 13, 2002, is entered into by and between ALTON
PLAZA PROPERTY, INC., a Delaware corporation ("LESSOR" or "LANDLORD"), and ISTA
PHARMACEUTICALS, INC., a Delaware corporation (formerly known as Advanced
Corneal Systems, Inc.) ("LESSEE" or "TENANT").

                                    RECITALS

        A. Lessor's predecessor in interest, Aetna Life Insurance Company, and
Lessee entered into that certain Lease Agreement dated September 13, 1996 (the
"ORIGINAL LEASE") for certain premises located at 15279 Alton Parkway, Suite
100, Irvine, California 92618 (the "EXISTING PREMISES"). The Existing Premises
contain approximately 13,448 square feet of rentable area. Landlord and Tenant
entered into that certain First Amendment to Lease dated as of June 27, 2001
(the "FIRST AMENDMENT"). The Original Lease as amended by the First Amendment is
hereinafter referred to as the "LEASE". The term of the Lease is currently
scheduled to expire on September 30, 2004.

        B. Landlord and Tenant presently desire to amend the Lease to, among
other things, provide for the expansion of the Existing Premises.

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

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

        2. Addition of the Expansion Premises. The increment of space located at
15273 Alton Plaza and labeled "EXPANSION PREMISES" on the attached Exhibit A-2
shall be added to the Existing Premises covered by the Lease on the date (the
"EXPANSION PREMISES COMMENCEMENT DATE") Landlord has Substantially Completed (as
defined in Section 4.2 below) the Tenant Improvements (as defined in Section 4.1
below) to be constructed in the Expansion Premises by Landlord pursuant to
Section 4 below, and shall remain a portion of the "Premises" (as defined below)
throughout the Lease term until the Expansion Premises Expiration Date (as
defined below). The Expansion Premises Commencement Date and the Expansion
Premises Expiration Date shall be confirmed in writing by the parties following
the occurrence of the Expansion Premises Commencement Date. Landlord and Tenant
agree that for the purpose of the Lease and this Amendment, the Expansion
Premises shall be deemed to contain approximately 5,238 square feet of space. As
of the Expansion Premises Commencement Date, the Basic Lease Information Page of
the Lease shall be modified to provide that the "Premises" consists of
approximately 18,686 square feet (the combined Existing Premises and Expansion
Premises shall hereinafter be referred to as the "PREMISES"). In addition, as of
the Expansion Premises Commencement Date, the provisions of the Lease


                                       1
<PAGE>

regarding Base Rent, Tenant's pro rata share of Operating Expenses, Tax
Expenses, Common Area Utility Costs, administrative expenses and Utility
Expenses, and the expiration of the term of the Lease, shall be modified, all as
more specifically set forth in this Amendment.

        3. Estimated Commencement Date. Landlord estimates that the Expansion
Premises Commencement Date will be May 1, 2002; provided, however, that the
foregoing is an estimate only, and in all events if Landlord cannot deliver
possession of the Expansion Premises to Tenant on or before the estimated
Expansion Premises Commencement Date, such delay shall not render this Amendment
void or voidable, or impose any liability upon Landlord for any loss or damage
resulting therefrom, or operate to extend the term of the Lease or amend
Tenant's obligations under the Lease (as amended by this Amendment). In no event
shall Landlord be liable to Tenant for any delay in Substantial Completion of
the Tenant Improvements caused or occasioned by strikes, lockout, labor
disputes, shortages of material or labor, fire or other casualty, acts of God or
any other cause beyond the reasonable control of Landlord (each, a "FORCE
MAJEURE EVENT"). Notwithstanding the foregoing, (i) in the event Substantial
Completion does not occur by June 15, 2002 (as such date may be extended by a
Tenant Delay or a Force Majeure Event(s), provided, however, that in no such
event shall such date be extended by more than thirty (30) days because of Force
Majeure Events) (the "RENT ABATEMENT DATE"), then Tenant shall receive one free
day of Base Rent for each day of delay after the Rent Abatement Date; and (ii)
in the event Substantial Completion does not occur by August 1, 2002 (as such
date may be extended by a Tenant Delay or a Force Majeure Event(s), provided,
however, that in no such event shall such date be extended by more than thirty
(30) days because of Force Majeure Events) (the "TRIGGER DATE"), Tenant may
terminate this Amendment upon written notice (the "TERMINATION NOTICE")
delivered to Landlord within five (5) business days after the Trigger Date
electing to terminate this Amendment effective on the date which is five (5)
business days after Landlord's receipt of the Termination Notice (the
"TERMINATION DATE"); provided, however, that if Tenant timely delivers such
Termination Notice, Landlord shall have the right to suspend the termination of
this Amendment for a period of twenty (20) days (thereby extending the
Termination Date for 20 days). In order to suspend the termination pursuant to
the foregoing, Landlord must deliver to Tenant, within five (5) business days
after receipt of Tenant's Termination Notice, notice of such suspension
("LANDLORD'S SUSPENSION NOTICE"). If Landlord delivers Landlord's Suspension
Notice, and, within that 20-day suspension period, Substantial Completion
occurs, Tenant's Termination Notice shall be of no further force or effect. If,
however, Substantial Completion does not occur within that 20-day suspension
period, this Amendment shall terminate at the end of the 20-day suspension
period and Landlord shall promptly return to Tenant any advance payment of rent
for the Expansion Premises and any other similar payment made by Tenant to
Landlord. If prior to the Termination Date, as such date may have been postponed
pursuant to this paragraph, Substantial Completion occurs, Tenant's Termination
Notice shall be of no further force or effect.


                                       2
<PAGE>

        4. Expansion Premises As-Is. Tenant shall accept the Expansion Premises
in their "as is" state and condition and Landlord shall have no obligation to
make or pay for any improvements or renovations in or to the Expansion Premises
or to otherwise prepare the Expansion Premises for Tenant's occupancy, except as
specifically provided in this Section 4.

        4.1 Tenant Improvements. The space plan describing the improvements
which Tenant desires to be constructed in the Expansion Premises, attached
hereto as Exhibit G (the "SPACE PLAN"), has been approved by Tenant and
Landlord. The Space Plan, as may be revised by Tenant from time to time with
Landlord's written approval in accordance with the following provisions of this
Section 4, is hereinafter called the "FINAL PLAN", and the improvements to be
performed in accordance with the Final Plan are hereinafter called the "TENANT
IMPROVEMENTS". The Tenant Improvements shall not include trade fixtures,
equipment, furniture, furnishings, telephone equipment or other personal
property of Tenant. Landlord and Tenant shall cooperate with each other to
resolve any space planning or other issues that are raised by applicable local,
state or federal building codes during the planning, permit or construction
process, but any delays associated with such efforts to resolve such space
planning or other issues shall not be deemed a Tenant Delay (unless Tenant fails
to timely cooperate with Landlord with regard to such matters). Landlord hereby
approves Tenant's right to install its security system in the Expansion
Premises, provided Tenant complies with the provisions of the Lease applicable
to such installation.

        4.2 Construction. The Tenant Improvements shall be constructed in the
Expansion Premises, using Building standard finishes and specifications, by a
general contractor selected by Landlord ("LANDLORD'S CONTRACTOR"). Landlord
shall cause Landlord's Contractor to perform construction of the Tenant
Improvements in accordance with the Final Plan, in a good and workmanlike
manner. Landlord will bear all costs and expenses to perform the work shown on
the Final Plan, including the cost of all permits and other governmental
approvals, except as otherwise provided herein. "SUBSTANTIAL COMPLETION" of the
Tenant Improvements shall be deemed to have occurred on the date on which (i)
Landlord's architect certifies that the Tenant Improvements have been completed
pursuant to the Final Plan, subject only to the completion or correction of
Landlord's Punch List Items; (ii) a certificate of occupancy or temporary
certificate of occupancy (or its equivalent) for the Expansion Premises has been
issued by the governmental agency responsible for issuing such certificate in
the county in which the Expansion Premises are located; and (iii) Landlord has
delivered possession of the Expansion Premises to Tenant in the condition
required under this Amendment. Notwithstanding the foregoing, Landlord warrants
that for sixty (60) days following the Expansion Premises Commencement Date the
heat, air conditioning and ventilating ("HVAC") equipment, and the electrical
and plumbing systems serving the Expansion Premises are warranted to be in good
working order. Landlord shall repair any defective or malfunctioning component
of such systems of which Landlord has received written notice from Tenant
describing the failure or malfunction within thirty (30) days of the Expansion
Premises Commencement Date. "PUNCH LIST ITEMS" shall mean minor items of
incomplete or defective work or materials in the improvements called for in the
Final Plan, which do not materially impair Tenant's use of the Expansion
Premises for the conduct of Tenant's business therein. Notwithstanding anything
to the contrary in this Lease, in no event shall Tenant be obligated to remove,
during the term of the Lease or at the expiration or sooner termination of the
term of the Lease, any of the Tenant Improvements.


                                       3
<PAGE>

        4.3 Changes. If Tenant desires any change, addition or alteration in or
to the Final Plan ("CHANGE"), Tenant shall submit to Landlord for Landlord's
review and written approval, which approval Landlord shall not unreasonably
withhold, revised plans prepared by an architect incorporating the requested
Change and clearly identifying the same as such on the revised plans. If
Landlord approves any proposed Change, Landlord shall give Tenant the estimated
cost of the Change and the amount of time the Landlord estimates the Change will
delay Substantial Completion. Landlord will use reasonable care in preparing the
estimates, but they shall be estimates only and will not limit Tenant's
obligation to pay for the actual cost of the Change. Within two (2) business
days after receipt of such cost and delay estimates, Tenant shall notify
Landlord in writing whether Tenant approves the Change. If Tenant fails to
approve the Change within such two (2) business day period, construction of the
Tenant Improvements shall continue as provided in accordance with the Final Plan
as it existed prior to the requested Change. If Tenant approves the Change,
Landlord shall proceed with the Change. If the Change increases the cost of the
Tenant Improvements, then Tenant shall be liable for the additional cost, which
cost shall be payable within thirty (30) days of Landlord's written demand
therefor. If the Change causes a delay in Substantial Completion of the Tenant
Improvements, Tenant's obligation to pay rent for the Expansion Premises shall
be accelerated as provided in Section 4.4 below. Landlord shall not make any
material changes to the Final Plan without first obtaining Tenant's approval
thereof, which approval shall not be unreasonably withheld, conditioned or
delayed, and any such material changes without such approval shall be at
Landlord's sole cost and expense.

        4.4 Tenant Delays. Tenant shall be responsible for, and shall pay to
Landlord any and all costs and expenses incurred by Landlord in connection with
any delay in Substantial Completion and any increase in the cost of Tenant
Improvements caused by (i) any Changes requested by Tenant in the Tenant
Improvements shown on the Final Plan (including any cost or delay resulting from
proposed Changes that are not ultimately made), (ii) any failure by Tenant to
timely pay any amounts due from Tenant hereunder, including any additional costs
resulting from any Change (it being acknowledged that if Tenant fails to make or
otherwise delays making such payments, Landlord may stop work on the Tenant
Improvements rather than incur costs which Tenant is obligated to fund but has
not yet done so and any delay from such a work stoppage will be a Tenant Delay),
(iii) the inclusion in the Tenant Improvements of any so-called "long lead"
materials (such as fabrics, panellings, carpeting or other items that must be
imported or are of unusual character or limited availability) which Landlord has
informed Tenant, at the time Tenant selects such item(s), are long-lead items,
(iv) any delay by Tenant in responding to inquiries within the time provided in
this Amendment or, if not specified, within commercially reasonable time
periods, regarding the construction of the Tenant Improvements or in granting
Tenant's approval of materials or finishes for the Tenant Improvements, or (v)
any other delay requested or proximately caused by Tenant. Each of the foregoing
is referred to herein as a "TENANT DELAY". Landlord shall provide Tenant written
notice promptly following the occurrence of any Tenant Delay specifying
Landlord's good faith estimate of the duration thereof.


                                       4
<PAGE>

        5. Base Rent. To reflect the addition of the Expansion Premises to the
Lease, effective as of the Expansion Premises Commencement Date, and continuing
thereafter through the Expansion Premises Expiration Date (as defined below),
Tenant shall pay to Landlord Base Rent in advance on or before the first day of
each calendar month, for the Expansion Premises, as follows:

<TABLE>
<CAPTION>
               For the Period:                      Base Rent:
               --------------                       ---------
              <S>                                   <C>
               First Lease Year                     $6,809.40 per month
               Second Lease Year                    $7,071.30 per month
               Third Lease Year                     $7,333.20 per month

</TABLE>

Notwithstanding the foregoing, if Substantial Completion is delayed as a result
of a Tenant Delay, then the Expansion Premises Commencement Date shall be deemed
to be the date that Substantial Completion would have occurred but for any
Tenant Delay. The first "LEASE YEAR" shall be the period commencing on the
Expansion Premises Commencement Date (as such date may be accelerated pursuant
to the preceding sentence) and ending on the last day of the twelfth (12th) full
calendar month thereafter. Each twelve (12) calendar month period thereafter
shall constitute a "LEASE YEAR." The "EXPANSION PREMISES EXPIRATION DATE" shall
be the last day of the third Lease Year. Tenant shall continue to pay Base Rent
for the Existing Premises as set forth in the Lease.

        6. Modification of Tenant's Percentage Share. To reflect the addition of
the Expansion Premises to the Lease, effective as of the Expansion Premises
Commencement Date, the provisions of Article 6 of the Lease shall apply to the
Expansion Premises and Tenant's pro rata share shall be 2.43% with respect to
the Expansion Premises.

        7. Modified Provision. Effective as of the date hereof, Section 14 of
the Original Lease is hereby modified as follows:

        7.1 Deletion. The fourth, fifth, sixth and seventh grammatical sentences
of Section 14.A. of the Original Lease (Landlord's recapture right) are hereby
deleted in their entirety and shall be of no further force or effect.

        7.2 Addition. The following language is hereby added as Section 14.D. to
the Original Lease:

        "D. ASSIGNMENT TO AFFILIATES. Notwithstanding anything to the contrary
        in this Section 14, Lessee may assign this Lease or sublet the Premises
        or any portion thereof, without Lessor's consent, to any partnership,
        corporation or other entity which controls, is controlled by, or is
        under common control with Lessee or Lessee's parent (control being
        defined for such purposes as ownership of at least 50% of the equity
        interests in, or the power to direct the management of, the relevant
        entity) or to any partnership, corporation or other entity resulting
        from a merger or consolidation with Lessee or Lessee's parent, or to any
        person or entity which acquires substantially all the assets of Lessee
        as a going concern (collectively, an "Affiliate"), provided that (i)
        Lessor receives written notice of an assignment or subletting promptly
        after such assignment or


                                       5
<PAGE>

        subletting, (ii) the Affiliate has a net worth at least equal to the net
        worth of Ista Pharmaceuticals, Inc. as of the date of the Second
        Amendment to Lease, (iii) the Affiliate remains an Affiliate for the
        duration of the subletting or the balance of the term in the event of an
        assignment, (iv) the Affiliate assumes (in the event of an assignment)
        in writing all of Lessee's obligations under this Lease, and (v) Lessor
        receives a fully executed copy of an assignment or sublease agreement
        between Lessee and the Affiliate."

        7.3 Casualty Damage. The following language is hereby added to Section
27 of the Original Lease:

               "D. If damage occurs to the Existing Premises and the damage
        cannot be repaired within 270 days from the date of such damage, Tenant
        may elect to terminate this Lease within fifteen (15) days after
        Landlord informs Tenant of the expected duration of the period of repair
        or restoration, as follows: (i) solely with respect to the portion of
        the Existing Premises so damaged, or (ii) if the entirety of the
        Existing Premises has been made untenantable by such damage, Tenant may
        terminate the Lease with respect to the entirety of the Premises. If
        damage occurs to the Expansion Premises and the damage cannot be
        repaired within 270 days from the date of such damage, Tenant may elect
        to terminate this Lease within fifteen (15) days after Landlord informs
        Tenant of the expected duration of the period of repair or restoration,
        as follows: (x) solely with respect to the portion of the Expansion
        Premises so damaged, or (y) if the entirety of the Expansion Premises
        has been made untenantable by such damage, Tenant may terminate the
        Lease solely with respect to the Expansion Premises.

        7.4 Condemnation. The following language is hereby added to Section 28
of the Original Lease:

        "If twenty-five percent (25%) or more of the Existing Premises is
        Condemned, Tenant may elect to terminate this Lease within fifteen (15)
        days after Landlord informs Tenant of the expected extent of such
        condemnation, as follows: (i) solely with respect to the portion of the
        Existing Premises so Condemned, or (ii) if the entirety of the Existing
        Premises has been made untenantable by such condemnation, Tenant may
        terminate the Lease with respect to the entirety of the Premises. If
        twenty-five percent (25%) or more of the Expansion Premises is
        Condemned, Tenant may elect to terminate this Lease within fifteen (15)
        days after Landlord informs Tenant of the expected extent of such
        condemnation, as follows: (x) solely with respect to the portion of the
        Expansion Premises so Condemned, or (y) if the entirety of the Expansion
        Premises has been made untenantable by such condemnation, Tenant may
        terminate the Lease solely with respect to the Expansion Premises.


                                       6
<PAGE>

        8. Temporary Premises. Notwithstanding anything to the contrary in this
Amendment, effective March 1, 2002, Landlord hereby leases to Tenant, and Tenant
hereby leases from Landlord, those certain premises in the Complex located at
15225 Alton Parkway, Suite 200, Irvine, California, containing approximately
4,671 square feet, as temporary premises (the "TEMPORARY PREMISES") for the
operation of Tenant's business. The Temporary Premises shall be leased to Tenant
in its "as is" condition under all the terms and conditions of the Lease,
including without limitation Sections 12 and 13, subject to the following:

        8.1 Base Rent. Base Rent for the Temporary Premises shall be $2,000.00
            per month, commencing March 1, 2002 and continuing through the end
            of the term for the Temporary Premises.

        8.2 Tenant's Proportionate Share. Tenant's proportionate share shall be
            0.93%.

        8.3 Alterations. Tenant shall not make any Alterations to the Temporary
            Premises, except that Tenant may install, at Tenant's sole cost and
            expense, its data and telecommunications wiring and cabling and its
            own security system (the "TEMPORARY PREMISES IMPROVEMENTS"), all in
            accordance with the provisions of the Lease. Upon execution of this
            Amendment by Landlord and Tenant, Landlord shall provide Tenant with
            access to the Temporary Premises for the sole purpose of installing
            the Temporary Premises Improvements; such early access shall be
            subject to all of the terms and conditions of the Lease, except for
            the payment of Base Rent for the Temporary Premises which shall not
            be payable until March 1, 2002 as provided in Section 8.1 above.

        8.4 Term for Temporary Premises. Tenant's lease of the Temporary
            Premises shall terminate on the date which is fifteen (15) calendar
            days following the Expansion Premises Commencement Date; provided,
            however, that if the Expansion Premises Commencement Date does not
            occur by September 1, 2002, on such date the lease of the Temporary
            Premises shall convert to a month-to-month tenancy, which may be
            terminated by either party upon not less than thirty (30) days prior
            written notice to the other party.

        9. Real Estate Brokers. Tenant represents and warrants that it has
negotiated this Amendment directly with Zuvich Cannon & Associates ("TENANT'S
BROKER") and Legacy Partners ("LANDLORD'S BROKER") and has not authorized or
employed, or acted by implication to authorize or to employ, any other real
estate broker or salesman to act for Tenant in connection with this Amendment.
Tenant shall indemnify, defend and hold Landlord harmless from and against any
and all claims by any other real estate broker or salesman other than Landlord's
Broker for a commission, finder's fee or other compensation as a result of
Tenant's entering into this Amendment. Landlord shall pay a commission to
Tenant's Broker pursuant to a separate agreement.


                                       7
<PAGE>

        10. Parking. Effective as of the Expansion Premises Commencement Date,
in addition to the parking spaces currently allocated to Tenant under the Lease,
Tenant shall have use of seventeen (17) nonexclusive and undesignated parking
spaces, subject to the terms of the Lease.

        11. Signage. Subject to (i) compliance with Landlord's signage criteria
attached hereto as Exhibit H, (ii) compliance with all applicable rules,
regulations and laws, and (iii) the approval of any governmental authority with
jurisdiction over the building in which the Expansion Premises are located,
Tenant shall have the right to install building-side signage similar to that on
the Existing Premises and building door signage with respect to the Expansion
Premises.

        12. Expiration of Lease Term and Expansion Premises Termination Date.
The parties acknowledge that the term of the Lease with respect to the Existing
Premises is currently scheduled to expire on September 30, 2004 (the "EXISTING
PREMISES EXPIRATION DATE"), which date is prior to the Expansion Premises
Expiration Date. Accordingly, as of the Existing Premises Expiration Date, the
Lease shall terminate, in accordance with its terms, as to the Existing
Premises, and the Lease shall remain in full force and effect as to only the
Expansion Premises through the Expansion Premises Expiration Date, unless sooner
terminated in accordance with the Lease. The parties further acknowledge and
agree that, as of the Existing Premises Expiration Date: (i) the amount of Base
Rent that Tenant is obligated to pay under the Lease shall be reduced to the
then applicable monthly Base Rent amount for the Existing Premises as set forth
in Section 5 of this Amendment; and (ii) Tenant's percentage share of Operating
Expenses, Tax Expenses, Common Area Utility Costs, administrative expenses and
Utility Expenses shall be 2.43%.

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

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

        15. Exhibits. Exhibits A-2, G and H attached hereto shall be
incorporated into the Lease, as amended hereby.

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


                                       8
<PAGE>

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

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

LANDLORD:                                   TENANT:

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


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

Name:                                       Name:
     -----------------------                    --------------------------

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


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

                                            Name:
                                                 -------------------------

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


                                       9
<PAGE>

                                   EXHIBIT A-2

                           PLAN OF EXPANSION PREMISES





                                     A-2-1


<PAGE>

                                    EXHIBIT G

                                   SPACE PLAN


                                      G-1




<PAGE>




                                    EXHIBIT H

                           LANDLORD'S SIGNAGE CRITERIA



                                      H-1

</TEXT>
</DOCUMENT>
